EXHIBIT 10.2
EMPLOYMENT, CONFIDENTIALITY
AND NONCOMPETE AGREEMENT
This Employment,
Confidentiality and Noncompete Agreement (“Agreement”)
is made and entered into effective as of the 16
th
day of March 2009,
by and between Build-A-Bear Workshop, Inc., a Delaware corporation
(“Company”), and John Haugh
(“Employee”).
WHEREAS, Company desires to employ
and Employee desires to be employed as the President and Chief
Marketing and Merchandising Bear of Company.
WHEREAS, Company has pioneered the
retail concept of “make your own” stuff plush toys,
including animals and dolls, and is engaged in, among other things,
the business of production, marketing, promotion and distribution
of plush stuff toys, clothing, accessories and similar items,
including without limitation, the ownership, management,
franchising, leasing and development of retail stores in which the
basic operation is the selling of such items, and the promotion of
the related concepts and characters through merchandising and mass
media. The Company is headquartered and its principal place of
business are located in, and this Agreement is being signed in,
St. Louis, Missouri.
WHEREAS, Company conducts business
in selected locations throughout the United States and
internationally through franchise arrangements.
WHEREAS, Company has expended a
great deal of time, money and effort to develop and maintain its
proprietary Confidential Information (as defined herein) which is
material to Company and which, if misused or disclosed, could be
very harmful to Company’s business.
WHEREAS, the success of Company
depends to a substantial extent upon the protection of its
Confidential Information and goodwill by all of its
employees.
WHEREAS, Company compensates its
employees to, among other things, develop and preserve goodwill
with its customers, landlords, suppliers and partners on
Company’s behalf and business information for Company’s
ownership and use.
WHEREAS, if Employee were to leave
Company, Company, in all fairness, would need certain protections
in order to prevent competitors of Company from gaining an unfair
competitive advantage over Company or diverting goodwill from
Company, or to prevent Employee from misusing or misappropriating
the Confidential Information.
NOW, THEREFORE, in consideration of
the compensation and other benefits of Employee’s employment
by Company and the recitals, mutual covenants and agreements
hereinafter set forth, Employee and Company agree as
follows:
1. Employment Services
.
(a) Employee is hereby employed by
Company, and Employee hereby accepts such employment, upon the
terms and conditions hereinafter set forth. Employee shall serve as
President and Chief Marketing and Merchandising Bear during the
Employment Period, on a full-time basis. Employee shall carry out
such duties as are assigned to him by Company’s Chief
Executive Bear.
(b) Employee agrees that throughout
Employee’s employment with Company, Employee will
(i) faithfully render such services as may be delegated to
Employee by Company, (ii) devote substantially all of
Employee’s entire business time, good faith, best efforts,
ability, skill and attention to Company’s business, and
(iii) follow and act in accordance with all of the rules,
policies and procedures of Company, including but not limited to
working hours, sales and promotion policies, and specific Company
rules. Company further agrees that it shall not during the Initial
Term of this Agreement require Employee to relocate his residence
outside of the St. Louis metropolitan area.
(c) “Company” means
Build-A-Bear Workshop, Inc. or one of its Subsidiaries, whichever
is Employee’s employer. The term “Subsidiary”
means any corporation, joint venture or other business organization
in which Build-A-Bear Workshop, Inc. now or hereafter, directly or
indirectly, owns or controls more than fifty percent
(50%) interest.
2. Term of Employment . The
term of this Agreement shall commence on the date first set forth
above, and shall end on the third anniversary hereof, unless sooner
terminated as provided in Section 4 hereof (the “Initial
Term”). Following the Initial Term, this Agreement shall
renew for successive one-year periods (each a “Renewal
Period”; collectively, the Initial Term and each Renewal
Period, the “Employment Period”), unless either party
notifies the other party of its decision not to renew the Agreement
at least 30 days prior to the third anniversary date or the
expiration of any Renewal Period, or unless the Agreement is sooner
terminated as provided in Section 4 hereof. For the avoidance
of doubt, if either party provides notice of non-renewal of the
Agreement at least 30 days prior to the end of the Initial Term or
the end of any Renewal Period, then the Agreement shall
expire.
3. Compensation .
(a) Base Salary . During the
Employment Period, Company shall pay Employee as compensation for
his services an annual base salary of not less than Three Hundred
Fifty Thousand Dollars ($350,000), payable in accordance with
Company’s usual practices. Employee’s annual base
salary rate shall be reviewed by the Compensation Committee of the
Board of Directors (the “Compensation Committee”) at
least annually for increase following each fiscal year so that
Employee’s salary will be commensurate for similarly situated
executives with firms similarly situated to Company; provided,
however , that if Employee’s individualized performance
targets (set for each fiscal year by Employee and Employee’s
team leader) are achieved, Employee’s annual base salary rate
shall not be subject to decrease at any time during the Employment
Period and shall be subject to annual increase by no less than the
average percentage increase given to all other Company executive
employees for such fiscal year (the “Average
Increase”).
(b) Bonus . Should Company
exceed the sales, profits and other objectives established by
Compensation Committee for any fiscal year, Employee shall be
eligible to receive a bonus for such fiscal year in the amount as
determined by the Compensation Committee; provided however the
potential bonus opportunity for Employee in any given fiscal year
will be set by the Compensation Committee such that, if the Company
exceeds its objectives, the Company will pay Employee not less than
fifty percent (50%) of Employee’s annual base pay for
such fiscal year. Any bonus payable to Employee will be payable in
cash, stock or stock options, or combination thereof, all as
determined by the Board of Directors or any duly authorized
committee thereof, and unless a different payout schedule is
applicable for
all executive employees of the
Company, any such bonus payment will be payable in a single, lump
sum payment. In the event of termination of this Agreement because
of Employee’s death or disability (as defined by
Section 4.1(b)), termination by the Company without Cause
pursuant to Section 4.1(c), or pursuant to Employee’s
right to terminate this Agreement for Good Reason under
Section 4.1(d), the bonus criteria shall not change and any
bonus shall be pro-rated based on the number of full calendar weeks
during the applicable fiscal year during which Employee was
employed hereunder and shall be paid at the time and in the form
such bonus would have been paid had Employee’s employment
continued. No bonus shall be payable hereunder for any other
termination of employment by Executive prior to the last day of a
fiscal year.
Such bonus, if any, shall be payable
after Company’s accountants have determined the sales and
profits and have issued their audit report with respect thereto for
the applicable fiscal year, which determination shall be binding on
the parties. Any such bonus shall be paid within seventy-five
(75) days after the end of each calendar year, regardless of
Employee’s employment status at the time payment is due. If
timely payment is not made, the Company shall indemnify the
Employee against any additional tax liability that the Employee may
incur proximately as a result of the payment being made after the
seventy-five day period.
(c) Stock Options . Employee
may have been granted in the past, and/or may in the future be
granted, a certain number of restricted shares and/or stock options
to purchase shares of Company’s common stock (the
“Common Stock”), pursuant to the terms set forth more
particularly in the stock option and/or restricted stock agreements
(“Stock Agreement”) used in connection with the
Build-A-Bear Workshop, Inc. 2004 Stock Incentive Plan (or any
successor plan) (the “Plan”). The Plan and applicable
Stock Agreement(s) shall govern any grants of restricted shares
and/or stock options to purchase shares of Company’s Common
Stock.
(d) Discounts . Employee and
his immediate family will be entitled to a 20% discount for all
merchandise purchased at Company’s stores.
(e) Vacation . Employee shall
be entitled to paid vacation and paid sick leave on the same basis
as may from time to time apply to other Company executive employees
generally. Vacations will be scheduled with the approval of
Company’s Chief Executive Bear, who may block out certain
periods of time during which vacations may not be taken, including
preceding Valentine’s Day, preceding Easter, from
November 1 through December 31, during Company inventory,
and just prior to store openings. One-third of one year’s
vacation (or any part of it) may be carried over to the next year;
provided that such carry over is used in the first calendar quarter
of the next year. Unless approved by the Chief Executive Bear, all
unused vacation shall be forfeited. No more than two weeks of
vacation can be taken at one time. Employee shall also be entitled
to one (1) additional day per calendar year of paid vacation
to be taken in the month of his birthday.
(f) Other . Employee shall be
eligible for such other perquisites as may from time to time be
awarded to Employee by Company payable at such times and in such
amounts as Company, in its sole discretion, may determine. All such
compensation shall be subject to customary withholding taxes and
other employment taxes as required with respect thereto. During the
Employment Period, Employee shall also qualify for all rights and
benefits for which Employee may be eligible under any benefit plans
including group life, medical, health, dental and/or disability
insurance or other benefits
(“Welfare Benefits”)
which are provided for employees generally at his then current
location of employment. Employee may, in his sole discretion,
decline any perquisite, Welfare Benefit, proposed annual salary
increase, or bonus payment.
4. Termination Provisions
.
4.1 Termination of Employment
. Prior to the expiration of the Employment Period, this Agreement
and Employee’s employment may be terminated as
follows:
(a) Upon Employee’s
death;
(b) By the Company upon thirty
(30) day’s prior written notice to Employee in the event
Employee, by reason of permanent physical or mental disability
(which shall be determined by a physician selected by Company or
its insurers and acceptable to Employee or Employee’s legal
representative (such agreement as to acceptability not to be
withheld unreasonably), shall be unable to perform the essential
functions of his position, with or without reasonable
accommodation, for six (6) consecutive months; provided,
however, Employee shall not be terminated due to permanent physical
or mental disability unless or until said disability also entitles
Employee to benefits under such disability insurance policy as is
provided to Employee by Company, provided however that continued
entitlement to disability benefits coverage shall be not required
where Employee fails to qualify for benefits coverage continuation
due to an act or omission by Employee.
(c) By the Company with or without
Cause. For the purposes of this Agreement, “Cause”
shall mean: (i) Employee’s engagement in any conduct
which, in Company’s reasonable determination, constitutes
gross misconduct, or is illegal, unethical or improper provided
such conduct brings detrimental notoriety or material harm to
Company; (ii) gross negligence or willful misconduct;
(iii) any act which results in a conviction for a felony
involving moral turpitude, fraud or misrepresentation; (v) a
material breach of a material provision of this Agreement by
Employee, or (v) failure of Employee to follow a written
directive of the Chief Executive Bear or the Board of Directors
within thirty (30) days after receiving such notice, provided
that such directive is reasonable in scope or is otherwise within
the Chief Executive Bear’s or the Board’s reasonable
business judgment, and is reasonably within Employee’s
control; provided Employee does not cure said conduct or breach (to
the extent curable) within thirty (30) days after the Chief
Executive Bear or the Board of Directors provides Employee with
written notice of said conduct or breach. In the event of
termination for Cause, the Employee will be afforded an opportunity
prior to the actual date of termination to discuss the matter with
the Company.
(d) By the Employee with or without
Good Reason. For purposes of this Agreement, “Good
Reason” shall mean (i) a material breach of a material
provision of this Agreement by Company, provided Company does not
cure said breach within thirty (30) days after Employee
provides the Board of Directors with written notice of the breach
or (ii) Company’s issuance of a notice of non-renewal of
this Agreement under Section 2, which results in expiration of
this Agreement and a failure of Company and Employee to enter into
a new written employment agreement.
4.2 Impact of
Termination.
(a) Survival of Covenants .
Upon termination of this Agreement, all rights and obligations of
the parties hereunder shall cease, except termination of employment
pursuant to Section 4 or otherwise shall not terminate or
otherwise affect the rights and obligations of the parties pursuant
to Sections 5 through 13 hereof.
(b) Severance . In the event
during the Employment Period (i) the Company terminates
Employee’s employment other than for Cause pursuant to
Section 4.1(c) or (ii) the Employee terminates his
employment for Good Reason pursuant to Section 4.1(d), the
Company shall continue his base salary for a period of twelve
(12) months from termination, such payments to be reduced by
the amount of any compensation from a subsequent employer during
such period. Employee shall accept these payments in full discharge
of all obligations of any kind which Company has to him except
obligations, if any (i) for post-employment benefits expressly
provided under this Agreement and/or at law, (ii) to
repurchase any
