EXHIBIT 10.1
June 27, 2003
Via Hand Delivery
PERSONAL & CONFIDENTIAL
Mr. Michael H. Baum
Dear Mike:
This will confirm our agreement concerning the termination of your
employment with Renaissance Learning, Inc. (the "Company").
(1) Benefits to You.
(A) The Company will continue to employ you until the earlier
of (i) the date the Company provides you with written notice that there
is Cause to end your employment with the Company; (ii) the effective
date of any written resignation that you submit to the Company; or
(iii) December 31, 2004 (the earlier of which shall be deemed the
"Separation Date"). For purposes of this document "Cause" means (i) any
act of dishonesty; or (ii) any violation by you of this Agreement.
Beginning July 1, 2003, the Company will pay you a monthly
base salary of Ten Thousand Dollars ($10,000.00) through September 30,
2003 and, thereafter, until the Separation Date, a monthly salary of
Five Hundred Dollars ($500.00), payable in accordance with the
Company's regular pay practices and subject to all requirements
respecting deductions for income and employment taxes. You will
continue to participate in the Company's group health insurance plan
through the earlier of the date you become eligible for coverage under
another group health plan or the Separation Date. Subject to the
qualification mentioned below, the Company will pay the employee
portion of the premium cost of that coverage through the earlier of the
date you become eligible for coverage under another group health plan
or the Separation Date. Except as provided in Subparagraph (1)(F),
below, you will be responsible for all other medical and health
insurance-related costs during the remaining term of your employment.
The Company will reimburse you for business expenses incurred by you
when acting on its behalf on or before the Separation Date in
accordance with its policies. Except as provided herein, you will
receive no other payments or benefits from the Company after June 30,
2003. You will continue to be allowed the use of the computer and
cellular telephone assigned you by the Company through the Separation
Date, in any manner not injurious to the Company or the security of its
computer network systems. You will retain all your vested rights as of
the Separation Date in the Company's 401(k) plan, and your stock
options will continue to vest until the Separation Date (although you
will not be eligible for any additional option grants after June 30,
2003), and will receive all payments and rights due you under the terms
of those plans.
(B) Until the Separation Date, you will remain an employee of
the Company in the capacity of a Special Consultant. As a Special
Consultant you will perform such tasks as may be assigned from time to
time; provided, however, that absent your consent, you will not be
required to provide more than 60 hours of such services in any month up
to September 30, 2003, and not more than 4 hours of such services in
any month after September 30, 2003. You agree to remove your personal
property from the office currently being utilized by you on Peach
Street in Wisconsin Rapids by July 31, 2003, and return all keys and
access cards used at that facility. Until the Separation Date, you can
continue to use office space made available to you at the Company's
Madison facility, and can continue to receive and send communications
such as email, phone calls, mail, and faxes at and from that address.
You and the company acknowledge that, as a Special Consultant, you
shall not be on the Company's distribution list for, nor shall you
otherwise routinely receive, material non-public financial information
relating to the Company.
(C) On the first regular Company pay date at least three (3)
business days following expiration of the Revocation Period, the
Company will pay you a separation bonus of Two Hundred Fifty Thousand
Dollars ($250,000.00). On the first regular Company pay date in 2004,
the Company will pay you a similar bonus in the amount of Two Hundred
Thousand Dollars ($200,000.00). These amounts will be subject to
deductions for income and employment taxes as required by law, and
deductions and matching payments pursuant to the terms of the Company's
401(k) program if you are still employed by the Company at the time the
bonuses are paid.
(D) Beginning on the first day following the Separation Date,
you will have the right to continue health insurance pursuant to the
Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA), as
amended and such conversion rights respecting the Company's group life
insurance as are provided by law.
(E) Unless and until you are separated for Cause, the Company
will provide you with a letter of reference which (i) states that you
resigned your employment; (ii) confirms your dates of employment with
the Company; (iii) confirms the titles and job responsibilities of all
positions you held; and (iv) provides positive statements concerning
your contributions to the Company. Furthermore, as an officer of the
Company, Terry Paul will make himself reasonably available to
prospective employers for the purpose of serving as a reference and to
confirm the accuracy of the information contained in this letter and
will not make any statements to any individual identifying him/herself
as affiliated with a prospective employer which could reasonably be
viewed as disparaging your personal or professional reputation.
Notwithstanding the foregoing, nothing in this Subparagraph shall be
required to impose a duty on Mr. Paul to respond other than truthfully
to any question posed to him by any of your prospective employers.
(F) The Company will pay for costs incurred by you for your
2003 Executive Physical that are not covered by the Company's group
health insurance plan.
(G) Following the Revocation Period below, the Company will
pay Career Momentum up to Six Thousand Dollars ($6,000.00) (Three
Thousand Dollars ($3,000.00) per quarter) for assistance it provides
you through the Separation Date.
(H) Following expiration of the Revocation Period described
below, the Company will transfer to you its ownership interests in any
non-group life insurance policies that it holds on your life.
(I) Provided that you sign the General Release in the form
attached as Exhibit A in accordance with its terms, the Company will
provide you with a severance payment in the gross, pre-tax amount of
Fifty Thousand Dollars ($50,000.00). Please note that you cannot sign
this General Release until after the Separation Date.
Notwithstanding the foregoing, the health insurance benefits described
in Subparagraph 1 and the benefits described in Subparagraphs 1(B) and 1(G) will
immediately cease when you begin working for another employer. You agree to
notify the Company in writing the first business day you accept employment with
another employer should that occur before the Separation Date.
(2) Your Undertakings. In exchange for the benefits provided to you
under Paragraph (1), above, you agree as follows:
(A) You agree, on behalf of yourself, your heirs, successors
and assigns, to give up and release all claims which you have against
the Released Parties which existed as of the time you sign this letter.
"Released Parties" means the Company, its affiliates and subsidiaries,
their successors and their respective past and present officers,
directors, stockholders, agents and employees. This release applies,
but is not limited to, any claims related in any way to your employment
by the Company, whether they are presently known or unknown, or
anticipated or unanticipated by you. Because you are age 40 or older,
your acceptance of this proposal also will release any and all claims
under the federal Age Discrimination in Employment Act. You should not
construe this reference to age discrimination claims as in any way
limiting the general and comprehensive nature of the release of claims
provided under this Paragraph (2)(A). This release, however, does not
apply to any rights under any workers' compensation law or any
indemnification rights or claims you presently possess under the
Company's corporate officer and director liability insurance contract,
other contract or other officer and director indemnification rights by
contract or under law. You agree to waive and give up any benefit
conferred on you by any order or judgment issued in connection with any
proceeding filed against any of the Released Parties regarding any
claim released in this document. Nothing in this Paragraph shall be
construed as an acknowledgment or admission by any of the Released
Parties of any liability to you or of any wrongdoing under federal,
state or local law or imply that you are a "prevailing party" under any
law. The Company and the other Released Parties deny that you have any
meritorious claims against any of them.
(B) On the earlier of (i) the first business day after you
accept employment with another employer or (ii) within three (3)
business days of the Separation Date, you agree to return to the
Company all of its property and all of the property of its present and
former officers, directors, stockholders, agents and employees which
you possess or over which you have direct or indirect control,
including, but not limited to, all monies, records and files, computer,
credit cards, office keys, cellular telephones, Confidential
Information (as that term is defined in the Restrictive Covenant
Agreement) and electronically encoded information such as computer
disks, etc. (and all
copies in any form of such records, files and Confidential
Information), excepting that you will have the right but not the
obligation to purchase the computer assigned to you by the Company at a
market price to be mutually agreed upon, provided that all Confidential
Information is deleted from your computer prior to any purchase.
(C) You agree that the financial terms of this letter and the
discussions leading to its execution are confidential and you will not
disclose the financial terms of this letter to anyone at any time,
except to your spouse, if applicable, your attorneys, your tax and
financial advisors and your personal bankers (who shall be informed of
these requirements and agree to be bound by them for the benefit of the
Company as a pre-condition of disclosure) or unless compelled to do so
under subpoena or other judicial or regulatory process or agreed to by
the Company. Notwithstanding the foregoing, you must disclose the
provisions of Paragraphs (2)(D) and (E) and the June 30, 1998
Restrictive Covenant Agreement between you and the Company
("Restrictive Covenant Agreement") to any entity or person who employs
or contracts with you for your professional service at any time prior
to October 1, 2005, and may disclose any information about the terms of
this Agreement that the Company has disclosed in accordance with its
filings under the securities laws.
(D) You agree that you will not at any time prior to October
1, 2005, directly or indirectly assist any Competitor of the Company by
providing services to it that are the same or are substantially similar
to those that you provided to the Company within two (2) years prior to
the date you sign this Agreement. This restriction shall apply only to
activities by you in the Continental United States in which, you
acknowledge, the Company presently does business. "Competitor" means
any business that is engaged in the development and/or sale of computer
software for use by educators in public or private schools to assess
student performance, manage or monitor student practice skills,
motivate learning and/or provide individualized exercises for
assessment or practice of skills, and/or training related to such
software; AND that sells such products and/or services in any state in
which the Company sold in excess of One Hundred Thousand Dollars
($100,000.00) of products or services in the twelve (12) months
preceding the time you begin to provide such services; AND where the
Company's Confidential Information (as that term is defined in the
Restrictive Covenant Agreement) or trade secrets would be useful to
such business. This provision shall not restrict you with respect to
services you may provide to a distinct business segment of a Competitor
that does not compete with the Company.
(E) You agree that during the remaining term of your
employment with the Company and for two (2) years following the
Separation Date, you will not directly or indirectly induce or attempt
to induce any person who is an employee of the Company to leave the
employ of the Company or accept other employment with any other person
or entity or to diminish the quantity or quality of services he/she
provides to the Company; provided that the provisions of this paragraph
will not be considered breached if such person or persons, independent
of action on your part, apply and/or are accepted for employment with
another person or entity with which you may be associated.
(F) You agree to make no remarks which could reasonably be
viewed as denigrating the personal or professional reputation of the
Company, its related businesses, or their officers, directors, or
employees. This provision shall not restrict you in any way from making
statements in any legal proceeding.
(G) You agree to take all reasonable actions to cooperate with
the Company and its related entities in any litigation involving any of
them, with the understanding that the Company will reimburse you for
any expenses incurred by you in the course of such actions. Nothing in
this provision should be interpreted to contemplate that you will offer
anything other than truthful testimony in any such litigation.
(H) Although you have not committed any act that would make
you ineligible for rehire, you agree not to seek employment with the
Company at any time after the Separation Date.
(3) Acceptance and Revocation Procedures. The Company wishes to ensure
that you voluntarily agree to the terms contained in this proposal and do so
only after you fully understand them. Accordingly, the following procedures
shall apply:
(A) You may agree to the terms of this document by signing and
dating it and returning the signed and dated document, via mail, hand
delivery, or overnight delivery, so that it is received by John
Corrigall, Renaissance Learning, Inc., 2911 Peach Street, Wisconsin
Rapids, Wisconsin 54494 on or before 5:00 p.m. Central Time of the
twenty-fifth (25th) day after you receive this agreement.
(B) You have seven (7) days after signing this agreement
within which to revoke your acceptance of it (the "Revocation Period").
Such revocation will not be effective unless written notice of the
revocation is, via mail, hand delivery, or overnight delivery, directed
to and received by John Corrigall, Renaissance Learning,
Inc., 2911 Peach Street, Wisconsin Rapids, Wisconsin 54494 on or before
5:00 p.m. Central Time of the seventh (7th) calendar day following the
date you signed this document;
(C) This letter shall not become effective or enforceable
until the Revocation Period has expired, at which time it will become a
binding agreement between us. If you give timely notice of revocation,
any of the offers contained in this letter shall be deemed withdrawn
and all rights and claims of the parties, which would have existed, but
for the execution of this letter, shall be restored.
(D) You represent and warrant to the Company that, in the
event you choose to accept the terms of this proposal by signing this
agreement, the date and time appearing above your name on the last page
of this document shall be the actual date and time on which you have
signed the agreement.
(4) Miscellaneous. Should you accept the terms of the Company's
proposal, its terms will be governed by the following:
(A) This document constitutes the complete understanding
between you and the Company concerning all matters affecting your
employment with the Company and the termination thereof. If you accept
this proposal, this document supersedes all prior agreements,
understandings and practices concerning such matters, including, but
not limited to, any Company personnel documents, handbooks, policies,
incentive or bonus plans or programs, and any prior customs or
practices of the Company; provided, however, that the Restrictive
Covenant Agreement (except Paragraph 1) remains in effect and is
incorporated by reference as a material provision of this document.
(B) You agree with the Company that irreparable injury may
result to the Company, its business and/or financial prospects if you
violate the covenants of Paragraphs (2)(C)-(F) of this document, and
further understand and acknowledge that, your acceptance of the
restrictions imposed by such covenants was a material factor in the
Company's decision to confer upon you the benefits provided hereunder.
You agree that in the event of your breach of any of these restrictive
covenants, the Company shall be entitled, in addition to any other
remedy, to an injunction enforcing such provisions.
(C) This document and its interpretation shall be governed and
construed in accordance with the laws of the State of Wisconsin and
shall be binding upon and insure to the benefit of the parties'
successors; and
(D) In the event of any breach of any provision of this
agreement, the breaching party shall, in addition to paying any damages
caused by the breach, pay the reasonable attorneys' fees or costs
incurred by the non-breaching party as a result of the breach.
(E) This Agreement is intended to inure to the benefit of the
Company's successors and assigns.
(F) IF YOU ACCEPT THIS PROPOSAL, YOU WILL BE GIVING UP ANY
LEGAL CLAIMS YOU HAVE AGAINST THE COMPANY AND OTHERS, INCLUDING, BUT
NOT LIMITED TO, THOSE ARISING UNDER THE AGE DISCRIMINATION IN
EMPLOYMENT ACT. THE COMPANY ENCOURAGES YOU TO CONSULT AN ATTORNEY PRIOR
TO SIGNING THIS AGREEMENT.
Very truly yours,
RENAISSANCE LEARNING, INC.
By: /s/ Terrance D. Paul
-----------------------------------------
Terrance D. Paul, Chief Executive Officer
I agree with and accept the terms
contained in this proposal and agree
to be bound by them. Dated this
27th day of June, 2003.
Time: 1:57 PM CDST
/s/ Michael H. Baum
- -------------------
Michael H. Baum
EXHIBIT A
GENERAL RELEASE
In exchange for a payment of severance pay in the pre-tax amount of
$50,000.00, I hereby agree, on behalf of myself, my heirs, successors and
assigns to release Renaissance Learning, Inc. ("the Company"), its affiliates
and subsidiaries and their respective past and present officers, directors,
stockholders, agents and employees (the "Released Parties") from any claims
arising on or before the time I sign this release. This includes, but is not
limited to, giving up any claims in any way related to my employment or the
ending of my employment relationship with the Company. This release of claims
includes any claims, whether they are presently known or unknown, or anticipated
or unanticipated by me. I understand that because I am age 40 or older, this
release of claims will include any which arise under the federal Age
Discrimination in Employment Act. I agree to waive and give up any benefit
conferred on me by any order or judgment issued in connection with any
proceeding filed against any of the Released Parties regarding any claim covered
by this release.
I acknowledge that I can accept the terms of this agreement if I sign
and return it to the Company so that it is received by the later of (i) five (5)
days following my last day of employment with the Company; or (ii) twenty-one
(21) days from the date I receive this document. I understand that to be valid,
this agreement must be received by the Company in the manner described in
Paragraph (3)(A) of the Agreement to which this is an Exhibit, by the later of
the dates referred to above.
I understand that I may revoke my acceptance of this document any time
within seven (7) days of signing it. I understand that notice of revocation of
my acceptance must be delivered in writing to the Company in the manner
described in Paragraph (3)(A) of the Agreement to which this is an Exhibit, with
the exception that the date shall be as described in this paragraph.
I acknowledge that I have been advised to consult an attorney prior to
signing this document.
Michael H. Baum RENAISSANCE LEARNING, INC.
By: ________________________ By: _________________________________________
Terrance D. Paul, Chief Executive Officer
Dated: ____________________ Dated: ________________________