Employment Agreement - McGregor Travel Management Inc., U.S. Office Products Co. and Douglas R. Knight


                               EMPLOYMENT AGREEMENT
 
    THIS EMPLOYMENT AGREEMENT, dated as of this 24th day of October, 1997, is by
and between McGregor Travel Management, Inc., a Connecticut corporation (the
'Company') and a wholly-owned subsidiary of U.S. Office Products Company
('USOP'), a Delaware corporation, and Douglas R. Knight ('Employee').
 
                                    RECITALS
 
    The Company desires 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.
 
    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; TERM.  The Company hereby employs Employee to perform the
duties described herein, and Employee hereby accepts employment with the
Company, for a term beginning on the date hereof and continuing for a period of
two (2) years (the 'Term').
 
    2.  POSITION AND DUTIES.  The Company hereby employs Employee as President.
As such, Employee shall have those responsibilities, duties and authority
assigned to him by the Board of Directors of the Company (the 'Board'). Employee
will report directly to the Board. Employee hereby accepts this employment upon
the terms and conditions herein contained and agrees to devote all of his
professional time, attention, and efforts to promote and further the business of
the Company. Employee shall faithfully adhere to, execute, and fulfill all
policies established by the Company.
 
    3.  COMPENSATION.  For all services rendered by Employee, the Company shall
compensate Employee as follows:
 
        (a)  BASE SALARY.  Effective on the date hereof, the base salary payable
    to Employee shall be $250,000 per year, payable on a regular basis in
    accordance with the Company's standard payroll procedures, but not less
    often than monthly. On at least an annual basis, the Board will review
    Employee's performance and may make increases to such base salary if, in its
    sole discretion, any such increase is warranted.
 
        (b)  PERQUISITES, BENEFITS, AND OTHER COMPENSATION.  During the Term,
    Employee shall be entitled to receive such perquisites and benefits as are
    customarily provided by the Company to its employees, subject to such
    changes, additions, or deletions as the Company may make from time to time,
    as well as such other perquisites or benefits as may be specified from time
    to time by the Board. Employee shall be entitled to be reimbursed for his
    annual costs of leasing an automobile for business use, not to exceed $550
    per month.
 
    4.  EXPENSE REIMBURSEMENT.  The Company shall reimburse Employee for (or, at
the Company's option, pay) all business travel and other out-of-pocket expenses
reasonably incurred by Employee in the performance of his services hereunder
during the Term. All reimbursable expenses shall be appropriately documented in
reasonable detail by Employee upon submission of any request for reimbursement,
and in a format and manner consistent with the Company's expense reporting
policy, as well as applicable federal and state tax record keeping requirements.
 
    5.  PLACE OF PERFORMANCE.  Employee understands that the Company may
relocate him from his present residence to another geographic location in order
to more efficiently carry out his duties and
 
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responsibilities under this Agreement or as part of a promotion or a change in
duties and responsibilities. In such event, the Company will provide Employee
with a relocation allowance, in an amount determined by the Company, to assist
Employee in covering the costs of moving himself, his immediate family, and
their personal property and effects. The total amount and type of costs to be
covered shall be determined by the Company, in light of prevailing Company
policy at the time. Employee's refusal to relocate shall not be deemed a breach
of this Agreement.
 
    6.  TERMINATION; RIGHTS ON TERMINATION.  Employee's employment may be
terminated in any one of the followings ways, prior to the expiration of the
Term:
 
        (a)  DEATH.  The death of Employee shall immediately terminate the Term,
    and no severance compensation shall be owed to Employee's estate.
 
        (b)  DISABILITY.  If, as a result of incapacity due to physical or
    mental illness or injury, Employee shall have been unable to perform the
    material duties of his position on a full-time basis for a period of four
    (4) consecutive months, or for a total of four (4) months in any six-month
    period, then thirty (30) days after written notice to the Employee (which
    notice may be given before or after the end of the aforementioned periods,
    but which shall not be effective earlier than the last day of the applicable
    period), the Company may terminate Employee's employment hereunder if
    Employee is unable to resume his full-time duties at the conclusion of such
    notice period. Subject to Section 6(f) below, if Employee's employment is
    terminated as a result of Employee's disability, the Company shall continue
    to pay Employee his base salary at the then-current rate for the lesser of
    (i) three (3) months from the effective date of termination, or (ii)
    whatever time period is remaining under the then-current period of the Term
    (without regard to renewals thereof). Such payments shall be made in
    accordance with the Company's regular payroll cycle.
 
        (c)  TERMINATION BY THE COMPANY 'FOR CAUSE.'  The Company may terminate
    Employee's employment hereunder ten (10) days after written notice to
    Employee 'for cause,' which shall be: (i) Employee's material breach of this
    Agreement, which breach is not cured within ten (10) days of receipt by
    Employee of written notice from the Company specifying the breach; (ii)
    Employee's gross negligence in the performance of his duties hereunder,
    intentional nonperformance or mis-performance of such duties, or refusal to
    abide by or comply with the directives of the Board, his superior officers,
    or the Company's policies and procedures, which actions continue for a
    period of at least ten (10) days after receipt by Employee of written notice
    of the need to cure or cease; (iii) Employee's willful dishonesty, fraud, or
    misconduct with respect to the business or affairs of the Company or USOP,
    and that in the judgment of the Company or USOP materially and adversely
    affects the operations or reputation of the Company or USOP; (iv) Employee's
    conviction of a felony or other crime involving moral turpitude; or (v)
    Employee's abuse of alcohol or drugs (legal or illegal) that, in the
    Company's judgment, materially impairs Employee's ability to perform his
    duties hereunder. In the event of a termination 'for cause,' as enumerated
    above, Employee shall have no right to any severance compensation.
 
        (d)  WITHOUT CAUSE.
 
            (i) At any time after the commencement of employment, the Company
       may, without cause, terminate Employee's employment, effective thirty
       (30) days after written notice is provided to the Employee.
 
            (ii) In the event the Company terminates Employee without cause,
       subject to Section 6(f) below, Employee shall receive from the Company
       severance compensation at the rate of $250,000 per year for whatever time
       period is remaining under the then current period of the Term. Such
       payments shall be made in accordance with the Company's regular payroll
       cycle.
 
           (iii) If Employee resigns or otherwise terminates his employment for
       any reason or for no reason, Employee shall receive no severance
       compensation.
 
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        (e)  PAYMENT THROUGH TERMINATION.  Upon termination of Employee's
    employment for any reason provided above, Employee shall be entitled to
    receive all compensation earned and all benefits and reimbursements
    (including payments for accrued vacation and sick leave, in each case in
    accordance with applicable policies of the Company) due through the
    effective date of termination. Additional compensation subsequent to
    termination, if any, will be due and payable to Employee only to the extent
    and in the manner expressly provided above in this Section 6. All other
    rights and obligations of USOP, the Company, and Employee under this
    Agreement shall cease as of the effective date of termination, except that
    the Employee's obligations under Sections 7, 8, 9 and 10 below shall survive
    such termination in accordance with their terms.
 
        (f)  RIGHT TO OFFSET.  In the event of any termination of Employee's
    employment under this Agreement, the Employee shall have no obligation to
    seek other employment; PROVIDED, HOWEVER, that in the event that Employee
    secures employment or any consulting or other similar arrangement during
    that period that any payment is continuing pursuant to the provisions of
    this Section 6, the Company shall have the right to reduce the amounts to be
    paid hereunder by the amount of Employee's earnings from such other
    employment, consulting or other arrangement.
 
    7.  RESTRICTION ON COMPETITION.
 
    (a) During the Term, and thereafter, if Employee continues to be employed by
the Company and/or any other entity owned by or affiliated with the Company or
USOP on an 'at will' basis, for the duration of such period, and thereafter for
a period equal to the longer of (x) one (1) year, or (y) the period during which
Employee is receiving any severance pay from the Company, Employee shall not,
directly or indirectly, for himself or on behalf of or in conjunction with any
other person, company, partnership, corporation, business, group, or other
entity (each, a 'Person'):
 
        (i) engage, as an office, director, shareholder, owner, partner, member,
    joint venturer, or in a managerial capacity, whether as an employee,
    independent contractor, consultant or adviser, or as a sales representative,
    in any travel-related business conducted by the Company or any other travel-
    related business (including consolidation and wholesale businesses) that
    involves arranging travel, meetings, events, incentives or other
    travel-related programs for third-parties ('Travel Agency Business'), if
    such Travel Agency Business is located within one hundred (100) miles of
    anywhere that USOP conducts a Travel Agency Business (the 'Territory');
 
        (ii) call upon any Person who is, at that time, within the Territory, an
    employee of the Company or USOP for the purpose or with the intent of
    enticing such employee away from or out of the employ of the Company or
    USOP;
 
       (iii) call upon any Person who or that is, at that time, or has been,
    within one year prior to that time, a customer of the Company or USOP within
    the Territory for the purpose of soliciting or selling products or services
    in direct competition with the Company or USOP within the Territory; or
 
        (iv) on Employee's own behalf or on behalf of any competitor, call upon
    any Person who or that, during Employee's employment by the Company or USOP
    was either called upon by the Company or USOP as a prospective acquisition
    candidate or was the subject of an acquisition analysis conducted by the
    Company or USOP.
 
    (b) The foregoing covenants shall not be deemed to prohibit Employee from
(i) 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 through the automated quotation system of a registered securities
association, or (ii) owning not more than twenty-five percent (25%) of the
percentage interests of Emergency Travel Service, L.L.C. ('ETS'), a
Massachusetts limited liability company, so long as (x) ETS's sole Travel Agency
Business at such time is the business of providing after regular business hours
travel assistance which it is conducting on the Closing Date, as represented to
USOP by the Employee, and
 
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(y) Employee is not an officer or employee of, consultant to, or otherwise
engaged in a managerial capacity by, ETS.
 
    (c) It is further agreed that, in the event that Employee shall cease to be
employed by the Company or USOP and enters into a business or pursues other
activities that, at such time, are not in competition with the Company or USOP,
Employee shall not be chargeable with a violation of this Section 7 if the
Company or USOP subsequently enters the same (or a similar) competitive business
or activity or commences competitive operations within one hundred (100) miles
of the Employee's new business or activities. In addition, if Employee has no
actual knowledge that his actions violate the terms of this Section 7, Employee
shall not be deemed to have breached the restrictive covenants contained herein
if, promptly after being notified by the Company or USOP of such breach,
Employee ceases the prohibited actions.
 
    (d) For purposes of this Section 7, references to 'USOP' shall mean U.S.
Office Products Company, together with its subsidiaries and affiliates.
 
    (e) The covenants in this Section 7 are severable and separate, and the
unenforceability of any specific covenant shall not affect the provisions of any
other covenant. If any provision of this Section 7 relating to the time period
or geographic area of the restrictive covenants shall be declared by a court of
competent jurisdiction to exceed the maximum time period or geographic area, as
applicable, that such court deems reasonable and enforceable, said time period
or geographic area shall be deemed to be, and thereafter shall become, the
maximum time period or largest geographic area that such court deems reasonable
and enforceable and this Agreement shall automatically be considered to have
been amended and revised to reflect such determination.
 
    (f) All of the covenants in this Section 7 shall be construed as an
agreement independent of any other provision in this Agreement, and the
existence of any claim or cause of action of Employee against the Company or
USOP, whether predicated on this Agreement or otherwise, shall not constitute a
defense to the enforcement by USOP or the Company of such covenants; PROVIDED,
that upon the failure of the Company to make any payments required under this
Agreement, the Employee may, upon thirty (30) days' prior written notice to the
Company, waive his right to receive any additional compensation pursuant to this
Agreement and engage in any activity prohibited by the covenants of this Section
7. It is specifically agreed that the period of one (1) year stated at the
beginning of this Section 7, during which the agreements and covenants of
Employee made in this Section 7 shall be effective, shall be computed by
excluding from such computation any time during which Employee is in violation
of any provision of this Section 7.
 
    (g) If the time period specified by this Section 7 shall be reduced by law
or court decision, then, notwithstanding the provisions of Section 6 above,
Employee shall be entitled to receive from the Company his base salary at the
rate then in effect solely for the longer of (i) the time period during which
the provisions of this Section 7 shall be enforceable under the provisions of
such applicable law, or (ii) the time period during which Employee is not
engaging in any competitive activity, but in no event longer than the applicable
period provided in Section 6 above. If Employee is subject to a restriction on
competitive activity as a party to that certain Agreement and Plan or
Reorganization, dated as of October 24, 1997, by and among USOP, MTM Acquisition
Corp., the Company and the stockholders named therein (the 'Merger Agreement'),
then Employee shall abide by, and in all cases be subject to, the restrictive
covenants (whether in this Section 7 or in the Merger Agreement) that, in the
aggregate, impose restrictions on Employee for the longest duration and the
broadest geographic scope (taking into account the effect of any applicable
court decisions limiting the scope or duration of such restrictions), it being
agreed that all such restrictive covenants are supported by separate and
distinct consideration. This Section 7(g) shall be construed and interpreted in
light of the duration of the applicable restrictive covenants.
 
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    (h) Employee has carefully read and considered the provisions of this
Section 7 and, having done so, agrees that the restrictive covenants in this
Section 7 impose a fair and reasonable restraint on Employee and are reasonably
required to protect the interests of the Company and USOP, and their respective
officers, directors, employees, and stockholders. It is further agreed that the
Company and Employee intend that such covenants be construed and enforced in
accordance with the changing activities, business, and locations of the Company
and USOP throughout the term of these covenants.
 
    8.  CONFIDENTIAL INFORMATION.  Employee hereby agrees to hold in strict
confidence and not to disclose to any third party any of the valuable,
confidential, and proprietary business, financial, technical, economic, sales,
and/or other types of proprietary business information relating to the Company
and/or USOP (including all trade secrets), in whatever form, whether oral,
written, or electronic (collectively, the 'Confidential Information'), to which
Employee has, or is given (or has had or been given), access as a result of his
employment by the Company. It is agreed that the Confidential Information is
confidential and proprietary to the Company and/or USOP because such
Confidential Information encompasses technical know-how, trade secrets, or
technical, financial, organizational, sales, or other valuable aspects of the
Company's and USOP's business and trade, including, without limitation,
technologies, products, processes, plans, clients, personnel, operations, and
business activities. This restriction shall not apply to any Confidential
Information that (a) becomes known generally to the public through no fault of
the Employee; (b) is required by applicable law, legal process, or any order or
mandate of a court or other governmental authority to be disclosed; or (c) is
reasonably believed by Employee, based upon the advice of legal counsel, to be
required to be disclosed in defense of a lawsuit or other legal or
administrative action brought against Employee; PROVIDED, that in the case of
clauses (b) or (c), Employee shall give the Company reasonable advance written
notice of the Confidential Information intended to be disclosed and the reasons
and circumstances surrounding such disclosure, in order to permit the Company to
seek a protective order or other appropriate request for confidential treatment
of the applicable Confidential Information.
 
    9.  INVENTIONS.  Employee shall disclose promptly to the Company and USOP
any and all significant conceptions and ideas for inventions, improvements, and
valuable discoveries, whether patentable or not, that are conceived or made by
Employee, solely or jointly with another, during the period of employment or
within one year thereafter, and that are directly related to the business or
activities of the Company or USOP and that Employee conceives as a result of his
employment by the Company, regardless of whether or not such ideas, inventions,
or improvements qualify as 'works for hire.' Employee hereby assigns and agrees
to assign all his interests therein to the Company or its nominee. Whenever
requested to do so by the Company, Employee shall execute any and all
applications, assignments, or other instruments that the Company shall deem
necessary to apply for and obtain Letters Patent of the United States or any
foreign country or to otherwise protect the Company's interest therein.
 
    10.  RETURN OF COMPANY PROPERTY.  Promptly upon termination of Employee's
employment by the Company for any reason or no reason, Employee or Employee's
personal representative shall return to the Company (a) all Confidential
Information; (b) all other records, designs, patents, business plans, financial
statements, manuals, memoranda, lists, correspondence, reports, records, charts,
advertising materials, and other data or property delivered to or compiled by
Employee by or on behalf of the Company, USOP or their respective
representatives, vendors, or customers that pertain to the business of the
Company or USOP, whether in paper, electronic, or other form; and (c) all keys,
credit cards, vehicles, and other property of the Company or USOP. Employee
shall not retain or cause to be retained any copies of the foregoing. Employee
hereby agrees that all of the foregoing shall be and remain the property of the
Company or USOP, as the case may be, and be subject at all times to their
discretion and control.
 
    11.  NO PRIOR AGREEMENTS.  Employee hereby represents and warrants to the
Company that the execution of this Agreement by Employee, his employment by the
Company, and the performance of his duties hereunder will not violate or be a
breach of any agreement with a former employer, client, or any other Person.
Further, Employee agrees to indemnify and hold harmless the Company and its
officers,
 
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directors, and representatives for any claim, including, but not limited to,
reasonable attorneys' fees and expenses of investigation, of any such third
party that such third party may now have or may hereafter come to have against
the Company or such other persons, based upon or arising out of any non-
competition agreement, invention, secrecy, or other agreement between Employee
and such third party that was in existence as of the date of this Agreement. To
the extent that Employee had any oral or written employment agreement or
understanding with the Company, this Agreement shall automatically supersede
such agreement or understanding, and upon execution of this Agreement by
Employee and the Company, such prior agreement or understanding automatically
shall be deemed to have been terminated and shall be null and void.
 
   
    12.  ASSIGNMENT; BINDING EFFECT.  Employee understands that he has been
selected for employment by the Company on the basis of his personal
qualifications, experience, and skills. Employee agrees, therefore, that he
cannot assign all or any portion of his performance under this Agreement. This
Agreement may not be assigned or transferred by the Company without the prior
written consent of Employee. Subject to the preceding two sentences, 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. Notwithstanding the foregoing, if Employee accepts
employment with a subsidiary or affiliate of USOP other than the Company, unless
Employee and his new employer agree otherwise in writing, this Agreement shall
automatically be deemed to have been assigned to such new employer (which shall
thereafter be an additional or substitute beneficiary of the covenants contained
herein, as appropriate), with the consent of Employee, such assignment shall be
considered a condition of employment by such new employer, and references to the
'Company' in this Agreement shall be deemed to refer to such new employer. If
the Company is merged with or into another subsidiary or affiliate of USOP, such
action shall not be considered to cause an assignment of this Agreement, and the
surviving or successor entity shall become the beneficiary of this Agreement and
all references to the 'Company' shall be deemed to refer to such surviving or
successor entity. It is intended that USOP will be a third-party beneficiary of
the rights of the Company under this Agreement. No other Person shall be a
third-party beneficiary.
    
 
    13.  COMPLETE AGREEMENT; WAIVER; AMENDMENT.  This Agreement is not a promise
of future employment. Employee has 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
Agreement together with the Merger Agreement is the final, complete, and
exclusive statement and expression of the agreement between the Company and
Employee with respect to the subject matter hereof and thereof, and 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 Employee, and no term of this Agreement may be waived except
by a writing signed by the party waiving the benefit of such term.
 
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    14.  NOTICE.  Whenever any notice is required hereunder, it shall be given
in writing addressed as follows:
 
    To the Company:        McGregor Travel Management, Inc.
                           112 Prospect Street
                           Stamford, CT 06901
                           Attn: President
 
    with a copy to:        U.S. Office Products Company
                           1025 Thomas Jefferson Street, N.W.
                           Suite 600 East
                           Washington, D.C. 2007
                           (Telefax: (202) 339-6733)
                           Attn: Mark D. Director, Esq.
 
    To Employee:           Douglas R. Knight
                           37 Davenport Avenue #1
                           Greenwich, CT 06830
 
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, if sent by express delivery, hand delivery, or
facsimile, when actually received. Either party may change the address for
notice by notifying the other party of such change in accordance with Section
14.
 
    15.  SEVERABILITY; HEADINGS.  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
provisions of Section 7(e) above. The paragraph headings herein are for
reference purposes only and are not intended in any way to describe, interpret,
define or limit the extent or intent of the Agreement or of any part hereof.
 
    16.  EQUITABLE REMEDY.  Because of the difficulty of measuring economic
losses to the Company and/ or USOP as a result of a breach of the restrictive
covenants set forth in Sections 7, 8, 9 and 10, and because of the immediate and
irreparable damage that would be caused to the Company and/or USOP for which
monetary damages would not be a sufficient remedy, it is hereby agreed that in
additional to all other remedies that may be available to the Company or USOP at
law or in equity, the Company and USOP 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.
 
    17.  ARBITRATION.  Any unresolved dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration
conducted in accordance with the rules of the American Arbitration Association
then in effect. 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 the city where the Company is located.
Notwithstanding the foregoing, the Company and/or USOP shall be entitled to seek
injunctive or other equitable relief, as contemplated by Section 16 above, from
any court of competent jurisdiction, without the need to resort to arbitration.
 
    18.  GOVERNING LAW.  This Agreement shall in all respects be construed
according to the laws of Connecticut, without regard to its conflict of laws
principles.
 
                           [Execution Page Following]
 
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    IN WITNESS WHEREOF, the parties hereto have cause this Agreement to be duly
executed as of the date first written above.
 
                                          MCGREGOR TRAVEL MANAGEMENT, INC.
 
   
                                          By: /s/ SAM DEFRANCO
                                             -----------------------------------
                                             Name: Sam DeFranco
                                             TITLE: CEO
    
 
EMPLOYEE:
 
/s/ DOUGLAS R. KNIGHT
-----------------------------------------
Douglas R. Knight
 
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