EXHIBIT 10.40
La Petite Academy, Inc
130 S. Jefferson Street, Suite 300
Chicago, Illinois 60661
Tel 312-798-1231
bbuckland@lpacorp.com
September 5, 2002
Mr. Michael F. Czlonka
1608 Fairfax Lane
Oak Brook Terrace, IL 60181
Dear Mike:
On behalf of La Petite Academy, Inc. (the Company), I am pleased to offer you
the position of Sr. Vice President & CFO, reporting to Gary Graves, Chief
Operating Officer. The details of our offer are as follows:
1. The annualized base salary is Two Hundred Twenty Thousand
($220,000) Dollars, paid on a bi-weekly basis. Future
increases to base salary are considered annually and will be
based on your performance.
2. You will be eligible to participate in the Company's
Short-Term Incentive Plan (with approval of the Plan by the
Board of Directors) with an annual target of 40% of base
salary, based on the Company achieving 100% of its EBITDA
budget; 60% of base salary for achievement of 105% of EBITDA
budget; and 80% of base salary for achievement of 110% of
EBITDA budget. For the fiscal year ending June 28, 2003, Plan
EBITDA will be determined within 90 days of your start date.
(No bonus is earned if the Company fails to meet its EBITDA
budget.) The Plan may, from year-to-year, be modified as
approved by the Board of Directors. For the current fiscal
year (FY 2003), your bonus will be pro-rated, based on full
Periods worked. Furthermore, you must be an active employee on
the last day of the fiscal year to be eligible for bonus
payment.
3. You will be eligible to participate in the Company's Long-Term
Stock Option Incentive Plan, which is currently being reviewed
by the Board of Directors. Subject to approval of the Board of
Directors, you will be offered 90,000 shares in the form of
options, subject to the prevailing vesting schedule.
4. You will be entitled to reasonable severance if your
employment is terminated by the Company other than for Cause,
voluntary resignation, death or disability. Without
limitation, "for Cause" shall include: a) violation of the
Company's Code of Conduct; b) action by you involving willful
malfeasance in connection with your employment having a
material adverse effect on the Company; c) continuing refusal
by you to perform the duties ordinarily performed by a chief
financial officer after a written demand for substantial
performance is delivered to you; or d) conviction of any
felony (or any misdemeanor involving the property or assets of
the Company) under the laws of any State or the United States.
You will also be entitled to reasonable severance if you elect
to terminate your employment for Good Reason. For "Good
Reason" shall include: a) assignment of duties substantially
inconsistent with your position, duties, responsibilities,
authorities, and title, or any material reduction by the
Company of your duties or responsibilities; or b) a reduction
by the Company in your base salary as in effect at the start
of your employment. Reasonable severance shall mean six months
of continued salary and medical and/or dental benefits if your
employment is terminated as described
above in your first year of employment. After one year of
employment, you will be entitled to an additional six months
of continued salary and medical and/or dental benefits. Such
additional continued salary and medical and/or dental benefits
will vest at the rate of one week for every full month worked
beyond one year, up to a maximum total severance payment of
twelve months. Any severance paid beyond the initial six
months is contingent upon you continuing to seek, but not
having secured, employment. Furthermore, any severance paid
beyond six months, after one year, up to a maximum of an
additional six months, before the vesting of the provisions
described above, is subject to the approval of the CEO.
5. You will be entitled to receive health, welfare and retirement
benefits on terms substantially equivalent to those offered to
the Company's other senior executives. You will be entitled to
a paid vacation each calendar year of no less than four weeks.
In calendar year 2002, your vacation entitlement will be
pro-rated, based on your hire date.
6. You will need to sign a customary non-compete and
confidentiality agreement.
Your employment is considered at-will. You specifically acknowledge that
execution of this offer letter does not constitute a contract of employment
between you and the Company, or any of its' subsidiaries or affiliates. Your
acceptance of this offer will indicate that you are not a party to any agreement
with your present, or any previous employer that would restrict, conflict with,
or prohibit your activities contemplated here at the Company.
Please sign one copy of this letter as your acceptance of employment with La
Petite and return it to me. It is agreed that your start date will be Monday,
September 23, 2002. On your first day you will need to bring with you two (2)
forms of proof of identity in order to complete the Employment Eligibility
Verification form (I-9).
Mike, we believe you will find your position at La Petite to be a challenging
and rewarding experience. We are delighted to have you join our team and look
forward to your contributions.
Sincerely,
/s/ William C. Buckland
William C. Buckland
Vice President, People
Cc: Judith Rogala
Gary Graves
/s/ Michael F. Czlonka
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Acknowledgement Signature/Date