SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (date of earliest event reported): February 1, 2019
SCHOOL SPECIALTY, INC.
(Exact name of registrant as specified in its charter)
(State or other jurisdiction
W6316 Design Drive
Greenville, Wisconsin 54942
(Address of principal executive offices, including zip code)
Registrant’s telephone number, including area code: (920) 734-5712
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of
the registrant under any of the following provisions:
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this
chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or
revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 5.02. Departure of Directors or Certain Officers; Election of
Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On February 1, 2019 (the
“Effective Date”), Joseph M. Yorio resigned as President and Chief Executive Officer and a member of the Board of Directors (the “Board”) of School Specialty, Inc. (the “Company”). On the Effective Date, the Board
appointed Michael Buenzow, an employee of FTI Consulting, Inc. (“FTI”), as Interim Chief Executive Officer while the Board searches for a permanent successor to Mr. Yorio.
Mr. Buenzow, age 54, has served as Senior Managing Director at FTI Consulting, Inc. (“FTI”) since 2002. His experience
includes serving as Chief Executive Officer of several companies including Bush Industries, Inc. and Huffy Corporation. Prior to joining FTI in 2002, Mr. Buenzow was a partner at PricewaterhouseCoopers. Mr. Buenzow earned an MBA from
the University of Notre Dame and a BBA from Niagara University.
In connection with Mr. Yorio’s resignation, the Company and
Mr. Yorio entered into a Resignation and General Release Agreement (the “Separation Agreement”), under which the Company agreed, in consideration of Mr. Yorio’s execution of a general release of claims in the Company’s
favor, to provide Mr. Yorio with certain severance payments, benefits and COBRA continuation payments as set forth in Section 3.2(c) of Mr. Yorio’s employment agreement with the Company, as though his employment had been
terminated without cause. The foregoing description of the Separation Agreement does not purport to be complete and is qualified in its entirety by reference to the actual Separation Agreement, a copy of which is attached hereto as Exhibit 10.1 and
incorporated herein by reference. Mr. Yorio’s employment agreement was attached as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on
March 23, 2016.
In connection with the appointment of Mr. Buenzow as Interim Chief Executive Officer, the Company entered into
a letter agreement (the “Engagement Agreement”) with FTI. Pursuant to the terms of the Engagement Agreement, Mr. Buenzow, and any other person who may provide services to the Company under the Engagement Agreement, will remain an
employee or independent contractor, as applicable, of FTI and will not be an employee of the Company. The Company will not be responsible for payment of any employee benefits or other costs typically incurred as an employer, except that the Company
has agreed to provide Mr. Buenzow and any other FTI employee serving as a director or officer of the Company with coverage under its existing directors and officers insurance policy.
Pursuant to the Engagement Agreement, the Company has agreed to compensate FTI on an hourly basis for Mr. Buenzow’s services. The
Engagement Agreement also includes an additional incentive fee based upon the Company’s adjusted EBITDA performance. In addition, the Company has agreed to reimburse FTI for reasonable expenses incurred on the Company’s behalf.
The foregoing description of the Engagement Agreement does not purport to be complete and is qualified in its entirety by reference to the
actual Engagement Agreement, a copy of which is attached hereto as Exhibit 10.2 and incorporated herein by reference.
Financial Statements and Exhibits.
|10.1||Resignation and General Release Agreement, dated February 1, 2019, between the Company and Joseph M. Yorio.|
|10.2||Engagement Agreement, dated February 1, 2019, between the Company and FTI Consulting, Inc.|
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
|SCHOOL SPECIALTY, INC.|
|Dated: February 4, 2019||By:|
|/s/ Kevin Baehler|
Executive Vice President and
Chief Financial Officer
RESIGNATION AND GENERAL RELEASE AGREEMENT
THIS RESIGNATION AND GENERAL RELEASE AGREEMENT (this “Agreement”) is made and entered into as of the Effective Date, defined
in Section 6(d) below, by and between, Joseph M. Yorio, an individual (the “Executive”), and School Specialty, Inc. (the “Company”).
WHEREAS, the Company and the Executive (the “Parties”) are parties to that certain Amended and Restated Employment Agreement,
dated as of March 23, 2016 (the “Employment Agreement”);
WHEREAS, the Parties have decided to end their employment
relationship on mutually agreeable terms as of February 1, 2019 (the “Resignation Date”);
NOW THEREFORE, in
consideration of the recitals above and the mutual promises and obligations contained herein, and other good and valuable consideration, the receipt and sufficiency of which are expressly acknowledged, it is agreed as follows:
1. Resignation. Executive hereby resigns from any and all offices or directorships with the Company or any
affiliate thereof, effective as of the Resignation Date, and submits his resignation in the form of Exhibit A hereto. Because the Parties have decided to end their employment relationship on mutually
agreeable terms, Executive’s employment will
be deemed to have been terminated without cause as of the Resignation Date for all purposes with respect to the Parties’ rights and obligations under the Employment Agreement.
2. All Obligations Paid in Full. Executive understands that except as set forth in this
Section 2 and Section 3, Executive is not entitled to any further wages (including bonuses or other incentive compensation), payments or benefits from the Company or its Affiliates after the Resignation Date.
Executive acknowledges and agrees that Executive has received all wages and benefits earned through the Company’s most recent regular pay date, except: (a) that on the next regular pay date will receive any wages earned between the last
regular pay date and the Resignation Date, and accrued, unused paid time off through the Resignation Date; (b) that Executive shall be reimbursed for business expenses actually incurred by Executive on or before the Resignation Date in
accordance with the Company’s regular policy and practice; and (c) for benefits to which Executive is entitled as a participant in the Company’s 401k Plan.
3. Separation Benefits. In accordance with and subject to the conditions of the Employment Agreement, the
Company will provide Executive with severance benefits, Severance Payments and COBRA Continuation Payments, as set forth in Section 3.2(c) of the Employment Agreement, as though his employment had been terminated without cause under
Section 3.1(d) of the Employment Agreement as of the Resignation Date. With respect to the pro-rated 2019 bonus component of the severance provided in Section 3.2(c)(i)(B), the Parties agree that the
amount shall be determined by multiplying one hundred twenty-five (125) percent of Executive’s final base salary by (i) the percentage of goal attainment determined by the Board of Directors for 2019 with respect to other executives
of the Company, and (ii) the fraction
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31/365, and that amount shall be payable as such time as bonuses are paid to the officers of the Company in 2020. The Company also agrees that the Company, at no charge to Executive, will
download from the Company laptop and mobile phone that Executive returns to the Company Executive’s personal photographs, and any personal financial information of Executive that is identified by Executive, and deliver that downloaded
electronically stored information to Executive within a reasonable time after the Company’s receipt of the laptop and phone.
4. General Release by Executive. Subject to Section 5 below, Executive hereby releases
and discharges forever the Company, and each of its parents, subsidiaries and affiliates, and each of their present and former investors, shareholders, members, partners, directors, officers, employees, trustees, agents, attorneys, administrators,
plans, plan administrators, insurers, agents, predecessors, successors and assigns, and all persons acting by, through, under or in concert with them (hereinafter collectively referred to as the “Executive Released Parties”), from
and against all liabilities, claims, demands, liens, causes of action, charges, suits, complaints, grievances, contracts, agreements, promises, obligations, costs, losses, damages, injuries, attorneys’ fees, and other legal responsibilities
(collectively referred to as “Claims”), of any form whatsoever, including, but not limited to, any claims in law, equity, contract, tort, or any claims under the Age Discrimination in Employment Act, as amended, 29 U.S.C.
§ 621, et seq. (the “ADEA”); Title VII of the Civil Rights Act of 1964, as amended by the Civil Rights Act of 1991, 42 U.S.C. § 2000 et seq.; the Equal Pay Act, as amended, 29 U.S.C. § 206(d);
the Civil Rights Act of 1866, 42 U.S.C. § 1981; the Family and Medical Leave Act of 1993, 29 U.S.C. § 2601 et seq.; the Americans with Disabilities Act of 1990, 42 U.S.C. § 12101 et seq.; the False Claims Act, 31 U.S.C.
§ 3729 et seq.; the Employee Retirement Income Security Act, as amended, 29 U.S.C. § 1001 et seq.; the Worker Adjustment and Retraining Notification Act, as amended, 29 U.S.C. § 2101 et seq.; the Wisconsin
Fair Employment Act, Wis. Stat. §§ 111.31 to 111.395; the Wisconsin Wage Claim and Payment Law, Wis. Stat. §§ 109.03 and 109.09; the Wisconsin Business Closing and Mass Layoff law, Wis. Stat. §§ 109.07; the Wisconsin
Cessation of Health Care Benefits Law, Wis. Stat. §§ 109.075; the Wisconsin, Family and Medical Leave Law, Wis. Stat. §§ 103.10; the Wisconsin Personnel Records Statute, Wis. Stat. §§ 103.13; the Wisconsin Employment
Peace Act, Wis. Stat. §§ 111.02 to 111.19; or any other local ordinance or federal or state statute, regulation or constitution, whether known or unknown arising from any action or inaction whatsoever prior to the date of execution of this
5. Exclusions from General Release. Notwithstanding the generality of
Section 4, Executive does not release the following claims and rights:
Executive’s rights under this Agreement;
Executive’s rights to vested benefits in the Company’s 401k Plan’
claims to continued participation in certain of the Company’s group benefit plans pursuant to the terms
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Executive’s rights with respect to restricted stock units and option awards in accordance with the terms
Executive’s rights with respect to Company stock owned by Executive;
Executive’s rights, if any, to indemnity and/or advancement of expenses pursuant to applicable state law,
Any other right that may not be released by private agreement.
6. Rights Under the ADEA and Older Worker’s Benefit Protection Act. Without
limiting the scope of the foregoing release of Claims in any way, Executive certifies that this release constitutes a knowing and voluntary waiver of any and all rights or claims that exist or that Executive has or may claim to have under ADEA. This
release does not govern any rights or claims that might arise under the ADEA after the date this Agreement is signed by Executive. Executive acknowledges that:
The consideration provided pursuant to this Agreement is in addition to any consideration that Executive would
Executive has been and is hereby advised in writing to consult with an attorney prior to signing this
Executive is hereby granted a period of forty-five (45) days from the date of Executive’s receipt of
Executive has the right to revoke this Agreement at any time within the seven
Page 3 of 7
7. Covenant Not To Sue. Executive represents and
covenants that Executive has not filed, initiated or caused to be filed or initiated, any Claim, charge, suit, complaint, grievance, action or cause of action against the Company or any of the Executive Released Parties. Executive further
acknowledges that Executive does not have any injury for which Employee would be entitled to workers’ compensation benefits. Except to the extent that such waiver is precluded by law, Executive further promises and agrees that Executive will
not file, initiate, or cause to be filed or initiated any Claim, charge, suit, complaint, grievance, action, or cause of action based upon, arising out of, or relating to any Claim, demand, or cause of action released herein, nor shall Executive
participate, assist or cooperate in any such Claim, charge, suit, complaint, grievance, action or cause of action regarding any of the Executive Released Parties, whether before a court or administrative agency or otherwise, unless required to do so
by law. The parties further acknowledge that this Agreement will not prevent the Executive from: (a) filing a charge with the Equal Employment Opportunity Commission (or similar state agency) or participating in any investigation conducted by
the Equal Employment Opportunity Commission (or similar state agency); provided, however, that Executive acknowledges and agrees that any Claims by Executive, or brought on Executive’s behalf, for personal relief in connection
with such a charge or investigation (such as reinstatement or monetary damages) would be and hereby are barred, or (b) from challenging the effectiveness of the release contained in this agreement as to claims under the Age Discrimination in
8. No Assignment. Executive represents and warrants that Executive has made no
assignment or other transfer, and covenants that Executive will make no assignment or other transfer, of any interest in any Claim which Executive may have against the Executive Released Parties, or any of them.
9. Right to Communicate Directly with Governmental or Self-Regulatory Bodies. Nothing in this Agreement or
any exhibit or attachment hereto, or the Employment Agreement, shall be construed or applied so as to impede Executive or any other person from communicating directly with, cooperating with or providing information to any governmental or regulatory
body or any self-regulatory organization or receiving awards from or by a government agency for providing information. Nothing contained in this Agreement shall be deemed to require or encourage any person to provide inaccurate or untruthful
information in response to a government, law enforcement, regulatory agency or in response to a subpoena or other legal process or proceeding.
10. No Presumption Against Drafter. Executive and the Company understand that this Agreement is
deemed to have been drafted jointly by the parties. Any uncertainty or ambiguity shall not be construed for or against any party based on attribution of drafting to any party.
11. Entire Agreement. Executive and the Company understand that this Agreement represents the
entire agreement and understanding between the parties with respect to
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the subject matter hereof and supersedes any prior agreement, understanding or negotiations respecting such subject matter. For the avoidance of doubt, this Agreement shall not limit, modify or
supersede: (1) Executive’s obligations under Articles IV through XI of the Employment Agreement, which remain in full force and effect; (2) Executive’s obligations under any agreement with the Company concerning intellectual
property rights, solicitation of employees or customers or competition with the Company; and (3) the Company’s obligations under Articles X and XI of the Employment Agreement, which remain in full force and effect. No change to or
modification of this Agreement shall be valid or binding unless it is in writing and signed by Executive and a duly authorized representative of the Company.
12. No Reliance. Executive and the Company acknowledge that each of them is relying solely upon the
contents of this Agreement, that there have been no other representations or statements made by any of the Released Parties or Executive, and that Executive and the Company are not relying on any other representations or statements whatsoever of any
of the Executive Released Parties or Executive as an inducement to enter into this Agreement.
13. Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed to
be an original, but all of which together will constitute one and the same Agreement.
Law. This Agreement shall be governed, construed, interpreted and enforced in accordance with the substantive laws of the State of Wisconsin, without reference to the principles of conflicts of law of Wisconsin or any other jurisdiction, and
where applicable, the laws of the United States.
[Signature Page Follows]
Page 5 of 7
IN WITNESS WHEREOF, this Agreement is executed by the parties hereto as of the date
indicated by the signature.
|Joseph M. Yorio|
|DATED: February 1, 2019||/s/ Joseph M. Yorio|
|School Specialty, Inc.|
|/s/ Gus D. Halas|
|DATED: February 1, 2019||By: Gus D. Halas|
|Its: Chairman of the Board|
Page 6 of 7
February 1, 2019
School Specialty, Inc.
W6316 Design Drive
Greenville, Wisconsin 54942
Resignation of Employment
Ladies and Gentlemen:
I hereby resign from the office of
President and Chief Executive Officer of School Specialty, Inc. (the “Company”) and all of its subsidiaries, from the Board of Directors of the Company and all of its committees and from all other offices, directorships, committees
and positions of employment that I hold with the Company and its subsidiaries, effective immediately.
|Joseph M. Yorio|
Page 7 of 7
February 1, 2019
Mr. Scott Scharfman
School Specialty, Inc.
W6316 Design Drive
Greenville, WI 54942
Re: Project School – Interim CEO
The purpose of this letter is to confirm the understanding and agreement (the “Agreement”) between School Specialty, Inc.,
(the “Client” or “SSI”) and FTI Consulting, Inc. (“FTI”) concerning the Client’s engagement of FTI to provide certain temporary employees to the Client for performing interim management services (the
“Services”). This Agreement is effective on February 1, 2019 (the “Effective Date”). The FTI Standard Terms and Conditions attached hereto as Exhibit “A” are also incorporated herein and forms part of this
1. Temporary Interim Officer(s), Hourly Temporary Employees and Services
FTI will provide Michael Buenzow to serve as the Client’s Interim Chief Executive Officer (the “Interim CEO”) reporting to the Board of
Directors of School Specialty, Inc. (“Board”), in connection with the Engagement. The Interim CEO, as well as any additional Hourly Temporary Staff, (as defined below), shall have such duties as the Board may from time to time determine,
shall always report to and be subject to supervision by the Board. Without limiting the foregoing, the Interim CEO, as well as any Hourly Temporary Staff, shall work with other senior management of the Client, and other professionals, to provide
In addition to providing the Interim CEO, FTI may also provide the Client with additional staff (the “Hourly Temporary Staff”
and, together with the Interim CEO, the “FTI Professionals”), subject to the terms and conditions of this Agreement. The Hourly Temporary Staff may be assisted by or replaced by other FTI professionals reasonably satisfactory to the Board,
as required, who shall also become Hourly Temporary Staff for purposes hereof. The initial schedule of potential Hourly Temporary Staff is set out on Exhibit “B”. FTI will keep the Board reasonably informed as to FTI’s staffing
and will not add additional Hourly Temporary Staff to the assignment without first consulting with the Client.
The Services do not include
(i) audit, legal, tax, environmental, accounting, actuarial, employee benefits, insurance advice or similar specialist and other professional services which are typically outsourced and which shall be obtained directly where required by the
Client at Client’s expense; or (ii) investment banking, including valuation or securities analysis, including advising any party or representation of the Client on the purchase, sale or exchange of securities or representation of the
Client in securities transactions. FTI is not a registered broker-dealer in any jurisdiction and will not offer advice or its opinion or any testimony on valuation or exchanges of securities or on any matter for which FTI is not appropriately
licensed or accredited. An affiliate of FTI is a broker-dealer but is not being engaged by the
Client to provide any investment banking or broker-dealer services. The Client agrees to supply office space, a dedicated computer, email, mobile phone, office telephone, and administrative
support services to the Interim CEO as reasonably requested by FTI in connection with the performance of its duties hereunder.
2. Compensation to FTI
Professional fees in connection with this Engagement are set forth in Exhibit C. In general, FTI will bill the Client based upon the actual time incurred
providing the Services, multiplied by our standard hourly rates, summarized as follows:
|Per Hour (USD)|
Senior Managing Directors
|$||895 - 1,195|
Directors / Senior Directors / Managing Directors
|670 - 880|
Consultants / Senior Consultants
|355 - 640|
Administrative / Paraprofessionals
|145 - 275|
Hourly rates are generally revised periodically. To the extent this engagement requires services of our International
divisions or personnel, the time will be multiplied by our standard hourly rates applicable on International engagements. Note that we do not provide any assurance regarding the outcome of our work and our fees will not be contingent on the results
of such work.
The Client is not responsible for payment of any employee benefits including medical insurance, vacation or sick pay, employment taxes or
any other costs typically incurred as employer. In addition to the professional fees, the Client is obligated to provide coverage for the Interim CEO under the Client’s Directors & Officers Insurance Policy. This is a standard and
typical practice for interim officer assignments and usually does not result in any incremental cost to the Client. In the event the existing policy is inadequate or does not provide $10.0 million of coverage, FTI may elect to purchase an
additional supplemental D&O policy, the cost of which may be billed to the Client.
In addition to the fees outlined above, FTI will bill for
reasonable allocated and direct expenses which are likely to be incurred on your behalf during this Engagement. Allocated expenses include the cost of items which are not billed directly to the engagement but are incurred centrally, including out-of-pocket costs for data services and research materials which FTI subscribes to that we expect to use on your engagement, copying, phone charges, and other overhead
expenses that are not billed through as direct reimbursable expenses and are calculated at 6.0% of FTI’s fees as described above. Since the Client will be directly providing the Interim CEO with administrative support, the allocated expense fee
will be eliminated for this engagement.
Direct expenses include reasonable and customary
out-of-pocket expenses which are billed directly to the engagement such as internet access, telephone, overnight mail, messenger, travel, meals, accommodations and other
expenses specifically related to this engagement. Further, if FTI and/or any of its employees are required to testify or provide evidence at or in connection with any judicial or administrative proceeding relating to this matter, FTI will be
compensated by you at its regular hourly rates and reimbursed for reasonable allocated and direct expenses (including legal counsel fees) with respect thereto.
We will send the Client periodic invoices (not less frequently than monthly) for services rendered and
charges and disbursements incurred on the basis discussed above. Each invoice constitutes a request for an interim payment against the final fee to be determined at the conclusion of our Services. Upon transmittal of the invoice, we may immediately
draw upon the Initial Cash on Account (as replenished from time to time) in the amount of the invoice. The Client agrees that within thirty (30) days of submission of each such invoice to wire the invoice amount to us as replenishment of the
Initial Cash on Account (together with any supplemental amount to which we and the Client mutually agree), without prejudice to the Client’s right to advise us of any differences it may have with respect to such invoice. We have the right to
apply to any outstanding invoice (including amounts billed prior to the date hereof), up to the remaining balance, if any, of the Initial Cash on Account (as may be supplemented from time to time) at any time subject to (and without prejudice to)
the Client’s opportunity to review our statements.
The Client agrees to promptly notify FTI if the Client or any of its subsidiaries or affiliates
extends (or solicits the possible interest in receiving) an offer of employment to a principal or employee of FTI involved in this Engagement and agrees that FTI has earned and is entitled to a cash fee, upon hiring, equal to 150% of the aggregate
first year’s annualized compensation, including any guaranteed or target bonus and equity award, to be paid to FTI’s former principal or employee that the Client or any of its subsidiaries or affiliates hires at any time up to one year
subsequent to the date of the final invoice rendered by FTI with respect to this Engagement.
Cash on Account:
Initially, the Client will forward to us the amount of $125,000, which funds will be held “on account” to be applied to our professional fees,
charges and disbursements for the Engagement (the “Initial Cash on Account”). To the extent that this amount exceeds our fees, charges and disbursements upon the completion of the Engagement, we will refund any unused portion. The Client
agrees to increase or supplement the Initial Cash on Account from time to time during the course of the Engagement in such amounts as the Client and we mutually shall agree are reasonably necessary to increase the Initial Cash on Account to a level
that will be sufficient to fund Engagement fees, charges, and disbursements to be incurred.
Additional Provisions Regarding Fees:
FTI may stop work or terminate the Agreement immediately upon the giving of written notice to the Client if
Client and FTI agree that FTI is not an employee of the Client and the FTI employees and independent FTI
Copies of Invoices shall be sent by facsimile or email as follows:
To the Client at:
W6316 Design Drive
Greenville, WI 54942
Attention: Kevin Baehler, CFO
3. Availability of Information
In connection with FTI’s activities on the Client’s behalf, the Client agrees (i) to furnish FTI with all information and data concerning the
business and operations of the Client which FTI reasonably requests, and (ii) to provide FTI with reasonable access to the Client’s officers, directors, partners, employees, retained consultants, independent accountants, and legal counsel.
FTI shall not be responsible for the truth or accuracy of materials and information received by FTI under this agreement.
Notices under this Agreement to the Client shall be provided as set forth in paragraph 2(e).
Notices to FTI shall be to:
FTI Consulting, Inc.
227 W. Monroe St., Suite 900
Chicago, IL, 60606
Attn: Michael Buenzow
Notices shall be provided by (a) fax and email, (b) hand delivery, or (c) overnight delivery. If provided by fax and email or hand
delivery, they shall be deemed effective the date given. If provided by overnight delivery, they shall be deemed effective on the date of actual receipt.
5. Indemnification by FTI
shall defend and indemnify the Client, its Officers and Directors with respect to any claim by any FTI employee or independent FTI contractor who performs services for the Client that such FTI employee or independent FTI contractor was employed by
the Client and is entitled to wages, benefits, or payroll tax contributions by the Client.
6. Confidential Information and
Assignment of Intellectual Property
FTI employees and independent FTI contractors who perform services for the Client shall execute the Client’s
form of non-disclosure agreement and assignment of intellectual property rights with respect to information developed or learned or intellectual property created in connection with his or her services to the
Client in the form attached hereto as Exhibit D. Subject to the restrictions on use and disclosure set forth in Section 1.1 of the attached Standard Terms and Conditions. FTI disclaims any ownership interest in any intellectual property,
whether in the form of a trade secret, invention, patent, trademark or copyright created by any FTI employee or independent FTI contractor in connection with his or her service to the Client.
FTI shall not assign FTI employees and independent FTI contractors who perform services for the Client to perform services for any person or entity relating to
the distribution. design, development, or sourcing of school supplies, furniture, curriculum and supplemental learning resources to educators or pre-school,
primary or secondary educational institutions, during the period such FTI employee or independent FTI contractor is assigned to perform services for Client or for a period of twelve
(12) months following the end of such FTI employee’s or independent FTI contractor’s assignment with Client.
Agreement: represents the entire understanding of the parties hereto and supersedes any and all other prior agreements among the parties regarding the subject matter hereof; shall be binding upon and inure to the benefit of the parties and their
respective heirs, representatives, successors and assigns; may be executed by facsimile (followed by originals sent via regular mail), and in two or more counterparts, each of which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument; and may not be waived, modified or amended unless in writing and signed by a representative of the Client and FTI. The provisions of this Agreement shall be severable. No failure to delay in exercising any
right, power or privilege related hereto, or any single or partial exercise thereof, shall operate as a waiver thereof.
Based on our understanding of the
parties involved in this matter and from input received directly from the Client, we have compiled a list of interested parties (the “Potentially Interested Parties”) and have undertaken a limited review of our records to determine
FTI’s professional relationships with the Client and such Potentially Interested Parties. From the results of such review, we are not aware of any conflicts of interest or relationships that we believe would preclude us from performing the
As you know, however, we are a large consulting firm with numerous offices throughout the world. We are regularly engaged by new clients, which
may include one or more of the Potentially Interested Parties. The FTI professionals providing services hereunder will not accept an engagement that directly conflicts with this Engagement without your prior written consent.
During this Engagement, in the event we become aware of any potential conflicts, we will promptly notify the Client of the situation and work collaboratively
with the Client to resolve the situation. Furthermore, we will not staff any FTI professionals on this Engagement if they have in the past or are currently working on other engagements that involve any Potentially Interested Parties.
If this letter correctly sets forth our understanding, please so acknowledge by signing below and returning a signed copy of this letter to us.
Very truly yours,
FTI CONSULTING, INC.
By: /s/ Michael Buenzow
Title: Senior Managing Director
ACCEPTED AND AGREED this 1st day of February, 2019.
On behalf of School Specialty, Inc.
By: /s/ Scott
Name: Scott Scharfman
FTI CONSULTING, INC.
STANDARD TERMS AND CONDITIONS
following are the Standard Terms and Conditions on which we will provide the Services to you set forth within the attached letter of engagement with the School Specialty, Inc. (the “Client”) dated as of February 1, (the
“Engagement Letter”). The Engagement Letter and these Standard Terms and Conditions annexed thereto (collectively, the “Engagement Contract”) form the entire agreement between us relating to the Services and replace and supersede
any previous proposals, letters of engagement, undertakings, agreements, understandings, correspondence and other communications, whether written or oral, regarding the Services. The headings and titles in the Engagement Contract are included to
make it easier to read but do not form part of the Engagement Contract.
Reports and Advice
Use and purpose of advice and reports – Any advice given or report issued by us is provided solely
Information and Assistance
Provision of information and assistance – Our performance of the Services is dependent upon you and
Punctual and accurate information – You and Client personnel shall use reasonable skill, care and
No assurance on financial data – While our work may include an analysis of financial and accounting
Prospective financial information – In the event the Services involve prospective financial
Responsibility for other parties – You and the Client shall be solely responsible for the work and
Restrictions on confidential information – All parties to this Engagement Contract agree that any
is or becomes generally available to the public other than as a result of a breach of an obligation under this
is acquired from a third party who, to the recipient party’s knowledge, owes no obligation of confidence
is or has been independently developed by the recipient (without the use of confidential information).
Disclosing confidential information – Notwithstanding Clause 1.1 or 4.1 above, all parties will be
Citation of engagement – Without prejudice to Clause 4.1 and Clause 4.2 above, to the extent our
Internal quality reviews – Notwithstanding the above, we may disclose any information referred to
Maintenance of workpapers – Notwithstanding the above, we may keep one archival set of our working
Termination of Engagement with notice – Termination of Engagement with notice – This Agreement
a) The Client shall reimburse FTI for its out-of-pocket
expenses (the “Termination Expenses”) incurred in connection with commitments made by FTI prior to the Termination Date with respect to advance travel arrangements reasonably incurred, to the extent FTI is unable to obtain refunds of such
expenses. FTI shall provide the Client with reasonable documentation to substantiate all Termination Expenses for which payment is requested; and
b) Unless FTI is in material default of this Agreement, termination shall not affect FTI’s entitlement to the Incentive Performance Fee.
Continuation of terms – The terms of the Engagement that by their context are intended to be
Indemnification, Insurance and Liability Limitation
Indemnification – The Client agrees to indemnify and hold harmless FTI and any of its subsidiaries
Insurance – In addition to the above indemnification and provision regarding advancement of
Limitation of liability – You agree that no Indemnified Person shall be liable to you, or your
Governing Law, Jurisdiction and WAIVER OF JURY TRIAL – The Engagement Contract shall be governed by and
Confirmation of Standard Terms and Conditions
Subject to the terms and conditions of the Engagement Letter, we agree that FTI Consulting, Inc. is engaged upon the terms set forth in these Standard Terms
and Conditions as outlined above.
On behalf of School Specialty, Inc.
By: /s/ Scott Scharfman
Name: Scott Scharfman
Date: February 1,
INITIAL SCHEDULE OF POTENTIAL HOURLY TEMPORARY STAFF
|Armen Emrikian||Sr. Managing Director||Finance / Lender Mgt.||$895|
|JD Wichser||Sr. Managing Director||Performance Improvement||$1,050|
|Tim Schleeter||Sr. Managing Director||Performance Improvement||$895|
|Ron Scalzo||Sr. Managing Director||Logistics / Distribution||$960|
|Christine DiBartolo||Sr. Managing Director||Strategic Communications||$875|
|Chase Gill||Managing Director||F, P & A||$825|
|Michael Paykin||Senior Director||Treasury / Cash Mgt.||$785|
|Ronald Bedway||Senior Consultant||Treasury / Cash Mgt.||$545|
|John Hayes||Consultant||Financial Modeling||$425|
|Andrew Kopfensteiner||Consultant||Financial Modeling||$425|
|Luke McCrory||Consultant||Financial Modeling||$425|
list should not be viewed as the engagement team staffing plan. This list is the current group of FTI professionals that have been identified as potential candidates to assist in the event additional staffing is required to complete the Services.
The actual team will be a smaller group that will be selected based on functional expertise, timing, and availability.
Fees – Interim Management Services
incurred in connection with these Services will be based upon the actual time incurred to provide the Interim Management Services, multiplied by our standard hourly billing rates. In the event that FTI requests payment for the Interim CEO fees in
excess of $160,000 during any one-month period, FTI is required to seek and obtain Board approval for any amount over the monthly threshold. Mr. Buenzow’s current standard hourly rate for 2019 is
$1,195 per hour.
Fees – Hourly Temporary Staff
The fees incurred in connection with the Services provided by all other FTI Employees other than the Interim Officer(s) will be based upon the actual time
incurred to provide the Services, multiplied by our standard hourly billing rates as set forth on page 2. Prior to the commencement of these Services, the Interim CEO will provide the Board with a detailed fee estimate along with an estimate of the
benefits to be derived from the completion of these Services.
Fees – Incentive Performance Fee
In addition to the hourly fees, we propose an additional Incentive Performance Fee (“IPF”) which is based on the Client’s adjusted EBITDA
performance. The agreed upon Incentive Performance Fee is as follows:
|Incentive Performance Fee|
$50,000,000 to $52,000,000
$52,000,001 to $57,000,000
$57,000,001 to $62,000,000
$62,000,001 to $65,000,000
The Incentive Performance Fee will be pro-rated based on the length of service of the
Interim CEO during SSI’s fiscal year 2019, as follows, the Incentive Performance Fee shall be multiplied by a fraction the numerator of which is the number of days in 2019 from the first day of service through the last day of service in 2019,
and the denominator of which will be the number of days in SSI’s fiscal year 2019.
CLIENTS FORM OF NON-DISCLOSURE AGREEMENT
CONSULTANT CONFIDENTIALITY AND ASSIGNMENT AGREEMENT