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EXHIBIT 10.11
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as
of the 20th day of December, 1999, effective as of January 1, 2000, by and
between BEACON EDUCATION MANAGEMENT LLC, a Tennessee limited liability company
("Employer"), and XXXXXXX X. XXXXX ("Executive").
WITNESSETH:
WHEREAS, Employer is a Tennessee limited liability company engaged in
the management of schools and educational institutions; and
WHEREAS, Executive is a qualified administrator, is duly licensed as an
administrator.
WHEREAS, Employer desires to employ Executive to provide educational
management services for and on behalf of Employer, and Executive desires to
accept such employment, subject to the terms and conditions set forth in this
Agreement.
NOW, THEREFORE, in consideration of the mutual promises, covenants,
representations and warranties contained herein, and of other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties, intending to be legally bound, agree as follows:
SECTION 1. EMPLOYMENT OF EXECUTIVE.
1.1 General Duties of Executive. Employer hereby engages Executive
to serve as the Chief Operating Officer on behalf of Employer on the terms and
conditions set forth herein. The parties hereto acknowledge that Executive may
perform the duties hereunder from his present location. Executive hereby accepts
such engagement by Employer. Executive agrees to serve in such capacity
exclusively through this Agreement on a full-time basis and, in furtherance
thereof, to provide the following professional services:
1.1.1 Professional Services. Executive shall oversee services
including but not limited to the following:
- marketing and development of school management contracts to
charter boards
- implementation of the Employer's school management contracts
- financial controls and human resources for the Employer and
the schools it managed
- student recruitment for schools managed by the Employer
- design and implementation of the Employer's educational
program
- compliance by the Employer and the schools it manages with
relevant laws and regulations
- design and procurement of facilities for schools managed by
the Company
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- all other aspects of the Employer's daily operations.
subject to the direction and control of the Managing Members of the
Employer.
1.1.2 Time Commitment. Executive shall devote Executive's
full business time and efforts to rendering administrative services on behalf of
Employer.
1.1.3 Professionalism and Personal Conduct. All of
Executive's services shall be performed in accordance with the ethical standards
of the education profession. Executive shall avoid all personal acts, habits,
and usages which might injure in any way, directly or indirectly, executive's
professional reputation, or the reputation of Employer. Executive shall promote
the professional practice of Employer to the extent permitted by law and the
applicable standards of professional ethics.
1.1.4 Other. Executive shall perform any other duties,
within the scope of employment as an educational administrator and manager, as
Employer may from time to time reasonably direct.
1.2 Executive's Representations and Warranties. Employer has
entered into this Agreement in reliance on Executive's representations and
warranties to Employer as follows:
1.2.1 Administrator Certification. Executive has, and will
maintain throughout the term of this Agreement, a license to act as a School
Superintendent. Executive shall promptly advise Employer of any cancellation,
suspension or impairment thereof.
1.2.2 No Violation. Executive is not in breach of, and will
not during the term of this Agreement be in breach of, any other contract,
obligation or covenant that would affect Executive's ability to perform
hereunder and, as a result of entering into this Agreement, will not breach any
such contract, obligation or covenant.
1.2.3 Prior Actions.
(a) Executive's administrative certification in
any state has never been suspended, revoked or restricted.
(b) Executive has never been reprimanded,
sanctioned or disciplined by any licensing board or state or local school board.
(c) There have been no claims threatened or
pending against Executive for abuse.
(d) Executive has never been denied membership
or reappointment of membership on the educational staff of any school or
institution and no school position has ever been suspended, curtailed or
revoked.
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1.3 Conflict of Interest. Executive shall not accept employment or
contractual obligations with any other educational entity, organization, or
individual without Employer's written approval, which approval shall not be
unreasonably withheld so long as such activity does not interfere with
Executive's duties contained in this Agreement.
1.4 Employer's Representations and Warranties. Employer hereby
warrants and represents as follows:
1.4.1 Employer is a Tennessee limited liability company,
engaged in the management of schools and educational institutions by and through
its subsidiaries qualified in the respective states in which Employer is engaged
in the management of such schools.
SECTION 2. COMPENSATION AND BENEFITS.
2.1 Compensation. For services rendered pursuant to this
Agreement, Executive shall receive the following compensation:
2.1.1 Salary. As base salary during the period January 1,
2000 through June 30, 2000, Employer shall pay Executive at the rate of One
Hundred Thirty Thousand Dollars ($130,000.00 ) per annum. Such base salary shall
increase to One Hundred Thirty Five Thousand Dollars ($135,000.00 ) per annum
for the period July 1, 2000 through June 30, 2001, and shall increase to One
Hundred Forty-five Thousand ($145,000.00) per annum for the period July 1, 2001
through June 30, 2002. For the period July 1, 2002 through September 30, 2002,
the base salary shall increase to One Hundred Fifty Five Thousand Dollars
($155,000.00) per annum.
2.1.2 Contribution Allowance. In accordance with two
Contribution Allowance Agreements dated July 2, 1997 and December 12, 1996
between Executive and Employer, Executive shall continue to vest over time in
options to purchase up to a total of twenty-seven thousand (27,000) Class B
Points of Interest pursuant to Employer's 1996 Points of Interest Option Plan
under the terms set forth in the two Contribution Allowance Agreements.
2.1.3 Bonuses. On September 15 of each year, Executive
shall be eligible to receive a bonus payment at the discretion of the Employer's
Board. On or before March 1, 2000, Executive and Employer's Board shall meet to
determine the amount of the bonus for which Executive shall be eligible each
year, and the criteria upon which the bonus payment shall be determined. At that
time, such amounts and criteria shall be added as an addendum to this Agreement
in a form similar to that attached hereto as Exhibit A.
2.1.4 Payment of Compensation. Employer shall pay Executive
all such compensation in accordance with Employer's normal payroll practices.
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2.2 Tax Withholdings. Employer shall withhold from the
compensation payable to Executive any and all federal, state or local taxes and
fees as is customary or required by law.
2.3 Benefits. Executive shall be entitled to participate in group
medical, dental, accident, disability, health and life insurance plans,
retirement funds, and other standard benefits (the "Benefits"), as may be
provided by Employer, from time to time, to its employees of comparable status,
subject to, and to the extent that, Executive is eligible under such benefit
plans in accordance with their terms. The parties hereto acknowledge that such
Benefits are subject to change from time to time as determined by the Managing
Members.
2.4 Vacation. Executive shall be entitled to the same paid
vacation per annum as may be provided by Employer to its employees of comparable
status but in no event shall such vacation be less than two weeks per annum.
Executive shall schedule such vacation at times which are mutually acceptable to
Employer and Executive.
SECTION 3. TERM AND TERMINATION.
3.1 Term. The term of this Agreement shall be for a period of two
years, nine months, commencing on January 1, 2000 and ending on September 30,
2002.
3.2 Termination By Executive For Cause. During the term of this
Agreement, Executive shall have the right to terminate this Agreement if there
has been a material breach of the provisions hereunder by Employer, provided
such breach is not corrected within thirty (30) days after written notice of the
breach is delivered to Employer by Executive.
3.3 Termination By Employer for Cause. During the term of this
Agreement, whether during the Initial Term or during any renewal term, Employer
shall have the right to immediately terminate the Agreement and all its
obligations hereunder, upon any of the following occurrences:
(a) death of Executive;
(b) the failure of Executive to perform his or her duties
hereunder because of a physical or mental illness or
injury or otherwise for a period of ninety (90)
consecutive days after use of all accrued vacation
and sick days;
(c) adjudication of Executive as legally incompetent by
any court having jurisdiction to determine such
matter;
(d) Executive's conviction of or try of a plea of nolo
contendere for a felony or any crime involving moral
turpitude;
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(e) acts of dishonesty by Executive towards Employer;
(f) continued acts which violate Employer's policies and
procedures as specified in the Employer's written
employee manual, or acts which violate Employer's
professional practice standards or quality assurance
standards, after Executive has been given notice by
Employer of such acts and a reasonable time (not to
exceed thirty (30) days from receipt of notice) to
cure such acts;
(g) a material breach of the provisions hereunder by
Executive, including Executive's neglect, failure or
refusal to perform or observe any or all of
Executive's obligations hereunder.
3.4 Effects of Termination.
3.4.1 Final Payment. Upon termination of this Agreement,
Employer will pay Executive as Executive's final compensation under this
Agreement: (i) any salary and reimbursable expense due and owing to Executive
for the period through the effective date of such termination; and (ii) vacation
time as of the effective date of such termination as reflected on Employer's
personnel records of Executive, such compensation to be determined pursuant to
the Employee Manual, less any outstanding amounts owed by Executive to Employer.
3.4.2 Resignation from Employer. Upon termination of this
Agreement, Executive shall be deemed to have resigned all positions then held by
Executive with Employer, including, without limitation, officerships or other
management positions in Employer.
3.4.3 Removal from Employer Offices. Executive shall
immediately vacate Employer's offices; provided, however, Employer shall afford
Executive reasonable access to its offices to remove Executive's personal
property.
3.4.4 Further Obligations. Upon the expiration or earlier
termination of this Agreement, neither party shall have any further obligations
hereunder except for (i) obligations accruing prior to the date of expiration or
termination and (ii) obligations, promises or covenants contained herein which
are expressly made to extend beyond the term of this Agreement, including,
without limitation, the covenants set forth in Section 4.
SECTION 4. RESTRICTIVE COVENANTS.
4.1 Confidentiality. Executive acknowledges and agrees that, while
employed by Employer and thereafter, Executive shall not, at any time, disclose
to any person, firm, corporation or other entity, or use for Executive's own
benefit whether or not for
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monetary gain, any confidential information ("Confidential Information")
concerning the conduct or the business affairs of Employer, including, without
limitation, trade secrets, know-how, inventions, curriculum, customer and
supplier lists, business plans, operation records, pricing policies, referral
sources or organizations, marketing and sales plans. financial information,
names, addresses, positions, salaries and other terms of employment of other
employees of Employer. Executive acknowledges that all records, data,
communications and other property of Employer entrusted or loaned, to Executive
or prepared by Executive during the term of this Agreement (including, but not
limited to, any inventions, data, creations or other work product) are
Employer's property and Executive agrees to return any material so loaned to or
so prepared by Executive or Employer immediately upon termination of employment.
For the purposes of this Agreement, Confidential Information does not include
information that is or becomes part of the public domain, other than through
Executive's action or inaction.
4.2 Ownership of Work Product. Employer shall own, and Executive
hereby transfers and assigns to Employer (to the extent proprietary), all rights
of, in and to any material and/or ideas and all results and proceeds of
Executive's services hereunder, or conceived of or produced during Executive's
employment (including but not limited to, any inventions, data, creations,
software programs or other work product) (collectively, "Work Product").
Executive will execute and deliver such assignments, certificates of authorship
or other instruments as Employer may require from time to time to evidence
ownership of such Work Product.
4.3 Non-Competition Covenant. During Executive's employment,
Executive shall not engage as principal, agent, trustee, employee or stockholder
or through the agency of any corporation, partnership, association or agent or
agency, in any business in competition with the business conducted by the
Employer or any of its affiliates at the time.
4.4 Non-Solicitation. During the term of this Agreement and for a
period of two years thereafter (the "Non-Solicitation Period"), Executive shall
not, directly or indirectly, individually or on behalf of any other person or
entity, do any of the following:
(a) call upon, solicit, or attempt to solicit Customers
to transfer their patronage from Employer to any
other business, firm or entity engaged in activities
which are directly or indirectly competitive with
those conducted by Employer;
(b) aid or agree to aid any person or entity in any
attempt to hire any employee of Employer; or
(c) induce or attempt to influence any person or business
entity who is or was a Customer or supplier of
Employer to transact business with a competitor of
Employer or cease to do business, in whole or in
part, with Employer.
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4.5 Definition of "Customer". For the purposes of Section 4
hereof, "Customer" means any individual or entity (including, without
limitation, any school, educational board, or educational institution,
executive, or executive consulting group) to whom Employer directly or
indirectly provides, either currently or at any time during Executive's
employment, any management services (without regard as to whom is billed for
such services). "Customer" shall also include any individual or entity actively
solicited by Employer during Executive's employment.
4.6 Injunctive Relief. Executive acknowledges and agrees that any
breach of Section 4 hereof could be expected to cause irreparable harm and
injury to Employer's goodwill and competitive position and that the remedy at
law for any breach of the provisions in Section 4 hereof will be inadequate.
Accordingly, Executive covenants and agrees that Employer shall, in addition to
other rights or remedies which it may have, be entitled to such equitable and
temporary or permanent injunctive relief to restrain Executive from any
violation of such provisions. Such right to obtain equitable and injunctive
relief may be exercised, at the option of Employer, concurrently with, prior to,
after or in lieu of, the exercise of any other rights or threatened remedies
Employer may have as a result of such breach or threatened breach. The pursuit
of one of such remedies at any time shall not be deemed an election of remedy or
waiver of the right to pursue any of the other of such remedies.
4.7 Reasonableness of Restrictions. The parties agree that the
duration and scope of the restrictions imposed under Section 4 hereof (the
"Covenants") are fair and reasonable and are reasonably required for the
protection of Employer. Should any court of competent jurisdiction determine
that any of the Covenants, or any part thereof, are unenforceable because of the
duration or scope of such provision, the parties hereto agree that such court
shall have the power to substitute, to the extent enforceable, provisions
similar hereto or such other provisions as will enable Employer, to the fullest
extent practicable, to enjoy the benefits intended to be agreed upon by and
under this Section 4.
4.8 Litigation Costs. In the event a legal action is instituted to
enforce this Section 4, each party shall be responsible for its costs and
expenses, including attorney's fees, incurred in connection with such action.
SECTION 5. MISCELLANEOUS.
5.1 Assignment. Employer may assign this Agreement to any entity
related or affiliated with Employer. Executive shall not have the right to
assign this Agreement or delegate any of Executive's responsibilities hereunder
without the prior written consent of Employer, which consent may be withheld in
its sole and absolute discretion. Any attempted assignment in violation of this
Section shall be null and void.
5.2 Entire Agreement. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof and
supersedes all prior
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agreements, representations, warranties, statements, promises and
understandings, whether oral or written, with respect to the subject matter
hereof.
5.3 Modifications. This Agreement may not be amended, altered or
modified except by writing signed by the parties.
5.4 Notices. Any notice or other communication required or
permitted by this Agreement shall be in writing and shall either be
hand-delivered, sent via overnight mail by a reputable overnight courier such as
Federal Express, or sent by certified or registered mail (postage prepaid)
addressed as follows:
If to Employer: Beacon Education Management LLC
00 Xxxxx Xxxxxx Xxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxxx X. XxXxxxxx, Xx.
With copy to: Bass, Xxxxx & Xxxx PLC
0000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxx III
If to Executive: Xxxxxxx X. Xxxxx
000 Xxxxx Xxxx
X.X. Xxx 000
Xxxxxxxx, Xxxxxxxxxxxxx 00000
or to such other addresses or persons as may be furnished from time to time in
writing by one party to the other party. The notice shall be effective on the
date of delivery if delivered by hand, the date of delivery as indicated on the
receipt if sent via overnight mail, or the date indicated on the return receipt
whether or not such notice is accepted by the addressee.
5.5 Third-Party Benefits. None of the provisions of this Agreement
will be for the benefit of, or enforceable by, any third-party beneficiary.
5.6 Governing Law. This Agreement shall be governed by the laws of
the State of Tennessee and that venue for all such disputes under this Agreement
shall be in the applicable state and federal courts located in Davidson County,
Tennessee.
5.7 Headings. The Section headings in this Agreement are inserted
only as a matter of convenience, and in no way define, limit, extend or
interpret the scope of this Agreement or of any particular Section.
5.8 Severability. The validity, legality or enforceability of the
remainder of this Agreement will not be affected even if one or more of the
provisions of this Agreement will be held to be invalid, illegal or
unenforceable in any respect.
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5.9 Waiver of Breach. The waiver by either party hereto of a
breach or violation of any provision of this Agreement shall not operate as, or
be construed to be, a waiver of a subsequent breach of the same or other
provision hereof.
5.10 Counterparts. This Agreement may be executed simultaneously in
two or more counterparts, each of which will be deemed an original, but all of
which together will constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement as of the date first above written.
EMPLOYER:
Beacon Education Management LLC
A Tennessee Limited Liability Company
By: /s/ XX XxXxxxxx, Xx.
-------------------------------
Title: Chairman
----------------------------
EXECUTIVE:
/s/ Xxxxxxx X. Xxxxx
-----------------------------------
Xxxxxxx X. Xxxxx
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Exhibit A
Bonus
September 15, 2000
Bonus Potential: to be determined
Criteria: to be determined
September 15, 2001
Bonus Potential: to be determined
Criteria: to be determined
September 15, 2002
Bonus Potential: to be determined
Criteria: to be determined
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[BEACON EDUCATION MANAGEMENT, INC. LOGO]
March 29, 2000
Xx. Xxxxxxx X. Xxxxx, Chief Operating Officer
Beacon Education Management, Inc.
000 Xxxxx Xxxx
Xxxxxxxx, XX 00000
Dear Xxxx,
Attached are copies of the bonus criteria and targets established by the Board
of Directors of Beacon Education Management, Inc. during executive session at
its meeting on March 29, 2000. These criteria and targets reflect the
discussions that you and I had leading up to that meeting, and hereby become a
part of Exhibit A of your employment contract dated December 20, 1999.
Please contact me if you have any questions concerning these documents.
Sincerely,
/s/ Xxxxxxx X. XxXxxxxx, Xx.
Xxxxxxx X. XxXxxxxx, Xx.
Chairman; Beacon Education Management, Inc.
00 Xxxxx Xxxxxx Xxxx, Xxxxx 000 Phone 615-352.2080
Xxxxxxxxx, XX 00000 Fax 000-000-0000
Email: xxxxxxxx@xxxxxxxxx.xxx
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BONUS CRITERIA AND TARGETS FOR XXXXXXX X. XXXXX, CHIEF OPERATING OFFICER
BEACON EDUCATION MANAGEMENT, INC.
ESTABLISHED BY THE BOARD OF DIRECTORS OF BEACON EDUCATION MANAGEMENT, INC.
MARCH 29, 2000
EXHIBIT A -- EMPLOYMENT CONTRACT DATED DECEMBER 20, 1999
FY 2000-01 BONUS CRITERIA AND TARGETS
40% OF BASE SALARY (BASE = $135,000; TARGET BONUS = $54,000)
1. 60% Quantitative
(a) CONSOLIDATED PRETAX INCOME. Target = positive pre tax income.
Determines 20% of total bonus. This portion of the bonus is
doubled if the pretax income achieved is in excess of
$750,000. This portion is not paid if there is a pretax loss.
(b) NUMBER OF SCHOOLS IN OPERATION IN 00- 01 IN WHICH BEACON IS
PAID A FEE OF AT LEAST $149,000. Target = 15 Determines 10% of
total bonus. This portion of the bonus is to be increased or
decreased based on the number of contracts in excess of 10
(e.g. 20% of this portion of the bonus paid if 11 total
contracts; 100% of this portion paid if 15 total contracts;
200% of this portion paid if 20 total contracts.)
(c) NUMBER OF DEVELOPMENT SCHOOL CONTRACTS SIGNED AS OF JUNE
30, 2001, FOR OPENING IN 01-02, IN WHICH PROJECTED MANAGEMENT
FEE IS AT LEAST $225,000. Target = 8 Determines 15% of total
bonus target. This portion of the bonus is to be increased or
decreased based on the number of contracts in excess of four
(e.g. 25% of this portion paid if 5 total contracts; 100% of
this portion paid if 8 total contracts; 200% of this potion
paid if 12 total contracts.)
(d) NUMBER OF CONTRACT MANAGEMENT SCHOOLS (VS. CHARTER SCHOOLS)
WITH LOCAL SCHOOL DISTRICTS FOR MANAGEMENT IN 2001-02, THAT
ARE SIGNED AND IN PLACE AS OF JUNE 30, 2001. Target = 1,
Determines 15% of total bonus target. This portion of the
bonus is to be increased or decreased based on the number of
contracts (e.g. 0% of this portion paid if 0 total contracts;
100% of this portion paid if 1 total contracts; 200% of this
portion paid if 2 total contracts; 300% paid if 3 total, etc.
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2. 40% Qualitative based on Board review of relevant information.
(a) RECRUITMENT OF A MANAGER CAPABLE OF STEPPING IN TO
MANAGE BEACON IN THE EVENT OF MIKE'S ABSENCE.
Determines 15% of total bonus target.
(b) ACADEMIC STRESSES OF BEACON'S SCHOOLS UNDER
MANAGEMENT BY BEACON FOR TWO FULL YEARS. Determines
15% of total bonus target.
(c) SUCCESS IN ESTABLISHING THE BEACON BRAND. Determines
10% of total bonus target.
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BONUS CRITERIA AND TARGETS FOR XXXXXXX X. XXXXX, CHIEF OPERATING OFFICER
BEACON EDUCATION MANAGEMENT, INC.
ESTABLISHED BY THE BOARD OF DIRECTORS OF BEACON EDUCATION MANAGEMENT, INC.
MARCH 29, 2000
EXHIBIT A -- EMPLOYMENT CONTRACT DATED DECEMBER 20, 1999
FY 1999-00 BONUS CRITERIA AND TARGETS
15% OF BASE SALARY (BASE = $130,000; TARGET BONUS $20,000)
1. 50% Quantitative
(a) NUMBER OF SCHOOLS UNDER MANAGEMENT AS OF JUNE 30, 2000, WITH
MANAGEMENT FEES FOR 1999-00 IN EXCESS OF $125,000. Target = 9
(counting the 3 Xxxxxxxx park schools as one). Determines 25%
of total bonus. Increases or decreases are pro rata based on
change from the target.
(b) NUMBER OF DEVELOPMENT SCHOOL CONTRACTS IN PLACE AS OF JUNE 30,
2000, FOR OPENING IN 00-01, IN WHICH PROJECTED MANAGEMENT FEE
IS AT LEAST $150,000. Target = 6. Determines 25% of total
bonus target. This portion of the bonus is to be increased or
decreased based on the number of contracts in excess of three
(e.g. 33% of this portion paid if 4 total contracts; 100% of
this portion paid if 6 total contracts; 200% of this portion
paid if 9 total contracts.) Mystic Valley counts as a
development project for purposes of this section.
2. 50% Qualitative, based on Board review
(a) SUCCESS OF JCR INTEGRATION IN 1999-00. Determines 25% of bonus
target.
(b) SUCCESS IN BUILDING A GOOD HEADQUARTERS' MANAGEMENT TEAM.
Determines 25% of bonus target.
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