Exhibit 10.9
EXECUTION COPY
|__| Employee's Copy
|__| Employer's Copy
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.
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, subject 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 provision,
Option you agree that your unexercised options are retroactively
Gain 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
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 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 also 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;
(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 Xxxxxxxx Electronics Communications
in Phoenix, Arizona;
(iii) any business engaged, and only to the extent
it is so engaged, in computer monitoring for
facilities management;
(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
(viii) U.S. Marketing Services, Inc.'s ("USM")
shelf-stocking and merchandising, 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 4.9% 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 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.
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
Employment CCC, 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' 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.
Attention: Chief Executive Officer
0000 Xxxxx Xxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxx 00000
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 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
Effect event, 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: June 9, 1998 By: /s/ Xxxxxx X. Xxxxxxxx
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Xxxxxx X. Xxxxxxxx
Chief Executive Officer
I agree to and accept these terms, specifically including the assignment of the
No Competition provision.
Date: June 9, 1998 /s/ Xxxxxxxx X. Xxxxxxx
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Xxxxxxxx X. Xxxxxxx
