Exhibit 10.1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT, dated as of this 30th
day of June, 1998, and effective on July 1, 1998 (the
"Effective Date"), is by and between SCHOOL SPECIALTY,INC.,
a Delaware Corporation (the "Company") and XXXXX X. XXXXXXX
(the "Employee").
RECITALS
The Company desires to employ Employee and to have
the benefit of his skills and services, and Employee
desires to accept employment with the Company, on the
terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual
promises, terms, covenants and conditions set forth
herein, and the performance of each, the parties
hereto, intending legally to be bound, hereby agree as
follows:
AGREEMENTS
1. Employment, Term.
The Company hereby employs Employee to perform the duties
described herein, and Employee hereby accepts
employment with the Company, for a term beginning on
the Effective Date and continuing for a period of two
(2) years (the "Term"). This Agreement may be
terminated prior to the end of the Term in the manner
provided for in Section 5 below.
2. Position and Duties.
The Company hereby employs Employee as president of the
Xxxxxxx & Xxxxxxxx division of the Company. As such,
Employee shall have responsibilities, duties and
authority reasonably accorded to and expected of a
divisional General Manager of the Company. Employee
hereby accepts this employment upon the terms and
conditions herein contained and agrees to devote all of
his professional time, attention, and efforts to
promote and further the business of the Company.
Employee shall faithfully adhere to, execute, and
fulfill all policies established by the Company.
3. Compensation.
For all services rendered by Employee, the Company shall
compensate Employee as follows:
(a) Base Salary.
Effective on the date hereof, the base salary payable to Employee
shall be One Hundred Thousand Dollars ($100,000.00) per
year, payable on a regular basis in accordance with the
Company's standard payroll procedures, but not less
than monthly.
(b) Incentive Bonus.
During the Term, Employee shall be eligible to
participate in the Company's executive management bonus
program according to the schedule attached hereto as
Exhibit A.
(c) Perquisites, Benefits, and Other Compensation.
During the Term, Employee shall be entitled
to received all perquisites and benefits as are
customarily provided by the Company to its
employees, subject to such
changes, additions, or
deletions as the Company may make generally from time
to time, as well as such other perquisites or benefits
as may be specified from time to time by the Board or
the President of the Company. Under no circumstances,
however shall the Company be responsible with providing
the Employee with an automobile for his use in his
employment with the Company.
4. Expense Reimbursement.
The Company shall reimburse Employee for, or at the Company's
option, pay all business travel and other out-of-pocket expenses
reasonably incurred by Employee in the performance of
his services hereunder during the Term. All
reimbursable expenses shall be appropriately documented
in reasonable detail by Employee upon submission of any
request for reimbursement, and in a format and manner
consistent with the Company's expense reporting policy,
as well as applicable federal and state tax record
keeping requirements.
5. Termination; Rights on Termination.
Employee's employment may be terminated in any one of
the following ways, prior to the expiration of the Term:
(a) Death.
The death of Employee shall immediately terminate the
Term, and no severance compensation shall be owed to
the Employee's estate.
(b) Disability.
If, as a result of incapacity due to physical or mental illness
or injury, Employee shall have been unable to perform
the material duties of his position on a full time
basis for a period of three consecutive months, or for
a total of three months in any (6) six-month period,
then 30 days after written notice to the Employee
(which notice may be given before or after the end of
the aforementioned periods, but which shall not be
effective earlier than the last day of the applicable
period), the Company may terminate Employee's
employment hereunder if Employee is unable to resume
his full-time duties at the conclusion of such notice period.
(c) Termination by the Company "For Cause".
The Company may terminate the
Term (10) ten days after written notice to Employee
"for cause," which shall be: (i) Employee's material
breach of this Agreement, which breach is not cured
within ten (10) days of receipt by Employee of written
notice from the Company specifying such breach; (ii)
Employee's negligence in the performance of his duties
hereunder, intentional nonperformance or mis-
performance of such duties, or refusal to abide by or
comply with the directives of the Board, his superior
officers, or the Company's policies and procedures,
which actions continue for a period of at least ten
(10) days after receipt by Employee of written notice
of the need to cure or cease; (iii) Employee's willful
dishonesty, fraud or misconduct with respect to the
business or affairs of the Company and that in the
judgment of the Company materially and adversely
affects the operations or reputation of the Company;
(iv) Employee's conviction of a felony or other crime
involving moral turpitude; or (v) Employee's abuse of
alcohol or drugs (legal or illegal) that, in the
Company' judgment, materially impairs Employee's
ability to perform his duties hereunder. In the event
of a termination "for cause," as enumerated above,
Employee shall have no right to any severance compensation.
(d) Without Cause.
At any time after the commencement of employment, the Company
may, without cause, terminate the Term and Employee's
employment, effective thirty (30) days after written
notice is provided to the Employee. Should Employee be
terminated by the Company without cause, subject to
Section 5(f) below, Employee shall receive from the
Company four (4) months salary. Such payments shall be
made in accordance with the Company' regular payroll
cycle. If Employee resigns or otherwise terminates his
employment for any reason or for no reason, Employee
shall receive no severance compensation.
(e) Payment Through Termination.
Upon termination of Employee's employment
for any reason provided above, Employee shall be
entitled to receive all compensation earned and all
benefits and reimbursements (including payments for
accrued vacation and sick leave, in each case in
accordance with applicable policies of the Company) due
through the effective date of termination. Additional
compensation subsequent to termination, if any, will be
due and payable to Employee only to the extent and in
the manner expressly provided above in this Section 5.
With respect to incentive bonus compensation, Employee
shall be entitled to receive any bonus declared but not
paid prior to termination. In addition, in the event
of a termination by the Company under Section 5(d),
Employee shall be entitled to receive incentive bonus
compensation as described on Exhibit A as attached
hereto and incorporated herein through the end of the
Company's fiscal year in which the termination occurs,
calculated as if Employee had remained employed by the
Company through the end of such fiscal year, and paid
in such amounts, at such times, and in such forms as
are determined pursuant to Section 3(b) above. Except
as specified in the preceding two sentences, Employee
shall not be entitled to receive any incentive bonus
compensation after the effective date of termination of
his employment. All other rights and obligations of
the Company and Employee under this Agreement shall
cease as of the effective date of termination, except
that the Company's obligations under Section 10 below
and Employee's obligations under Sections 6 and 7 below
shall survive such termination in accordance with their
terms.
(f) Right to Offset.
In the event of any termination of Employee's employment
under this Agreement, the Employee shall have no
obligation to seek other employment; provided, that in
the event that Employee secures employment or any
consulting or other similar arrangement during the
period that any payment is continuing pursuant to the
provisions of this Section 5, the Company shall have
the right to reduce the amounts to be paid hereunder by
the amount of Employee's earnings from such other
employment.
6. Restriction on Competition.
(a) During the Term, and
thereafter, if Employee continues to be employed by the
Company and/or any other entity owned by or affiliated
with the Company on an "at will" basis, for the
duration of such period, and thereafter for a period
equal to the longer of (x) two years, or (y) the period
during which Employee
is receiving any severance pay
from the Company Employee shall not, directly or
indirectly, for himself or on behalf of or in
conjunction with any other person, company,
partnership, corporation, business, group or other
entity (each, a "Person"):
(i) Engage, as an officer, director, shareholder, owner, partner,
joint venturer, or in a managerial capacity, whether as an
employee, independent contractor, consultant, advisor,
or sales representative, in any business selling any
products or services in direct competition with the
Company within 100 miles of any location where the
Company conducts business, with the expressed exception
of the operation of video production and sale by HSO
Enterprises, LLC which videos deal with educational
training (the "Territory");
(ii) Call upon any Person who is, at that time, within the Territory,
an employee of the Company for the purpose of with the
intent of enticing such employee away from or out of
the employ of the Company;
(iii) Call upon Person who that is, at that time, or has been within
one year prior to that time, a customer of the Company
within the Territory for the purpose of soliciting or
selling products or services in direct competition with
the Company within the Territory; or
(iv) On Employee's own behalf or on behalf of any competitor, call
upon any Person who or that, during Employee's employment by
the Company was either called upon by the Company as a
prospective acquisition candidate or was the subject of
an acquisition analysis conducted by the Company.
(b) The foregoing covenants shall not be deemed to prohibit Employee
from acquiring as an investment not more than one percent (1%)
of the capital stock of a competing business, whose stock is
traded on a national securities exchange or through the
automated quotation system of a registered securities
association.
(c) It is further agreed that, in the event that Employee shall
cease to be employed by the Company and enters into a business or
pursues other activities that, at such time, are not in
competition with the Company, Employee shall not be
chargeable with a violation of this Section 6 if the
Company subsequently enters the same (or a similar)
competitive business or activity or commences
competitive operations within 100 miles of the
Employee's new business or activities. In addition, if
Employee has no actual knowledge that his actions
violate the terms of this Section 6, Employee shall not
be deemed to have breached the restrictive covenants
contained herein if, promptly after being notified by
the Company of such breach, Employee ceases the
prohibited actions.
(d) The covenants in this Section 6 are severable and separate, and
the enforce ability of any specific covenant shall not affect the
provisions of any other covenant. If any provision of
this Section 6 relating to the time period or
geographic area of the restrictive covenants shall be
declared by a court of competent jurisdiction to exceed
the maximum time period or largest geographic area, as
applicable, that such court deems reasonable and
enforceable, said time period of geographic area shall
be deemed to be, and thereafter shall become, the
maximum time period or largest geographic area that
such court deems reasonable and this Agreement shall
automatically be considered to have been amended and
revised to reflect such determination.
(e) Employee has carefully read and considered the provisions of
this Section 6 and, having done so, agrees that the restrictive
covenants in this Section 6 impose a fair and
reasonable restraint on Employee and are reasonably
required to protect the interests of the Company and
their respective officers, directors, employees and
stockholders.
(f) It is acknowledged by the Employee that in addition to the
consideration provided under the terms of this Employment
Contract that, as the sole shareholder of Xxxxxxx & Xxxxxxxx,
Inc. ("H&S"), he significantly benefitted from the
acquisition of the operating assets of H&S by the
Company. The Employee acknowledges that the covenants
he has given pursuant to the terms of Section 6 and 7
of this Agreement are also in exchange for the above
described asset purchase. The Employee further
expressly acknowledges that the consideration for these
covenants is adequate for the benefits received by the
Employee under either this Employment Contract or the
above described asset purchase.
7. Confidential Information.
Employee hereby agrees to hold in strict confidence and not to
disclose to any third party any of the valuable, confidential,
and proprietary business, financial, technical,
economic, sales, and/or other types of proprietary
business information relating to the Company (including
all trade secrets), in whatever form, whether oral,
written, or electronic (collectively, the "Confidential
Information"), to which Employee has, or is given (or
has had or been given), access as a result of his
employment by the Company. It is agreed that the
Confidential Information is confidential and
proprietary to the Company because such Confidential
Information encompasses technical know-how, trade
secrets, or technical, financial, organizational, sales
or other valuable aspects of the Company's business and
trade, including, without limitation, technologies,
products, processes, plans, clients, personnel,
operations, and business activities. This restriction
shall not apply to any Confidential Information that
(a) becomes known generally to the public through no
fault of the Employee; (b) is required by applicable
law, legal process, or any order or mandate of a court
or other govenimental authority to be disclosed; or (c)
is reasonably believed by Employee, based upon the
advice of legal counsel, to be required to be disclosed
in defense of a lawsuit or other legal or
administration action brought against Employee,
provided, that in the case of clauses (b) or (c),
Employee shall give the Company reasonable advance
notice of the Confidential Information intended to be
disclosed and the reasons and circumstances surrounding
such disclosure, in order to permit the Company to seek
a protective order or other appropriate request for
confidential treatment of the applicable Confidential
Information.
8. Return of Company Property.
Promptly upon termination of Employee's employment by the Company
for any reason or no reason, Employee or Employee's
personal representative shall return to the Company (a)
all Confidential Information; (b) all other records,
designs, patents, business plans, financial statements,
manuals, memoranda, lists, correspondence, reports,
records, charts, advertising materials, and other data
or property delivered to or compiled by Employee by or
on behalf of the Company or its respective
representatives, vendors, or customers that pertain to
the business of the Company, whether in paper,
electronic, or other form; and (c) all keys, credit
cards, vehicles, and other property of the Company.
Employee shall not retain or cause to be retained any
copies of the foregoing. Employee hereby agrees that
all of the foregoing shall be and remain the property
of the Company, as the case may be, and be subject at
all times to their discretion and control.
9. No Prior Agreements.
Employee hereby represents and warrants to the Company that the
execution of this Agreement by Employee, his employment
by the Company, and the performance of his duties
hereunder will not violate or be a breach of any
agreement with a former employer, client, or any other
Person. Further, Employee agrees to indemnify and hold
harmless the Company and its officers, directors, and
representatives for any claim, including, but not
limited to, reasonable attorney's fees and expenses of
investigation of any such third party that such third
party may now have or may hereafter come to have
against the Company or such other persons, based upon
or arising out of any non-competition agreement,
invention, secrecy, or other agreement between Employee
and such third party that was in existence as of the
date of this Agreement. To the extent that Employee
had any oral or written employment agreement or
understanding with the Company, this Agreement shall
automatically supersede such agreement or
understanding, and upon execution of this Agreement by
Employee and the Company, such prior agreement or
understanding automatically shall be deemed to have
been terminated and shall be null and void.
10. Assignment, Binding Effect.
Employee understands that he has been selected for employment by
the Company on the basis of his personal
qualifications, experience, and skills. Employee
agrees, therefore, that he cannot assign all or any
portion of his performance under this Agreement. This
Agreement may be assigned or transferred by the Company
without the prior written consent of Employee. Subject
to the preceding two sentences, this Agreement shall be
binding upon, inure to the benefit of, and be
enforceable by the parties hereto and their respective
heirs, legal representatives, successors, and assigns.
It is intended that the Company will be a third-party
beneficiary of the rights of the Company under this
Agreement. No other Person shall be a third-party
beneficiary.
11. Complete Agreement, Waiver, Amendment.
This Agreement is not a promise of future employment.
Employee has no oral representations, understandings,
or agreements with the Company or any of its officers,
directors, or representatives covering the same subject
matter as this Agreement. This Agreement by and
between the Company and Employee, is the final,
complete, and exclusive statement and expression of the
agreement between the Company and Employee with respect
to the subject matter hereof and thereof, and cannot be varied,
contradicted, or supplemented by evidence of
any prior or contemporaneous oral or written
agreements. This written Agreement may not be later
modified except by a further writing signed by a duly
authorized officer of the Company and Employee, and no
term of this Agreement may be waived except by a
writing signed by the party waiving the benefit of such
term.
12. Notice.
Whenever any notice is required hereunder,
it shall be given in writing addressed as follows:
To the Company: School Specialty Inc.
0000 Xxxxx Xxxxxxxxx Xxxxx
X.X. Xxx 0000
Xxxxxxxx, XX 00000-0000
Attention: Xx. Xxxxx X. Xxxxxx Zanden
With a copy to: Xx. Xxxxxx X. Xxxxxxx XX
Xxxxxxx & Xxxxxxx, S.C.
000 Xxxxxx Xxxxxx
Xxxxxxx, XX 00000
To Employee: Xx. Xxxxx X. Xxxxxxx
0000 X. Xxxxxxxxxxx Xxxxx
Xxxxxxx, XX 00000
With a copy to: Xx. Xxxxxxx X. Xxxxxxx
Xxxxxx, Svoboda, Schilke, Thomsen,
Holtorf, Boggy & Nick
Military Colonial Building
000 X. Xxxxxxxx
Xxxxxxx, XX 00000
Notice shall be deemed given and effective
three days after the deposit in the U.S. mail
of a writing addressed as above and sent first
class mail, certified, return receipt
requested, or, if sent by express delivery,
hand delivery, or facsimile, when actually
received. Either party may change the address
for notice by notifying the other party of
such change in accordance with this Section 12.
13. Severability, Headings.
If any portion of this Agreement is held invalid or inoperative,
the other portions of this Agreement shall be deemed valid
and operative and, so far as is reasonable and
possible, effect shall be given to the intent
manifested by the portion held invalid or inoperative.
This severability provision shall be in addition to,
and not in place of, the provisions of Section 6(e) above.
The paragraph headings herein are for reference
purposes only and are not intended in any way to
describe, interpret, define or limit the extent or
intent of the Agreement or of any part hereof.
14. Equitable Remedy.
Because of the difficulty of measuring economic losses to the
Company as a result of a breach of the restrictive covenants
set forth in Sections 6 and 7, and because of the
immediate and irreparable damage that would be caused
to the Company for which monetary damages would not be
a sufficient remedy, it is hereby agreed that in
addition to all other remedies that may be available to
the Company, at law or in equity, the Company shall be
entitled to specific performance and any injunctive or
other equitable relief as a remedy for any breach or
threatened breach of the aforementioned restrictive
covenants.
15. Arbitration.
Any unresolved dispute or controversy arising under or in connection
with this Agreement shall be settled exclusively by arbitration
conducted in accordance with the rules of the American
Arbitration Association then in effect. The
arbitrators shall not have the authority to add to,
detract from, or modify any provision hereof nor to
award punitive damages to any injured party. A
decision by a majority of the arbitration panel shall
be final and binding. Judgment may be entered on the
arbitrators' award in any court having jurisdiction.
The direct expense of any arbitration proceeding shall
be borne by the Company. Each party shall bear its own
counsel fees. The arbitration proceeding shall be held
in the city where the Company is located.
Notwithstanding the foregoing, the Company shall be
entitled to seek injunctive or other equitable relief,
as contemplated by Section 14 above, from any court of
competent jurisdiction, without the need to resort to
arbitration.
16. Governing Law.
This Agreement shall in all respects be construed according to
the laws of the State of Nebraska, without regard to its conflict of
laws principles.
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed as of the date first
written above.
SCHOOL SPECIALTY, INC.
/s/ Xxxxxx X. Xxxxxxxxx
-----------------------------------
Xxxxxx X. Xxxxxxxxx, Vice-President
& Chief Financial Officer
EMPLOYEE:
/s/ Xxxxx X. Xxxxxxx
------------------------
Xxxxx X. Xxxxxxx
Exhibit A
To: Incentive Plan III Participants
From: Xxx Xxxxxxxx
Date: June 3, 1997
Subject: Bonus Program for Fiscal 1998
Enclosed you will find your bonus program for fiscal
1998. If your objectives are not listed on your bonus
sheet, you need to submit your objectives for approval
by June 12th. The following criteria apply to this
program:
1. A threshold target of 8% operating profit
2. Normal bonus calculations based on operating profit
3. Corporate normal bonus (the calculated base bonus
before individual factors) 100% tied to the combined
School Specialty operations, including all divisions,
based on operating profit before interest and taxes.
4. Divisions normal bonus based 25% on the corporate
number with the remaining 75% tied to the operating
profit of the specific division.
5. Scale of performance: unlimited top side to 100%
of salary.
* Corporate factor starts at 50% of budget
* Division targets start at 80% of budget
1. Scale fluctuations based on threshold
* 8% is the threshold target. The scale as attached
will apply for any division or corporate, as long as
the threshold is met.
* Below 8% attainment, no bonus will be paid under
plan. If the operating profit is 7% and results are
94% of plan, no bonus is paid. If results reach plan
or better, the scale applies. Exception: if
performance shows 20% or better improvement over the
previous year, the entire scale applies.
1. The scale is based on the dollar amount of
operating profit, not the percentage. For larger
divisions, however, it may be beneficial to offer a
choice of either dollar or percentage targets.
Individual factors will still be calculated in the same
way. I highly recommend that targets for division
managers include cash flow numbers, growth numbers,
customer service audit numbers and one or two strategic
initiatives with a scale allowing the individual
factors to fluctuate anywhere from 50% to 150%.
Division Bonus Scale for 30% Group
1.00% increment salary to profit over
100%
0.6% increment salary to profit under 100%
Profit % Bonus % Profit % Bonus % Profit % Bonus %
of Budget of Salary of Budget of Salary of Budget of Salary
80 18.00 122 52.00 164 94.00
81 18.60 123 53.00 165 95.00
82 19.20 124 54.00 166 96.00
83 19.80 125 55.00 167 97.00
84 20.40 126 56.00 168 98.00
85 21.00 127 57.00 169 99.00
86 21.60 128 58.00 170 100.00
87 22.20 129 59.00
88 22.80 130 60.00
89 23.40 131 61.00
90 24.00 132 62.00
91 24.60 133 63.00
92 25.20 134 64.00
93 25.80 135 65.00
94 26.40 136 66.00
95 27.00 137 67.00
96 27.60 138 68.00
97 28.20 139 69.00
98 28.80 140 70.00
99 29.40 141 71.00
100 30.00 142 72.00
101 31.00 143 73.00
102 32.00 144 74.00
103 33.00 145 75.00
104 34.00 146 76.00
105 35.00 147 77.00
106 36.00 148 78.00
107 37.00 149 79.00
108 38.00 150 80.00
109 39.00 151 81.00
110 40.00 152 82.00
111 41.00 153 83.00
112 42.00 154 84.00
113 43.00 155 85.00
114 44.00 156 86.00
115 45.00 157 87.00
116 46.00 158 88.00
117 47.00 159 89.00
118 48.00 160 90.00
119 49.00 161 91.00
120 50.00 162 92.00
121 51.00 163 93.00
