ENGLISH LANGUAGE LEARNING & INSTRUCTION SYSTEM, INC.
EMPLOYMENT AGREEMENT
To Xxxxx Xxxxx:
This Agreement establishes and memorializes the terms of your employment
with English Language Learning & Instruction System, Inc., a Delaware
corporation (the "Company").
Employment and Duties. Effective May 1, 2004the Company is retaining
you, and you agree to be, its Chief Executive Officer on the terms contained
in this Agreement. In such position, you will report directly to the
Company's Board of Directors, and you agree to perform duties the Board may
assign you from time to time. Beyond reporting to and being tasked by the
Board, your duties shall include, and the Company hereby authorizes you to:
i) generally manage the Company's affairs, including hiring, firing,
capital commitments, budgeting, leases, major contracts, financings,
borrowings and determinations of salaries and bonuses of employees and
officers, subject to approval of the Board where required;
ii) supervise the Company's management, employees and consultants in
implementing those strategies and initiatives;
iii) interface with the Company's Chief Financial Officer or equivalent
in monitoring and periodically presenting to the Board your analysis of the
Company's financial statements, cash flow and imminent operating expenses;
iv) interface with and act as a spokesperson to third parties who, by
contract and/or circumstance, would reasonably expect to have access to the
Company's Chief Executive Officer. By way of example, but not limitation,
these third parties would include major shareholders of the Company's common
and/or preferred stock, distributors of the Company's products, media
representatives making inquiries into the Company and its products, stock
analysts, and representatives of investment banking concerns;
v) offer employment to and unilaterally (i.e., without consulting the
Company's Board of Directors) terminate the employment of any Company employee
whose gross cash compensation (not including or factoring in the employee's
participation in the Company's group health insurance plan or other
Company-sponsored benefits packages) does not exceed $65,000; and
vi) represent the Company at trade shows, contract negotiations, and
other forums requiring or warranting the participation of the Company's Chief
Executive Officer.
You agree to use your best efforts in performing these and other duties
that the Company's Board of Directors may assign you from time to time, and in
generally carrying out the Company's goals and initiatives as its Board has
established and will establish in the future. You also agree to comply with
the non-competition, secrecy, and other provisions of Exhibit A to this
Agreement, which is incorporated hereto.
At-Will Employment. Your employment with the Company is "at-will,"
meaning that either you or the Company may terminate this Agreement at any
time. Termination or expiration of this Agreement ends your employment under
this Agreement, but does not extinguish either i) your obligation to comply
with Exhibit A to this Agreement; or ii) your accrued rights to compensation
or options to purchase shares of the Company's common stock.
Compensation
Salary The Company will pay you an annualized salary of $156,000,
which shall be paid in accordance with the Company's generally
applicable payroll practices (the "Salary"). The Board will
review your Salary annually, but it will be increased no less
than five percent 5% annually throughout your tenure as the
Company's CEO, with the first such increase becoming effective
on the first anniversary of the Effective Date.
Bonus The Company will pay you bonuses as follows:
. For fiscal year 2004, 25% of the Company's pre-tax income,
as reflected in the Company's 2004 audited financial
statements, up to a maximum bonus payment of $50,000;
. For fiscal year 2005, 5% of the Company's pre-tax income,
as reflected in the Company's audited 2005 financial
statements, payable only if the pre-tax income exceeds
$600,000, up to a maximum bonus payment of $125,000.
The Company will pay you these bonuses after the end of each
calendar year and upon receiving the audited financials of
the company for the year completed.
Options You will have options to purchase up to 1,665,911 shares of
the Company's common stock, to be vested according the
schedule listed below. Vesting for each quarter will be
effective if you have been employed by the company
continuously through the last day of that quarter.. The
strike price of these options shall be $0.15, regardless of
the time that you exercise your right to purchase them. Your
options to purchase shares of the Company's common stock shall
vest according to the following schedule:
. 465,911 shares on the Effective Date of this Agreement;
. 150,000 additional shares at the conclusion of every
fiscal quarter during which you serve as the Company's
CEO.
If you resign as the Company's CEO before July 1, 2006, you
will have options to purchase 1) the 465,911 shares that vest
on the Effective Date of this Agreement; and 2) 150,000
additional options for each complete fiscal quarter during
which you were employed by the Company.
In addition to these options, you will have the right to
purchase the equivalent of 3% of any number of common shares
that the Company issues during your employment with the
Company beyond the 57, common shares currently issuable on a
fully diluted basis.
You may exercise any vested options to purchase shares of the
Company's common stock at any time during your tenure as an
employee of the Company, or within thirty (30) days after your
employment with the company is terminated.. Any options that
have vested at the time your tenure as an employee of the
Company ends will expire and terminate if you do not exercise
them within thirty (30) days after the date of such
termination. The strike price for all options you exercise to
purchase shares of the Company's common stock shall be $0.15.
Benefits The Company will provide you with the same benefits as it
makes generally available to the Company's senior executives,
as those benefits are amended or terminated from time to time.
Your participation in the Company's benefit plans will be
subject to the terms of the applicable plan documents and the
Company's generally applied policies, and the Company in its
sole discretion may from time to time adopt, modify,
interpret, or discontinue such plans or policies. You'll be
eligible for twenty days of paid vacation each calendar year
during the term of your employment by the Company.
Place of Employment. Your principal place of employment will be at such
offices as the Company may establish from time to time and to which it assigns
you in its sole discretion. You understand and agree that your employment will
require travel from time to time.
Expenses. The Company will reimburse you for reasonable and necessary
travel and other business-related expenses you incur in performing your duties
for the Company. You agree to itemize and tender to the Company's Chief
Financial Officer all requests for reimbursements. You agree to submit
requests for reimbursement in accordance with the policies and practices that
the Company establishes.
No Other Employment. You agree not to engage in activities that would
conflict or interfere significantly with your faithful performance of your
duties as an employee of the Company. You may manage your personal
investments, as long as the management takes only minimal amounts of time and
is consistent with the provisions of the No Conflicts of Interest Section and
the No Competition Section in Exhibit A and is otherwise consistent with the
policies and practices of the Company.
No Conflicts of Interest. You confirm that you have fully disclosed to
the Company, to the best of your knowledge, all circumstances under which you,
your spouse, your immediate relatives, and other persons who reside in your
household have or may have a conflict of interest with the Company. You
further agree to fully disclose to the Company any such circumstances that
might arise during your employment upon your becoming aware of such
circumstances.
The Company specifically recognizes that you serve as an advisor,
consultant and director to certain entities and non-profit corporations. The
Company authorizes you to continue as a director of Amedica, Inc., and to
continue working with BNA, Inc., American Staffing, Inc., and NIIT in an
advisory capacity, so long as those endeavors do not conflict or materially
interfere with your duties to the Company as CEO. The Company further
acknowledges that you were instrumental in introducing XXXXX to NIIT in 2001,
and that you were working with NIIT at that time under an agreement that is no
longer in effect. You and the Company acknowledge that you will receive no
separate compensation for any sales that the Company makes to NIIT during your
tenure as the Company's CEO.
Payments on Termination. Upon any termination of this Agreement, the
Company will pay you any unpaid portion of your Salary pro-rated through the
last day of the Term (and any annual bonuses already determined by such date
but not yet paid), reimburse any substantiated but un-reimbursed business
expenses, pay any accrued and unused vacation time (to the extent consistent
with the Company's policies), and provide such other benefits as applicable
laws or the terms of the benefits require.
Assignment. The Company may assign or otherwise transfer this Agreement
and any and all of its rights, duties, obligations, or interests under it to
1) any of its affiliates or subsidiaries; or 2) any business entity that at
any time by merger, consolidation, or otherwise acquires all or substantially
all of the Company's stock or assets. This Agreement binds and benefits the
Company, its successors or assigns, and your heirs and the personal
representatives of your estate. Without the Board's prior written consent,
you may not assign or delegate this Agreement or any rights, duties,
obligations, or interests under it.
Severability. If a court having jurisdiction declares any term or
provision of this Agreement invalid or unenforceable, the remaining terms and
provisions will be unimpaired, and the invalid or unenforceable term or
provision will be replaced by a term or provision that is valid and
enforceable and comes closest to expressing the intention of the invalid or
unenforceable term or provision.
Amendment; Waiver. Neither you nor the Company may modify or amend the
terms of this Agreement other than by a written instrument signed by you and
by another executive officer of the Company duly authorized by the Board.
Either party's waiver of the other party's compliance with any provision of
this Agreement is not a waiver of any other provision of this Agreement or of
any subsequent breach by such party of a provision of this Agreement.
Withholding. The Company will reduce its compensatory payments to you
for withholding and FICA taxes and any other withholdings and contributions
required by law.
Third Party Beneficiary. You understand and agree that Camden Partners,
Inc. is a third party beneficiary of this Agreement, which means that Camden
Partners, Inc. may enforce this Agreement even though not a party to it.
Governing Law. The substantive and procedural laws of the State of Utah
(other than its conflict of laws provisions) shall govern this Agreement and
any proceedings that might occur to clarify the parties' relative rights
hereunder.
Notices. Notices must be given in writing by personal delivery, by
certified mail, return receipt requested, by telecopy, or by overnight
delivery. You should send or deliver your notices to the Company's corporate
headquarters. The Company will send or deliver any notice given to you at
your address as reflected on the Company's personnel records. You and the
Company may change the address for notice by like notice to the other. You
and the Company agree that notice is received on the date it is personally
delivered, the date it is received by certified mail, the date of guaranteed
delivery by the overnight service, or the date the fax machine confirms
effective transmission.
Integration Clause. This Agreement supersedes all prior or
contemporaneous negotiations, commitments, agreements, and writings with
respect to the subject matter of this Agreement. All such other negotiations,
commitments, agreements, and writings will have no further force or effect.
If you accept the terms of this Agreement, please sign in the space indicated
below. We encourage you to consult with any advisors you choose to help you
understand your obligations under this Agreement.
ENGLISH LANGUAGE LEARNING & INSTRUCTION SYSTEM, INC.
/s/ Xxxxx Xxxx
By: _______________________________________
Xxxxx Xxxx
Name: _____________________________________
Chairman of the Board and Director
Title: _____________________________________
I accept and agree to the terms of employment set
forth in this Agreement:
/s/ Xxxxx Xxxxx
___________________________
Xxxxx Xxxxx
Dated:_____________________
Exhibit A
No Competition. You will not be employed by or engage in any Competing
Business within the Market Area during the Restricted Period (each as defined
below). You further agree not to use, incorporate, or otherwise create any
business organization or domain name using any name confusingly similar to
"English Language Learning & Instruction System, Inc." or "XXXXX" or any other
name under which the Company does business.
If you are offered and want to accept employment with an existing
business or start a new business that engages in activities similar to the
Company's, you will inform the Board in writing of the identity of the
business, your proposed duties with an existing business or the proposed
business plan of your new business, and the proposed starting date of your
employment or that new business. You will also inform any existing business
of the terms of this Exhibit A. Within two weeks of such notice by you The
Company will analyze the proposed employment or the creation of your new
business and make a good faith determination as to whether it would threaten
the Company's legitimate competitive interests. If the Company determines
that the proposed employment or the creation of your new business would not
pose an unacceptable threat to its interests, the Company will notify you
within two weeks of the date of such notice by you that it does not object to
the employment or the creation of your new business.
You acknowledge that, during the portion of the Restricted Period
(defined below) that follows your employment, you may engage in any business
activity or gainful employment of any type and in any place except as
described above. You acknowledge that you will be reasonably able to earn a
livelihood without violating the terms of this Agreement.
You understand and agree that the rights and obligations set forth in
this No Competition Section will continue and will survive through the
Restricted Period.
Definitions
Competing Competing Business means any service or product of any person
Business or enterprise engaged in the development, marketing or sale
of English as a Second Language software or instructional
products.
Market The Market Area is the United States. You agree that the
Area Company provides goods and services both at its facilities
and at the locations of its customers or clients and that, by
the nature of its business, it operates throughout the Market
Area.
Restricted For purposes of this Agreement, the Restricted Period begins
Period on the Effective Date and ends at the first anniversary of
the date your employment with the Company Group ends for any
reason.
No Interference; No Solicitation. During the Restricted Period, you
agree that you will not, directly or indirectly, whether for yourself or for
any other individual or entity (other than the Company or its affiliates or
subsidiaries), intentionally
. hire away or endeavor to entice away from the Company any employee or
any other person or entity whom the Company engages to perform
services or supply products and including, but not limited to, any
independent contractors, consultants, engineers, or sales
representatives or any contractor, subcontractor, supplier, or
vendor; or
. hire any person whom the Company employed within the prior 12 months.
Secrecy
Preserving Your employment with the Company under and before this
Company Agreement has given and will give you access to Confidential
Confidences Information (as defined below). You acknowledge and agree
that using, disclosing, or publishing any Confidential
Information in an unauthorized or improper manner could cause
the Company or Company Group to incur substantial loss and
damages that could not be readily calculated and for which no
remedy at law would be adequate. Accordingly, you agree with
the Company that you will not at any time, except in
performing your employment duties to the Company under this
Agreement (or with the Board's or your Direct Report's prior
written consent), directly or indirectly disclose, publish,
or knowingly or negligently permit others not so authorized
to disclose or publish, any Confidential Information of which
you may become aware because of your prior or continuing
employment association with the Company.
Confidential "Confidential Information" includes, without limitation, any
Information information protected under the Uniform Trade Secrets Act
and any information that the Company has not previously
disclosed to the public or to the trade with respect to its
present or future business, operations, services, products,
research, designs, technical information, copyrights,
software, source code, object code, patent applications,
intellectual property, confidential reports, price lists,
pricing formulae, customer lists, financial information,
business plans, projections, prospects, opportunities or
strategies, acquisitions or mergers, advertising or
promotions, personnel matters, legal matters, any other
confidential and proprietary information, and any other
information not generally known outside the Company.
"Confidential Information" also includes confidential and
proprietary information and trade secrets that third parties
entrust to the Company or the Company Group in confidence.
You understand and agree that the rights and obligations set forth in
this Secrecy Section will continue indefinitely and will survive termination
of this Agreement and your employment with the Company.
Exclusive Property. You confirm that all Confidential Information is and
must remain the Company's exclusive property. Any office equipment (including
computers) you receive from the Company in the course of your employment and
all business records, business papers, and business documents you keep or
create, whether on digital media or otherwise, in the course of your
employment by the Company must be and remain the Company's property. Upon
this Agreement's termination, you agree to promptly deliver to the Company any
such office equipment (including computers) and any Confidential Information
or other materials (written or otherwise) not available to the public or made
available to the public, and any copies, excerpts, summaries, compilations,
records, or documents you made or that came into your possession during your
employment. You agree that you will not, without the Company's consent,
retain copies, excerpts, summaries, or compilations of the foregoing
information and materials. You understand and agree that the rights and
obligations set forth in this Exclusive Property Section will continue
indefinitely and will survive termination of this Agreement and your
employment with the Company Group.
Copyrights, Inventions, Patents. You agree that all records, in whatever
media (including written works), documents, papers, notebooks, drawings,
designs, technical information, source code, object code, processes, methods
or other copyrightable or otherwise protected works you conceive, create,
author, prepare derivative works from, make, invent, or discover that relate
to or result from any work you perform or performed for the Company or that
arise from the use or assistance of the Company's facilities, materials,
personnel, or Confidential Information in the course of your employment
(whether or not during usual working hours), whether conceived, created,
authored, discovered, made, or invented individually or jointly with others,
will be and remain the absolute property of the Company, as will all the
worldwide patent, copyright, trademark, service xxxx, trade secret, or other
intellectual property rights in all such works.
You will promptly disclose, and hereby grant, and assign all rights,
title, and interest in ownership to the Company for its or their sole use and
benefit any and all intellectual property, including all ideas, processes,
inventions, invention disclosures, discoveries, improvements, technical
information, trademarks, service marks, and copyrightable works (whether
patentable or not) that you develop, acquire, conceive, reduce to practice,
author, or prepare derivative works from (whether or not during usual working
hours) while the Company employs you. You will promptly disclose and hereby
grant and assign ownership to the Company of all intellectual property,
including utility and design patents, copyrights, and trademarks, or service
marks, including any associated registrations, applications, renewals,
extensions, continuations, continuations-in-part, divisions, or reissues
thereof or any foreign equivalents thereof.
This Copyrights, Inventions and Patents section does not apply to an
invention that you conceived, developed, reduced to practice, or created
entirely on your own time except for any invention that is, in whole or part,
an "employment invention" because (a) you conceived, developed, reduced to
practice, or created it (i) within the scope of your employment, (ii) on your
employer's time, or (iii) with the aid, assistance, or use of the Company's
property, equipment, facilities, supplies, or intellectual property, (b) it
results from any work, services, or duties you performed for the Company, (c)
it relates to the Company's industry or trade, or (d) it relates to the
Company's current or demonstrably anticipated business research or
development.
Injunctive Relief. Without limiting the remedies available to the
Company, you acknowledge that:
. a breach of any of the covenants in this Exhibit A may result in
material irreparable injury to the Company and Company Group for
which there is no adequate remedy at law; and
. it may not be possible to measure damages for such injuries
precisely.
You agree that, if there is a breach or threatened breach, the Company
may be entitled to obtain a temporary restraining order and/or a preliminary
or permanent injunction restraining you from engaging in activities prohibited
by any provisions of this Exhibit A or such other relief as may be required to
specifically enforce any of the covenants in this Exhibit A. The Company
will, in addition to the remedies provided in this Agreement, be entitled to
avail itself of all such other remedies as may now or hereafter exist at law
or in equity for compensation and for the specific enforcement of the
covenants contained in this Agreement.
