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Exhibit 10.7.b
COVENANT NOT TO COMPETE AGREEMENT
THIS AGREEMENT dated this 27 day of June, 1997, by and between XXXXXXX
X. XXXXX (hereinafter referred to as "Xxxxx") and SAX ARTS AND CRAFTS, INC., a
Delaware corporation (hereinafter referred to as the "Company").
W I T N E S S E T H:
WHEREAS, Xxxxx has been in the business of the sale and distribution of
arts and craft supplies and equipment (hereinafter the "Business"); and
WHEREAS, Xxxxx is currently employed by the Company pursuant to the
terms of an employment agreement executed by and between Xxxxx and the Company
on even date herewith (the "Employment Agreement"); and
WHEREAS, it is intended by the parties hereto that the restrictive
covenants in this Agreement shall become effective upon the date of the
termination of Xxxxx'x employment with the Company for reasons other than death
(the "Effective Date") [and during the term of his employment with the Company];
and
WHEREAS, Xxxxx, in the absence of this Agreement, could compete with
the Company in the market and during the time which are the subject of this
Agreement; and
WHEREAS, the Company desires to restrict Xxxxx'x competitive activities
pursuant to the terms of this Agreement.
IT IS NOW THEREFORE agreed as follows:
1. Restriction on Competition.
(a) During the term of his employment with the Company and for
one (1) year from the Effective Date, Xxxxx shall not,
directly or indirectly, for himself or on
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behalf of or in conjunction with any other person, company,
partnership, corporation, business, group, or other
entity:
(i) engage, as an officer, director, shareholder, owner,
partner, joint venturer, or in any capacity which
utilizes non-public information learned by or involves
customer contacts developed by Xxxxx during the term of
his employment with the Company, whether as an employee,
independent contractor, consultant, advisor, or manager,
in any business selling any products or services in
direct competition with the Company (other than an
affiliate of the Company), within the 48 continental
states of the United States of America (the "Territory");
(ii) call upon any person who is, at that time, within the
Territory, an employee of the Company or School
Specialty, Inc., a Wisconsin corporation or any
subsidiary or affiliate of School Specialty, Inc.
(hereinafter collectively "School") for the purpose
or with the intent of enticing such employee to
terminate or otherwise limit his/her employment with
of the Company or School; or
(iii)on Xxxxx'x own behalf or on behalf of any
competitor, contact any person or entity who or that,
during Xxxxx'x employment by the Company or School,
was either contacted by or engaged in discussions
with the Company or School as a prospective
acquisition candidate or was the subject of an
acquisition analysis conducted by the Company or
School within the two (2) year period prior to the
termination of the Xxxxx'x employment with the
Company.
(b) The foregoing covenants shall not be deemed to prohibit
Xxxxx from acquiring as an investment not more than one
percent of the capital stock of a competing business,
whose stock is traded on a national securities exchange or
through the automated quotation system of a registered
securities association.
(c) It is further agreed that, in the event that Xxxxx shall
cease to be employed by the Company or School and enters
into a business or pursues other activities that, at such
time, are not in competition with the Company or School,
Xxxxx shall not be chargeable with a violation of this
Section 1 if the Company or School subsequently enters the
same (or a similar) competitive business or activity or
commences competitive operations within 100 miles of
Xxxxx'x new business or activities.
(d) Xxxxx has carefully read and considered the provisions of
this Section 1 and, having done so, agrees that the
restrictive covenants in this Section 1 impose a fair and
reasonable restraint on Xxxxx and are reasonably required
to protect the interests of the Company and School, and
their respective officers, directors, employees, and
stockholders. It is further agreed that the Company
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and Xxxxx intend that such covenants be construed and enforced
in accordance with the changing activities, business, and
locations of the Company and School throughout the term of
these covenants.
2. Consideration. Xxxxx'x execution of this Agreement is a condition of
his employment with the Company. As additional consideration, the Company agrees
that within ten (10) days of the Effective Date, the Company shall pay to Xxxxx
the sum of Thirty One Thousand Two Hundred Fifty Dollars ($31,250.00). Based
upon such consideration, Xxxxx does agree to be bound to the terms and
conditions of this Agreement. Further, Xxxxx does agree that said consideration
is adequate to bind it to this Agreement.
3. Equitable Remedy. Because of the difficulty of measuring economic
losses to the Company and/or School as a result of a breach of the restrictive
covenants set forth in Section 1, and because of the immediate and irreparable
damage that would be caused to the Company and/or School for which monetary
damages would not be a sufficient remedy, it is hereby agreed that in addition
to all other remedies that may be available to the Company or School at law or
in equity, the Company and School shall be entitled to specific performance and
any injunctive or other equitable relief as a remedy for any breach or
threatened breach of the aforementioned restrictive covenants.
4. Arbitration. Any unresolved dispute or controversy arising under or
in connection with this Agreement may be settled exclusively by arbitration
conducted in accordance with the rules of the American Arbitration Association
then in effect unless the Company shall elect to pursue equitable relief as
provided under Section 3 above. The Company shall have the right to pursue money
damages in addition to equitable relief pursuant to the terms of this section 4.
The arbitrators shall not have the authority to add to, detract from, or modify
any provision hereof nor to award punitive damages to any injured party. A
decision by a majority of the arbitration panel shall be final and binding.
Judgment may be entered on the arbitrators' award in any court having
jurisdiction. The direct expense of any arbitration proceeding shall be borne by
the Company. Each party shall bear its own counsel fees. The arbitration
proceeding shall be held in Milwaukee, Wisconsin. Notwithstanding the foregoing,
the Company and/or School shall be entitled to seek injunctive or other
equitable relief, as contemplated by Section 3 above, from any court of
competent jurisdiction, without the need to resort to arbitration.
5. Notices. All notices, statements, and other communications given
hereunder shall be made in writing by telegraph, telex, fax, personal delivery,
or by mailing the same by certified mail, return receipt requested, by express
delivery be a nationally recognized express delivery service or by next day
express mail delivery in a postpaid wrapper, addressed to the other as
aforesaid, and the date of such personal delivery, telegraphing, telexing,
faxing, the next day if by express delivery, or the date five (5) days after
such mailing shall be deemed the date on which such notice is effective. Except
as otherwise specified herein, all notices sent to the Company hereunder shall
be directed to the attention of Xxxxxx X. Xxxxxxxx, Executive-Vice President at
the corporate offices of School Specialty, Inc., with an additional copy
directed to Xxxx Director, Executive-Vice President of School sent to him at
U.S. Office Products Company 0000 Xxxxxx Xxxxxxxxx Xxxxxx, XX, Xxxxxxxxxx, X.X.
00000 (Telefax: (000) 000-0000).
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6. Modifications. This agreement may not be changed orally, but only by
an agreement in writing signed by the party against whom enforcement of any
waiver, change, modification, or discharge is sought.
7. Descriptive Headings. The descriptive headings of the several
sections of this agreement are inserted for convenience only and do not
constitute a part of this agreement.
8. Counterparts. This agreement may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original, and it shall
not be necessary in making proof of this agreement to produce or account for
more than one such counterpart.
9. Severability. In the event that this agreement is in part found
invalid by a court of competent jurisdiction, the remaining portions of this
agreement shall continue to be in full force and effect, provided, however, that
nothing in this Section 9 shall be construed to contemplate any equitable
reformation or "blue penciling" of the restrictive covenants contained herein.
This agreement shall represent the complete understanding of the parties hereto
relating to the subject matter herein.
10. Jurisdiction. This Agreement and the rights and obligations of the
parties hereunder shall be governed by and construed in accordance with the laws
of the State of Wisconsin applicable to contracts entered into and fully
performed therein. The parties hereby (i) agree that, subject to the provisions
of Section 4, any litigation, action or proceeding arising out of or relating to
this Agreement be instituted in a state or federal court in the City of
Appleton, Wisconsin for state actions and the Milwaukee, Wisconsin for federal
actions, both within the State of Wisconsin, (ii) waive any objection which the
parties might have now or hereafter to the venue of any such litigation, action
or proceeding, (iii) irrevocably submit to the jurisdiction of any such court in
any such litigation, action, or proceedings and (iv) hereby waive any claim or
defense of inconvenient forum. For all purposes of this Agreement the parties
hereby submit to the venue and jurisdiction of the Courts in the State of
Wisconsin (Federal and State), irrevocably consent to personal jurisdiction by
such courts, and further agree that service of process upon they may be effected
pursuant to paragraph 5 above.
11. Assignment and Parties Bound. Xxxxx agrees, that he cannot assign
all or any portion of his performance under this Agreement. This Agreement may
be assigned or transferred by the Company without the prior written consent of
Xxxxx. This Agreement shall be binding upon, inure to the benefit of, and be
enforceable by the parties hereto and their respective heirs, legal
representatives, successors, and assigns. It is intended that the Company,
School or its assign will be a third-party beneficiary of the rights of the
Company under this Agreement. No other person shall be a third-party
beneficiary.
12. Pronouns. For purposes of this Agreement, the neuter shall include
the masculine and the feminine and the singular shall include the plural and the
plural the singular, as the context may require.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date and year first above written.
/s/ Xxxxxxx X. Xxxxx
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Xxxxxxx X. Xxxxx, Individually
SAX ARTS AND CRAFTS, INC.
/s/ Xxxxxx X. Xxxxxxxx
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Xxxxxx X. Xxxxxxxx, Executive Vice President
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