EMPLOYMENT AGREEMENT
EXHIBIT 10.14
This Employment Agreement (“Agreement”) is entered into as of this 21st day of August,
2006, by and between EDUCATIONAL COMMUNICATIONS, INC. and any successors thereto (collectively
referred to as the “Company”) and Xxxxx Xxxx Xxxxxxx (“Executive”).
The parties hereby agree as follows:
1. Employment. Executive will serve the Company in the position of General Manager of
Educational Communications, Inc. and will perform such duties as from time to time shall be
determined by the Board of Directors of the Company, and will perform, faithfully and diligently,
the services and functions performed and will carry out the functions of his/her office and furnish
his/her best advice, information, judgment and knowledge with respect to the business of the
Company. Executive agrees to perform such duties as hereinabove described and to devote full-time
attention and energy to the business of the Company. Executive will not, during the term of
employment under this Agreement, engage in any other business activity if such business activity
would impair Executive’s ability to carry out his/her duties under this Agreement.
2. Term. Contingent upon successful completion of a criminal background investigation,
reference check and pre-employment drug screen, this Agreement shall be effective August
21st, 2006 and end on August 31st, 2007, and shall thereafter renew for
successive one-year terms, unless two months’ notice is given by either party to the other party of
non-renewal. However, this Agreement may be terminated at any time by either party in accordance
with Section 6 hereof.
3. Compensation and Other Benefits.
3.1 Salary. The salary compensation to be paid by the Company to Executive and which
Executive agrees to accept from the Company for services performed and to be performed by Executive
hereunder shall be an annual gross amount, before applicable withholding and other payroll
deductions, of $175,000.00, payable in equal bi-weekly installments of $6,730.76, subject to such
changes as the Board of Directors of the Company may, in its sole discretion, from time to time
determine.
3.2 Benefits. Executive shall be entitled to participate in such employee benefit
programs, plans and policies (including incentive bonus plans and incentive stock option plans) as
are maintained by the Company and as may be established for the employees of the Company from time
to time on the same basis as other executive employees are entitled thereto, except to the extent
such plans are duplicative of benefits otherwise provided to Executive under this Agreement (e.g.
severance). It is understood that the establishment, termination or change in any such Executive
employee benefit programs, plans or policies shall be at the option of the Company in the exercise
of its sole discretion, from time to time, and any such termination or change in such program, plan
or policy will not affect this Agreement so long as Executive is treated on the same basis as other
executive employees participating in such program, plan or policy, as the case may be. Upon
termination of employment under this Agreement, without regard to the manner in which the
termination was brought about, Executive’s rights in such
employee benefit programs, plans or policies shall be governed solely by the terms of the
program, plan or policy itself and not this Agreement. Executive shall be entitled to an annual
paid vacation in accordance with the Company’s personnel policy for his/her years of service
completed as an employee of the Company (and, to the extent applicable, the Company’s
predecessors).
4. Working Facilities. During the term of his/her employment under this Agreement,
Executive shall be furnished with a private office, stenographic services and such other facilities
and services as are commensurate with his/her position with the Company and adequate for the
performance of his/her duties under this Agreement.
5. Expenses. During the term of his/her employment under this Agreement, Executive is
authorized to incur reasonable out-of-pocket expenses for the discharge of his/her duties hereunder
and the promotion of business of the Company, including expenses for entertainment, travel and
related items, that are incurred in accordance with the Company’s policies. The Company shall
reimburse Executive for all such expenses upon presentation by Executive from time to time of
itemized accounts of expenditures incurred in accordance with Company policies.
6. Termination. The employment relationship between Executive and the Company is
“at-will”, which means that Executive’s employment under this Agreement may be terminated with or
without cause or reason by either the Company or Executive at any time. Payment to Executive upon
his/her termination is governed by the following terms and conditions.
6.1 Termination by Company for Cause. The following events or circumstances are deemed
“Cause” for Executive’s termination.
| (i) | Executive’s indictment of, or plea of nolo contendere to, a felony or other crime involving moral turpitude; | ||
| (ii) | Executive’s material breach of a contractual obligation to the Company or any of its Affiliates (as defined below); | ||
| (iii) | Executive’s failure to perform, or gross negligence in the performance of, Executive material duties and responsibilities to the Company or any of its Affiliates; or | ||
| (iv) | Executive’s substantial, wrongful damage to property of the Company. |
If the Executive is terminated for Cause, upon payment by the Company to Executive of all
salary earned but unpaid through the termination date, accrued and unused vacation, and any accrued
and unpaid bonus to the date of such termination, the Company shall have no further liability to
Executive for compensation in accordance herewith, and Executive will not be entitled to receive
any other salary, the Termination Payments or Termination Benefits (as such terms are defined
below) except aforesaid vacation and any accrued bonus. For purposes of this Agreement,
“Affiliates” means all persons and entities directly or indirectly controlling, controlled by or
under common control with the Company, where control may be by management authority, equity
interest or otherwise.
6.2 Termination by Company Without Cause. In the event of the termination of
Executive’s employment under this Agreement by the Company without Cause the Executive will be
entitled to receive 26 bi-weekly payments equal to the average of his/her bi-weekly base salary in
effect within the two years preceding the termination (including, for these purposes, average
bi-weekly base salary of Executive from the Company’s predecessors) (“Termination Payments”), less
legally required withholdings. In addition to the Termination Payments, Executive will be entitled
to elect the continuation of health benefits under COBRA and the Company will pay the COBRA
premiums for a maximum of 12-months, beginning on the date that Executive’s health coverage ceases
due to his/her termination, accrued but unused vacation, and any accrued bonus (“Termination
Benefits”). If Executive obtains employment while he is entitled to receive the Termination
Payments and the Termination Benefits, each Termination Payment shall be reduced by the amount of
his/her average bi-weekly compensation to be received in connection with his/her new employment and
the payment of the Termination Benefits shall cease upon Executive becoming covered under the new
employer’s health coverage plan. The combination of the Termination Payments and the Termination
Benefits constitute the sole amount to which Executive is entitled if termination is without Cause.
6.3 Termination by Executive Without Good Reason. Executive may terminate his/her
employment under this Agreement without Good Reason as defined in Paragraph 6.4 below upon the
giving of 90 days written notice of termination. In the event of such termination, in lieu of the
90 day notice period, the Company may elect to pay Executive compensation for the notice period (or
any remaining portion thereof), plus unused accrued vacation and any accrued unpaid bonus, in which
event Executive’s services to the company will be terminated immediately. No Termination Payments
or Termination Benefits other than as set forth in Section 6.3 shall be payable upon Executive’s
termination of this Agreement without Good Reason.
6.4 Termination by Executive With Good Reason. Executive may terminate his/her
employment under this Agreement for Good Reason. For purposes of this Agreement, “Good Reason”
shall mean:
| (i) | Without Executive’s consent, the assignment to Executive of substantial duties inconsistent with Executive’s then-current position, duties, responsibilities and status with the Company, or any removal of Executive from his/her titles and offices, except in connection with the termination of Executive’s employment under this Agreement by Company or as a result of Executive’s death or permanent disability (as defined in the Company’s or Executive’s disability insurance policies); | ||
| (ii) | The Company requiring Executive to relocate anywhere other than Austin, Texas without Executive’s consent (see exception in paragraph 6.2); or | ||
| (iii) | A decrease in Executive’s salary from the salary in effect upon the date hereof that is inconsistent with or not commensurate with Executive’s then current position in the Company. |
In the event of termination under this Section 6.4, the Company shall pay to Executive
Termination Payments of thirteen (13) bi-weekly payments and Termination Benefits of six (6) months
of COBRA coverage. If Executive obtains employment while he is entitled to receive the Termination
Payments and the Termination Benefits, each Termination Payment shall be reduced by the amount of
his/her average bi-weekly compensation to be received in connection with his/her new employment and
the payment of the Termination Benefits shall cease upon Executive becoming covered under the new
employer’s health coverage plan. The combination of the Termination Payments and the Termination
Benefits constitute the sole amount to which Executive is entitled if termination is by Executive
With Good Reason.
6.5 Death or Permanent Disability. Executive’s employment under this Agreement shall
terminate upon Executive’s death or permanent disability (as defined in the Company’s or
Executive’s disability insurance policies). Other than accrued but unused vacation and any accrued
but unpaid bonus, no Termination Payments or Termination Benefits shall be payable upon Executive’s
death or permanent disability.
6.6 Release Agreement. The Termination Payments and Termination Benefits pursuant to
Section 6 are conditioned upon your signing a release of claims in the form provided by the Company
(the “Release Agreement”) within twenty-one days of the date on which you give or receive, as
applicable, notice of termination of your employment and upon your not revoking the Employee
Release thereafter.
6.7 Notwithstanding anything to the contrary in this Agreement, (i) except to the extent
required by law, no payment will be due and payable under this Section 6 until the later of the
next regular Company payday following the effective date of the Release Agreement or that date
which is in accordance with the requirements of clause (ii) hereof and (ii) in the event that at
the time that Executive’s employment with the Company terminates the Company is publicly traded (as
defined in Section 409A of the Internal Revenue Code), any amounts payable under this Section 6
that would otherwise be considered deferred compensation subject to the additional twenty percent
(20%) tax imposed by Section 409A if paid within six (6) months following the date of termination
of Company employment shall be paid at the later of the time otherwise provided in Section 6 or the
time that will prevent such amounts from being considered deferred compensation.
7. Confidentiality. The Company and its Affiliates possess confidential information,
proprietary information goodwill and trade secrets, which is important to their business.
Immediately upon Executive’s execution of this Agreement and during the course of Executive’s
employment with the Company, the Company will give Executive confidential information, proprietary
information, goodwill and trade secrets belonging to the Company and its Affiliates that Executive
did not have or have access to prior to Executive’s execution of this Agreement to enable Executive
to perform his/her duties and responsibilities hereunder. During and after the term of employment
under this Agreement, Executive agrees that he shall not, without the express written consent of
Company, directly or indirectly communicate or divulge to, or use for his/her own benefit or for
the benefit of any other person, firm, association or corporation, any of Company’s or its
Affiliates’ trade secrets, confidential information, proprietary information or goodwill, which
trade secrets, confidential information, proprietary data and goodwill were communicated to or
otherwise learned or acquired by Executive during his/her employment
relationship with Company (“Confidential Information”), except that Executive may disclose such
matters to the extent that disclosure is required (a) at Company’s direction or (b) by a court or
other governmental agency of competent jurisdiction. As long as such matters remain trade secrets,
confidential information, proprietary information or goodwill, Executive shall not use such trade
secrets, confidential information, proprietary information or goodwill in any way or in any
capacity other than as expressly consented to by Company.
8. Covenant not to Compete or Solicit. Ancillary to the Company’s commitments as set
forth herein, including but not limited to, the obligation to provide Executive with the Company’s
and its Affiliates’ confidential information, proprietary information, trade secrets and goodwill
and Executive’s agreement not to improperly use or disclose the Company’s and its Affiliates’
proprietary information, trade secrets or goodwill, the receipt and sufficiency of which is hereby
acknowledged, and to avoid the actual or threatened misappropriation of the Company’s and its
Affiliates’ confidential information, proprietary information, trade secrets or goodwill, Executive
agrees to the following covenants:
8.1 Executive agrees to refrain during his/her employment under this Agreement and for one
year after the termination of his/her employment under this agreement for any reason, without
written permission of the Company, from becoming involved in any way, within the boundaries of the
United States, in the business of preparation, compilation or promotion of academic recognition
programs, directories, student mailing list, or student related products, manufacturing,
designing, servicing or selling, the type of jewelry or fine paper or other scholastic, licensed
sports, insignia, recognition or affinity products manufactured or sold (or then contemplated to be
manufactured or sold) by the Company, its divisions, subsidiaries and/or other affiliated entities,
including but not limited to, as an employee, consultant, independent representative, partner
representative, partner or proprietor. For the avoidance of doubt, these restrictions shall apply,
but shall not be limited to, US Achievement Academy, National Honor Roll, Who’s Who Among Students,
International, And Who’s Who Historical Society.
8.2 Executive also agrees to refrain during his/her employment under this Agreement, and in
the event of the termination of his/her employment under this Agreement for any reason, for one
year thereafter, without written permission from the Company, from diverting, taking, soliciting,
licensed sports, insignia, recognition or affinity business of any customer of the Company, its
divisions, subsidiaries and/or affiliated entities, or any potential customer of the Company, its
divisions, subsidiaries and/or affiliated entities whose identity became known to Executive through
his/her employment by the Company and to which the Company has made a written business proposal or
provided written pricing information before the termination of Executive’s employment under this
Agreement.
8.3 Executive agrees to refrain during his/her employment under this Agreement, and in the
event of the termination of his/her employment under this Agreement for any reason for a period of
one year thereafter, from inducing or attempting to influence any employee or independent
representative of the Company, its divisions, subsidiaries, and/or affiliated entities to terminate
his/her or his/her employment or association with the Company or such other entity.
8.4 Executive further agrees that the covenants in Sections 8.1, 8.2 and 8.3 are made to
protect the legitimate business interests of the Company, including interests in the Company’s
“Confidential Information,” as defined in Section 7 of this Agreement, and not to restrict his/her
mobility or to prevent him from utilizing his/her skills. In signing this Agreement, Executive
gives the Company assurance that he has carefully read and considered all the terms and conditions
of this Agreement, including the restraints imposed on him under Section 7 and 8. Executive agrees
without reservation that these restraints are necessary for the reasonable and proper protection of
the Company and its Affiliates and that each and every one of the restraints is reasonable in
respect to subject matter, length of time and geographic area. Executive further agrees that, were
he to breach any of the covenants contained in Section 7 and 8, the damage to the Company and its
Affiliates would be irreparable. Executive therefore agrees that the Company, in addition to any
other remedies available to it, shall be entitled to preliminary and permanent injunctive relief
against any breach or threatened breach by him of any of those covenants, without having to post
bond. Executive and the Company further agree that, in the event that any provision of Section 7
and 8 is determined by any court of competent jurisdiction to be unenforceable by reason of its
being extended over too great a time, too large a geographic area or too great a range of
activities, that provision shall be deemed to be modified to permit its enforcement to the maximum
extent permitted by law. It is also agreed that each of the Company’s Affiliates shall have the
right to enforce all of Executive’s obligations to that Affiliate under this Agreement, including
without limitation pursuant to Section 7 and 8.
9. Controlling Law and Performability. The execution, validity, interpretation and
performance of this Agreement will be governed by the laws of the state of Texas.
10. Reparability. If any provision of this Agreement is rendered or declared illegal or
unenforceable, all other provisions of this Agreement will remain in full force and effect.
11. Notices. Any notice required or permitted to be given under this Agreement shall be
sufficient if in writing and if sent by certified mail (return receipt requested) addressed as
follows:
If to Executive:
|
Xxxxx Xxxx Xxxxxxx | |
| 0000 Xxxxxx Xxxxx Xxxx. # 0000 | ||
| Xxxxxx, Xxxxx 00000 | ||
| Phone: 000-000-0000 | ||
If to the Company:
|
Educational Communications, Inc. | |
| 0000 Xxxxxx X Xxxx | ||
| Xxxxxx, Xxxxx 00000 | ||
| Attention: Xxx Xxxxxxxx, President & CEO |
Any address or other change to the above shall be in writing to the other party to become
effective.
12. Assignment. The rights and obligations of the Company under this Agreement shall inure
to the benefit of and be binding upon its successors and assigns. The rights and obligations
of Executive under this Agreement are of a personal nature and shall neither be transferred nor
assigned in whole or in party by Executive.
13. Non-Waiver. No waiver of or failure to assert any claim, right, benefit or remedy
hereunder shall operate as a waiver of any other claim, right, benefit or remedy of the company or
Executive.
14. Review and Consultation. Executive acknowledges that he has had a reasonable time to
review and consider this Agreement and has been given the opportunity to consult with an attorney.
15. Entire Agreement and Amendments. This Agreement contains the entire agreement of
Executive and the company relating to the matters contained in this Agreement and supersedes all
prior agreements and understandings, oral or written, between Executive and the Company with
respect to the subject matter in this Agreement. This Agreement may be changed only by an
agreement in writing by Executive and the Company.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date and year first above
written.
| EDUCATIONAL COMMUNICATIONS, INC. |
||||
| By: | /s/ Xxx Xxxxxxxx | |||
| Xxx Xxxxxxxx, President & CEO | ||||
| EXECUTIVE |
||||
| /s/ Xxxxx Xxxx Xxxxxxx | ||||
| Xxxxx Xxxx Xxxxxxx | ||||
