Employment Agreement – President and CEO – School Specialty, Inc.

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (“Agreement“) is executed as of this 12th
day of January 2012 (“the Effective Date”), by and between Michael P. Lavelle
(“Executive“) and School Specialty, Inc. (the “Company“).

RECITALS

The Company desires to employ Executive as its President and Chief Executive
Officer, and Executive desires to be employed by the Company in such capacity,
on the terms and conditions set forth herein.

As a result of Executive153s employment with the Company, Executive will have
access to and be entrusted with valuable information about the Company153s
business and customers, including trade secrets and confidential information;
and

The parties believe it is in their best interests to make provision for
certain aspects of their relationship during and after the period in which
Executive is employed by the Company.

NOW, THEREFORE, in consideration of the promises and the mutual agreements
and covenants contained herein, and for other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged by the Company and
Executive (jointly, the “Parties“), the Parties agree as follows:

ARTICLE I

EMPLOYMENT

1.1.

Position and Duties. Executive shall be employed in the position of
President and Chief Executive Officer of the Company and shall be subject to the
authority of, and shall report to, the Company153s Board of Directors (the
“Board“). Executive153s duties and responsibilities shall include all those
customarily attendant to the position of President and Chief Executive Officer,
and such other duties and responsibilities as may be assigned from time to time
by the Board. In addition, Executive shall serve as an officer and/or member of
the board of directors of an Affiliate of the Company (a “Related
Company“, and jointly, “Related Companies“) to which he may be
appointed or elected. An “Affiliate” means an entity which, directly or
indirectly, controls, is controlled by, or is under common control with, the
Company, with control measured by the ability to vote a majority of the stock or
other ownership interests in such entity. Executive shall devote Executive153s
entire business time, attention and energies exclusively to the business
interests of the Company and Related Companies while employed by the Company,
except as otherwise specifically approved in writing by the Board.

1.2.

Term of Employment. The Company employs Executive, and Executive
accepts employment by the Company, for the period commencing on the Effective
Date and ending on June 30, 2015 (the “Employment Term”), subject to earlier
termination as hereinafter set forth in Article III. Upon the termination of
Executive153s employment for any reason, he will be deemed

to have resigned all of his positions with the Company and any Related
Company as an officer or member of their respective boards of directors,
including the Board.

1.3

Board Service. Effective as of the first day of Executive153s employment
with the Company, Executive will serve as a Class I member of the Board until
the earlier of the next annual meeting of the Company or the termination of his
employment with the Company for any reason. Thereafter, for so long as he
remains the President and Chief Executive Officer of the Company, he will be
nominated to serve as a member of the Board. Executive will be an employee
director, and as such, he will not receive any additional compensation for
serving as a member of the Board.

ARTICLE II

COMPENSATION AND OTHER BENEFITS

2.1

Base Salary. During the Employment Term, the Company shall pay
Executive in substantially equal monthly or more frequent installments, an
annual salary of Six Hundred Twenty-Five Thousand Dollars ($625,000) (“Base
Salary“), payable in accordance with the normal payroll practices and
schedule of the Company. Executive153s Base Salary shall be reviewed at least
annually and may be increased at any time and from time to time as the
Compensation Committee of the Board (the “Compensation Committee”) and the Board
as required, in their sole discretion, shall deem appropriate. The term “Base
Salary”, as utilized in this Agreement, shall refer to Base Salary as so
increased. Any increase in Base Salary shall not serve to limit or reduce any
other obligation to Executive under this Agreement. Base Salary shall not be
reduced at any time during the Employment Term, except with the consent of the
Executive. All amounts in this Agreement are stated prior to deductions for
federal and state income and employment tax withholding.

2.2

Incentive Compensation.

(a)

In General. During the Employment Term, Executive shall participate in
annual incentive bonus plans and long-term incentive compensation plans (the
latter to consist of plans offering stock options, restricted stock and/or other
long-term incentive compensation) offered by the Company to its senior
executives. Specifically, as regards the Company153s annual cash incentive bonus
plan, Executive will commence participation for fiscal year 2013, and as regards
long-term incentive compensation, Executive will commence participation with the
annual grants made in fiscal year 2013. The amount and type of grants, any
vesting criteria and performance metrics for such compensation, as well as any
other material terms, shall be determined by the Compensation Committee and the
Board as required, in their sole discretion, after consultation with
Executive.

(b)

Awards on First Day of Employment. In addition to, and notwithstanding
the foregoing, Executive shall receive the long-term incentive awards set out in
Exhibits A, B and C hereto on the first date of employment by the Company.

2.3

Other Benefits.

(a)

In General. During the Employment Term and subject to any limitation
on participation provided by applicable law: (i) the Executive shall be entitled
to

participate in all applicable qualified and nonqualified retirement plans,
practices, policies and programs of the Company to the same extent as other
senior executives of the Company, and (ii) Executive and/or Executive153s family,
as the case may be, shall be eligible for all applicable welfare benefit plans,
practices, policies and programs provided by the Company and its Affiliates,
other than severance plans, practices, policies and programs, to the same extent
as other senior executives of the Company. Nothing herein shall be deemed to
limit the Company153s ability to amend, terminate or otherwise change any of the
referenced plans, practices, polices and programs at any time, and from time to
time.

(b)

Paid Time Off. During the Employment Term, Executive shall be entitled
to 20 days of Paid Time Off per calendar year, which shall accrue in accordance
with the Company153s policy. As used herein, “Paid Time Off” means sick
days, personal days and vacation days. Carryovers of Paid Time Off will be
determined pursuant to the Company153s written policy.

(c)

Relocation Benefits. In addition to those benefits provided in the
Company153s relocation policy, Executive shall be entitled to such additional
benefits as shall be agreed to between Executive and the Chair of the
Compensation Committee, including, but not limited to, reimbursement to
Executive for reasonable commuting expenses between Orlando, Florida and
Appleton, Wisconsin until such time as Executive relocates his family to
Appleton, Wisconsin, which shall be no later than June 30, 2012. Any payment or
reimbursement of any relocation expense shall be paid on or before the end of
the calendar year following the calendar year in which such expense was incurred
and the amount of relocation expenses eligible for payment or reimbursement
during any calendar year may not affect the relocation expenses eligible for
payment or reimbursement in any other calendar year. Further, Executive may not
liquidate or exchange the right to payment or reimbursement of relocation
expenses for any other benefit.

2.4

Expense Reimbursement. The Company shall pay or reimburse Executive
for all reasonable out-of- pocket expenses incurred by Executive in the course
of performing Executive153s duties for the Company in accordance with the
Company153s reimbursement policies for senior executives as in effect from time to
time. Executive shall keep accurate records and receipts of such expenditures
and shall submit such accounts and proof thereof as may from time to time be
required in accordance with such expense account or reimbursement policies that
the Company may establish for its senior executives generally. The Company153s
obligation to pay or reimburse Executive for certain expenses will comply with
the requirements set forth in Section 1.409A-3(i)(1)(iv) of the regulations (the
“409A Regulations“), promulgated under Section 409A of the Internal
Revenue Code of 1986, as amended (the “Code“), including the requirement
that the amount of expenses eligible for reimbursement during any calendar year
may not affect the expenses eligible for reimbursement in any other taxable
year. Further, reimbursement of eligible expenses shall be made on or before the
last day of the calendar year following the calendar year in which the expense
was incurred, as required by Section 1.409A-3(i)(1)(iv) of the 409A Regulations.

ARTICLE III

TERMINATION

3.1

Right to Terminate; Automatic Termination. During the Employment Term,
Executive153s employment may terminate for any of the reasons set out in
paragraphs (a) through (e) hereof.

(a)

Termination by Death or Disability. Executive153s employment and the Company153s
obligations under this Agreement, except as provided in Section 3.2(a), below,
shall terminate automatically, effective immediately and without any notice
being necessary, upon Executive153s death or a determination of Disability of
Executive. For purposes of this Agreement, “Disability” means the
inability of Executive, due to a physical or mental impairment, to perform the
essential functions of Executive153s job with the Company, with reasonable
accommodation, for a period of 90 days (whether or not consecutive) in any
consecutive 365-day period, as determined by a physician selected by the Company
and Executive. If the Company and Executive cannot agree on a physician, each
party shall select a physician and the two physicians shall select a third who
shall make the determination as to whether Executive meets the definition of
Disability. Executive shall cooperate with any reasonable efforts to make such
determination. In the event Executive is unable to select a physician, such
selection shall be made by his spouse, and if she is unable to select a
physician, such selection shall be made by Executive153s legal representative. Any
such determination shall be conclusive and binding on the Parties. Any
determination of Disability under this Section 3.1(a) is not intended to alter
any benefits any party may be entitled to receive under any long-term disability
insurance policy carried by either the Company or Executive with respect to
Executive, which benefits shall be governed solely by the terms of any such
insurance policy.

(b)

Termination For Cause. The Company may terminate Executive153s employment and
all of the Company153s obligations under this Agreement, except as provided in
Section 3.2(a), below, at any time for Cause (as defined below) by giving
written notice to Executive stating the basis for such termination, effective
immediately upon giving such notice or at such other time thereafter as the
Company may designate. “Cause” shall mean any of the following: (1)
Executive has materially breached this Agreement, any other agreement to which
Executive and the Company are parties, or any Company policy (including the
Company153s policy against unlawful harassment), or has materially breached any
other obligation or duty owed to the Company, including, but not limited to,
Executive153s substantial failure or willful refusal to perform his duties and
responsibilities to the Company; (2) Executive has committed gross negligence,
willful misconduct or any violation of law in the performance of Executive153s
duties for the Company; (3) Executive has taken any action substantially likely
to result in discredit to or loss of business, reputation or goodwill of the
Company; (4) Executive has failed to follow reasonable instructions from the
Board concerning the operations or business of the Company; (5) Executive has
been convicted of or plead nolo contendere to a felony or other crime,
the circumstances of which substantially relate to Executive153s employment duties
with the Company; (6) Executive has misappropriated funds or property of the
Company or engaged in any material act of dishonesty; (7) Executive has
attempted to obtain a personal profit from any transaction in which the Company
has an

interest, and which constitutes a corporate opportunity of the Company, or
which is adverse to the interests of the Company, unless the transaction was
approved in writing by the Board after full disclosure of all details relating
to such transaction. For purposes of this Section 3.1(b), no act, or failure to
act, on Executive153s part will be deemed “willful” unless done, or omitted
to be done, by the employee in bad faith.

(c)

Termination by Resignation. Executive153s employment and the Company153s
obligations under this Agreement shall terminate automatically, except as
provided in Section 3.2(a), below, when Executive voluntarily terminates his
employment with the Company other than with Good Reason (as described in Section
3.1(e), below), with ninety (90) days153 prior notice, or at such other earlier
time as may be mutually agreed between the Parties following the provision of
such notice.

(d)

Termination Without Cause. The Company may terminate Executive153s
employment and all of the Company153s obligations under this Agreement, except as
provided in Section 3.2(b), below, at any time and for any reason. Such
termination shall be effective immediately upon the Company providing notice to
Executive that he is terminated without Cause, or such other time thereafter as
the Company shall designate. If the Executive is employed by the Company at the
end of the Employment Term, and the Employment Term is not extended beyond June
30, 2015, such non-extension shall be treated as a termination without Cause
under this Section 3.1(d) and Executive153s termination date shall be June 30,
2015.

(e)

Termination By Executive With Good Reason. Executive may terminate
this Agreement with Good Reason, at which time Executive153s employment and all of
the Company153s obligations under this Agreement shall terminate, except as
provided in Section 3.2(b). “Good Reason” shall mean the occurrence of
any of the following conditions without Executive153s written consent, provided
that Executive shall provide notice to the Company of the existence of the
condition within 90 days of the initial existence of such condition, the Company
shall have 30 days from the date it receives the notice (the “Cure
Period“) within which to cure such condition, and the Executive must
terminate his employment within no more than 30 days after the expiration of the
Cure Period if the Company does not cure the condition within the Cure Period:
(A) a reduction in Executive153s title such that he is no longer President and
Chief Executive Officer of the Company, (B) a material reduction in (i)
Executive153s current level of Base Salary under Section 2.1 hereof or (ii)
Executive153s incentive compensation under Section 2.2(a) hereof, or (C) a
material breach by the Company of any material provision of this Agreement.

3.2

Obligations Upon Termination.

(a)

Section 3.1(a)-(c) Terminations. If Executive153s employment is
terminated pursuant to Section 3.1(a) or (b), above, or if Executive resigns
pursuant to Section 3.1(c), above, Executive or Executive153s estate shall have no
further rights against the Company hereunder, except for the right to receive
(i) any unpaid Base Salary with respect to the period prior to the effective
date of termination of employment, (ii) payment of any accrued but unused Paid
Time-Off, consistent with the Company153s policy

related to carryovers of unused time and applicable law, (iii) all vested
benefits to which Executive is entitled under any benefit plans set forth in
Section 2.3(a) hereof in accordance with the terms of such plans through the
date employment terminates and (iv) reimbursement of expenses to which Executive
may be entitled under Sections 2.3(c) and 2.4 hereof (collectively, the
“Accrued Obligations“). The treatment of Executive153s incentive
compensation provided under Section 2.2 hereof shall be governed by the terms of
the applicable plans or grant agreements, except as explicitly provided to the
contrary pursuant to this Agreement.

(b)

Termination Without Cause or For Good Reason Prior to a Change in Control
or After the Protected Period.

Company Obligations. If Executive153s employment is terminated pursuant
to Section 3.1(d) or (e), above, prior to a Change in Control as defined in the
Company153s 2008 Equity Incentive Plan (a “Change in Control“) or after the
Protected Period as defined in Section 3.2(c), below, Executive shall have no
further rights against the Company hereunder, except for the right to receive
(i) the Accrued Obligations and (ii) Severance Payments, as defined below, but
only for so long as Executive complies with the requirements of Articles IV, V,
VI, VII, VIII, IX and X, below. For purposes of this Agreement, “Severance
Payments” means (A) twelve (12) months of Base Salary continuation, (B) a
pro-rated annual incentive bonus payment (based on the number of days worked in
that fiscal year) for the fiscal year in which termination of employment occurs
based on actual performance-based bonus attainments for such fiscal year in a
lump sum, and (C) reimbursement for that portion of the premiums paid by
Executive to obtain COBRA continuation health coverage that equals the Company153s
subsidy for health coverage for active employees with family coverage
(“COBRA Continuation Payments“) for twelve (12) months following the date
employment terminates (provided that Executive has not obtained health coverage
from any other source and is not eligible to receive health coverage from any
other employer, in which event Executive shall no longer be entitled to
reimbursement), at the times provided in subsection (iii), below. The treatment
of Executive153s incentive compensation provided under Section 2.2 hereof shall be
governed by the terms of the Company153s applicable plans or grant agreements,
except as explicitly provided to the contrary pursuant to this Agreement.

ii.

Release Requirement. Notwithstanding the foregoing, the Company shall
not pay to Executive, and Executive shall not have any right to receive, the
Severance Payments unless, on or before the forty-fifth (45th) day following the
date of termination of employment, (1) Executive has executed and delivered to
the Company a release of all employment-related claims against the Company, its
Affiliates, successor companies, and their past and current directors, officers,
employees and agents, in a form provided to Executive by the Company, and (2)
the statutory rescission period for such release has expired.

iii.

Timing of Payment of Severance Payments. Base Salary continuation
shall commence on the first payroll date after the forty-fifth (45th)

day following the date of Executive153s termination of employment, provided
that (1) and (2) of Section 3.2(b)(ii) have been satisfied by such date, and
shall be paid over a twelve (12) month period in accordance with the normal
payroll practices and schedule of the Company. The pro-rated annual incentive
bonus payment shall be made at such time as other participants in the plan
receive their payment, or, if later, on the forty-fifth (45th) day following the
date of Executive153s termination of employment, provided that (1) and (2) of
Section 3.2(b)(ii) have been satisfied by such date. COBRA Continuation Payments
shall be paid on a monthly basis after Executive has paid the applicable COBRA
premium payment, provided that (1) and (2) of Section 3.2(b)(ii) have been
satisfied by such date, over a 12-month period. Notwithstanding anything to the
contrary contained in this Agreement, if (1) Employee is a “specified employee”
within the meaning of Section 1.409A-1(i) of the 409A Regulations, and (2) the
Severance Payments do not qualify for exemption from Section 409A under the
short-term deferral exception to deferred compensation of Section 1.409A-1(b)(4)
of the 409A Regulations, the separation pay plan exception to deferred
compensation of Section 1.409A-1(b)(9) of the 409A Regulations, or any other
exception under the 409A Regulations, that portion of the Severance Payments not
exempt from Section 409A of the Code shall be made in accordance with the terms
of this Agreement, but in no event earlier than the first to occur of
(a) the day after the six-month anniversary of Employee153s termination
of employment, or (b) Employee153s death. Any payments delayed pursuant
to the prior sentence shall be made in a lump sum, on the first business day
after the six-month anniversary of Employee153s termination of employment along
with interest thereon payable at the short-term applicable federal rate for
monthly payments, as determined under Section 1274(d) of the Code, for the month
in which Employee153s employment terminated.

iv.

Treatment of Severance Payments for Tax and Benefit Purposes. The
Severance Payments shall be treated as ordinary income and shall be reduced by
any applicable income or employment taxes which are required to be withheld
under applicable law, and all amounts are stated before any such deduction.
Furthermore, the Severance Payments shall not be included as compensation for
purposes of any qualified or nonqualified retirement or welfare benefit plan,
program or policy of the Company.

(c)

Termination Without Cause or For Good Reason After a Change in Control and
Prior to the Expiration of the Protected Period.

(i)

Company Obligations. If Executive153s employment is terminated pursuant
to Section 3.1(d) or (e), above, after a Change in Control that is a change in
control for purposes of Section 409A of the Code and within two years after such
Change in Control (the “Protected Period“), Executive shall have no
further rights against the Company hereunder, except for the right to receive
(i) the Accrued Obligations and (ii) CIC Severance Payments and Health Care
Continuation, as defined below, but only for so long as Executive complies with
the requirements of Articles IV, V, VI, VII, VIII, IX and X, below. For purposes

of this Agreement, “CIC Severance Payments” means (A) twenty-four (24)
months of Base Salary in a lump sum and (B) a pro-rated annual incentive bonus
payment (based on the number of days worked in that fiscal year) for the fiscal
year in which termination of employment occurs based on the target bonus for
such fiscal year in a lump sum, at the times provided in subsection (iii). The
Company, its successor or such other entity that would be required to provide
COBRA continuation coverage to “M&A qualified beneficiaries” shall provide
group health benefits under that entity153s then-current group health plans for
Executive and Executive153s spouse and dependents, if applicable, for up to
twenty-four (24) months following Executive153s termination of employment on the
same basis as if Executive had continued to be employed during that period (such
continuation coverage hereinafter referred to as the “Health Care
Continuation“), provided that (1) Executive timely pays the premiums toward
the cost of such benefits that an active employee would be required to pay for
the same benefits, and (2) Executive has not obtained health coverage from any
other source and is not eligible to receive health coverage from any other
employer. The Health Care Continuation shall terminate on the earlier of the
effective date of Executive153s health coverage from any other source or
Executive153s eligibility to receive health coverage from any other employer of
Executive. Further, the COBRA health care continuation coverage period under
Section 4980B of the Code shall run concurrently with the Health Care
Continuation period. In addition, the Health Care Continuation will be on an
after-tax basis with the portion of the monthly cost of coverage paid by the
Company (or another entity) being taxable income to Executive. The treatment of
Executive153s incentive compensation provided under Section 2.2 hereof shall be
governed by the terms of the Company153s applicable plans or grant agreements,
except as explicitly provided to the contrary pursuant to this Agreement.

(ii)

Release Requirement. Notwithstanding the foregoing, the Company shall
not pay to Executive, and Executive shall not have any right to receive, the CIC
Severance Payments or Health Care Continuation unless, on or before the
forty-fifth (45th) day following the date of termination of employment, (1)
Executive has executed and delivered to the Company a release of all
employment-related claims against the Company, its Affiliates, successor
companies, and their past and current directors, officers, employees and agents,
in a form provided to Executive by the Company, and (ii) the statutory
rescission period for such release has expired.

(iii)

Timing of Payment of CIC Severance Payments. The lump sum payment of
twenty-four (24) months of Base Salary and the pro-rated annual incentive
payment shall be made on the forty-fifth (45th) day following the date of
Executive153s termination of employment, provided that (1) and (2) of Section
3.2(c)(ii) have been satisfied by such date. Notwithstanding anything to the
contrary contained in this Agreement, if (1) Employee is a “specified employee”
within the meaning of Section 1.409A-1(i) of the 409A Regulations, and (2) the
CIC Severance Payments do not qualify for exemption from Section 409A under the
short-term deferral exception to deferred compensation of Section 1.409A-

1(b)(4) of the 409A Regulations, the separation pay plan exception to
deferred compensation of Section 1.409A-1(b)(9) of the Treasury Regulations, or
any other exception under the 409A Regulations, that portion of the CIC
Severance Payments not exempt from Section 409A of the Code shall be made in
accordance with the terms of this Agreement, but in no event earlier than the
first to occur of (a) the day after the six-month anniversary of
Employee153s termination of employment, or (b) Employee153s death. Any
payments delayed pursuant to the prior sentence shall be made in a lump sum, on
the first business day after the six-month anniversary of Employee153s termination
of employment along with interest thereon payable at the short-term applicable
federal rate for monthly payments, as determined under Section 1274(d) of the
Code, for the month in which Employee153s employment terminated.

(iv)

Treatment of CIC Severance Payments for Tax and Benefit Purposes. The
CIC Severance Payments shall be treated as ordinary income and shall be reduced
by any applicable income or employment taxes which are required to be withheld
under applicable law, and all amounts are stated before any such deduction.
Furthermore, the CIC Severance Payments shall not be included as compensation
for purposes of any qualified or nonqualified retirement or welfare benefit
plan, program or policy of the Company.

(d)

Parachute Payments. Notwithstanding anything contained in this
Agreement to the contrary, the Company, based on the advice of its legal or tax
counsel, shall compute whether there would be any “excess parachute payments”
payable to Executive, within the meaning of Section 280G of the Code, taking
into account the total parachute payments,” within the meaning of Section 280G
of the Code, payable to Executive by the Company under this Agreement and any
other plan, agreement or otherwise. If there would be any excess parachute
payments, the Company, based on the advice of its legal or tax counsel, shall
compute the net after-tax proceeds related to such parachute payments, taking
into account the excise tax imposed by Section 4999 of the Code, as if (i) such
parachute payments were reduced, but not below zero, such that the total
parachute payments payable to Executive would not exceed three (3) times the
“base amount” as defined in Section 280G of the Code, less One Dollar ($1.00),
or (ii) the full amount of such parachute payments were not reduced. If reducing
the amount of such parachute payments otherwise payable would result in a
greater after-tax amount to Executive, such reduced amount shall be paid to
Executive and the remainder shall be forfeited as of the date Executive153s
employment terminates. If not reducing such parachute payments otherwise payable
would result in a greater after-tax amount to Executive, then such parachute
payments shall not be reduced. If such parachute payments are reduced pursuant
to the foregoing, they will be reduced in the following order: first, by
reducing any cash severance payments, then by reducing any fringe or other
severance benefits, and finally by reducing any payments or benefits otherwise
payable with respect to, or measured by, the Company153s common stock (including
without limitation by eliminating accelerated vesting, in each case starting
with the installment or tranche last eligible to become vested absent the
occurrence of the Change in Control). Notwithstanding the foregoing, to the
extent the parties agree that any of the foregoing amounts are not parachute
payments, such amounts shall not be reduced. To

the extent the parties cannot agree as to whether any of the payments are in
fact parachute payments, the parties will designate, by mutual agreement, an
unrelated third-party with tax expertise to make the determination.
Notwithstanding any provision of this Section 3.2(d) to the contrary, no amount
shall be subject to reduction pursuant to this Section 3.2(d) to the extent the
reduction would result in a violation of any applicable law.

ARTICLE IV

CONFIDENTIALITY

4.1

Confidentiality Obligations. Executive will not, during the term of
Executive153s employment, directly or indirectly use or disclose any Confidential
Information or Trade Secrets except in the interest and for the benefit of the
Company. After the end, for any reason, of Executive153s employment with the
Company, Executive will not directly or indirectly use or disclose any Trade
Secrets. For a period of twenty-four (24) months following the end, for any
reason, of Executive153s employment with the Company, Executive will not directly
or indirectly use or disclose any Confidential Information. Executive further
agrees not to use or disclose at any time information received by the Company
from others except in accordance with the Company153s contractual or other legal
obligations; the Company153s Customers are third party beneficiaries of this
obligation.

4.2

Definitions.

(a)

Trade Secret. The term “Trade Secret” has that meaning set forth under
the Uniform Trade Secrets Act or, if the definition in Wisconsin law varies from
that in the Uniform Trade Secrets Act at the time of such determination,
Wisconsin law. The term includes, but is not limited to, all computer source
code and/or related data created by or for the Company or a Related Company.

(b)

Confidential Information. The term “Confidential Information” means
all non-Trade Secret or proprietary information of the Company which has value
to the Company and which is not known to the public or the Company153s
competitors, generally. Confidential Information includes, but is not limited
to: (i) inventions, product specifications, information about products under
development, research, development or business plans, production know-how and
processes, manufacturing techniques, operational methods, equipment design and
layout, test results, financial information, customer lists, information about
orders and transactions with customers, sales and marketing strategies, plans
and techniques, pricing strategies, information relating to sources of materials
and production costs, purchasing and accounting information, personnel
information and all business records; (ii) information which is marked or
otherwise designated as confidential or proprietary by the Company; and (iii)
information received by the Company from others which the Company has an
obligation to treat as confidential.

(c)

Exclusions. Notwithstanding the foregoing, the terms “Trade Secret”
and “Confidential Information” shall not include, and the obligations set forth
in this Agreement shall not apply to, any information which: (i) can be
demonstrated by Executive to have been known by Executive prior to Executive153s
employment by the

Company; (ii) is or becomes generally available to the public through no act
or omission of Executive; (iii) is obtained by Executive in good faith from a
third party who discloses such information to Executive on a non-confidential
basis outside the scope of Executive153s employment without violating any
obligation of confidentiality or secrecy relating to the information disclosed;
or (iv) is independently developed by Executive outside the scope of Executive153s
employment without use of Confidential Information or Trade Secrets.

(d)

Company. For all purposes of this Article IV, references to the
Company also refer to all Related Companies.

ARTICLE V

NON-COMPETITION

5.1

Restrictions on Competition During Employment. During the term of
Executive153s employment with the Company, Executive shall not directly or
indirectly compete against the Company, or directly or indirectly divert or
attempt to divert any Customer153s business from the Company anywhere the Company
does or is taking steps to do business.

5.2

Post-Employment Non-Solicitation of Restricted Customers. For twelve
(12) months (or for twenty-four (24) months where any CIC Severance Payments are
governed by Section 3.2(c) of this Agreement) following termination of
Executive153s employment with the Company for any reason, Executive agrees not to
directly or indirectly solicit or attempt to solicit any business from any
Restricted Customer in any manner which competes with the services or products
offered by the Company in the twelve (12) months preceding termination of
Executive153s employment with the Company, or to directly or indirectly divert or
attempt to divert any Restricted Customer153s business from the Company.

5.3

Post-Employment Restricted Services Obligation. For twelve (12) months
(or for twenty-four (24) months where any CIC Severance Payments are governed by
Section 3.2(c) of this Agreement) following termination of Executive153s
employment with the Company, for any reason, Executive agrees not to provide
Restricted Services to any Competitor in any geographic area in which the
Company sold pre-kindergarten through 12th grade educational products and
services during the twelve (12) month period preceding termination of
Executive153s employment. During such twelve (12) month (twenty-four (24) months
where any CIC Severance Payments are governed by Section 3.2(c) of this
Agreement) period, Executive also will not provide any Competitor with any
advice or counsel concerning the provision of Restricted Services anywhere in
such geographic area.

5.4

Definitions.

(a)

Customer. The term “Customer” means any individual or entity for
whom/which the Company has provided services or products or made a proposal to
perform services or provide products.

(b)

Restricted Customer. The term “Restricted Customer” means any
individual or entity (i) for whom/which the Company provided services or
products and (ii) with whom/which Executive had direct contact on behalf of the
Company or about

whom/which Executive acquired non-public information in connection with
Executive153s employment by the Company during the twenty-four (24) months
preceding the end, for any reason, of Executive153s employment with the Company;
provided, however, that the term “Restricted Customer” shall not
include any individual or entity who/which, through no direct or indirect act or
omission of Executive, has terminated its business relationship with the
Company.

(c)

Restricted Services. The term “Restricted Services” means services of
any kind or character comparable to those Executive provided to the Company
during the twelve (12) months preceding the termination of Executive153s
employment with the Company relating to pre-kindergarten through 12th grade
educational products and services of the type sold by the Company within any
geographic area in which the Company engaged in the sale of such products or
services within the last twelve (12) month period preceding termination of
Executive153s employment.

(d)

Competitor. The term “Competitor” means any business which is engaged
in the sale of pre-kindergarten through 12th grade educational products and
services of the type sold by the Company within any geographic area in which the
Company engaged in the sale of such products or services within the twelve (12)
month period preceding termination of Executive153s employment.

(e)

Company. For all purposes of this Article V, references to the Company
also refer to all Related Companies.

ARTICLE VI

BUSINESS IDEA RIGHTS

6.1

Assignment. The Company will own, and Executive hereby assigns to the
Company and agrees to assign to the Company, all rights in all Business Ideas
which Executive originates or develops whether alone or working with others
while Executive is employed by the Company. All Business Ideas which are or form
the basis for copyrightable works are hereby assigned to the Company and/or
shall be assigned to the Company or shall be considered “works for hire” as that
term is defined by United States Copyright Law.

6.2

Definition of Business Ideas. The term “Business Ideas” means all
ideas, designs, modifications, formulations, specifications, concepts, know-how,
trade secrets, discoveries, inventions, data, software, developments and
copyrightable works, whether or not patentable or registrable, which Executive
originates or develops, either alone or jointly with others while Executive is
employed by the Company and which are (i) related to any business known to
Executive to be engaged in or contemplated by the Company; (ii) originated or
developed during Executive153s working hours; or (iii) originated or developed in
whole or in part using materials, labor, facilities or equipment furnished by
the Company.

6.3

Disclosure. While employed by the Company, Executive will promptly
disclose all Business Ideas to the Company.

6.4

Execution of Documentation. Executive, at any time during or after the
term of Executive153s employment with the Company, will promptly execute all
documents which the

Company may reasonably require to perfect its patent, copyright and other
rights to such Business Ideas throughout the world.

6.5

Definition of Company. For all purposes of this Article VI, references
to the Company also refer to all Related Companies.

ARTICLE VII

NON-SOLICITATION OF EMPLOYEES

During the term of Executive153s employment with the Company and for twelve
(12) months (or for twenty-four (24) months where any CIC Severance Payments are
governed by Section 3.2(c) of this Agreement) thereafter, Executive shall not
directly or indirectly encourage any Company employee to terminate employment
with the Company or solicit such an individual for employment outside the
Company in any manner which would end or diminish that employee153s services to
the Company. For all purposes of this Article VII, references to the Company
also refer to all Related Companies.

ARTICLE VIII

EMPLOYEE DISCLOSURES AND ACKNOWLEDGMENTS

8.1

Confidential Information of Others. Executive warrants and represents
to the Company that Executive is not subject to any employment, consulting or
services agreement, or any restrictive covenants or agreements of any type,
which would conflict or prohibit Executive from fully carrying out Executive153s
duties as described under the terms of this Agreement. Further, Executive
warrants and represents to the Company that Executive has not and will not
retain or use, for the benefit of the Company, any confidential information,
records, trade secrets, or other property of a former employer.

8.2

Scope of Restrictions. Executive acknowledges that during the course
of Executive153s employment with the Company, Executive will gain knowledge of
Confidential Information and Trade Secrets of the Company and Related Companies.
Executive acknowledges that the Confidential Information and Trade Secrets of
the Company and Related Companies are necessarily shared with Executive on a
routine basis in the course of performing Executive153s job duties and that the
Company and Related Companies have a legitimate protectable interest in such
Confidential Information and Trade Secrets, and in the goodwill and business
prospects associated therewith. Executive acknowledges that the Company and
Related Companies sell pre-kindergarten through 12th grade educational products
and services to all states in the United States and in Canada. Accordingly,
Executive acknowledges that the scope of the restrictions contained in this
Agreement are appropriate, necessary and reasonable for the protection of the
business, goodwill and property rights of the Company and Related Companies, and
that the restrictions imposed will not prevent Executive from earning a living
in the event of, and after, the end, for any reason, of Executive153s employment
with the Company.

8.3

Prospective Employers. Executive agrees, during the term of any
restriction contained in Articles IV, V, VI, VII, VIII, IX and X of this
Agreement, to disclose this Agreement to any entity which offers employment to
Executive. Executive further agrees that

the Company may send a copy of this Agreement to, or otherwise make the
provisions hereof known to, any of Executive153s potential employers.

8.4

Third Party Beneficiaries. All Related Companies are third party
beneficiaries with respect to Executive153s performance of Executive153s duties
under this Agreement and the undertakings and covenants contained in this
Agreement, and the Company and any
Related Company, enjoying the benefits thereof, may enforce this Agreement
directly against Executive.

8.5

Survival. The Covenants set forth in Articles IV, V, VI, VII, VIII, IX
and X of this Agreement shall survive the termination of this Agreement.

8.6

Injunctive Relief. Executive acknowledges that the services to be
rendered by Executive hereunder are of a special, unique, and extraordinary
character and, in connection with such services, Executive will have access to
Confidential Information and Trade Secrets that are vital to the Company153s and
the Related Companies153 business. Executive consents and agrees that, in the
event of the breach or a threatened breach by Executive of any of the provisions
of this Agreement, the Company and the Related Companies would sustain
irreparable harm and that damages at law would not be an adequate remedy for a
violation of this Agreement, and, in addition to any other rights or remedies
that the Company and the Related Companies may have under this Agreement, common
or statutory law or otherwise, the Company and Related Companies shall be
entitled to specific performance and/or injunctive or other equitable relief
from a court of competent jurisdiction enforcing this Agreement and/or
restraining Executive from committing, threatening to commit, or continuing any
violation of this Agreement (in each case without posting a bond or other
security), including, but not limited to, restraining Executive from disclosing,
using for any purpose, selling, transferring, or otherwise disposing of, in
whole or in part, any Confidential Information. In addition, in the event of a
breach or violation by Executive of the provisions of Articles IV, V and VII,
the number of months set forth therein that relate to the term of the provisions
shall be automatically extended by the amount of time between the initial
occurrence of the breach or violation and when such breach or violation has been
duly cured. Nothing contained herein shall be construed as prohibiting the
Company or the Related Companies from pursuing any other remedies available to
it for any breach or threatened breach of any provision of this Agreement,
including, but not limited to, the recovery of damages, costs, and fees,
including the recovery of any prior Severance Payments or CIC Severance Payments
made to Executive.

ARTICLE IX

RETURN OF RECORDS

Upon the end, for any reason, of Executive153s employment with the Company, or
upon request by the Company at any time, Executive shall immediately return to
the Company all documents, records, equipment (including computers, laptops,
tablet computers, cell phones and other such equipment (“Electronic
Equipment“)) and materials belonging and/or relating to the Company (except
Executive153s own personnel and wage and benefit materials relating solely to
Executive and Executive153s personal Electronic Equipment which is not owned by
the Company), and all copies of all such materials. Upon the end, for any
reason, of Executive153s employment with the Company, or upon request of the
Company at any time, Executive further agrees to

destroy such records maintained by Executive on Executive153s personally-owned
Electronic Equipment, which destruction Company may reasonably confirm.

ARTICLE X

NONDISPARAGEMENT

Executive agrees that Executive will not, at any time (whether during or
after the Employment Term), publish or communicate to any person or entity any
Disparaging (as defined below) remarks, comments or statements concerning the
Company and any Related Company and their respective present and former members,
partners, directors, officers, shareholders, employees, agents, attorneys,
successors and assigns, except as required by law, rule or regulation. The
Company agrees to instruct its executive officers and directors to refrain from
publishing or communicating to any person or entity any Disparaging remarks,
comments or statements concerning the Executive during or after the Employment
Term, except as required by law, rule or regulation. “Disparaging” remarks,
comments or statements are those that impugn the character, honesty, integrity
or morality or business acumen or abilities in connection with any aspect of the
operation of business of the individual or entity being disparaged.

ARTICLE XI

MISCELLANEOUS

11.1

Notice. Notices and all other communications provided for in this
Agreement shall be in writing and shall be delivered personally or sent by
registered or certified mail, return receipt requested, postage prepaid, or sent
by facsimile, electronic mail or prepaid overnight courier to the parties at the
addresses set forth below (or such other address as shall be specified by the
parties by like notice pursuant to this Section 11.1):

To the Company:

School Specialty, Inc.

W6316 Design Drive

P.O. Box 1579

Appleton WI 54912-1579

Attention: Chief Human Resources Officer

Fax: 1-920-882-5863

Email: rachel.mckinney@schoolspecialty.com

With a copy to:

Godfrey & Kahn, S.C.

780 N. Water St.

Milwaukee, WI 53202

Attention: Dennis F. Connolly

Debra S. Koenig

Fax: 1-414-273-5198

Email: dconnoll@gklaw.com

dkoenig@gklaw.com

And :

Franzoi & Franzoi, S.C.

514 Racine Street

Menasha, WI 54952

Attention: Joseph F. Franzoi IV

Fax: 1-920-725-0998

Email: jffiv@franzoi.com

To Executive:

Michael P. Lavelle

8402 Lake Burden Circle

Windermere, FL 34786

Email: mikelavelle@hotmail.com

With a copy to:

Joyce Ackerbaum Cox

Baker Hostetler

200 S. Orange Avenue, Ste 2300

Orlando, FL 32801

Fax: 407 841 0168

E-mail: jacox@bakerlaw.com

Such notices and communications shall be deemed given upon personal delivery
or receipt at the address, facsimile or email account of the party stated above
or at any other address specified by such party to the other party in writing,
except that if delivery is refused or cannot be made for any reason, then such
notice shall be deemed given on the third day after it is sent.

11.2

Entire Agreement; Amendment; Waiver. This Agreement (including any
documents referred to herein) sets forth the entire understanding of the parties
hereto with respect to the subject matter contemplated hereby. Any and all
previous agreements and understandings between or among the Parties regarding
the subject matter hereof, whether written or oral, are superseded by this
Agreement. This Agreement shall not be amended or modified except by a written
instrument duly executed by each of the parties hereto. Any extension or waiver
by any party of any provision hereto shall be valid only if set forth in an
instrument in writing signed on behalf of such party.

11.3

Headings. The headings of sections and paragraphs of this Agreement
are for convenience of reference only and shall not control or affect the
meaning or construction of any of its provisions.

11.4

Attorneys153 Fees; Expenses. Each party hereto shall bear and pay all of
the respective fees, expenses and disbursements of their agents,
representatives, accountants and counsel incurred in connection with negotiating
this Agreement. In a dispute between the Parties concerning the subject matter
of this Agreement, including a dispute whether Executive has breached the terms
of Articles IV, V, VI, VII, VIII, IX, or X, above, the reasonable attorneys153
fees, expenses and costs incurred by the prevailing party shall be paid by the
other party to the prevailing party within thirty (30) days after conclusion of
the litigation including any appeals.

11.5

Waiver of Breach. The waiver by either party of the breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
subsequent breach by either party.

11.6

Severability. If any court of competent jurisdiction determines that
any provision of this Agreement is invalid or unenforceable, then such
invalidity or unenforceability shall have no effect on the other provisions
hereof, which shall remain valid, binding and enforceable and in full force and
effect, and, to the extent allowed by law, such invalid or unenforceable
provision shall be construed in a manner so as to give the maximum valid and
enforceable effect to the intent of the Parties expressed therein.

11.7

Governing Law. This Agreement shall in all respects be construed
according to the laws of the State of Wisconsin, without regard to its conflict
of laws principles.

11.8

Future Cooperation. Executive agrees that, during his employment and
following the termination of Executive153s employment for any reason, Executive
will cooperate with requests by the Company to assist in the defense or
prosecution of any lawsuits or claims in which the Company, any Related Company
or its officers, directors or employees may be or become involved and in
connection with any internal investigation or administrative, regulatory or
judicial proceeding, in each case which relates to matters occurring while
Executive was employed by the Company, at such times and at such places as shall
be mutually convenient for Executive and the Company, taking into account any
employment commitments which Executive then has. Executive shall be compensated
by the Company at a rate comparable to that which he earned while an employee of
the Company or that which he is currently earning, whichever is greater;
provided, however, that Executive shall not be paid for such future cooperation
during such time as Executive is receiving Severance Payments or CIC Severance
Payments pursuant to Section 3.2(b) or 3.2(c) of this Agreement, respectively.

11.9

Compliance with Section 409A of the Code and the 409A Regulations.
This Agreement shall be interpreted and administered in compliance with Section
409A of the Code, the 409A Regulations and any authority promulgated thereunder.
Any term used in this Agreement which is defined in Code Section 409A or the
409A Regulations shall have the meaning set forth therein unless otherwise
specifically defined herein. Any obligations under this Agreement that arise in
connection with the Executive153s “termination of employment”, “termination” or
other similar references shall only be triggered if the termination of
employment or termination qualifies as a “separation from service” within the
meaning of Section 1.409A-1(h) of the 409A Regulations. Notwithstanding any
other provision of this Agreement, if at the time of the termination of the
Executive153s employment, the Executive is a “specified employee,” as defined in
Section 409A or the 409A Regulations, and any payments upon such termination
under this Agreement hereof will result in additional tax or interest to the
Executive under Code Section 409A, Executive will not be entitled to receive
such payments until the date which is six (6) months after the termination of
the Executive153s employment for any reason, other than as a result of the
Executive153s death or disability (as such term is defined in Code Section 409A or
the 409A Regulations).

IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be duly
executed as of the date first written above.


	EXECUTIVE:


	/s/ Michael P. Lavelle
	Michael P. Lavelle

	Date:	January 12, 2012

	SCHOOL SPECIALTY, INC.:


	By:	/s/ Terry L. Lay

	Title:	Chairman of the Board

	Date:	January 12, 2012

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