EMPLOYMENT AGREEMENT
Exhibit
10.26
EMPLOYMENT AGREEMENT
THIS AGREEMENT is entered into, effective this 31st day of August 2007, by and between Apollo
Group, Inc. (the “Company”), and P. Xxxxxx Xxxx (the “Executive”) (hereinafter collectively
referred to as “the parties”).
WHEREAS, the Company has determined that it is in the best interests of the Company and its
shareholders to employ the Executive as described herein;
WHEREAS, the Company desires to employ the Executive and to enter into an agreement embodying
the terms of such employment; and
WHEREAS, the Executive desires to enter into this Agreement and to accept such employment;
NOW, THEREFORE, in consideration of the foregoing and the respective agreements of the parties
contained herein, the parties hereby agree as follows:
1 . Term. The initial term of employment under this Agreement will be for the period
commencing on September 1, 2007 (the “Commencement Date”) and ending on August 31, 2011 (the
“Initial Term”); provided, however, that thereafter the term of employment under this Agreement
will be automatically renewed from year to year, unless either the Company or the Executive will
have given written notice to the other at least sixty (60) calendar days prior thereto that the
term of employment under this Agreement will not be so renewed (a “Notice of Non-Renewal”).
2. Employment.
(a) Position. The Executive will be employed as, and hold the title of, Senior Vice
President and General Counsel of the Company, and will have the duties, powers, and
responsibilities as are customary for such position. The Executive will be given the authority
needed to perform the duties and undertake the responsibilities assigned to his position. The
Executive will report to either the Company’s President or the Company’s Chief Executive Officer or
to any other individual with equivalent authority.
(b) Obligations. The Executive shall devote his full business time and attention to the
business and affairs of the Company. During the term of this Agreement, the Executive shall not
engage in any other employment, service or consulting activity without the prior written approval
of the Company’s Board of Directors. The foregoing, however, shall not preclude the Executive from
(i) serving on any corporate, civic or charitable boards or committees on which the Executive is
serving on the Commencement Date, provided those positions are listed in attached Schedule I, or on
which he commences service following the Commencement Date with the prior written approval of the
person to whom the Executive reports, (ii) serving as Of Counsel to Xxxxxxx & Xxxxx LLP, or (iii)
managing personal investments, so long as such clause (i), (ii), and (iii) activities do not
interfere, in the judgment of the person to whom the Executive reports, with the performance of the
Executive’s responsibilities or otherwise conflict with Executive’s obligations to the Company
herein, including the obligations in Section 10.
3. Base Salary and Bonus.
(a) Base Salary. The Company agrees to pay or cause to be paid to the Executive an annual
base salary at the rate of $400,000, less applicable withholding. This base salary will be
subject
to annual review and may be increased from time to time by the Compensation Committee of
the Board of Directors (the “Compensation Committee”) upon consideration of such factors
as the Executive’s responsibilities, compensation of similar executives within the
Company and in other companies, performance of the Executive, and other pertinent
factors. The Executive’s annual rate of base salary, as it may be increased from time to
time, will be hereinafter referred to as the “Base Salary”. Such Base Salary will be
payable in accordance with the Company’s customary practices applicable to its
executives.
(b) Bonus. For each fiscal year completed during the Term, the Executive will be
eligible to receive an annual cash bonus (“Annual Bonus”) based upon individual and
Company performance goals that are established in good faith by the Compensation
Committee and that are reasonable in comparison to the individual and Company
performance goals the Compensation Committee sets for the Company’s other executive
officers, provided that the Executive’s target Annual Bonus will be no less than 100% of
his Base Salary (the “Target Bonus”). The Annual Bonus for each fiscal year shall be
paid in accordance with the Company’s customary practices, but in no event more than 75
days following the end of such fiscal year.
4. Equity Compensation Awards. In addition to the grants below, the
Executive will be eligible during the Term for grants of equity compensation awards in
accordance with the Company’s policies, as in effect from time to time. The grants below
will be issued pursuant and subject to the terms of the Company’s 2000 Stock Incentive
Plan, as amended and restated effective as of August 28, 2004 and as subsequently
amended to expressly provide for the grant of restricted stock units (the “Incentive
Plan”) and to the award agreements evidencing the grants, except that in the event of
any conflict between the terms of the Incentive Plan or the award agreements and this
Agreement, the terms of this Agreement will control:
(a) Initial Stock Option Grant. As soon as practicable on or after the Commencement
Date, the Compensation Committee shall grant the Executive stock options for 110,000
shares of Class A common stock with an exercise price equal to the closing selling price
per share on the grant date and a maximum term of six (6) years assuming continued
employment (the “Initial Option Grant”).
(b) Initial Restricted Stock Unit Award. As soon as practicable on or after
the Commencement Date, the Compensation Committee shall grant the Executive restricted
stock units covering 17,000 shares of the Company’s Class A common stock (the “Initial
RSU Award’). Each restricted stock unit will represent the right to receive one share of
such Class A common stock upon the vesting of that unit, subject to the Company’s
collection of all applicable withholding taxes.
(c) Vesting. The Initial Option Grant will vest and become exercisable either (i) in
a series of four successive equal annual installments upon the Executive’s completion of
each year of employment with the Company over the four-year period measured from the
Commencement Date (regardless of the actual grant date); or (ii) as otherwise provided in
Sections 8 and 11 of this Agreement. The shares of the Company’s Class A common stock
underlying the Initial RSU Award will vest and become immediately issuable, subject to
the Company’s collection of the applicable withholding taxes, either: (i) in a series
of four successive equal annual installments upon the Executive’s completion of each year
of employment with the Company over the four-year period measured from the Commencement
Date (regardless of the actual grant date); or (ii) as otherwise provided in Sections 8
and 11 of this Agreement.
(d) Shares to Be Registered; Stock Certificates. All shares issued to the Executive
pursuant to his exercise of the Initial Option Grant and the vesting of the Initial RSU
Award will be registered
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under an appropriate and effective registration statement under the
Securities Act of 1933, as amended (the “1933 Act”).
(e) The Company represents and warrants that this Agreement, the
grants described in subsections (a) and (b) above, and the terms of those
grants have been authorized and approved by the Compensation Committee.
5. Employee Benefits. Provided he otherwise satisfies
any applicable eligibility requirements for participation, the
Executive will be entitled to participate in the welfare, retirement,
perquisite, and fringe benefit plans, practices, and programs maintained
by the Company and made available to senior executives generally and as
may be in effect from time to time. The Executive’s participation in any
such plans, practices and programs for which he satisfies the applicable
eligibility requirements will be on the same basis and terms as are
applicable to senior executives of the Company generally.
6. Other Benefits.
(a) Expenses. Subject to applicable Company policies, including
(without limitation) the timely submission of appropriate documentation
and expense reports, the Executive will be entitled to receive prompt
reimbursement of all expenses reasonably incurred by him in connection
with the performance of his duties hereunder or for promoting, pursuing,
or otherwise furthering the business or interests of the Company.
(b) Vacation. During the Term, the Executive will be eligible for
paid vacation in accordance with the Company’s policies, as may be in
effect from time to time, for its senior executives generally; provided,
however, that the Executive will be eligible for no less than four weeks
of paid vacation per year.
7. Termination. Except for a Notice of Non-Renewal, as
described in Section 1, the Executive’s employment hereunder may only be
terminated in accordance with the following terms and conditions:
(a) Termination by the Company without Cause. The Company will be
entitled to terminate the Executive’s employment at any time by
delivering a Notice of Termination to the Executive pursuant to Section
7(e); provided, however, that any termination of the Executive’s
employment for Cause shall be governed by the provisions of Section 7(b).
(b) Termination by the Company for Cause.
(i) The Company may terminate the Executive’s employment hereunder
for “Cause” (as defined below) by delivering to him a Notice of
Termination. For purposes of the foregoing, any of the following shall
constitute grounds for terminating the Executive’s employment for Cause:
(A) the Executive’s pleading “guilty” or “no contest” to, or his
conviction of, a felony or any crime involving moral turpitude, (B) his
commission of any act of fraud or any act of personal dishonesty
involving the property or assets of the Company intended to result in
material financial enrichment to the Executive or material injury or harm
to the Company, including the Company’s reputation, (C) a material breach
by the Executive of one or more of his obligations under Section 9 of
this Agreement or his Proprietary Information and Inventions Agreement
with the Company, (D) a material breach by the Executive of any of his
other obligations under this Agreement or any other agreement with the
Company, (E) the Executive’s commission of a material violation of
Company policy which would result in an employment termination if
committed by any other employee of the
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Company or his gross misconduct, (F) the Executive’s material
dereliction of the major duties, functions and responsibilities of his
executive position (other than a failure resulting from the Executive’s
incapacity due to physical or mental illness), (G) a material breach by
the Executive of any of the Executive’s fiduciary obligations as an
officer of the Company, (H) the Executive’s willful and knowing
participation in the preparation or release of false or materially
misleading financial statements relating
to the Company’s operations and financial condition or his willful and
knowing submission of any false or erroneous certification required of
him under the Xxxxxxxx-Xxxxx Act of 2002 or any securities exchange on
which shares of the Company’s Class A common stock are at the time
listed for trading, or
(I) the suspension or revocation of the Executive’s license to practice
law. However, prior to any termination of the Executive’s employment
for Cause based on any of the reasons specified in clauses (C) through
(F) and the delivery of a Notice of Termination in connection therewith,
the Company shall give written notice to the Executive of the actions or
omissions deemed to constitute the grounds for such a termination for
Cause, and the Executive shall have a period of not less than sixty (60)
calendar days after the receipt of such notice in which to cure the
specified default in his performance and thereby avoid a Notice of
Termination under this subsection (b)(i).
(ii) In the event the Executive is provided with a Notice of
Termination under subsection (b)(i), the Notice of Termination shall
specify a Termination Date that is no earlier than the third business day
following the date of the Notice of Termination, and the Executive will
have three (3) business days following the date of such Notice of
Termination to submit a written request to the Board for a meeting to
review the circumstances of his termination. If the Executive timely
submits such a written request to the Board, the Board or a committee of
the Board shall set a meeting whereby the Executive, together with his
counsel, shall be permitted to present any mitigating circumstances or
other information as to why he should not be terminated for Cause, and
the Executive’s Termination Date shall be delayed until such meeting has
occurred. Such meeting will be held, at the Company’s option, either on a
mutually agreeable date prior to the Termination Date specified in the
Notice of Termination or on a mutually agreeable date within fifteen (15)
calendar days after the Executive’s timely written notice to the Company
requesting such a meeting. Within five (5) business days after such
meeting, the Board or committee of the Board, as applicable, shall
deliver written notice to the Executive of its final determination and,
if the termination decision is upheld, the final actual Termination Date.
During the period following the date of the Notice of Termination until
the Termination Date or other resolution of the matter, the Company shall
have the option to place the Executive on an unpaid leave of absence. The
rights under this subsection will not be deemed to prejudice the
Executive’s other rights and remedies in any way or give rise to any
waiver, estoppel, or other defense or bar. Without limiting the foregoing
sentence and for purposes of clarification, the failure by the Executive
to request a meeting under this subsection, to participate in a meeting
that has been requested, or to present any evidence or argument will not
prevent the Executive from making any claim against the Company, from
seeking any legal or equitable remedy, or from putting forward any
evidence or argument at any judicial or arbitral hearing.
(c) Termination by the Executive. The Executive may terminate his
employment hereunder for “Good Reason” by delivering to the Company (1) a
Preliminary Notice of Good Reason (as defined below) no later than one
hundred and twenty (120) calendar days following the act or omission
which the Executive sets forth in such notice as grounds for a Good
Reason termination, and
(2) not earlier than fourteen (14) calendar days after the delivery of
such Preliminary Notice or (if later) the third business day following
the Company’s failure to take appropriate remedial action within the
applicable sixty (60)-day cure period provided below to the Company
following the receipt of such the Preliminary Notice, a Notice of
Termination. For purposes of this Agreement, “Good Reason” means:
(i)
a material reduction in the scope of the Executive’s duties, responsibilities or
authority;
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(ii) the repeated assignment to the Executive of duties materially
inconsistent with the Executive’s positions, duties, authority or
responsibilities, or a materially adverse change in Executive’s
reporting requirements as set forth in Section 2(a) hereof or an adverse
change to his title set forth in Section 2(a) hereof: provided however,
that none of the following shall constitute Good Reason: (A) the
occasional assignment of duties that are inconsistent with Section 2(a)
hereof, or (B) a change in the Executive’s reporting requirements so
that he is required to report to a person with equivalent authority of
the Company’s President or Chief Executive Officer but without such
title;
(iii) a relocation of the Executive’s principal place of employment
other than in Phoenix, Arizona; provided, however that travel to other
locations as reasonably required to carry out the Executive’s duties and
responsibilities hereunder shall not be a basis for a termination for
Good Reason; or
(iv) a
material breach by the Company of any of its obligations under this
Agreement.
In no event will any acts or omissions of the Company which are not
the result of bad faith and which are cured within sixty (60) days after
receipt of written notice from the Executive identifying in reasonable
detail the acts or omissions constituting “Good Reason” (a “Preliminary
Notice of Good Reason”) be deemed to constitute grounds for a Good Reason
resignation. A Preliminary Notice of Good Reason will not, by itself,
constitute a Notice of Termination.
A ten percent (10%) or less aggregate reduction in the Executive’s
base salary and Target Bonus shall not constitute Good Reason if
substantially all of the other executive officers of the Company are
subject to the same aggregate reduction to their base salary and target
bonuses.
(d) Termination due to the Executive’s Death or Disability. This
Agreement will terminate upon the death of the Executive. The Company may
terminate the Executive’s employment hereunder if he is unable to perform,
with or without reasonable accommodation, the principal duties and
responsibilities of his position with the Company for a period of six (6)
consecutive months or more by reason of any physical or mental injury or
impairment; provided, however, that in the event the Executive is at the
time covered under any long-term disability benefit program in effect for
the Company’s executive officers or employees, such termination of the
Executive’s employment shall not occur prior to the date he first becomes
eligible to receive benefits under such program. The termination of the
Executive’s employment under such circumstances shall, for purposes of this
Agreement, constitute a termination for “Disability.”
(e) Notice of Termination. Any purported termination for Cause by the
Company or for Good Reason by the Executive will be communicated by a
written Notice of Termination to the other at least three (3) business days
prior to the Termination Date (as defined below). For purposes of this
Agreement, a “Notice of Termination” will mean a notice which indicates the
specific termination provision in this Agreement relied upon and will, with
respect to a termination for Cause or Good Reason, set forth in reasonable
detail the facts and circumstances claimed to provide a basis for such
termination of the Executive’s employment under the provision so indicated.
Any termination by the Company under this Section 7 other than for Cause or
by the Executive without Good Reason will be communicated by a written
Notice of Termination to the other party fourteen (14) calendar days prior
to the Termination Date. However, the Company may elect to pay the Executive
in lieu of fourteen (14) calendar days’ written notice. For purposes of
this Agreement, no such purported termination of employment pursuant to this
Section 7 will be effective without such Notice of Termination.
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(f) Termination Date. “Termination Date” will mean in the case of
the Executive’s death, the date of death; in the case of non-renewal of
the Agreement pursuant to Section 1, the date the Term of the Agreement
expires; and in all other cases, the date specified in the Notice of
Termination.
8. Compensation Upon Termination.
(a) Except as provided further in this Section 8(a), if the
Executive’s employment is terminated: (i) by the Company for Cause; (ii)
by reason of the Executive’s death or Disability; (iii) pursuant to a
Notice of Non-Renewal delivered by the Executive; or (iv) by the Executive
by delivery of a written notice of resignation without Good Reason, the
Company’s sole obligations hereunder will be to pay the Executive or his
estate on the Termination Date the following amounts earned hereunder but
not paid as of the Termination Date: (i) Base Salary, (ii) reimbursement
for any and all monies advanced or expenses incurred pursuant to Section
6(a) through the Termination Date, provided the Executive has submitted
appropriate documentation for such expenses, and (iii) the amount of the
Executive’s accrued but unpaid vacation time (together, these amounts will
be referred to as the “Accrued Obligations”). In addition to the
Accrued Obligations, in the event the Executive’s employment terminates by
reason of the Executive’s death or Disability or pursuant to a Notice of
Non-Renewal delivered by the Executive, the Executive or his estate will
be paid his Target Bonus, pro-rated for his actual period of service
during the fiscal year in which such termination of employment occurs.
Furthermore, if the Executive’s employment terminates as a result of his
death or Disability, then any unvested stock options, restricted stock,
restricted stock units, or other equity granted to the Executive that
would have otherwise been vested on the date of such termination of
employment had the vesting schedule for each of those grants been in the
form of successive equal monthly installments over the applicable vesting
period will immediately vest. The Executive’s entitlement to any other
benefits will be determined in accordance with the Company’s employee
benefit plans then in effect.
(b) If the Executive’s employment is terminated: (i) by the Company
for any reason other than for Cause; (ii) by the Executive for Good
Reason; or (iii) pursuant to a Notice of Non-Renewal delivered by the
Company, the Executive will, in addition to the Accrued Obligations, be
entitled to the following compensation and benefits from the Company,
provided and only if he (i) executes and delivers to the Company a general
release (substantially in the form of attached Exhibit A) which
becomes effective and enforceable in accordance with applicable law
and (ii) complies with the restrictive covenants set forth in Section 10:
(i) an amount equal to the sum of the Executive’s Base Salary and
Target Bonus at the time of the Notice of Termination, to be paid in
equal increments, in accordance with the Company’s normal payroll
practices, over the one-year measured from the Termination Date;
(ii) accelerated vesting of the Initial RSU Award and the Initial
Option Grant to the extent of the portion of such grant which would have
vested had the Executive completed an additional twelve (12) months of
employment with the Company prior to the Termination Date;
(iii) provided the Executive and/or his dependents are eligible and
timely elect to continue their healthcare coverage under the Company’s
group health plan pursuant to their rights under COBRA, continued
coverage under such plan at the Company’s expense until the earliest of
(A) the end of the twelve (12)-month period measured from the
Termination Date, (B) the date that the Executive and/or his eligible
dependents are no longer eligible for COBRA coverage, and (C) the date
that the Executive becomes eligible for such coverage under the health
plan of any new employer (the Executive agrees to provide the Company
with written notice of such eligibility within ten calendar days); and
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(iv) the Executive’s entitlement to any other benefits will be
determined in accordance with the Company’s employee benefit plans then
in effect.
(c) The Executive shall have the right to resign, for any reason or
no reason, at any time within the thirty (30) day period beginning six
(6) months after the closing of a Change in Control (as defined in
Section 11) and to receive, in connection with such resignation, the same
severance benefits to which he would be entitled under Section 8(b) above
had such resignation been for Good Reason; provided, however, that the
Executive’s entitlement to severance benefits under this Section 8(c)
shall be conditioned upon (i) his execution and delivery to the Company
of a general release (substantially in the form of attached Exhibit A)
which becomes effective and enforceable in accordance with applicable law
and (ii) his compliance with the restrictive covenants set forth in
Section 10 of this Agreement.
(d) The Executive will not be required to mitigate the amount of any
payment provided for in this Section 8 by seeking other employment or
otherwise, and no such payment or benefit will be eliminated, offset or
reduced by the amount of any compensation provided to the Executive in
any subsequent employment.
9. Confidentiality.
(a) The Executive hereby acknowledges that the Company may, from
time to time during the Term, disclose to the Executive confidential
information pertaining to the Company’s business, strategic plans,
technology or financial affairs. All information, data and know-how,
whether or not in writing, of a private or confidential nature concerning
the Company’s trade secrets, processes, systems, marketing strategies and
future marketing plans, student enrollment lists, prospective course
offerings, finances and financial reports, employee and faculty member
information and other organizational information (collectively,
“Proprietary Information”) is and shall remain the sole and exclusive
property of the Company and shall not be used or disclosed by the
Executive except to the extent necessary to perform his duties and
responsibilities under this Agreement. All tangible manifestations of
such Proprietary Information (whether written, printed or otherwise
reproduced) shall be returned by the Executive upon the termination of
his employment hereunder, and the Executive shall not retain any copies
or excerpts of the returned items. The foregoing restrictions on the use,
disclosure and disposition of the Company’s Proprietary Information shall
also apply to the Executive’s use, disclosure and disposition of any
confidential information relating to the business or affairs of the
Company’s faculty, students and employees.
(b) The Executive shall on the Commencement Date execute and deliver
to the Company the standard form Proprietary Information and Inventions
Agreement, as attached as Exhibit B to this Agreement. The Executive
shall, throughout the term of this Agreement and thereafter, remain
subject to the terms and conditions of such Proprietary Information and
Inventions Agreement.
(c) The Executive shall not, in connection with his duties and
responsibilities hereunder, improperly use or disclose any trade secrets
or proprietary and confidential information of any former employer or
other person or entity.
10. Restrictive Covenants. At all times during the
Executive’s employment with the Company, and for a period of one (1) year
after the termination of his employment with the Company,
regardless of the reason or cause for such termination, the
Executive shall comply with the following restrictions:
(a) The Executive shall not directly or indirectly encourage or
solicit any employee, faculty member, consultant or independent
contractor to leave the employment or service of the Company (or
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any affiliated company) for any reason or interfere in any other manner
with any employment or service relationships at the time existing between
the Company (or any affiliated company) and its employees, faculty
members, consultants and independent contractors.
(b) The Executive shall not directly or indirectly solicit any
vendor, supplier, licensor, licensee or other business affiliate of the
Company (or any affiliated company) with respect to products or services
competitive with those offered by the Company or directly or indirectly
induce any such person to terminate its existing business relationship
with the Company (or affiliated company) or interfere in any other manner
with any existing business relationship between the Company (or any
affiliated company) and any such vendor, supplier, licensor, licensee or
other business affiliate.
(c) The Executive shall not, on his own or as an employee, agent,
promoter, consultant, advisor, independent contractor, general partner,
officer, director, investor, lender or guarantor or in any other capacity,
directly or indirectly:
(i) conduct, engage in, be connected with, have any interest in, or
assist any person or entity engaged in, any business, whether in the
United States, any possession of the United States or any foreign country
or territory, that competes with any of the businesses or programs
conducted by the Company in the education industry during the period of
his employment with the Company (hereafter collectively referred to as
the “Businesses”); or
(ii) permit his name to be used in connection with a business which
is competitive or substantially similar to the Businesses.
Notwithstanding the foregoing the Executive may own, directly or
indirectly, solely as an investment, up to one percent (1%) of any class
of publicly traded securities of any business that is competitive or
substantially similar to the Businesses shall not be deemed a breach of
his restrictive covenant under this Section 10(c).
11. Change in Control. For purposes of this Agreement,
“Change in Control” shall have the same meaning assigned to such term
under the Incentive Plan, and upon the occurrence of such Change in
Control, any unvested stock options, restricted stock, restricted stock
units, or other equity granted to the Executive and outstanding at that
time shall vest on an accelerated basis to the same extent as all other
outstanding awards under the Incentive Plan held by individuals who are
executive officers of the Company at that time.
12. Benefit Limitation. In the event it should be determined
(in the manner set forth below) that any payment or distribution of any
type to or for the benefit of the Executive made by the Company, any of
its affiliates, any Person who acquires ownership or effective control of
the Company or ownership of a substantial portion of the Company’s assets
(within the meaning of Section 280G of the Internal Revenue Code of 1986,
as amended (the “Code”), and the regulations thereunder—a “Change in
Control Event”) or any affiliate of such Person, whether paid or payable
or distributed or distributable pursuant to the terms of this Agreement
or otherwise (the “Total Payments”), would otherwise exceed the amount
that could be received by the Executive without the imposition of an
excise tax under Section 4999 of the Code (the “Safe Harbor Amount”),
then the Total Payments shall be reduced to the extent, and only to the
extent, necessary to assure that their aggregate present value, as
determined in accordance the applicable provisions of Code Section 280G
and the regulations thereunder, does not exceed the greater of the
following dollar amounts (the “Benefit Limit”):
(A) The Safe Harbor Amount, or
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(B) the greatest after-tax amount payable to the
Executive after taking into account any excise tax
imposed under Code Section 4999 on the Total Payments.
All determinations under this Section 12 shall be made by an independent
registered public accounting firm selected by the Company from among the
largest four accounting firms in the United States (the “Accounting
Firm”). However, in determining whether such Benefit Limit is exceeded,
the Accounting Firm shall make a reasonable determination of the value to
be assigned to the restrictive covenants in effect for the Executive
pursuant to Section 10 of the Agreement, and the amount of his potential
parachute payment under Code Section 280G shall reduced by the value of
those restrictive covenants to the extent consistent with Code Section
280G and the regulations thereunder.
13. Section 409A. Certain payments contemplated by this
Agreement may be “deferred compensation” for purposes of Section 409A of
the Code. Accordingly, the following provisions shall be in effect for
purposes of avoiding or mitigating any adverse tax consequences to the
Executive under Code Section 409A.
(a) It is the intent of the parties that the provisions of this
Agreement comply with all applicable requirements of Code Section 409A.
Accordingly, to the extent any provisions of this Agreement would
otherwise contravene one or more requirements or limitations of Code
Section 409A, then the Company and the Executive shall, within the
remedial amendment period provided under the regulations issued under
Code Section 409A, effect through mutual agreement the appropriate
amendments to those provisions which are necessary in order to bring the
provisions of this Agreement into compliance with Section 409A: provided
such amendments shall not reduce the dollar amount of any such item of
deferred compensation or adversely affect the vesting provisions
applicable to such item or otherwise reduce the present value of that
item. If any federal legislation is enacted during the term of this
Agreement which imposes a dollar limit on deferred compensation, then the
Executive will co-operate with the Company in restructuring any items of
compensation under this Agreement that are deemed to be deferred
compensation subject to such limitation; provided such restructuring
shall not reduce the dollar amount of any such item or adversely affect
the vesting provisions applicable to such item or otherwise reduce the
present value of that item.
(b) Notwithstanding any provision to the contrary in this Agreement,
no payments or benefits to which the Executive becomes entitled under
Section 8 of this Agreement shall be made or paid to the Executive prior
to the earlier of (i) the expiration of the six (6)-month period measured
from the date of his “separation from service” with the Company (as such
term is defined in the final regulations under Section 409A) or (ii) the
date of his death, if the Executive is deemed at the time of such
separation from service a “key employee” within the meaning of that term
under Code Section 416(i) and such delayed commencement is otherwise
required in order to avoid a prohibited distribution under Code Section
409A(a)(2). Upon the expiration of the applicable Code Section
409A(a)(2) deferral period, all payments deferred pursuant to this
subsection 13(b) shall be paid in a lump sum to the Executive, and any
remaining payments due under this Agreement shall be paid in accordance
with the normal payment dates specified for them herein.
14. Indemnification. The Executive shall be covered by any
policy of liability insurance which the Company maintains during the Term
for its officers and directors (“D&O Insurance”), to the maximum extent
of such coverage provided any other executive officer of the Company. The
Company agrees to provide the Executive with information about all D&O
Insurance maintained during the Term, including proof that such insurance
is in place and the terms of coverage, upon the Executive’s reasonable
request. In addition to any rights the Executive may have under such
D&O Insurance, applicable law, or the articles of incorporation and
bylaws of the Company and except as may be
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prohibited by applicable law, the Company agrees to indemnify, defend,
and hold the Executive harmless from and against any and all claims
and/or liability arising from, as a result of, or in connection with the
Executive’s employment by the Company or any outside appointments and
offices held at the Company’s request, except to the extent such claims
or liability are attributable to the Executive’s gross negligence or
willful misconduct.
15. Injunctive Relief. The Executive expressly agrees that
the covenants set forth in Sections 9 and 10 of this Agreement are
reasonable and necessary to protect the Company and its legitimate
business interests, and to prevent the unauthorized dissemination of
Proprietary Information to competitors of the Company. The Executive also
agrees that the Company will be irreparably harmed and that damages alone
cannot adequately compensate the Company if there is a violation of
Section 9 or 10 of this Agreement by the Executive, and that injunctive
relief against the Executive is essential for the protection of the
Company. Therefore, in the event of any such breach, it is agreed that,
in addition to any other remedies available, the Company shall be
entitled as a matter of right to injunctive relief in any court of
competent jurisdiction, plus attorneys’ fees actually incurred for the
securing of such relief.
16. Survival of Certain Provisions. The provisions of
Sections 8, 9, 10, 11 through 21, and 24 will survive any termination of
this Agreement.
17. Withholdings. Any compensation and/or benefits
provided to the Executive by the Company shall be subject to the
Company’s collection of all applicable payroll deductions and applicable
withholding and payroll taxes.
18. Successors and Assigns. This Agreement will be binding
upon and will inure to the benefit of the Company, its successors and
assigns, and the Company will require any successor or assign to
expressly assume and agree to perform this Agreement in the same manner
and to the same extent that the Company would be required to perform it
if no such succession or assignment had taken place. The term “the
Company” as used herein will include any such successors and assigns to
the Company’s business and/or assets. The term “successors and assigns”
as used herein will mean a corporation or other entity acquiring or
otherwise succeeding to, directly or indirectly, all or substantially all
the assets and business of the Company (including this Agreement) whether
by
operation of law or otherwise. This Agreement will inure to the
benefit of and be enforceable by the Executive’s legal personal
representative.
19. Arbitration. Except as otherwise provided in Section
15, any controversy or claim between the Company or any of its affiliates
and the Executive arising out of or relating to this Agreement or its
termination or any other dispute between the parties, whether arising in
tort, contract, or pursuant to a statute, regulation, or ordinance now in
existence or which may in the future be enacted or recognized will be
settled and determined by a single arbitrator whose award will be
accepted as final and binding upon the parties. The arbitration shall be
conducted in Phoenix, Arizona and in accordance with the American
Arbitration Association (“AAA”) Employment Arbitration Rules in effect at
the time such arbitration is properly initiated. To the extent that any
of the AAA rules or anything in the Agreement conflicts with any
arbitration procedures required by applicable law, the arbitration
procedures required by applicable law shall govern. The costs of
the arbitration, including administrative fees and fees charged by the
arbitrator, will be borne by the Company. Each party will bear its or his
own travel expenses and attorneys’ fees: provided, however that the
arbitrator (i) shall award attorneys’ fees to the Executive with respect
to any claim for breach of this Agreement on which he is the prevailing
party and may award attorneys’ fees to the Executive as otherwise allowed
by law and (ii) shall award attorneys’ fees to the Company with respect
to any claim brought under Section 15 on which it is the prevailing party
and may award attorneys’ fees to the Company with respect to any other
claim on which it is the prevailing party and it is determined by the
arbitrator that such claim by
10
the Executive was frivolous in that it presented no colorable arguments
for recovery; but the maximum amount of attorneys’ fees that may be
awarded to the Company other than with respect to any claim brought under
Section 15 shall not exceed one hundred thousand dollars ($100,000). The
arbitration shall be instead of any civil litigation; and the Executive
hereby waives any right to a jury trial. The arbitrator’s decision shall
be final and binding to the fullest extent permitted by law and
enforceable by any court having jurisdiction thereof. In any situation in
which emergency injunctive relief may be necessary, either party may seek
such relief from a court until such time as the arbitrator is able to
address the matter covered by this Section 19. Both parties agree that
the state and federal courts located in Phoenix, Arizona, will be the
sole venue for any such action involving emergency injunctive relief, and
the parties submit to personal jurisdiction in these courts for this
purpose. Judgment upon any award rendered by the arbitrator may be
entered in any court having jurisdiction thereof.
20. Notice. For the purposes of this Agreement, notices and
all other communications provided for in the Agreement (including the
Notice of Termination) will be in writing and will be deemed to have been
given when personally delivered or on the third business day following
mailing if sent by registered or certified mail, return receipt requested,
postage prepaid, or upon receipt if overnight delivery service is used,
addressed as follows:
To the Executive:
P. Xxxxxx Xxxx
0000 X. Xxxxxx Xxxx Xxxx
Xxxxxxxx Xxxxxx, Xxxxxxx 00000
0000 X. Xxxxxx Xxxx Xxxx
Xxxxxxxx Xxxxxx, Xxxxxxx 00000
To the Company:
Apollo Group, Inc
0000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: Chief Financial Officer
0000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: Chief Financial Officer
With a copy to:
Xxxxx X. Xxxxxx
Levenfeld Xxxxxxxxxx, LLC
0 X. XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Levenfeld Xxxxxxxxxx, LLC
0 X. XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
21. Miscellaneous. No provision of this Agreement may be
modified, waived, or discharged unless such waiver, modification, or
discharge is agreed to in writing and signed by the Executive and the
Company. No waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or provision of
this Agreement to be performed by such other party will be deemed a waiver
of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time. No agreement or representation, oral or
otherwise, express or implied, with respect to the subject matter hereof
has been made by either party which is not expressly set forth in this
Agreement.
11
22. Counterparts. This Agreement may be executed in several
counterparts, each of which will be deemed an original and all of which
will constitute but one and the same instrument. An electronic facsimile
of a signature, when delivered by the signing party to the non-signing
party, will have the same force and effect as an original.
23. Governing Law. This Agreement will be governed by and
construed and enforced in accordance with the laws of the State of Arizona
without giving effect to the conflict of law principles thereof.
24. Severability. If any provision of this Agreement as
applied to any party or to any circumstance should be adjudged by a court
of competent jurisdiction (or determined by the arbitrator) to be void or
unenforceable for any reason, the invalidity of that provision shall in no
way affect (to the maximum extent permissible by law) the application of
such provision under circumstances different from those adjudicated by the
court or determined by the arbitrator, the application of any other
provision of this Agreement, or the enforceability or invalidity of this
Agreement as a whole. Should any provision of this Agreement become or be
deemed invalid, illegal or unenforceable in any jurisdiction by reason of
the scope, extent or duration of its coverage, then such provision shall
be deemed amended to the extent necessary to conform to applicable law so
as to be valid and enforceable or, if such provision cannot be so amended
without materially altering the intention of the parties, then such
provision will be stricken, and the remainder of this Agreement shall
continue in full force and effect.
25. Entire Agreement. This Agreement, together with the
Proprietary Information and Inventions Agreement referred to in Section 9
and the documentation for the equity grants referred to in Section 4,
shall constitute the entire agreement between the parties hereto with
respect to the subject matter hereof and shall supersede all prior
agreements, if any, understandings and arrangements, oral or written,
between the parties hereto with respect to the subject matter hereof.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duly authorized officer and the Executive has executed
this Agreement as of the day and year first above written.
| P. XXXXXX XXXX | THE APOLLO GROUP, INC. | |||||
/s/ P. Xxxxxx Xxxx
|
By: | /s/ Xxxxxx X. X’Xxxxx | ||||
| Its: | Executive VP and CFO | |||||
12
EXHIBIT A
FORM OF GENERAL RELEASE
GENERAL RELEASE
This AGREEMENT is made as of
, 200 , by and between P. Xxxxxx
Xxxx (“Executive”), and Apollo Group, Inc. (the “Company”).
In consideration for the severance benefits offered by the Company to Executive pursuant
to Section 8 of his Employment Agreement with the Company dated , 2007 (the “Employment
Agreement”), Executive agree as follows:
1. Termination of Employment. Executive acknowledges that his employment
with the
Company is terminated effective
(the “Termination Date”), and he agrees that he will
not apply for or seek re-employment with the Company, its parent
companies, subsidiaries and affiliates after that date. Executive agrees
that he has received and reviewed his final paycheck and he has received
all wages and accrued but unpaid vacation pay earned by him through the
Termination Date.
2. Waiver and Release.
(a) Except as set forth in Section 2(b), which identifies claims
expressly excluded from this release, Executive hereby releases the
Company, all affiliated companies, and their respective officers,
directors, agents, employees, stockholders, successors and assigns from
any and all claims, liabilities, demands, causes of action, costs,
expenses, attorney fees, damages, indemnities and obligations of every
kind and nature, in law, equity or otherwise, known and unknown, suspected
and unsuspected, disclosed and undisclosed, arising from or relating to
Executive’s employment with the Company and the termination of that
employment, including (without limitation): claims of wrongful discharge,
emotional distress, defamation, fraud, breach of contract, breach of the
covenant of good faith and fair dealing, discrimination claims based on
sex, age, race, national origin, disability or any other basis under Title
VII of the Civil Rights Act of 1964, as amended, the Age Discrimination in
Employment Act of 1967, as amended (“ADEA”), the Americans with
Disability Act, the Employee Retirement Income Security Act, as amended,
the Equal Pay Act of 1963, as amended, and any similar law of any state or
governmental entity, any contract claims, tort claims and wage or benefit
claims, including (without limitation) claims for salary, bonuses,
commissions, equity awards (including stock grants, stock options and
restricted stock units), vesting acceleration, vacation pay, fringe
benefits, severance pay or any other form of compensation.
(b) The only claims that Executive is not waiving and releasing under
this Agreement are claims he may have for (1) unemployment, state
disability, worker’s compensation, and/or paid family leave insurance
benefits pursuant to the terms of applicable state law; (2) continuation
of existing participation in Company-sponsored group health benefit plans
under the federal law known as “COBRA” and/or under an applicable state
law counterpart(s); (3) any benefits entitlements that are vested and
unpaid as of his termination date pursuant to the terms of a Company-
sponsored benefit plan; (4) any benefits to which he is entitled pursuant
to Section 8 of the Employment Agreement or his rights to indemnification
pursuant to Section 14 of the Employment Agreement, (5) violation of any
federal state or local statutory and/or public policy right or entitlement
that, by applicable law, is not waivable; and (6) any wrongful act or
omission occurring after the date he executes this Agreement. In addition,
nothing in this Agreement prevents or prohibits Executive from filing a
claim with the Equal Employment Opportunity Commission (EEOC) or any other
government agency that is responsible for enforcing a law on behalf of the
government and deems such claims not waivable. However, because
Executive is hereby waiving and releasing all claims “for monetary damages
and any other form of personal relief (per Section 2(a) above), he may
only seek and receive non-personal forms of relief from the EEOC and
similar government agencies.
(c) Executive represents that he has not filed any complaints, charges, claims,
grievances, or lawsuits against the Company and/or any related persons with any local,
state or federal agency or court, or with any other forum.
(d) Executive acknowledges that he may discover facts different from or in
addition to those he now knows or believes to be true with respect to the claims,
demands, causes of action, obligations, damages, and liabilities of any nature
whatsoever that are the subject of this Agreement, and he expressly agrees to assume
the risk of the possible discovery of additional or different facts, and agrees that
this Agreement shall be and remain in effect in all respects regardless of such
additional or different facts. Executive expressly acknowledges that this Agreement is
intended to include, and does include in its effect, without limitation, all claims
which Executive does not know or suspect to exist in his favor against the Company
and/or any related persons at the moment of execution thereof, and that this Agreement
expressly contemplates extinguishing all such claims.
(e) Executive understands and agrees that the Company has no obligation to provide
him with any severance benefits under the Employment Agreement unless he executes this
Agreement. Executive also understands that he has received or will receive, regardless
of the execution of this Agreement, all wages owed to him, together with any accrued
but unpaid vacation pay, less applicable withholdings and deductions, earned through
the Termination Date.
(f) This Agreement is binding on Executive, his heirs, legal representatives and assigns.
3. Cooperation. Executive agrees reasonably to cooperate
with and assist the Company and its counsel at any time and in any manner reasonably
required by the Company or its counsel (with due regard for the Executive’s other
commitments if he has obtained other employment) in connection with any litigation or
other legal process affecting the Company or in answering questions concerning any
other matter of which Executive has knowledge as result of his employment (other than
any litigation with respect to this Agreement). In the event of such requested
cooperation, the Company shall reimburse Executive for his reasonable out-of-pocket
expenses.
4. Entire Agreement. This Agreement and the Employment Agreement
constitute the entire understanding and agreement between Executive and the Company in
connection with the matters described, and replaces and cancels all previous agreements
and commitments, whether spoken or written, with respect to such matters. Nothing in
this Agreement supersedes or replaces any of Executive’s obligations under his
Employment Agreement that survive termination, including, but not limited to (i) his
(and the Company’s) agreement to arbitrate disputes, (ii) his restrictive covenants
under Section 10 of the Employment Agreement and (iii) his obligations under Section 9
of the Employment Agreement, his existing Proprietary Information Inventions Agreement
with the Company and any other obligations not to use or disclose Company confidential
and/or proprietary information.
5. Modification in Writing. No oral agreement, statement, promise,
commitment or representation shall alter or terminate the provisions of this Agreement.
This Agreement cannot be changed or modified except by written agreement signed by
Executive and authorized representatives of the Company.
6. Governing Law: Jurisdiction. This Agreement shall be governed by and
enforced in accordance with the laws of the State of Arizona.
7. Severability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such
15
invalidity or unenforceability without rendering invalid
or unenforceable the remaining terms and provisions of
this Agreement or affecting the validity or
enforceability of any of the terms or provisions of this
Agreement in any other jurisdiction. If any provision of
this Agreement is so broad as to be unenforceable, the
provision shall be interpreted to be only so broad as is
enforceable.
8. No Admission of Liability. This Agreement
does not constitute an admission of any unlawful
discriminatory acts or liability of any kind by the Company
or anyone acting under their supervision or on their
behalf. This Agreement may not be used or introduced as
evidence in any legal proceeding, except to enforce or
challenge its terms.
9. Acknowledgements. Executive is advised to
consult with an attorney of his choice prior to executing
this Agreement. By signing below, Executive acknowledges
and certifies that he:
(a) has read and understands all of the terms of this
Agreement and is not relying on any representations or
statements, written or oral, not set forth in this
Agreement;
(b) has been provided a consideration period of
twenty-one calendar days within which to decide whether he
will execute this Agreement and that no one hurried him
into executing this Agreement;
(c) is signing this Agreement knowingly and voluntarily; and
(d) has the right to revoke this Agreement within
seven (7) days after signing it, by providing written
notice of revocation via certified mail to the Company to
the address specified in the Employment Agreement.
Executive’s written notice of revocation must be postmarked
on or before the end of the eighth (8th) calendar day after
he has timely signed this Agreement. This deadline will be
extended to the next business day should it fall on a
Saturday, Sunday or holiday recognized by the U.S. Postal
Service.
Because of the revocation period, the Company’s
obligations under this Agreement shall not become
effective or enforceable until the eighth (8th) calendar
day after the date Executive signs this Agreement
provided he has delivered it to the Company without
modification and not revoked it (the “Effective Date”).
I HAVE READ, UNDERSTAND AND
VOLUNTARILY ACCEPT AND AGREE TO THE ABOVE TERMS
P. Xxxxxx Xxxx
Signature |
Date: , 20 |
16
EXHIBIT B
FORM OF PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT
PROPRIETARY
INFORMATION AND INVENTIONS
AGREEMENT
AGREEMENT
This Proprietary Information and Inventions Agreement (“PIIA”) confirms certain terms of my
employment with The Apollo Group (the “Company”), is a condition of my employment, and is a
material part of the consideration for my employment by the Company. The headings contained in
this PIIA are for convenience only, have no legal significance, and are not intended to change or
limit this PIIA in any matter whatsoever.
A. Definitions
1. The “Company”
As used in this PIIA, the “Company” refers to The Apollo Group, each of its subsidiaries,
affiliated and parent companies, and successors and assigns. I recognize and agree that my
obligations under this PIIA and all terms of this PIIA apply to me regardless of whether I am
employed by or provide services to The Apollo Group, any subsidiary, affiliate or parent companies
of The Apollo Group.
2. “Proprietary Information”
I understand that the Company possesses and will possess Proprietary Information which is
important to its business. For purposes of this PIIA, “Proprietary Information” is information
that was or will be developed, created, or discovered by or on behalf of the Company, or which
became or will become known by, or was or is conveyed to the Company, which has commercial value
in the Company’s business. “Proprietary Information” includes information concerning the
organization, business and finances of the Company or of any third party which the Company is
under an obligation to keep confidential that is maintained by the Company as confidential,
including (without limitation):
a.
the Company’s Lead List which is comprised of prospective students who meet the admission requirements of the Company;
b. data and information on current and prospective corporate accounts,
including, but not limited to, the identity of the corporate accounts, the decision makers or
decision influencers, the buying criteria of the accounts and programs for those accounts;
c.
the management process, training materials, scripts, programs and preferred responses to features and benefits provided to Admission Counselors;
d. the certification training materials and processes for the certification of the
Company’s Student Advisors (known as the ACU online learning system program), including,
but not limited to, the tests taken, materials provided and course work;
e.
the information and data contained in the Company’s enrollment data system, all monthly enrollment reports;
Page l of 8
f. salary, terms of employment, tenure and performance review information
on the faculty members and other employees of the Company, all business models and financial
information, data and materials of the Company not otherwise available to the general public
through the Company’s Annual Report or otherwise;
g. all market research or works for hire materials, including, but not limited
to, industry data, demographics, company profiles and/or specific consumer
behavior
information, all monthly financial, statistical and operational information and reports
including
but not limited to the “Yellow Book”, and all other
information concerning enrollment by campus, profit and loss per campus and the terms of any lease;
h. all monthly financial statements, including, but not limited to, the “Board Book”;
i. all internally developed source code, including, but not limited to, modifications to
existing source codes for student information systems (such as Galaxy, Campus Tracking, OSIRIS and
eCampus), academic systems (such as rEsource and OnLine Learning System (OLS), proprietary
modifications to packaged applications (such as PeopleSoft, Oracle Financials and ADP HRizon) and
all future internally developed source code.
I understand and agree that my employment creates a relationship of confidence and trust
between the Company and me with respect to Proprietary Information.
3. “Company Documents and Materials”
I understand that the Company possesses or will possess “Company Documents and Materials”
which are important to its business. For purposes of this PIIA, “Company Documents and Materials”
are documents or other media or tangible items that contain or embody Proprietary Information or
any other information concerning the business, operations or plans of the Company, whether such
documents, media or items have been prepared by me or by others.
“Company Documents and Materials” include (without limitation) blueprints, drawings,
photographs, charts, graphs, notebooks, customer lists, computer disks, tapes, computer hard
drives, floppy disks, CD ROMS, or printouts, sound recordings and other printed, typewritten or
handwritten documents, sample products, prototypes and models and any information recorded in any
other form whatsoever. “Company Documents and Materials” also include copies of any of the
foregoing.
B. Assignment of Rights
All Proprietary Information and all patents, patent rights, copyrights, trade secret rights,
trademark rights and other rights (including, without limitation, intellectual property rights)
anywhere in the world in connection therewith is and shall be the sole property of the Company. I
hereby assign to the Company any and all rights, title and interest I may have or acquire in such
Proprietary Information.
Page 2 of 8
At all times, both during my employment by the Company and after its termination, I will keep
in confidence and trust and will not use or disclose any Proprietary Information or anything
relating to it without the prior written consent of an officer of the Company, except as may be
necessary in the ordinary course of performing my duties to the Company.
C. Maintenance and Return of Company Documents and Materials
I agree to make and maintain adequate and current written records, in a form specified by the
Company, of all inventions, trade secrets and works of authorship assigned or to be assigned to
the Company pursuant to this PIIA. All Company Documents and Materials are and shall be the sole
property of the Company.
I agree that during my employment by the Company, I will not remove any Company Documents and
Materials from the business premises of the Company or deliver any Company Documents and Materials
to any person or entity outside the Company, except in connection with performing the duties of my
employment. I further agree that, immediately upon the termination of my employment by me or by
the Company for any reason, or during my employment if so requested by the Company, I will return
all Company Documents and Materials, apparatus, equipment and other physical property, or any
reproduction of such property, excepting only (i) my personal copies of records relating to my
compensation; (ii) my personal copies of any materials previously distributed generally to
stockholders of the Company; and (iii) my copy of this PIIA.
D. Disclosure of Inventions to the Company
I will promptly disclose in writing to the Chair of the Company’s Board of Directors or to
such other person designated by the Board all “Inventions,” which includes (without limitation)
all software programs or subroutines, source or object code, algorithms, improvements, inventions,
works of authorship, trade secrets, technology, designs, formulas, ideas, processes, techniques,
know-how and data, whether or not patentable, made or discovered or conceived or reduced to
practice or developed by me, either alone or jointly with others, during the term of my
employment.
I will also disclose to the Chair of the Company’s Board of Directors or to such other person
designated by the Board all Inventions made, discovered, conceived, reduced to practice, or
developed by me within six (6) months after the termination of my employment with the Company
which resulted, in whole or in part, from my prior employment by the Company. Such disclosures
shall be received by the Company in confidence (to the extent such Inventions are not assigned to
the Company pursuant to Section (E) below) and do not extend the assignment made in Section (E)
below.
Notwithstanding any other provision of this Agreement to the contrary, this Agreement does not
obligate me to assign to the Company any of my rights in an invention for which no equipment,
supplies, facility, or trade secret information of the Company was used and
Page 3 of 8
which was developed entirely on my own time, unless (a) the invention relates (i) directly to the
business of the Company, or (ii) to the Company’s actual or demonstrably anticipated research or
development, or (b) the invention results from any work performed by me for the Company.
E. Right to New Ideas
1. Assignment of Inventions to the Company
I agree that all Inventions that I make, discover, conceive, reduce to practice or develop
(in whole or in part, either alone or jointly with others) during my employment shall be the sole
property of the Company to the maximum extent permitted by applicable law. However, any inventions
that I make, discover, conceive, reduce to practice or develop (in whole or in part, either alone
or jointly with others) during my employment shall not be the sole property of the Company so long
as such inventions have been developed entirely on my own time without using any of the Company’s
equipment, supplies, facilities or Proprietary Information, unless such inventions constitute
Inventions for purposes of this Agreement because:
a. they relate at the time of conception or reduction to practice of the
invention to the Company’s business, or actual or demonstrably
anticipated
research or development of the Company, or
b. they result from any work I performed for the Company.
2. Works Made for Hire
The Company shall be the sole owner of all patents, patent rights, copyrights, trade secret
rights, trademark rights and all other intellectual property or other rights in connection with
Inventions. I further acknowledge and agree that such Inventions, including (without limitation)
any computer programs, programming documentation, and other works of authorship, are “works made
for hire” for purposes of the Company’s rights under copyright laws. I hereby assign to the
Company any and all rights, title and interest I may have or acquire in such Inventions. If in the
course of my employment with the Company, I incorporate into a Company product, service or process
a prior Invention owned by me or in which I have interest, the Company is hereby granted and shall
have a nonexclusive, royalty-free, irrevocable, perpetual, sublicensable, worldwide license to
make, have made, modify, use, market, sell and distribute such prior Invention as part of or in
connection with such product, service or process.
3. Cooperation
I agree to perform, during and after my employment, all acts deemed necessary or desirable by
the Company to permit and assist it, at the Company’s expense, in further evidencing and perfecting
the assignments made to the Company under this PIIA and in obtaining, maintaining, defending and
enforcing patents, patent rights, copyrights, trademark rights, trade secret rights or any other
rights in connection with such Inventions and improvements thereto in any and all countries. Such
acts may include (without limitation) execution of documents and assistance or cooperation in legal
proceedings. I hereby irrevocably designate and appoint the Company and its duly authorized
officers and agents, as my agents and attorney-in-fact to act for and on my behalf and instead of
me, to execute and file any
Page 4 of 8
documents, applications or related findings and to do all other lawfully permitted acts to further
the purposes set forth above in this Subsection 3, including (without limitation) the perfection
of assignment and the prosecution and issuance of patents, patent applications, copyright
applications and registrations, trademark applications and registrations or other rights in
connection with such Inventions and improvements thereto with the same legal force and effect as
if executed by me.
4. Assignment or Waiver of Moral Rights
Any assignment of copyright hereunder (and any ownership of a copyright as a work made for
hire) includes all rights of paternity, integrity, disclosure and withdrawal and any other rights
that may be known as or referred to as “moral rights” (collectively “Moral Rights”). To the extent
such Moral Rights cannot be assigned under applicable law and to the extent the following is
allowed by the laws in the various countries where Moral Rights exist, I hereby waive such Moral
Rights and consent to any action of the Company that would violate such Moral Rights in the
absence of such consent.
5. List of Inventions
I have attached hereto as Appendix A a complete list of all inventions or improvements to
which I claim ownership and that I desire to remove from the operation of this PIIA (except for
the license granted in Section (E)(2) above), and I acknowledge and agree that such list is
complete. If no such list is attached to this PIIA, I represent that I have no such inventions or
improvements at the time of signing this PIIA.
F. Company Authorization for Publication
Prior to my submitting or disclosing for possible publication or dissemination outside the
Company any material prepared by me that incorporates information that concerns the Company’s
business or anticipated research, I agree to deliver a copy of such material to an officer of the
Company for his or her review. Within twenty (20) days following such submission, the Company
agrees to notify me in writing whether the Company believes such material contains any Proprietary
Information or Inventions, and I agree to make such deletions and revisions as are reasonably
requested by the Company to protect its Proprietary Information and Inventions. I further agree to
obtain the written consent of the Company prior to any review of such material by persons outside
the Company.
G. Restrictive Covenants
I agree to abide by the restrictive covenants described in Section 10 of my Employment
Agreement with the Company dated
August 31st 2007 (the “Employment Agreement”).
H. Former Employer’s and Others’ Information
I represent that my performance of all the terms of this PIIA does not and will not breach any
agreement to keep in confidence proprietary information, knowledge or data acquired or developed by
me in confidence or in trust prior to my employment by the Company.
Page 5 of 8
I agree that I will not disclose to the Company, or use in the performance of my duties and
responsibilities as an employee of the Company, any trade secrets or confidential or proprietary
information or material belonging to any previous employers or other person or entity.
I. Reformation and Severability
I agree that if any provision, or portion of a provision, of this Agreement is deemed
unenforceable by reason of the scope, extent or duration of its coverage, then such provision
shall be deemed amended to the extent necessary to conform to applicable law so as to be valid and
enforceable. Should any provision, or portion of a provision, of this Agreement be deemed
unenforceable for any other reason, such unenforceability will not affect any other provision, or
portion of a provision, of this Agreement and this Agreement shall be construed as if such
unenforceable provision, or portion of provision, had never been contained herein.
J. Authorization for Post-Termination Notification of Obligations Under PIIA
I hereby authorize the Company to notify any person or entity with whom I become employed, or
to whom I provide services, following the termination of my employment with the Company of my
ongoing obligations under this PIIA.
K. Entire Agreement
This PIIA and the Employment Agreement set forth the entire agreement and understanding
between the Company and me relating to the subject matters covered therein, and this PIIA and the
Employee Agreement merge, cancel, supersede and replace all prior discussions between us, including
(without limitation) any and all statements, representations, negotiations, promises or agreements
relating to the subject matters covered by this PIIA and the Employment Agreement that may have
been made by any officer, employee or representative of the Company.
Page 6 of 8
I HAVE
READ THIS PIIA CAREFULLY, AND I UNDERSTAND AND ACCEPT THE OBLIGATIONS THAT IT IMPOSES UPON ME
WITHOUT RESERVATION.
I SIGN
THIS PIIA FREELY AND VOLUNTARILY, WITHOUT COERCION OR DURESS.
Date: August 31, 2007
|
/s/ P. Xxxxxx Xxxx
|
|||
| Employee Signature | ||||
| P. Xxxxxx Xxxx | ||||
| Employee Name [Please Print] |
Page 7 of 8
APPENDIX A
| 1. | The following is a complete list of all Inventions or improvements relevant to the subject matter of my employment by the Company that have been made or discovered or conceived or first reduced to practice by me or jointly with others prior to my employment by the Company that I desire to remove from the operation of the Company’s Proprietary Information and Inventions Agreement (“PIIA”), except for the license granted in Section (E)(2) of the PIIA: |
| þ | No inventions or improvements. | ||
| o | See below: | ||
| o | See (#) additional sheets attached. |
| 2. | I propose to bring to my employment the following materials and documents of a former employer or other person/entity: |
| þ | No materials or documents | ||
| o | See below: | ||
| o | See (#) additional sheet(s) attached: |
| Date: August 31, 2007 | /s/ P. Xxxxxx Xxxx | |||
| Employee Signature | ||||
Page 8 of 8
SCHEDULE I
LIST OF EXISTING BOARD MEMBERSHIPS
InPlay Technologies Inc.: Member of Board of Directors, Audit Committee and Compensation Committee;
member and Chairman of Nominations and Corporate Governance Committee
