/__/ Employee's Copy
/__/ Employer's Copy
[FORM OF]
SCHOOL SPECIALTY, INC.
EMPLOYMENT AGREEMENT
To Xxxxxxxx X. Xxxxxxx:
This Agreement establishes the terms of your employment with School
Specialty, Inc., a Delaware corporation (the "Company"), as of June 10, 1998.
This Agreement is contingent on and subject to the closing of the
distribution (the "Distribution") to the U.S. Office Products Company
("USOP") stockholders of the Company's stock. If the Distribution does not
close by September 30, 1998, this Agreement will have no force or effect.
Duties You agree to serve as a senior consultant to the Company
providing strategic business advice and high level
acquisition negotiations. In that capacity, you will report
to the Company's senior management and its Board of Directors
(the "Board"). The Board can require such reports of your
activities on the Company's behalf as it reasonably deems
appropriate. It can require your services to the extent
consistent with your other contractual employment obligations
to Consolidation Capital Corporation ("CCC"), USOP, and the
other subsidiaries ("Other Spincos") of USOP whose common
stock will be distributed to the USOP stockholders concurrent
with the Company's stock, with the specific timing of your
services to be mutually agreed. You agree to comply with the
Company's generally applicable personnel policies to the
extent applicable to a person working on your schedule and
consistent with your obligations in this Agreement.
Term The term of this Agreement runs from the day following the
effective date of the Distribution (the "Closing Date")
through June 30, 2000, unless earlier terminated as provided
in this Agreement.
Salary You will receive an annual salary of $48,000 from the Closing
Date, payable in accordance with the Company's payroll
policies.
Benefits You are eligible for participation in the Company's generally
applicable benefit plans and programs (including its 401(k)
Plan) to the extent you satisfy their terms for
participation.
Employment Agreement between School Specialty and Xxxxxxxx X. Xxxxxxx
Expenses The Company will make available to you, on an as needed and
as mutually agreed basis, office space, secretarial
assistance, and supplies for the direct performance of your
services to the Company. It will pay or reimburse you for
reasonable business expenses relating to the direct
performance of such services, to limits to be mutually agreed
in advance, upon proper and timely substantiation.
Options You are receiving options for the Common Stock of the Company
in consideration for services as an employee of the Company.
Option Your options will cover 7.5% of the Company's
outstanding common stock determined as of the
Distribution Date (excluding the stock under the
Company's initial public offering), with no
anti-dilution provisions in the event of issuance of
additional shares of common stock (other than with
respect to stock splits or reverse stock splits).
Term Your option will expire ten years from the Closing Date.
Price Your option will have a per share exercise price equal
to the offering price in the Company's initial public
offering, or if no initial public offering commences
on the Closing Date, at the fair market value of the
Company's common stock, as determined under the
Company's option plan, for the date of grant.
Schedule Your option will be fully vested when granted, but may
not be exercised until the first anniversary of the
Closing Date.
Your option will become exercisable before that first
anniversary if and to the extent that the Company
accelerates the exercisability of the options for
substantially all management optionholders.
All unexercised portions of your options will expire if,
as finally determined by a court, you violate the No
Competition provision.
Disgorging If a court finds that you violated the No Competition
Option provision, you agree that your unexercised options are
Gain retroactively forfeited as of the date of the violation
and that, if you have exercised the options since the
violation began, you will promptly pay the Company any
Option Gain, net of any taxes actually paid on the
options. For purposes of this Agreement, the "Option
Gain" per share you received on exercise of options on
or after the violation is
Stock for stock you have sold, the greater of (i) the spread
Sold between closing price on the date of exercise and the
exercise price paid ("Exercise Spread") and (ii) the
spread between the price at which you sold the stock and
the exercise price paid, and
Employment Agreement between School Specialty and Xxxxxxxx X. Xxxxxxx
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Stock for stock you have retained, the greater of (i) Exercise
Retained Spread and (ii) the spread between the closing price on
the date of the court's final determination and the
exercise price paid.
All unexpired options will vest and be exercisable at your
death.
Termination The Company can terminate your employment under this
Agreement only for "cause." "Cause" means your (i) conviction
of or guilty or nolo contendere plea to a felony demonstrably
and materially injurious to the Company's business, and
resulting in a sentence of imprisonment, or (ii), as finally
determined by a court, violation of the No Competition
provision as it applies to the Company, provided that the
Company will give you 10 days to resolve the violation before
attempting to invoke this termination provision. For a
termination under (ii), you agree to repay any salary you
received from the Company between the date of the violation
and the date of the court's determination.
Severance If your employment ends because you resign or are properly
terminated for cause, you will not receive severance or
termination pay and your salary will end. Except to the
extent the law or the terms of an applicable plan requires
otherwise, neither you nor your beneficiary or estate will
have any rights or claims under this Agreement or otherwise
to receive severance or any other compensation or to
participate in any other plan, arrangement, or benefit, after
your termination of employment, other than with respect to
your options.
No Competition Consistent with certain of your prior obligations to USOP,
you will not, until after the end of the Restricted Period,
for any reason whatsoever, directly or indirectly, for
yourself or on behalf of or in conjunction with any other
person, persons, company, partnership, corporation, or
business of whatever nature:
Competition (i) engage, as an officer, director, shareholder, owner,
partner, joint venturer, or in a managerial capacity,
whether as an employee, independent contractor,
consultant, or advisor, or as a sales representative, in
any business (other than an Excluded Business, as
defined below) selling any products or services in
direct competition with the Company within 100 miles of
where the Company or where any of the Company's
subsidiaries or affiliates regularly maintains any of
its or their offices with employees (the "Territory"),
where "products or services" are determined for this
clause with respect to products or services offered on
or before January 13, 1998 by the Company and/or any of
its subsidiaries or
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the predecessor companies combined to form the Company
in connection with Distribution and where the geographic
limitation is determined with reference to the Company
and its subsidiaries and not to USOP or the other
Spincos (e.g., competition with respect to the
Company is determined by reference to the location
where the Company or its subsidiary has an office
with employees and not to the locations of offices of
other Spincos);
Employees (ii) call upon any person who is, at that time, within
the Territory, an employee of the Company (including the
respective subsidiaries and/or affiliates thereof) in a
managerial capacity for the purpose or with the intent
of enticing such employee away from or out of the
Company's employ (including the respective subsidiaries
and/or affiliates thereof) other than a member of your
immediate family; or
Customers (iii) call upon any person or entity that is, at that
time, or that has been, within one year prior to that
time, a customer of the Company (including the
respective subsidiaries and/or affiliates thereof)
within the Territory for the purpose of soliciting or
selling products or services in direct competition with
the Company (including the respective subsidiaries
and/or affiliates thereof) within the Territory other
than on behalf of an Excluded Business.
For purposes of this Agreement, the "Restricted Period"
ends, on the later of the second anniversary of the
Closing Date and the date one year after you leave
employment with the Company and its subsidiaries and
affiliates.
For purposes of this Agreement, the "Excluded
Businesses" are the following:
(i) any electrical contracting business that, at
the time of its creation or acquisition and at
all later times, derives more than 50% of its
revenues from electrical contracting and
maintenance services, without regard to whether
it would otherwise violate the No Competition
clause because it is engaged in a business
directly competitive with the Aztec Technology
Partners, Inc. or any of its subsidiaries
(together, "Aztec"), provided that this
exclusion does not permit the business to engage
in any of the lines of business described under
"Consulting and Engineering Services," "Systems
and Network Design and Implementation Services,"
and "Software Development and Implementation
Services" in the Aztec Form S-1 filed on June 3,
1998 (the "Aztec Specified Businesses") other
than as provided under (ii) or (vi) in the
Excluded Businesses;
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(ii) any business whose revenue from activities
that compete with Aztec and its subsidiaries, at
the time of the business's creation or
acquisition and at all later times, is less than
$15 million per year, provided that this
exclusion does not permit the business to engage
in the Aztec Specified Businesses other than (i)
as provided under (vi) in the Excluded
Businesses or (ii) through the pending CCC
acquisitions of National Network Systems in
Denver, Colorado and of Chamber Electronics
Communications in Phoenix, Arizona
(iv) any business engaged, and only to the extent
that it is so engaged, in the business of selling,
supplying, or distributing janitorial or sanitary
products or services;
(v) any business engaged, and only to the extent
it is so engaged, in the managing or servicing of
office equipment (other than computers);
(vi) any business engaged, and only to the extent
it is so engaged, in providing internet access
services and activities supportive of such
services;
(vii) UniCapital Corporation's business as
described in its prospectus as of the date of
this Agreement; and
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(viii) U.S. Marketing Services Inc's ("USM")
shelf-stocking and merchandising, and point of
purchase display creation and incentive
marketing businesses, as described in its
registration statement filed on the date of this
Agreement, so long as you are solely an investor
in USM and not an officer, director, or employee
of, or consultant to, USM; provided, however,
that your service as a director will not violate
the foregoing requirement as long as you cease
to be a director no later than the 90th day
after the effective date of the registration of
USM's initial public offering;
provided, that in each case you are engaged in such
business only in a policy making role and not in the
entity's business in a manner that would involve you in
direct personal competition with the Company (and its
subsidiaries), provided further that this proviso does
not prevent your activities in furtherance of
acquisitions of Excluded Businesses, and provided
further that you will comply with your fiduciary
duties as a director of the Company in connection
with the Excluded Businesses.
To the extent permitted by your obligations to the relevant
Excluded Business, as an employee and/or director of the
Company (or its subsidiaries), you will inform the relevant
entity of any opportunities for it associated with any of the
Excluded Businesses.
In addition to (and not in lieu of) the restriction contained
in the Employees clause above, you agree that, during the
period that the restrictions contained in this No Competition
provision remain in effect, and so long as you are employed
by, or otherwise affiliated with, CCC, you will not, directly
or indirectly, offer employment with CCC to, or otherwise
allow CCC to employ, any person who
is employed by the Company or a subsidiary of the
Company at the time; or
was so employed by the Company or a subsidiary of the
Company within one year prior to such time.
Notwithstanding the above, the foregoing covenant shall
not be deemed to prohibit you from acquiring capital stock
in CCC or any Excluded Business or serving as an officer,
director or employee or consultant to CCC, or acquiring as
an investment not more than one percent (1%) of the
capital stock of a competing business, whose stock is
traded on a national securities exchange or
over-the-counter, provided that such actions do not
otherwise breach your obligations hereunder; and provided
further that actions of CCC after you have ceased to be a
director, officer, and employee of CCC will not constitute
a breach of this covenant, despite your continued stock
ownership, so long as you are not then directly assisting
any competitive actions.
Because of the difficulty of measuring economic losses to the
Company as a result of a breach of the foregoing covenant,
and because of the immediate and irreparable damage that
could be caused to the Company for which it would have no
other adequate remedy, you agree that the Company may enforce
the No Competition provisions by injunctions and restraining
orders.
You and the Company agree that you will not be in
violation of the No Competition provisions by virtue of
your investment in or other relationship to USOP, any of
the Spincos, or their respective subsidiaries, even if one
of those entities engages in direct competition with
another. You and the Company agree that CCC's acquisition
or retention of Xxxxxx Electric Company, Inc. ("Xxxxxx")
and Xxxxxx'x engaging in any lines of business in place as
of the Closing Date do not violate the No Competition
provision.
You and the Company agree that the No Competition provisions
impose a reasonable restraint on you in light of the
Company's activities and
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business (including the Company's subsidiaries and/or
affiliates) on the date of the execution of this Agreement.
The Company agrees to consider reasonably and within two
weeks of receipt any requests you make for a waiver from the
No Competition provisions for a particular acquisition.
You and the Company further agree that, if you enter into a
business or pursue other activities not in competition with
the Company (including the Company's subsidiaries), or
similar activities or business in locations the operation of
which, under such circumstances, does not violate the
Competition clause of this No Competition provision, and in
any event such new business, activities, or location is not
in violation of this No Competition provision or of your
obligations under this No Competition provision, if any, you
will not be chargeable with a violation of this provision if
the Company (including the Company's subsidiaries) shall
thereafter enter the same, similar, or a competitive (i)
business, (ii) course of activities, or (iii) location, as
applicable.
The covenants in this No Competition provision are severable
and separate, and the unenforceability of any specific
covenant does not affect the provisions of any other
covenant. Moreover, if any court of competent jurisdiction
shall determine that the scope, time, or territorial
restrictions set forth are unreasonable, then it is the
intention of the parties that such restrictions be enforced
to the fullest extent which the court deems reasonable, and
the Agreement shall thereby be reformed.
All of the covenants in this No Competition provision shall
be construed as an agreement independent of any other
provision in this Agreement, and the existence of any claim
or cause of action by you against the Company, whether
predicated on this Agreement or otherwise, shall not
constitute a defense to the enforcement by the Company of
such covenants. It is specifically agreed that the Restricted
Period, during which your agreements and covenants made in
this provision shall be effective, is computed by excluding
from such computation any time during which you are in
violation of any provision of the No Competition provision.
Notwithstanding any of the foregoing, if any applicable law
reduces the time period during which you are prohibited from
engaging in any competitive activity described in this
provision, you agree that the period for prohibition shall be
the maximum time permitted by law.
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You specifically agree that USOP and the Company have
provided you with sufficient consideration for the
enforcement of the No Competition obligations for the
Restricted Period and for the assumption of such benefits by
the Company. You specifically consent to USOP's assignment to
the Company of the right to enforce the No Competition
provisions of the Amended Ledecky Services Agreement, as
those provisions are incorporated in this Agreement.
Other The Company acknowledges that you are also employed by CCC,
Employment USOP, and the Other Spincos, and agrees that such dual
employment does not breach this Agreement, unless and to the
extent that you thereby violate the No Competition
provisions.
Return of All records, designs, patents, business plans, financial
Company statements, manuals, memoranda, lists and other property
Property delivered to or compiled by you by or on behalf of the
Company (including the respective subsidiaries thereof) or
their representatives, vendors, or customers that pertain to
the business of the Company (including the respective
subsidiaries thereof) shall be and remain the property of the
Company, and be subject at all times to its discretion and
control. Likewise, you will make reasonably available at the
Company's request during business hours all correspondence,
reports, records, acquisition materials, charts, advertising
materials and other similar data pertaining to the business,
activities, or future plans of the Company that you have
collected or obtained.
Trade Secrets You agree that you will not, during or after the term of this
Agreement with the Company, disclose the specific terms of
the Company's (including the respective subsidiaries thereof)
relationships or agreements with its or their respective
significant vendors or customers or any other significant and
material trade secret of the Company (including the
respective subsidiaries thereof) whether in existence or
proposed, to any person, firm, partnership, corporation or
business for any reason or purpose whatsoever. For CCC or any
other businesses with which you are affiliated or in which
you are a stockholder, you may reach agreement on comparable
terms with significant vendors to the Company, so long as you
do not provide copies of or otherwise disclose the specific
terms of the Company's relationships or agreements.
Indemnification If you are made a party to any threatened, pending, or
completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an
action by the Company against you), by reason of the fact
that you are or were performing services under this Agreement
then the Company must indemnify you against all expenses
(including attorneys'
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fees), judgments, fines and amounts paid in settlement, as
actually and reasonably incurred by you in connection
therewith to the fullest extent provided by Delaware law and
in accordance with the Company's Bylaws.
No Prior You hereby represent and warrant to the Company that your
Agreements execution of this Agreement, your services to the Company,
and the performance of your agreements hereunder will not
violate or be a breach of any agreement with a former or
current employer, client, or any other person or entity.
Further, you agree to indemnify the Company for any claim,
including, but not limited to, attorneys' fees and expenses
of investigation, by any such third party that such third
party may now have or may hereafter come to have against the
Company based upon or arising out of any non-competition
agreement, invention, or secrecy agreement between you and
such third party that was in existence as of the date of this
Agreement.
Complete This Agreement is not a promise of future employment. You
Agreement have no oral representations, understandings, or agreements
with the Company or any of its officers, directors, or
representatives covering the same subject matter as this
Agreement. This written Agreement is the final, complete, and
exclusive statement and expression of the agreement between
the Company and you with respect to all the terms of this
Agreement, and it cannot be varied, contradicted, or
supplemented by evidence of any prior or contemporaneous oral
or written agreements. This written Agreement may not be
later modified except by a further writing signed by a duly
authorized officer of the Company and you, and no term of
this Agreement may be waived except by writing signed by the
party waiving the benefit of such term.
Notice Whenever any notice is required hereunder, it shall be given
in writing addressed as follows:
To the Company: School Specialty, Inc.
0000 Xxxxx Xxxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxx 00000
Attention: Chief Executive Officer
To Employee: Xxxxxxxx X. Xxxxxxx
0000 00xx Xx., X.X.
Xxxxxxxxxx, X.X. 00000
Notice shall be deemed given and effective three days after
the deposit in the U.S. mail of a writing addressed as above
and sent first class mail, certified, return receipt
requested, or when actually received. Either party
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may change the address for notice by notifying the other
party of such change in accordance with this Notice
provision.
Severability If any portion of this Agreement is held invalid or
inoperative, the other portions of this Agreement shall be
deemed valid and operative and, so far as is reasonable and
possible, effect shall be given to the intent manifested by
the portion held invalid or inoperative. This severability
provision shall be in addition to, and not in place of, the
comparable provisions in the No Competition provision.
Governing Law This Agreement shall in all respects be construed
according to the laws of the State of Delaware, other than
those relating to conflicts of laws. Any decision as to
breaches of this Agreement or any provision herein shall be
made pursuant to a final, nonappealable decision of a court.
Binding Effect This Agreement binds and benefits the Company, each of its
and Assignment successors or assigns, and your heirs and the personal
representatives of your estate. Without the Company's prior
written consent, you may not assign or delegate this
Agreement or any or all rights, duties, obligations, or
interests under it.
Superseding Contingent upon the Closing and effective only in that event,
Effect this Agreement supersedes any prior oral or written
employment or severance agreements between you and the
Company (specifically excluding your options to purchase
Company stock). Except as set forth above, this Agreement
supersedes all prior or contemporaneous negotiations,
commitments, agreements, and writings with respect to the
subject matter of this Agreement. All such other
negotiations, commitments, agreements, and writings will have
no further force or effect; and the parties to any such other
negotiation, commitment, agreement, or writing will have no
further rights or obligations thereunder.
Negotiated You agree that you have consulted with counsel of your own
Agreement selection and have negotiated the terms of this Agreement
with the Company. You and the Company agree that this
Agreement should not be construed against either party as the
"drafter."
SCHOOL SPECIALTY, INC.
Date: By:
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President and Chief Executive Officer
I agree to and accept these terms, specifically including the assignment of the
No Competition provision.
Date:
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Xxxxxxxx X. Xxxxxxx
Employment Agreement between School Specialty and Xxxxxxxx X. Xxxxxxx
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