THE TESSERACT GROUP, INC.
0000 Xxxx 00xx Xxxxxx
Xxxxx 0000
Xxxxxxxxxxx, Xxxxxxxxx 00000
EMPLOYMENT AGREEMENT
with
XXXX X. XXXXXXXX
THIS AGREEMENT is made as of February 16, 1998, between THE
TESSERACT GROUP, INC., a Minnesota corporation (the "Company"), and XXXX X.
XXXXXXXX ("Employee").
RECITALS
The Company's current business activities include, among other
things, designing, developing, marketing and providing educational services.
Employee desires to be employed, and the Company desires to employ
Employee, in connection with its business in the position of Chief Financial
Officer.
Accordingly, in consideration of the mutual promises and agreements
contained herein, the parties hereto agree as follows:
1. NATURE OF EMPLOYMENT. The Company shall employ Employee and
Employee shall serve the Company as Chief Financial Officer of the Company
upon the terms and conditions contained herein. Employee agrees to devote
his full time and best efforts to the business of the Company and the
performance of his duties hereunder. Such duties shall be consistent with
the position of a senior officer of the Company as may be determined by the
Chief Executive Officer or the Board of Directors from time to time.
Employee shall be subject to the supervision and direction of the Chief
Executive Officer of the Company, as to assignment and performance of his
duties.
2. TERM OF EMPLOYMENT. The term of Employee's employment under
this Agreement shall commence on the date hereof and shall continue upon the
terms and conditions contained herein, until terminated in accordance with
paragraph 3 hereof.
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3. TERMINATION. This Agreement and Employee's employment
hereunder may be terminated in accordance with the following provisions:
(a) DISABILITY. If Employee at any time is prevented from performing
his duties under this Agreement by reason of illness, injury or mental
incapacity for an aggregate of one hundred twenty (120) days in any twelve
consecutive months during the term of this Agreement, the Company shall have
the right to terminate this Agreement and Employee's employment hereunder by
giving Employee fourteen (14) days' prior written notice of termination.
(b) CAUSE. The Company shall have the right to terminate this
Agreement and Employee's employment hereunder for cause by giving Employee
thirty (30) days' prior written notice of termination. "Cause" shall include
gross negligence, gross neglect of duties, gross insubordination, Employee's
unauthorized appropriation of the Company's property, willful violation of
any law applicable to the conduct of the Company's business and affairs, the
violation of which could have a material adverse effect upon the business or
financial condition of the Company, and conviction of or plea of no contest
to any crime involving moral turpitude.
(c) WITHOUT CAUSE. The Company shall have the right to terminate this
Agreement and Employee's employment hereunder without cause at any time by
giving Employee thirty (30) days' prior written notice of termination,
provided, that the Company shall be obligated to make severance payments to
Employee (provided that Employee has not violated the terms of his
non-competition agreement set forth in paragraph 9 hereof) in an amount equal
to his then current monthly compensation (exclusive of any benefits) for (6)
six months.
(d) BY EMPLOYEE. This Agreement may be terminated at any time by
Employee upon thirty (30) days' prior written notice to the Company.
(e) RETURN OF PROPERTY. No later than the date of cessation of his
employment by the Company, Employee shall deliver to an executive officer of
the Company (or another Company employee designated by an executive officer)
all keys, credit cards, travel advances, business plans and records
(including all copies and extracts thereof) and other property of the Company
in Employee's possession, custody or control.
(f) RIGHT TO RECEIVE COMPENSATION AND BENEFITS. Employee's right to
receive compensation and benefits pursuant to paragraphs 4 and 5 of this
Agreement (except for disability or other benefits that, by their terms,
arise or are operative after termination) shall cease upon the effective date
of termination under this paragraph 3.
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4. COMPENSATION.
(a) BASE SALARY. Employee shall receive a base salary of
$10,416.67 per month ($125,000 annualized), payable semi-monthly, on the 15th
and last day of each calendar month commencing with the first day of
employment, or such higher compensation as the Company in its discretion may
from time to time determine to be appropriate.
(b) PERFORMANCE BONUS. Employee shall be eligible to receive
annual performance bonuses to be determined by the Board of Directors in
amounts not to exceed $50,000 per year based upon the achievement (as
determined by the Board of Directors) of mutually agreed performance
objectives.
5. EMPLOYEE BENEFITS.
(a) BENEFIT PLANS AND PROGRAMS. During his term of employment
Employee shall be entitled to participate in such benefit plans and programs
as the Company may make available from time to time. The details of the
availability and operation of benefit plans and programs are governed by the
plan or program documents or by the Company's employee handbook, where
applicable. The Company reserves the right to change or discontinue any
benefit plan or program at any time upon reasonable notice to employees.
(b) OPTIONS. In addition to any benefits received under
subparagraph 5(a) above and subject to the terms and conditions of a
definitive stock option agreement between Employee and the Company pursuant
to the Company's 1992 Long-Term Executive Stock Option Plan, as Amended and
Restated (1992 Plan), Employee shall receive non-statutory options to
purchase 40,000 shares of the Company's common stock, par value $.01 per
share, at a price equal to the fair market value of a share of common stock
on the date of grant. The date of grant shall be February 16, 1998. The
options are Class II options under the 1992 Plan and vest in 20% annual
increments beginning five years from the date of grant. Vesting of these
options may be accelerated by the Company's Board of Directors based upon the
achievement of individual and Company goals.
6. REIMBURSEMENT OF EXPENSES. The Company shall reimburse the
Employee for all reasonable and necessary business expenses incurred in the
performance of his duties hereunder.
7. TRADE SECRETS. Employee shall not, during the term of this
Agreement or at any time thereafter, divulge, furnish or make accessible to
anyone other than the directors, officers, employees and agents of the
Company any knowledge or information with respect to (a) processes, plans,
software, formulae, machinery, devices or material relating to the business,
products, or activities of the Company, its affiliates or subsidiaries which
is maintained by the Company as secret or confidential, or (b) any
development or research work of the Company, its affiliates or subsidiaries
which is maintained by the Company as secret or
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confidential, or (c) any other aspect of the business, products, or
activities of the Company, its affiliates or subsidiaries which is maintained
by the Company as secret or confidential, or (d) any customer or student
lists of the Company, its affiliates or subsidiaries which are maintained by
the Company as secret or confidential. This restriction shall not apply to
any information (a) that becomes generally available to the public other than
as a result of unauthorized disclosure by Employee, (b) that was available to
Employee on a nonconfidential basis prior to the date hereof or is received
hereafter from a third party without restriction, or (c) that is disclosed
pursuant to a requirement of a government agency.
8. INTELLECTUAL PROPERTY. As one of the conditions to Employee's
employment hereunder, Employee shall do all in his power to promote the
interests of the Company and shall exercise his inventive faculties for the
benefit of the Company. If Employee shall discover or invent anything
related to the business of the Company, or its affiliates or subsidiaries, at
the specific request or instruction of the Company, the same shall be the
exclusive property of the Company. Employee shall forthwith disclose in
writing such discoveries or inventions to the Company but to no other person
and shall forthwith assign to the Company full and exclusive rights to any
such discovery or invention and to any trademark, copyright or patent to the
full end of the term of such trademark, copyright or patent. Employee, upon
request of the Company, shall forthwith execute all documents necessary or
advisable in the opinion of the Company to direct the issuance of trademarks,
copyrights or patents to the Company or to vest title in the Company to such
inventions or discoveries. The expense of securing any trademark, copyright
or patent shall be borne by the Company. The continuance of Employee in the
Company's employ for a definite period is not made obligatory upon either
party hereto as a condition hereof. Employee shall hold any secret process,
software, plans, formula, methods or applications developed for the Company
or its affiliates or subsidiaries but for which no trademark, copyright or
patent is issued, as trustee for the benefit of the Company. This paragraph
does not apply to an invention which was developed entirely on Employee's own
time and (a) which does not relate (i) directly to the business of the
Company or (ii) to the Company's actual or demonstrably anticipated research
or development, or (b) which does not result from any work performed by the
Employee for the Company.
9. NON-COMPETITION. Employee covenants and agrees that,
commencing on February 16, 1998, and thereafter during the term of this
Agreement and without the express consent of the Board of Directors of the
Company, he will not give advice or render services as an employee or
consultant to, nor invest or acquire any interest in, any corporation or any
other business organization, a substantial portion of the business of which
is the same as, related to, or complementary to the business of the Company
or its affiliates or subsidiaries, provided, however, that Employee may
invest in securities of any company which is listed on a national securities
exchange. Employee also covenants and agrees that for one (1) year(s)
following termination of this Agreement (unless such termination is
involuntary and effected by the Company without cause), he will not in any
manner personally solicit or cause to be solicited in competition with the
Company or its affiliates or subsidiaries any persons or companies who were
or are employees, customers or reasonably firm prospective customers of the
Company or such affiliates or subsidiaries during the term of this Agreement.
Employee
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hereby agrees to these restrictions in recognition that the imposition of
such restrictions may be essential to the success of the Company and the
livelihood of the Employee's associates.
10. SPECIFIC ENFORCEMENT. Employee acknowledges and agrees that a
breach by him of the provisions of this Agreement, including without
limitation the provisions of paragraphs 7, 8, and 9 hereof, may cause the
Company irreparable injury and damage which cannot be reasonably or
adequately compensated by damages at law. Employee, therefore, expressly
agrees that the Company shall be entitled to injunctive relief or other
equitable relief to prevent a breach of this Agreement or any part thereof,
in addition to any other remedies legally available to it.
11. INVALIDITY. In case any one or more of the provisions of this
Agreement should be invalid, illegal or unenforceable in any respect, the
validity, legality, and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby.
12. NOTICES. Any notices required to be given to the Company
hereunder shall be deemed properly given if addressed to its registered
office. Any notices required to be given to Employee hereunder shall be
deemed properly given if addressed to:
Xxxx X. Xxxxxxxx
0000 Xxxx 00xx Xxxxxx
Xxxxx 0000
Xxxxxxxxxxx, Xxxxxxxxx 00000
13. GOVERNING LAW. This Agreement shall be construed under and
governed by the laws of the State of Minnesota.
14. ASSIGNMENTS. This Agreement shall not be assignable, in whole
or in part, by either party.
15. AMENDMENTS. This Agreement may be amended, terminated or
superseded only by an agreement in writing between the Company and the
Employee.
16. TERMINATION OF PRIOR AGREEMENT. This Agreement terminates,
in its entirety, the prior employment agreement between the Company and
Employee dated June 25, 1993.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed as of the date and year first above written.
THE TESSERACT GROUP, INC. EMPLOYEE
By /s/ Xxxx X. Xxxxx By /s/ Xxxx X. Xxxxxxxx
-------------------- ------------------------
Its Chief Executive Officer Xxxx X. Xxxxxxxx
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