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                                                                    EXHIBIT 10.7

                             SCHOOL SPECIALTY, INC.
                              INCENTIVE BONUS PLAN

     1. Purpose. The Board of Directors of School Specialty, Inc. adopted this
Incentive Bonus Plan to establish a correlation between the annual incentives
awarded to the Participants and the Company's financial performance. Subject to
the terms and conditions of this Plan, the Participants will receive a
discretionary incentive bonus and/or an incentive bonus tied to Performance
Goals. The Plan will be applicable to Fiscal Year 2003 and subsequent years
unless and until terminated by the Committee.

     2. Definitions. As used in the Plan, the following terms have the meanings
indicated:

          (a) "Board" means the Board of Directors of the Company.

          (b) "Committee" means the Board or the Executive Performance
     Compensation Committee or any other authorized committee of the Board.

          (c) "Company" means School Specialty, Inc. and its consolidated
     subsidiaries.

          (d) "Disability" means a condition that entitles the Participant to
     disability payments under the terms of the Company's long-term disability
     plan.

          (e) "Participant" means any executive or other associate of the
     Company participating in the Plan for the applicable Fiscal Year.

          (f) "Performance Goal" means a goal established by the Committee to
     measure the performance of the Company for the purpose of determining
     whether, and to what extent, an award will be payable under the Plan for
     the Fiscal Year.

          (g) "Fiscal Year" means the Company's fiscal year. The initial Fiscal
     Year is the fiscal year ended April 26, 2003.

          (h) "Plan" means this School Specialty, Inc. Incentive Bonus Plan, as
     amended from time to time.

          (i) "Retirement" means the termination of employment of a Participant
     due to retirement with the consent of the Committee.

          (j) "Salary" means base salary actually earned by a Participant during
     the applicable Fiscal Year.

     3. Participation. Participation in the Plan for any Fiscal Year shall be
limited to the Participants designated by the Committee by name or position. At
the Committee's discretion, a

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person who becomes a Participant after the commencement of a Fiscal Year shall
be eligible to receive an award pursuant to Section 4 on such terms as the
Committee may determine.

     4. Determination of Awards.

     (a) From time to time, the Committee may approve one or more Performance
Goals and the terms and amount of an award for each Participant. Awards are
based on a percentage of a Participant's Salary for the Fiscal Year. Awards may
include awards that are paid at the discretion of the Committee and awards
payable if and/or to the extent that Performance Goals are achieved.

     (b) The Committee expressly reserves the right to increase, reduce or
eliminate entirely any award at any time before it is paid. Such determination
shall be conclusive and binding on the Participant(s) and the Company.

     5. Payment of Awards.

     (a) Subject to the other terms and conditions of this Plan, awards shall be
payable promptly following the completion of the audit of the Fiscal Year for
which they are computed. Notwithstanding the foregoing, a Participant may defer
receipt of an award otherwise payable by filing a timely election pursuant to
any deferred compensation plan maintained by the Company. All awards under the
Plan are subject to federal, state and local income and payroll tax withholding.

     (b) Even if the Performance Goals have been met, Participant shall receive
no payment if the Participant's employment with the Company terminates prior to
the date of payment for any reason other than death, Disability or Retirement. A
Participant who terminates employment for death, Disability or Retirement shall
be eligible to receive an award based on Salary earned in the applicable Fiscal
Year through the date of termination, if an award is otherwise payable pursuant
to Section 4.

     (c) If a Participant dies and is subsequently entitled to receive an award
under the Plan, the award shall be paid to the Participant's estate.

     6. Administration. The Plan shall be administered by the Committee. The
Committee may adopt rules and regulations for carrying out the Plan, and the
Committee may take such actions as it deems appropriate to ensure that the Plan
is administered in the best interests of the Company. The Committee has the
authority to construe and interpret the Plan, resolve any ambiguities, grant
waivers or exceptions to the terms of the Plan or an award, and make
determinations with respect to the eligibility for or amount and terms of any
award. The interpretation, construction and administration of the Plan by the
Committee shall be final and conclusive. The Committee may consult with counsel,
who may be counsel to the Company, and shall not incur any liability for any
action taken in good faith in reliance upon the advice of counsel. The
Committee, in its discretion, may delegate its authority and duties under the
Plan to the Chief Executive Officer, President and/or other senior officers of
the Company under such conditions and/or limitations as the Committee may
establish.

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     7. Rights. Participation in the Plan and the right to receive awards under
the Plan shall not give a Participant any proprietary interest in the Company or
any of its assets or create contractual or other legal duties in favor of a
Participant. A Participant shall for all purposes be a general creditor of the
Company. The interests of a Participant cannot be assigned, anticipated, sold,
encumbered or pledged and shall not be subject to the claims of his creditors.
Nothing in the Plan shall confer upon any Participant the right to receive an
award, be selected as a Participant or continue in the employ of the Company, or
shall interfere with or restrict in any way the right of the Company to
discharge a Participant at any time for any reason whatsoever, with or without
cause. A person's selection to be a Participant in any Fiscal Year does not give
such person any right to be selected a Participant in any other Fiscal Year.

     8. Successors. The Plan shall be binding on the Participants and their
personal representatives. If the Company becomes a party to any merger,
consolidation, reorganization or other corporate transaction, the Plan shall
remain in full force and effect as an obligation of the Company or its successor
in interest.

     9. Amendment and Termination. The Committee may amend or terminate the Plan
or any awards hereunder at any time as it deems appropriate.

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