EXHIBIT 10.5
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT, dated as of this 1st day of May, 2002, and
having an "Effective Date" of May 1, 2002, is by and between SCHOOL SPECIALTY,
INC., a Wisconsin corporation (the "Company") and XXXXX X. XXXXXX ZANDEN
("Employee").
RECITALS
The Company desires to continue to employ Employee and to have the benefit
of his skills and services, and Employee desires to accept employment with the
Company on the terms and conditions set forth herein.
This Employment Agreement supercedes and cancels any other prior employment
agreements or understandings, written or oral, between the Company and the
Employee.
NOW, THEREFORE, in consideration of the mutual promises, terms, covenants
and conditions set forth herein, and the performance of each, the parties
hereto, intending legally to be bound, hereby agree as follows:
AGREEMENTS
1. Employment and Duties. The Company hereby agrees to employ the
Employee and the Employee hereby accepts employment as the Chief
Operating Officer and President of the Company and agrees to devote
his full business time and efforts to the diligent and faithful
performance of his duties as Chief Operating Officer and President of
the Company hereunder under the direction of the Chief Executive
Officer of the Company. Such duties shall be performed from
headquarters in the Greenville, Wisconsin, area. Throughout the term
of this Agreement, the Employee shall be recommended by the Board of
the Company, to its shareholders as a suitable candidate for a
position on the Board of Directors of the Company.
2. Term of Employment. Unless sooner terminated as hereinafter provided,
the term of the Employee's employment hereunder shall commence with
and only with the Effective Date and shall continue for a period of
three (3) years (the "Term"). This Agreement may be terminated prior
to the end of the Term in the manner provided herein. In the event
that this agreement is not terminated pursuant to the terms of this
Agreement, following the first year of the Term of three (3) years or
the first year of any renewal terms thereof, said agreement shall
extend for successive renewal terms of three (3) years each measured
from the date of renewal, unless either party shall notify the other
party of their desire to not renew the term of this agreement, with
said notice to be made no later than ninety (90) days prior to the
expiration of the first year of the Term of this agreement or any then
effective first year of any renewal term thereof.
3. Compensation. For all services rendered by Employee, the Company shall
compensate Employee as follows:
(a) Base Salary. Effective on the date hereof, the annual base salary
payable to Employee shall be Three Hundred Ten Thousand Dollars
($310,000.00) per year or such greater amount as determined from
time to time by the Board of Directors of the Company (but not
reviewed less frequently than on an annual basis), payable on a
regular basis in accordance with the Company's standard payroll
procedures, but not less than monthly. It is understood that the
base salary is a minimum amount, and shall not be reduced during
the term of this Agreement.
(b) Incentive Bonus. During the initial term and any extensions
thereof, Employee shall be eligible to receive an incentive bonus
based upon his participation in the Company's current senior
management bonus program or successor senior management bonus
programs, when effective. The first and last years of employment
will be prorated.
(c) Perquisites, Benefits, and Other Compensation. During the initial
term and any extensions thereof, Employee shall be entitled to
receive all perquisites and benefits as are customarily provided
by the Company to its executive employees, subject to such
changes, additions, or deletions as the Company may make
generally from time to time, as well as such other perquisites or
benefits as may be specified from time to time by the Board of
Directors or the Chief Executive Officer of the Company.
Throughout the term of this Agreement, and during any period of
salary continuation hereunder, the Employee and his family shall
continue to be covered under all health insurance coverage of the
Company afforded its senior management, at the then effective
cost sharing arrangement between the Employee and the Company.
Notwithstanding anything to the contrary in this Agreement or any
documents relating to qualified or non-qualified stock options,
all such outstanding stock options which were outstanding on the
Effective Date and are unvested at the time of termination of
employment of the Employee with the Company shall be vested in
full upon such termination, unless such termination is
effectuated by the Company for cause.
4. Covenants and Conditions.
(a) The Employee will acquire information and knowledge respecting
the intimate and confidential affairs of the Company in the
various phases of its business. Accordingly, the Employee agrees
that he shall not for a period of two (2) years following the
termination of his employment with the Company, use for himself
or disclose to any person not employed by the Company any such
knowledge or information heretofore acquired or acquired during
the term of this employment hereunder including but not limited
to the prescribed requirements of (S) 134.90 of the Wisconsin
Statutes, as hereinafter amended from time to time. Nothing in
this agreement shall be
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construed to limit or supersede the common law of torts or
statutory or other protection of trade secrets where such law
provides the Company with greater protections or protections for
a longer duration than that provided in this section 4 of this
Agreement.
(b) The Employee agrees that all memoranda, notes, records, papers,
or other documents and all copies thereof relating to the
Company's operations or business, some of which may be prepared
by him, and all objects associated therewith (such as models and
samples) in any way obtained by him shall be the Company's
property. This shall include, but is not limited to, documents
and objects concerning any process, apparatus, or product
manufactured, used, developed, investigated, or considered by the
Company. The Employee shall not, except for Company use, copy or
duplicate any of the aforementioned documents or objects, nor
remove them from the Company's facilities, nor use any
information concerning them except for the Company's benefit,
either during his employment or thereafter. The Employee agrees
that he will deliver all of the aforementioned documents and
objects that may be in his possession to the Company on
termination of his employment, or at any other time on the
Company's request, together with his written certification of
compliance, except for those documents and objects received as a
director of the Company.
5. Death or Disability of the Employee. The Employee's employment shall
terminate immediately upon his death. In the event the Employee
becomes physically or mentally disabled so as to qualify for
disability payments under the then current disability coverage for
full time employees of the Company, the Company may at its option
terminate his employment upon not less than thirty (30) days written
notice. The Company's right to terminate the Employee's employment
pursuant to the preceding sentence shall cease in the event the notice
of termination provided for therein shall not be given during the
period of the Employee's disability or within ninety (90) days after
such disability ceases. In the event of termination, the Company shall
be obligated to pay the Employee's salary under paragraph 3 hereof,
net of the gross amount of Long Term disability benefits received by
the Employee, through the balance of the term of this Agreement and
any then currently effective extension thereof.
6. Termination and Severance Compensation. The Company reserves the right
to immediately terminate the Employee's employment under this
agreement should any of the following occur:
(a) The Employee's commission of a felony that is an act which, in
the opinion of the Board of Directors, is either abhorrent to the
community or is an intentional act, which the Board of Directors
considers materially damaging to the reputation of the Company or
its successors or assigns.
(b) The Employee's breach of or failure to perform his obligations in
accordance with the terms and conditions of this agreement.
However the right of the Company to terminate the employment of
the Employee under the terms of
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this paragraph 6(b) shall be conditioned upon the Company
promptly providing to the Employee a written notice which
describes the Employee's breach of or failure to perform his
obligations in accordance with the terms and conditions of this
agreement. The Employee shall have thirty (30) days from the date
of the Company's issuance of this notice to cure the described
breach or failure. Notwithstanding the above described language,
should the Company issue more than one (1) notice in any twelve
(12) month period under the terms of this paragraph 6(b), the
Employee shall have no cure rights for such breach or failure to
perform.
(c) The death of the Employee.
(d) The disability of the Employee, as described in Section 5 above.
Should the term of the Employee's employment with the Company be
terminated pursuant to the terms of Sections 6(c), 6(d), 7, and 8
herein, the Company shall pay to the Employee the Base Salary
described in Section 3(a) for the balance of the then effective term
of this Agreement.
7. Rights and Obligations of Successors. In the event that any of the
following events occur, a "Change in Control" shall be deemed to occur
for the purpose of this Agreement: (a) any person or group of persons
acting in concert becomes the beneficial owner, directly or indirectly
(excluding ownership by or through employee benefit plans), of
securities of the Company representing fifty percent (50%) or more of
the combined voting power of the Company's then outstanding
securities; (b) the Company is combined (by merger, share exchange,
consolidation, or otherwise) with another corporation and as a result
of such combination less than seventy five percent (75%) of the
outstanding securities of the surviving or resulting corporation are
owned in the aggregate by the former shareholders of the Company; or
(c) any person or group of persons acting in concert obtains direct or
indirect control of the Board of Directors of the Company, other than
the current shareholders of the Company. The Employee shall have the
right to terminate his employment under the terms of this Agreement
for a period of sixty (60) days following the Change in Control. In
the event that the Employee shall not so elect to terminate this
Agreement, then this agreement shall be assignable and transferable by
the Company to any subsidiary or affiliate or to any subsidiary or
affiliate of the Company affiliated with the Change in Control and
shall inure to the benefit of and be binding upon the Employee and his
heirs and personal representatives and the Company and its successors
and assigns. In the event the Employee elects to terminate employment,
the Employee shall be paid through the term of this Agreement and any
then currently effective extension thereof.
8. Termination Rights of the Employee. Throughout the term of this
Agreement, the Employee shall have the right to termination his
employment with the Company, with or without cause, upon 180 days
prior written notice. Such notice period shall extend to 270 days
during the first six (6) months of employment of any newly hired chief
executive officer of the Company. The terms of this Section
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8 shall terminate three (3) years from the Effective Date of this
Agreement.
9. Covenant Not to Compete. In consideration of the employment hereunder,
the Employee hereby agrees that during the term of his employment by
the Company and for the longer of (a) a period of twenty four (24)
months following the termination of his employment with the Company,
or (b) the length of time which the Employee receives base salary
payments under this Agreement under the provisions of Section 6 of
this Agreement, the Employee will not either directly or indirectly
own, have proprietary interest (except for less than 5% of any listed
company or company traded in the over-the-counter market) of any kind
in, be employed by, or serve as a consultant to or in any other
capacity for any firm, other than the Company and its subsidiaries,
engaged in the manufacture and distribution of school supplies,
equipment, furniture or other products made and distributed by the
Company or any of the Company's present or future subsidiary
corporations (acquired during the term of this Agreement) during the
period of the Employee's employment in the area where they are engaged
in business without the express written consent of the Company. The
Employee agrees that a breach of the covenant contained herein will
result in irreparable and continuing damage to the Company for which
there will be no adequate remedy at law and in the event of any breach
of such agreement, the Company shall be entitled to injunctive and
such other and further relief including damages as may be proper.
10. Notice. All notices, demands and other communications hereunder shall
be deemed to have been duly given, if delivered by hand or mailed,
certified or registered mail with postage prepaid:
To the Company: School Specialty, Inc.
X.X. Xxx 0000
Xxxxxxxx, XX 00000-0000
Attention: Xxxx Xxxxxxxxxx, Chief Financial
Officer
Fax: (000) 000-0000
With a copy to: Xxxxxx X. Xxxxxxx XX, Esq.
Xxxxxxx & Xxxxxxx, S.C.
000 Xxxxxx Xxxxxx
Xxxxxxx, XX 00000
Fax: (000) 000-0000
To Employee: Xxxxx X. Xxxxxx Zanden
X0000 Xxxxxxxx Xxxxx
Xxxxxxxx XX 00000
or to such other address as the person to whom notice is to be given
may have specified in a notice duly given to the sender as provided
herein. Such notice, request, claim, demand, waiver, consent, approval
or other communication shall be deemed to have been given as of the
date so delivered, telefaxed, mailed or dispatched and, if given by
any other means, shall be deemed given only when actually received by
the addressees.
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10. Entire Agreement; Amendment; Waiver. This Agreement (including any
documents referred to herein) sets forth the entire understanding of
the parties hereto with respect to the subject matter contemplated
hereby. Any and all previous agreements and understandings between or
among the parties regarding the subject matter hereof, whether written
or oral, are superseded by this Agreement. This Agreement shall not be
amended or modified except by a written instrument duly executed by
each of the parties hereto. Any extension or waiver by any party of
any provision hereto shall be valid only if set forth in an instrument
in writing signed on behalf of such party.
11. Expenses. Each party hereto will pay their respective fees, expenses
and disbursements of their agents, representatives, accountants and
counsel incurred in connection with the subject matter of this
Agreement, and its enforcement.
12. Governing Law. This Agreement shall in all respects be construed
according to the laws of the State of Wisconsin, without regard to its
conflict of laws principles.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first written above.
COMPANY:
SCHOOL SPECIALTY, INC.
/s/ Xxx X. XxXxxxx
----------------------------------------
Xxx X. XxXxxxx,
Interim Chairman of the Board
EMPLOYEE:
/s/ Xxxxx X. Xxxxxx Zanden
----------------------------------------
Xxxxx X. Xxxxxx Zanden, Individually
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