Exhibit 10.2
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT, dated as of this 2nd
day of March, 1999 and having an "Effective Date" of
February 1, 1999, is by and between Sportime, LLC, a
Delaware limited liability company (the "Company") and
Xxxxx Xxxxxx ("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 and Duties.
The Company hereby agrees to employ the Employee and the Employee
hereby accepts employment as the general manager of the
Company and agrees to devote his full business time and
efforts to the diligent and faithful performance of his
duties as a general manager of the Company, as he has
historically performed same, under the direction of the
President of School Specialty, Inc. Such duties shall
be performed in the metropolitan area of Atlanta,
Georgia.
2. Term of Employment.
Unless sooner terminated as hereinafter provided, the term of the
Employee's employment hereunder shall commence with and
only with the Effective Date of this agreement and
shall continue until January 31, 2003. This Agreement
may be terminated prior to the end of the Term in the
manner provided herein.
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 Ninety Thousand Dollars
($190,000.00) per year (the "Base Salary"), payable on
a regular basis in accordance with the Company's
standard payroll procedures, but not less than monthly.
The Base Salary shall be subject to annual review for
increase by the managing member of the Company. In the
event that the Employee shall be terminated for any
reason other than death, disability or cause, he shall
be paid his then current Base Salary, as then
periodically paid, for the balance of the term of this
agreement as described in Section 2 herein. In the
event that the Company
and the Employee shall not agree
on whether a termination shall be for cause, such issue
shall be resolved pursuant to the arbitration
provisions of Section 11 of this Agreement.
(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, which executive management bonus program
shall permit bonuses from 0% to 100% of the Base Salary
as described in Section 3(a) herein. This bonus
program shall be subject to the annual review and
revision of same by the managing member of the Company.
(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 School Specialty, Inc. In addition to
the foregoing the employee shall continue to be
provided by the Company with the 1996 Lexus automobile
for the balance of its current lease term. Following
the expiration of this automobile lease and throughout
the term of the Employee's employment under the terms
of this agreement, the Company shall pay to the
Employee One Thousand Four Hundred Dollars ($1,400.00)
on a monthly basis, as additional compensation. These
payments shall be gross and the amount received by the
Employee shall be net of all related employment taxes
which are the normal responsibility of the Employee.
Throughout the term of this agreement the Company shall
continue to maintain the current disability insurance
coverage on the Employee. The Employee shall be
permitted to take up to eight (8) weeks of vacation
during each anniversary year during the term of this
agreement, with the anniversary year to be measured
from the effective date of this agreement.
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. Covenants and Conditions.
(a) The Employee will
acquire information and knowledge respecting the
intimate and confidential affairs of the Company in the
various phases of its business. Accordingly, the
Employee agrees that he shall not during his
employment with the Company or for twenty four (24) months
thereafter (the "Effective Period"), use for himself or
disclose to any person not employed by the Company any
such knowledge or information heretofore acquired or
acquired during the term of this employment hereunder.
Nothing in this agreement shall be construed to limit
or supersede the common law of torts or statutory or
other protection of trade secrets where such law
provides the Company with greater protections or
protections for a longer duration than that provided in
this section 4 of this Agreement.
(b) The Employee agrees that all memoranda, notes, records, papers,
or other documents and all copies thereof relating to the
Company's operations or business, some of which may be
prepared by him, and all objects associated therewith
(such as models and samples) in any way obtained by him
shall be the Company's property. This shall include,
but is not limited to, documents and objects concerning
any process, apparatus, or product manufactured, used,
developed, investigated, or considered by the Company.
The Employee shall not, except for Company use, copy or
duplicate any of the aforementioned documents or
objects, nor remove them from the Company's facilities.
The Employee shall not use any information concerning
the aforementioned documents or objects, except for the
Company's benefit, either during the Effective Period.
The Employee agrees that he will deliver all of the
aforementioned documents and objects that may be in his
possession to the Company on termination of his
employment, or at any other time on the Company's
request, together with his written certification of
compliance, except for those documents and objects
received as a director of the Company.
(c) During the Effective Period, the Employee will not, without
the written consent of the Company, either as principal, agent,
consultant, employee, director, or otherwise, directly
or indirectly, contact (1) any customer, supplier or
vendor of the Company with whom the Employee had direct
contact on behalf of the Company; (2) any customer,
supplier or vendor of the Company who was contacted by
an individual directly or indirectly supervised by the
Employee; and (3) any customer, supplier or vendor of
the Company about whom the Employee obtained non-public
information in connection with his/her relationship
with the Company, with the purpose or effect of causing
such customer to buy or use products competitive with
the Company's. The customer contacts/acquisition of
knowledge described in this Paragraph 4 only apply to
those occurring during the eighteen (18) months prior
to the termination of Employee's relationship with the
Company.
(d) During the Effective Period, the Employee will not, without
the written consent of the Company, either as principal, agent,
consultant, employee, director, or otherwise, directly
or indirectly, contact any of the employees of
the Company or School Specialty, Inc. in an effort cause
any such employees to leave the employ of the Company
and/or School.
(e) The Company shall pay to the Employee a monthly payment of
$4,166.67 during that portion of the Effective Period that the
Employee is not receiving other consideration under the terms of
this Agreement.
6. Death or Disability of the Employee.
The Employee's employment shall terminate immediately upon
his/her death. In the event the Employee becomes
physically or mentally disabled under the terms of the
then currently effective disability coverage for full
time employees of the Company, they shall cease
receiving compensation under the terms of this
agreement. In the event that the Employee returns to
active full time employment with the Company during the
term of this agreement, or any extension or renewal
thereof, he shall then be compensated for his
employment under the terms of this agreement.
7. Termination.
The Company reserves the right to terminate the Employee's employment
immediately under this agreement should any of the
following occur:
(a) The Employee's commission of a felony that is an act which, in
the opinion of the Board of Directors, is either abhorrent
to the community or is an intentional act which the
Board of Directors considers materially damaging to the
reputation of the Company or its successors or assigns.
(b) The Employee's breach of or failure to perform his obligations
in accordance with the terms and conditions of this agreement
following receipt of a written notice detailing such
failure or material breach and failure to cure same
during a thirty (30) day period following receipt of said notice.
(c) The death or disability of the Employee.
8. Successors and Assigns.
Rights and duties under this Agreement shall be and are binding
upon and inure to the benefit of the parties hereto and their
respective heirs, personal representatives, successors
and assigns, although this agreement, and the right of
the employee to act as a sales representative of the
Company, is purely personal and not transferable.
9. Representations of the Employee.
The Employee warrants and represents to the Company that as
of the Effective Date, he is not subject to any
employment, consulting or services agreement, or any
restrictive covenants or agreements of any type which
would conflict or prohibit the Employee from fully
carrying our their duties as described under the terms
of this agreement. Further the Employee warrants and
represents to the Company that he 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. These warranties
and representations shall remain in full force and
effect beyond the term of the employment of the
Employee with the Company.
10. Notice.
All notices, demands and other communications hereunder shall be
deemed to have been duly given, if delivered by hand or mailed,
certified or registered mail with postage prepaid:
To the Company: School Specialty Inc.
0000 Xxxxx Xxxxxxxxx Xxxxx
X.X. Xxx 0000
Xxxxxxxx, XX 00000-0000
Attention: Xx. Xxxxx Xxxxxx Zanden
Fax: 0-000-000-0000
With a copy to: Xxxxxx X. Xxxxxxx XX, Esq.
Xxxxxxx & Xxxxxxx, S.C.
000 Xxxxxx Xxxxxx
Xxxxxxx, XX 00000
Fax: (000) 000-0000
To Employee: Xx. Xxxxx Xxxxxx
000 Xxxxxxxxxx Xxxxx
Xxxxxxx, XX 00000
or to such other address as the person to
whom notice is to be given may have specified
in a notice duly given to the sender as
provided herein. Such notice, request, claim,
demand, waiver, consent, approval or other
communication shall be deemed to have been
given as of the date so delivered, telefaxed,
mailed or dispatched and, if given by any
other means, shall be deemed given only when
actually received by the addressees.
11. 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.
12. Arbitration.
Any controversy or dispute
arising out of or relating to a provision of
this agreement shall be settled by a single
arbitrator selected by the Company and the
Employee or, if the Company and the Employee
cannot agree on one arbitrator, by three
arbitrators selected in accordance with the
Commercial Arbitration Rules of the American
Arbitration Association. All arbitration
proceedings shall take place in Atlanta,
Georgia and judgment upon the award rendered
by the arbitrator(s) may be entered in any
court having jurisdiction thereof. The
decision of the arbitrator(s) shall be in
writing and shall be final and nonappealable.
The arbitrator(s) shall also make a decision
regarding which party's legal position in any
such controversy or dispute is the more
substantially correct (the "Prevailing
Party"), and the arbitrator(s) may require
the other party to pay the reasonable legal
and other professional fees and costs
incurred by the Prevailing Party in
connection with such arbitration proceeding
and any necessary court action.
13. Expenses.
Each party hereto shall bear and
pay all of their respective fees, expenses
and disbursements of their agents,
representatives, accountants and counsel
incurred in connection with the subject
matter of this Agreement, and its
enforcement.
14. Governing Law.
This Agreement shall in all respects be construed
according to the laws of the State of Georgia, without
regard to its conflict of laws principles.
IN WITNESS WHEREOF, the parties hereto have cause
this Agreement to be duly executed as of the date first
written above.
COMPANY: SPORTIME, LLC
/s/ Xxxxxx X. Xxxxxxxx
-------------------------
Xxxxxx X. Xxxxxxxx, Chief Executive Officer
of School Specialty, Inc., the Sole Member
of Sportime, LLC
EMPLOYEE:
/s/ Xxxxx Xxxxxx
--------------------
Xxxxx Xxxxxx, Individually
EXHIBIT A
EXECUTIVE PLAN
The Executive Incentive Plan will be based on the
operating profit budget. The incentive of company
presidents will be based 25% on the consolidated
operating budget and 75% on their company's operating
profit budget. Corporate executives' incentive will be
based 100% on the consolidated operating profit budget.
If the budget is met, participants will be eligible to
receive a bonus of 50% of base salary. If the budget
is exceeded, participants will be eligible for
additional bonus of up to 50% of base salary which will
be calculated as a percentage of salary based upon the
amount exceeding budget and the maximum payout level.
If the budget is not met, the bonus amount will be
zero. New acquisitions will not be included in these
calculations.
Consolidated operating profit must be at least 7% of
sales in order for any incentives to be paid. Payment
will be made annually after the audit and approval by
the Board of Directors' Compensation Committee.
Target
Operating Profit 1
Maximum
Budget Payout Level
Consolidated $31,000,000 $40,000,000
Childcraft $3,900,000 $5,000,000
Re-Print $5,500,000 $7,100,000
Sax $5,700,000 $7,400,000
Traditional $18,000,000 $23,200,000
Gresswell $750,000 $1,500,000
Education Access $900,000 $1,800,000
1 These figures are based on the most recent version of
the budget. When the budget is finalized, they will
be revised to reflect our final operating budget.
Calculations for Executive Incentive Plan
Example 1
Act. Consolidated Act. Childcraft
Salary Operating Profit Operating Profit
President of Specialty Division $100,000 $35,000,000 $4,900,000
-------------------------------------------------------
Percentage for exceeding budget
Consolidated Portion
Maximum payout level $40,000,000
Budget - 31,000,000
-------------
$9,000,000
(50% of salary) $50,000/ $9,000,000 = .56% x 25% = .139%
Division Portion
Maximum payout level $5,000,000
Budget $3,900,000
-----------
$1,100,000
(50% of salary) $50,000/ $1,100,000 = 4.55% x 75% = 3.41%
-------------------------------------------------------
Bonus earned for meeting budget
Consolidated Operating Profit: 50% x 100,000 x .25 = $12,500
Division Operating Profit 50% x 100,000 x .75 = $37,500
--------
$50,000
Bonus earned for exceeding budget
35,000,000 - 31,000,000 = 4,000,000 x .139% = $ 5,560
4,900,000 - 3,900,000 = 1,000,000 x 3.41% = $34,100
--------
$39,660
--------
TOTAL BONUS EARNED $89,660
========
89.7%
Example 2
Act. Consolidated Act. Division
Salary Operating Profit Operating Profit
President of Specialty Division $100,000 $30,000,000 $4,900,000
Bonus earned for meeting budget
Consolidated Operating Profit: 0% x 100,000 x .25 = $0
Division Operating Profit 50% x 100,000 x .75 = $37,500
-------
$37,500
Bonus earned for exceeding budget
30,000,000 - 31,000,000 = (1,000,000) $0
4,900,000 - 3,900,000 = 1,000,000 x 3.41% = $34,100
-------
$34,100
-------
TOTAL BONUS EARNED $71,600
=======
71.6%
