EXHIBIT 10
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EMPLOYMENT AGREEMENT
This Agreement ("Agreement"), dated as of September 20, 2007
(the "Effective Date"), is between Questar Assessment, Inc., a
Delaware corporation (the "Company"), and Xxx Xxxxxx, an
individual resident of Deerfield, Illinois ("Executive"). The
Company and Executive are collectively referred to in this
Agreement as the "Parties."
WHEREAS, the Company desires to employ Executive, and
Executive desires to accept employment with the Company, as set
forth in this Agreement;
In consideration of the mutual covenants expressed below and
other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties agree
as follows:
1. EMPLOYMENT.
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As of a date determined by Executive in writing but not
later than November 1, 2007 (the "Start Date"), Executive shall
be employed by the Company, and the Company shall employ
Executive, on the terms and conditions expressed in this
Agreement. This employment is not to be considered a guaranty of
employment for any specific duration. As an at-will employee,
Executive and, subject to the severance terms in this Agreement,
the Company, have the right to terminate the employment of
Executive at any time, subject to the provisions of this
Agreement concerning the termination of the Executive's
employment without "Cause" or his resignation for "Good Reason."
During the term hereof, the Executive shall devote his full
business time and his best efforts, business judgment, skill and
knowledge exclusively to the advancement of the business and
interests of the Company and its Affiliates and to the discharge
of his duties and responsibilities hereunder in a manner
reasonably consistent with the professional duties,
responsibilities and loyalty of his position, except that the
Executive may, subject to the approval of the Board (which
approval shall not be unreasonably withheld), devote a reasonable
amount of time to charitable and educational endeavors and to
personal affairs and the boards of directors of other
corporations, trade associations or charitable organizations
including, but not limited to, the Chicago Economic Club, to the
extent that such exceptions do not interfere with the Executive's
responsibilities to the Company and its Affiliates. "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. Executive agrees that the covenants set
forth in that certain Employee Proprietary Rights Agreement and
Non-competition Agreement annexed hereto as Exhibit A ("Rights
Agreement") and made a part hereof, and all other provisions of
such Rights Agreement related to the enforcement thereof, shall
survive the termination of Executive's employment hereunder for
any reason.
2. DUTIES.
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(a) As of the Start Date, Executive shall initially
serve the Company as its President and Chief Operating Officer
and thereafter, within twelve to eighteen months of the Start
Date, and subject to Executive's continuing employment by the
Company, shall be appointed Chief Executive Officer of the
Company and shall, as President and Chief Operating Officer, have
responsibility for all Company operations other than Human
Resources and Finance which will continue to direct report to the
Chief Executive Officer. As President and Chief Operating
Officer, Executive shall report to the Company's Chief Executive
Officer. Thereafter, as Chief Executive Officer of the Company,
Executive shall report to the Board of Directors of the Company
and to the Chairman of the Board and shall have responsibility
for all operations without exclusion.
(b) As President, Chief Operating Officer and,
thereafter, as Chief Executive Officer of the Company, Executive
shall perform such assignments and have such duties and
authorities as are appropriate to his position(s), and shall
perform such assignments and have such other related duties as
may reasonably be assigned, delegated, designated, or modified
from time to time by those to whom he reports and by the Board or
its Chairman. Except as specifically set forth in Section 2(a)
above, Executive's duties shall include, without limitation,
overall operational responsibility for all Company business,
including the oversight of sales, marketing, promotion, strategic
planning and development for the Company's business; provided
that while President and Chief Operating Officer of the Company,
those duties of the Chief Executive Officer as described in the
Company's bylaws in effect from time to time shall remain with
the Chief Executive Officer of the Company. Executive's office
shall be at the Company's place of business in Apple Valley,
Minnesota; provided, however, that Executive shall render his
services at such other locations from time-to-time as the proper
performance of Executive's duties may reasonably require or
permit. The Company acknowledges and agrees that the Executive
may continue to reside in Illinois during the term of his
employment with the Company.
(c) Upon the appointment of Executive as Chief Executive
Officer, Executive shall be recommended for appointment to the
Company's Board as soon as may be practicable, but in any event
not later than the next scheduled meeting of the Board.
3. COMPENSATION.
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(a) BASE SALARY. During the period Executive is employed
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as President and Chief Operating Officer, the Company shall pay to
Executive at such intervals as are in effect from time to time for
other executive officers of the Company, an annual base salary of
not less than $300,000 (the "Base Salary"). During the period
Executive is employed as Chief Executive Officer, the Company
shall increase the Executive's Base Salary to not less than
$350,000. Base Salary may be increased thereafter if the
Company, in its sole and absolute discretion, determines that
such an increase is advisable based on such factors as the
Compensation Committee of the Company (the "Committee") shall
reasonably consider appropriate from time to time. Executive's
Base Salary shall be payable in accordance with the Company's
customary employee payroll policy as in effect from time to time.
Such Base Salary, together with any other compensation which may
be payable to Executive hereunder, shall be less such deductions
as shall be required to be withheld by applicable law and
regulations and shall be pro-rated for any period that does not
constitute a full twelve (12) month period.
(b) BONUS OPPORTUNITY.
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(i) A signing bonus totaling $200,000 shall be
payable by the Company to Executive on the following conditions.
Within ninety (90) days following the Start Date, provided no
notice of termination for "Cause" or resignation without "Good
Reason" has been given, Executive will receive from the Company
one-half of the signing bonus, i.e., One Hundred Thousand Dollars
($100,000). Not later than March 31, 2008, provided no notice of
termination for "Cause" or "Resignation without Good Reason" has
been given, Executive will receive the balance of the signing
bonus, i.e., One Hundred Thousand Dollars ($100,000). In the
event of the termination of the Executive's employment for
"Cause" or his resignation without "Good Reason" (as each is
defined in Paragraph 4 below) at any time prior to the
anniversary date of the Start Date, Executive shall reimburse the
Company for a pro rata portion of such bonus for each month or
portion thereof from the date of termination to such anniversary
date.
(ii) During the term hereof, Executive shall be
entitled to participate in the Company's Executive Bonus Plan as
such incentive compensation plan is developed, adopted and in
effect from time to time. Prior to adopting and developing the
Executive Bonus Plan, the Company agrees that it will consult
with the Executive about it and its provisions; provided that
Executive's advice concerning such plan shall be advisory only
and not binding on the ultimate decisions of the Company with
regard to such plan. Except as otherwise expressly provided
herein, Executive's participation in any such incentive
compensation plan shall be subject to (A) the terms of the
applicable plan documents, (B) generally applicable policies of
the Company, and (C) the reasonable discretion of the Board or
any committee of the Board provided for in or contemplated by
such plans. Executive understands and agrees that the Company
may adopt, amend, replace or terminate any or all of its
incentive compensation plans from time to time in the sole
discretion of the Board and that nothing contained herein shall
obligate the Company to adopt or continue any such plan or any
term thereof; provided, however, that adoption, amendment,
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replacement or termination of one or all of the plans shall not
affect the Executive's right to receive any bonuses he has earned
to date and, in any event, not less than the minimum bonuses set
forth below during his employment under this Agreement.
Executive shall be entitled to receive, for the plan year in
which termination of his employment occurs, unless such
termination is as a result of "Cause", or "Resignation without
Good Reason" (each as defined in Paragraph 4 below), a bonus
under any incentive compensation plan in which he is then a
participant, pro-rated to the date of termination and calculated
on the basis of the prior year's bonus under such plan. With
respect to the Fiscal Year 2008 (ending 10/31/08), provided that
he is employed hereunder at the time the 2008 executive incentive
compensation bonus is payable to executives of the Company
generally, the Executive shall be awarded an incentive bonus
payable on or before March 31, 2009 but in any event no later
than Section 409A of the Internal Revenue Code requires so as not
to trigger additional tax liability for the Executive. It is
currently anticipated but not guaranteed that an executive bonus
plan to be developed and adopted by the Committee, shall
initially include a "target" bonus for the position of Chief
Operating Officer, based on achievement of the objectives or
goals established by the Committee for Fiscal Year 2008 (ending
10/31/08), of 50% expressed as a percentage of Base Salary (at
plan as opposed to above plan). The Committee shall discuss
proposed performance objectives or goals with Executive and work
in good faith to develop them with the Executive, but the Company
may finally determine the objectives or goals. Bonus
compensation, however, shall not be guaranteed, and the amount of
additional cash compensation earned by Executive (if any) under
the terms of this Paragraph 3(b) and any executive bonus plan in
effect hereafter will depend upon Executive's level of
performance, as reasonably determined by the Committee and in
accordance with applicable plan documents. It is agreed, in the
event that the criteria used to determine Executive's bonus under
this provision for Fiscal Year 2008 shall be limited solely to
criteria related to the Company's fiscal performance based upon
revenues and profits as determined on an annual basis as opposed
to quarterly and individual performance objectives as such
objectives are determined in the sole discretion of the
Committee.
(c) BENEFIT PLANS; ADDITIONAL BENEFIT. Until this
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Agreement is terminated as provided herein and subject to any
contribution therefore generally required of employees of the
Company, the Executive shall be entitled to participate in any
and all employee benefit plans from time to time in effect for
employees of the Company generally, except to the extent such
plans are in a category of benefit (such as severance pay)
otherwise provided to Executive hereunder. Participation in such
plans shall be subject to (1) the terms of the applicable plan
documents, (2) generally applicable Company policies and (3) the
discretion of the plan administrators provided for in or
contemplated by such plan. The Company may alter, modify, add to
or delete its employee benefit plans and its retirement plans at
any time as it, in its sole discretion, determines to be
appropriate, without recourse by the Executive. Notwithstanding
the foregoing, the Executive shall be entitled to at least four
(4) weeks of vacation per year.
(d) EXPENSES AND RELOCATION. Executive shall be entitled
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to reimbursement for all normal and reasonable travel,
entertainment and other expenses necessarily incurred by him in
the performance of his duties hereunder in accordance with the
policies, practices and procedures of the Company as amended from
time to time. In lieu of any relocation payments, the Executive,
who is currently not anticipating relocation from Illinois to
Minnesota, shall be entitled to an annual mutually renewable
benefit of up to Forty Thousand Dollars ($40,000) per twelve month
period to cover his properly documented travel, lodging and car
expenses.
4. TERMINATION.
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(a) TERMINATION UPON DEATH OR DISABILITY:
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(i) If while employed by the Company Executive should
die, then Executive's employment shall be deemed to have
automatically terminated as of the date of Executive's death.
Executive's estate shall be entitled to any unpaid vested amounts
or benefits then due under any Company compensation, incentive or
benefit plan; any then-vested but unconveyed equity compensation
owed to Executive; and outstanding reimbursable business expenses
incurred by Executive prior to such termination.
(ii) In the event of the Executive's "Disability" (as
defined below), the Company shall have the right to terminate the
employment of Executive at the Company's election not less than
30 days after the date of such event. Subject to compliance with
applicable law (including the Family and Medical Leave Act, the
Americans with Disabilities Act, and any applicable state or
local laws), "Disability" means the earlier of (i) a mental or
physical condition that renders Executive incapable of performing
his duties and obligations under this Agreement for a period of
three (3) consecutive months or more than ninety (90) days in any
eight (8) month period, in the written opinion of a competent
physician specializing in such condition reasonably selected by
the Company who has personally examined and evaluated Executive's
condition and who has consulted with Executive's physician, (ii)
determination of Disability under any disability income policy
covering Executive and (iii) determination of Disability pursuant
to the Personnel Handbook of the Company as amended from time to
time. In the event the Company elects to terminate the
Executive's employment pursuant to this Paragraph 4(a)(ii), then
the Executive shall be entitled to receive from the Company all
the amounts and benefits payable or provided to the Executive
under Paragraph 4(a)(i) above as if death had occurred.
(b) TERMINATION FOR CAUSE OR RESIGNATION WITHOUT GOOD
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REASON: Only the following, as determined by the Board in its
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reasonable judgment, shall constitute Cause for termination of
the Executive's employment:
(i) any act of fraud, embezzlement, or other
misappropriation or any other material act or omission by
Executive that amounts to a willful breach of Executive's
fiduciary duty to Company; (ii) Executive's conviction or plea of
nolo contendere of a felony under state or federal law, or the
equivalent under foreign law; (iii) any other material acts or
omissions by Executive constituting willful dereliction of
Executive's duties hereunder; (iv) material breach by Executive
of any of the restrictive covenants contained in the Rights
Agreement; and (v) Executive's default of any material
obligations under this Agreement (other than those specified in
clauses (i) through (iv) above) and including but not limited to
the requirement that Executive effect a Start Date not later than
October 29, 2007; provided however, that in connection with
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clause (v) herein, the Company shall have given Executive written
notice specifying any such acts, omissions or default and
permitted Executive to cure any such default within the period of
30 days after receipt of such notice if such default is capable
of being cured and Executive has failed to cure such breach
within such 30 days; provided, further, however that the Company
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shall not be obligated to provide Executive with notice and
opportunity to cure more the same event or default under clause
(v) herein. If Executive's employment is terminated by Company
for Cause or Executive terminates this Agreement or resigns
without Good Reason (as defined in Paragraph 4(d) below),
Company's obligations to Executive shall terminate immediately;
provided that Company shall promptly pay to Executive any unpaid
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vested amounts or benefits then due under any Company
compensation, incentive or benefit plan; any then-vested but
unconveyed equity compensation owed to Executive; the pro rata
portion of all earned and unpaid Base Salary, and outstanding
reimbursable business expenses incurred by Executive prior to
such termination. In the event of such termination of employment
for Cause or resignation without Good Reason at any time prior to
the first anniversary date of the Start Date, Executive shall
promptly reimburse the Company for the $200,000 sign on bonus
paid by the Company pursuant to Paragraph 3(b), such
reimbursement to be on a pro-rata basis for each calendar month
or portion thereof remaining from the Start Date to the date of
termination. For purposes of this Agreement, no act on the part
of the Executive shall be considered "willful" unless it is done
by the Executive in bad faith or without reasonable belief that
the Executive's action was in the best interests of the Company.
Any act or omission of the Executive based upon authority given
pursuant to the Articles of Incorporation of the Company or
Bylaws of the Company or a resolution duly adopted by the
Company's Board or based upon the advice of counsel for the
Company shall be conclusively deemed to be done by Executive in
good faith and in the best interests of the Company.
(c) TERMINATION WITHOUT CAUSE BY COMPANY, OR FOR GOOD
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REASON BY EXECUTIVE: If the Company terminates the Executive's
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employment without Cause (including, but not limited to,
terminating this Agreement before Executive commences work for
Company), or if Executive's employment hereunder is terminated by
Executive for Good Reason (as defined in Paragraph 4(d) below),
the Company's obligations to Executive shall terminate
immediately; provided that Company shall promptly pay to
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Executive (i) any unpaid vested amounts or benefits then due
under any Company compensation, incentive or benefit plan; any
then-vested but unconveyed equity compensation owed to Executive;
and outstanding reimbursable business expenses incurred by
Executive prior to such termination; (ii) any unpaid portion of
Executive's Base Salary earned to date; (iii) severance, in an
amount equal to monthly Base Salary as in effect at the date of
termination for a period of twelve (12) months thereafter (the
"Severance Period"), payable monthly; (iv) the pro rata portion
of Executive's bonus, if any, under Paragraph 3(b)(ii) of this
Agreement for the Fiscal Year in which termination occurs if a
bonus would have otherwise been earned by Executive at the end of
the Fiscal Year under the bonus plan criteria for such Fiscal
Year; and (v) if not already paid to Executive, the $200,000 sign
on bonus provided for under the provisions of Paragraph 3(b)
hereof, each of which shall be paid to Executive on the dates set
forth in Paragraph 3(b). In addition, any and all unvested stock
options and stock grants of the Executive shall accelerate and
immediately and fully vest and shall be exercisable by the
Executive for ninety (90) days after the termination of his
employment without "Cause" or for "Good Reason," provided,
however, that if the Company terminates Executive's employment
without Cause prior to his being appointed Chief Executive
Officer of the Company or if the Executive terminates his
employment for Good Reason prior to his being appointed Chief
Executive Officer of the Company, then only fifty percent (50%)
of the Executive's unvested stock options and stock grants will
accelerate and immediately and fully vest. Under Paragraph
(e)(v) above, for example, if Executive's employment is
terminated in the sixth month after the start of the Fiscal Year
having completed five full months, and under the Executive Bonus
Plan in effect for such Fiscal Year at the end of the Fiscal Year
a determination is made that an annual bonus of $150,000 would
have been payable to Executive for such Fiscal Year, the Company
shall pay to Executive, at the time bonuses under the Plan are
paid, a bonus of $62,500 ($150,000 ./. 12 x 5). If the Executive
should die at any time after the termination of his employment
pursuant to this Paragraph 4(c), the amounts or benefits payable
or provided to the Executive under this Paragraph 4(c) shall
continue to be paid to the Executive's estate or designated
beneficiary in accordance with the provisions of Paragraph 3(a).
Executive shall not be required to seek other employment or
take other action in order to mitigate his damages or to be
entitled to the any of the payments, bonuses, benefits, expenses,
perquisites, and stock options and grants under this Agreement.
The Company shall not be entitled to set off against any such
payments benefits, bonuses, expenses, perquisites, and stock
options and grants due or any other amounts of money payable to
Executive any amounts he earns in other employment or engagement
after the termination of his employment with the Company without
Cause or for Good Reason or any amounts that he might or could
have earned in other employment or engagement had he sought such
other employment or engagement.
(d) GOOD REASON. For purposes of this Agreement, Good
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Reason shall mean any act or omission identified below to which
Executive does not consent and which does not occur in connection
with the termination of Executive's employment for Cause, other
than Good Reason, Death or Disability, as provided in this
Agreement. The following shall constitute "Good Reason" for
termination by the Executive:
(i) Any (A) failure to designate Executive, or
(B) removal of the Executive from, any of the following
positions:
(I) as President and Chief Operating
Officer until he is appointed as Chief Executive Officer or as
Chief Executive Officer (which appointment shall occur not later
than 18 months after the Start Date); or
(II) Member of the Board or Executive's
failure to be appointed Chief Executive Officer); or
(ii) a substantial and material reduction or
change in Executive's duties;
(iii) a material breach by Company of any provision
of this Agreement;
provided, however, that in each of (i) through (iii) above,
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Executive shall first have given the Company written notice
specifying the Good Reason, and Company shall have failed to cure
any such failure within the period of 30 days after receipt of
such notice if capable of cure within such period.
(e) RELEASE. The Company's obligations to make payments
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under Paragraph 4(c) are conditioned on the Executive's execution
of a general release in favor of the Company in such form as the
Company shall reasonably specify.
(f) DATE OF TERMINATION. "Date of Termination" means the
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date of receipt of a notice of termination or any later date
specified therein, as the case may be; provided, however, that
(i) if the Executive's employment is terminated by the Company
other than for Cause or Disability or by reason of death, the
Date of Termination shall be the date on which the Company
notifies Executive of such termination and (ii) if Executive's
employment is terminated by reason of death or Disability, or
resignation, the Date of Termination shall be the date of death
or Executive or the Disability effective date, or the last date
of employment, as the case may be.
5. STOCK OPTIONS AND AWARDS.
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(a) As an incentive to enter into this Agreement, the
Company, immediately upon the Start Date of this Agreement, shall
deliver to Executive a Stock Option Agreement pursuant to its
2000 Stock Option Incentive Plan ("Stock Option Plan"), granting
to Executive ten (10) year options for 97,000 shares of Common
Stock of the Company at fair market value as of the Start Date.
The option is subject in all respects to the terms and conditions
of the Stock Option Plan and the Stock Option Agreement. When
the Executive becomes the Chief Executive Officer of the Company,
the Company shall deliver to Executive a Stock Option Agreement
pursuant to its Stock Option Plan granting to Executive ten (10)
year options for 30,000 shares of the Common Stock of the Company
at fair market value as of the date of grant, subject to the
commitment to the Stock Option Plan by the Company of sufficient
additional shares necessary to fund said grant. To the extent
any benefit that the Executive is to receive under the Company's
Stock Option Plan, Stock Option Agreement, or other agreement is
in conflict with this Agreement, the provisions of this Agreement
(provided that they are more favorable to the Executive) shall
control.
(b) As a further incentive to enter into this Agreement,
immediately upon the later of (i) the Start Date of this
Agreement and (ii) the adoption of a new incentive compensation
plan by the Company which, as of the date hereof, is expected to
occur no later than the Start Date of this Agreement, the Company
shall grant to the Executive an award of Common Stock of the
Company in such number of whole shares as will aggregate the
amount of $115,000 priced as set forth in the next sentence with
any fractional shares paid in cash. Shares shall be issued at
fair market value as of the date of grant and shall become vested
over a three (3) year period with 33 1/3% of such stock vesting
on the first anniversary date of the Start Date, 33 1/3% of such
stock vesting on the second anniversary date of the Start Date,
and 33 1/3% of such stock vesting on the third anniversary of the
Start Date such that 100% of such stock has vested as of such
third anniversary date. Executive shall have no rights as a
stockholder with respect to any share of Common Stock to be
issued with respect to this grant until the date of vesting.
(c) The Company hereby agrees that it shall cause to be
filed with the Securities and Exchange Commission a registration
statement on Form S-8 (or equivalent form as may be in effect at
such time) with respect to all options granted to Executive under
the Plan. The Company covenants that it shall keep such
registration statement current until Executive is no longer
employed by the Company. The Company hereby agrees that, for so
long as either the Company does not have an effective
registration statement on Form S-8 or the Company has an
effective registration statement on Form S-8 but Executive is
restricted in his ability to resell shares acquired pursuant to
the exercise of options because of the provisions of General
Instruction C.2(b) to Form S-8, Executive shall have "piggyback"
registration rights with respect to the options granted to
Executive under the Stock Option Plan and the shares underlying
such options.
(d) If there shall occur a "Change of Control" (as defined
below), then any and all unvested stock options and stock grants
of the Executive shall accelerate and immediately and fully vest
and shall be exercisable by the Executive for the time period for
exercise set forth in any applicable agreements or plans
concerning the Executive's stock options and stock grants. As
used in this Agreement, the term "Change of Control" shall mean
the occurrence hereafter of one of the following events: (I) any
"person," as such term is used in Sections 3(a)(9) and 13(d) of
the Securities Exchange Act of 1934, as amended (the "Act"),
becomes a "beneficial owner," as such term is used in Rule 13d-3
promulgated under the Act, of forty percent (40%) or more of the
voting stock of the Company; (II) the Company adopts any plan of
liquidation providing for distribution of all or substantially
all of its assets; (III) all or substantially all of the assets
or business of the Company is disposed of pursuant to a merger,
consolidation or other transaction (unless the shareholders of
the Company immediately prior to such merger, consolidation or
other transaction beneficially own, directly or indirectly, in
substantially the same proportion as they owned the voting stock
of the Company, all of the voting stock or other ownership
interests of the entity or entities, if any, that succeed to the
business of the Company); or (IV) the Company combines with
another company and is the surviving corporation but, immediately
after the combination, the shareholders of the Company
immediately prior to the combination hold, directly or
indirectly, fifty percent (50%) or less of the voting stock of
the combined company (there being excluded from the number of
shares held by such shareholders, but not from the voting stock
of the combined company, any shares received by affiliates of
such other company in exchange for stock of such other company);
provided, however, that for purposes of determining whether or
not a "Change of Control" has occurred with respect to the
Company, the following transactions shall not constitute a Change
of Control:
(1) The offer or issuance of shares of common
stock, options to acquire common stock, common stock equivalents
or rights with respect to common stock or other equity securities
or derivative securities pursuant to a stock incentive plan of
the Company, or the reservation of shares for issuance pursuant
to such plan;
(2) The offer, sale, assignment or transfer
of any shares of common stock of the Company (collectively, the
"Sale") to any of Xxxxxx Xxxxxxx Strategic Partners Fund, L.P. ,
Strategic Associates, L.P., Camden Partners Strategic Fund III,
L.P., Camden Partners Strategic Fund III-A, L.P., or any other
fund sponsored by, managed by or affiliated with Camden Partners
Strategic Manager, LLC (collectively the "Camden Affiliates"); or
(3) The Sale by one or more Camden Affiliates
which, in the aggregate, constitutes (i) less than 40% of the
outstanding shares of common stock of the Company on a fully-
diluted basis at the time of transfer or (ii) 40% or more of the
outstanding shares of common stock of the Company on a fully-
diluted basis at the time of transfer, and if the provisions of
Section (d)(I) above are not met (i.e., as a result of such
transfer no "person" as such term is used in Sections 3(a)(9) and
13(d) of the Act, becomes a "beneficial owner," as such term is
used in Rule 13d-3 promulgated under the Act, of forty percent
(40%) or more of the voting stock of the Company).
As clarification, the Sale by one or more Camden Affiliate of 40%
or more of the outstanding shares of common stock of the Company
on a fully-diluted basis at the time of transfer which does, as a
result of such transfer, result in a "person" as such term is
used in Section 3(a)(9) and 13(d) of the Act, becoming a
"beneficial owner," as such term is used in Rule 13d-3
promulgated under the act of 40% or more of the outstanding
shares of common stock of the Company on a fully-diluted basis at
the time of transfer, would constitute a Change of Control
hereunder.
6. EXECUTIVE'S REPRESENTATIONS AND WARRANTIES AND
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INDEMNIFICATION.
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(a) RIGHT TO ENTER INTO AGREEMENT: Executive has the
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right and is free to execute this Agreement, to grant the rights
granted by him to the Company hereunder, and to perform each and
every term and provision hereof.
(b) BREACH UNDER OTHER AGREEMENT OR ARRANGEMENT: Neither
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the execution and delivery of this Agreement nor the performance
by Executive of any of his obligations hereunder does or shall
constitute a violation, breach, or default under, any agreement,
arrangement or understanding, or any other restriction of any
kind, to which Executive is a party or by which Executive is
bound.
(c) INDEMNIFICATION.
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(i) Executive agrees and does hereby indemnify save
and hold Company harmless from and against any and all damages,
liabilities, costs, losses and expenses (including legal costs
and reasonable attorney's fees) arising out of or in connection
with any claim, demand or action by a third party arising out of
or related to any of the warranties, representations or
agreements made by Executive under Section 6(a) or (b) of this
Agreement. Executive agrees to reimburse Company, within ten
(10) business days after demand is made by the Company, for any
payment made by Company at any time with respect to any such
demand, liability, costs, loss or expense to which the foregoing
indemnity applies; provided, such payment arises from a final
judgment or arbitration or a settlement made with Executive's
prior consent, which consent Executive shall not unreasonably
withhold. Company shall notify Executive in writing of any such
claim, demand or action promptly after Company has been formally
advised thereof and Executive shall have the right, at his
expense, to participate in the defense thereof with counsel of
his choice. Notwithstanding the foregoing to the contrary,
Executive shall not be liable to indemnify Company as provided
above to the extent that any above referenced claim is covered by
any insurance policies Company has elected to maintain generally
for the benefit of officers.
(ii) To the maximum extent provided for or permitted
by the Company's Certificate of Incorporation and By-Laws, the
Company shall indemnify the Executive from and against any and
all of the expenses, claims, demands, liabilities, proceedings,
and other matters referred to in, or covered by, such Certificate
and By-Laws. To the maximum extent permitted by applicable law,
the Company shall provide officers and directors liability
insurance to Executive with coverage limits and terms
commensurate with industry standards.
7. NOTICES. Any notice, consent or other communication under
-------
this Agreement (hereinafter "Notice") shall be in writing and
shall be delivered personally, sent by facsimile transmission
(and confirmed in writing) or overnight courier (regularly
providing proof of delivery) or sent by registered, certified, or
express mail and shall be deemed given when so delivered
personally, sent by facsimile transmission and confirmed in any
other manner permitted in this Paragraph 7 or overnight courier,
or if mailed five (5) business days after the date of deposit in
the United States mail as provided herein. Notices shall be
addressed to Executive at 000 Xxxx Xxx Xxxxxx Xxxxxxxxx, XX
00000, with a copy to Xxxxxxxxxx Vegosen Xxxxxxx & Xxxx Ltd., 00
X. Xxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, XX 00000, Attention: Xxx
Xxxxxxx, Esq. Notices shall be addressed to the Company at 0
Xxxxxxxxxxxx Xxxxxxx, Xxxxxxxx, Xxx Xxxx 00000, Attention: Xxxxxx
X. Xxxxx or Chairman of the Board, with copy to Rider, Weiner &
Xxxxxxx, P.C., 000 Xxxxxx Xxxxxxx Xxxx, Xxxxxxxx, XX 00000;
Attention: Xxxxxxx Crush, Esq. Either party may change its
address for Notices hereunder by notice to the other party in
accordance with this Paragraph 7.
8. ASSIGNMENT. This Agreement is personal in its nature, and
----------
neither the Company nor Executive may make any assignment of this
Agreement or any interest herein, by operation of law or
otherwise, without the prior written consent of the other;
provided, however, that the Company may assign its rights and
obligations under this Agreement without the consent of Executive
in the event that the Company shall hereafter effect a
reorganization, consolidate with, or merge into, any other entity
or transfer all or substantially all of its properties or assets
to any other entity. This Agreement shall inure to the benefit of
and be binding upon the Company and Executive, their respective
successors, executors, administrators, heirs and permitted
assigns.
9. FURTHER INSTRUMENTS. Executive shall furnish Company with
-------------------
any further instruments, in such form and substance as shall be
approved or designated by Company, which Company may reasonably
require or deem necessary, from time to time, in its discretion,
to more fully effectuate or carry out the purposes, provisions
or intent of this Agreement.
10. COMPLETE AGREEMENT; MODIFICATION AND TERMINATION. This
------------------------------------------------
Agreement and the Schedules and Exhibits annexed hereto contain
the entire agreement between the parties with respect to
Executive's employment by Company, superseding all existing
agreements between them concerning Executive's employment. This
Agreement may not be amended, modified, superseded, canceled, or
waived except by a written instrument signed by the party to be
charged provided, however, that the Company shall have the right,
-----------------
after consultation and agreement with the Executive, to amend
this Agreement or take any action or inaction that is reasonably
necessary in order for all compensation paid to Executive by the
Company to be fully compliant with Section 409A of the Internal
Revenue Code of 1986, as amended with the least adverse tax
consequence for the Executive. The headings in this Agreement
are solely for the convenience of reference and shall not affect
its interpretation.
11. GOVERNING LAW. This Agreement shall be interpreted in
-------------
accordance with, and governed by, the laws of the State of
Minnesota, without regard to conflicts of law doctrines. Any
claim, dispute or disagreement in respect of this Agreement may
be brought only in the courts of the State of Minnesota, in
Dakota County or the federal courts within the State of Minnesota
and in Dakota County, which courts shall have exclusive
jurisdiction thereof. Any process in any action or proceeding
commenced in such courts may, among other methods, be served upon
the parties hereto, as applicable, by delivering or mailing the
same, via registered or certified mail, return receipt requested,
addressed to Company or Executive, as applicable, at the
addresses set forth or designated pursuant to Paragraph 7, above.
Any such service by delivery or mail shall be deemed to have the
same force and effect as personal service within the State of
Minnesota.
12. SEVERABILITY. If any portion or provision of this
------------
Agreement shall to any extent be declared illegal or
unenforceable by a court of competent jurisdiction, then the
remainder of this Agreement, or the application of such portion
or provision in circumstances other than those as to which it is
so declared illegal or unenforceable, shall not be affected
thereby, and each portion and provision of this Agreement shall
be valid and enforceable to the fullest extent permitted by law.
13. WAIVER. No waiver of any provision hereof shall be
------
effective unless made in writing and signed by the waiving party.
The failure of either party to require the performance of any
term or obligation of this Agreement, or the waiver by either
party of any breach of this Agreement, shall not prevent any
subsequent enforcement of such term or obligation or be deemed a
waiver of any subsequent breach.
14. HEADINGS. The headings and captions in this Agreement are
--------
for convenience only, and in no way define or describe the scope
or content of any provision of this Agreement.
15. COUNTERPARTS. This Agreement may be executed in two or
------------
more counterparts, each of which shall, when executed, be deemed
to be an original and all of which together shall constitute one
and the same instrument.
IN WITNESS WHEREOF, the undersigned parties have executed and
delivered this Agreement as of the date first above written.
QUESTAR ASSESSMENT, INC.
By:____________________________
Name: Xxxxxx X. Xxxxx
Title: Chief Executive Officer
EXECUTIVE:
____________________________
Xxx Xxxxxx
EXHIBIT A
---------
EMPLOYEE PROPRIETARY RIGHTS AGREEMENT
-------------------------------------
AND NON-COMPETITION AGREEMENT
-----------------------------
As a condition of my employment by QUESTAR ASSESSMENT, INC.,
a Delaware corporation (the "Company"), and in consideration of
my promise of employment, compensation and enhanced benefits, I,
XXX XXXXXX, agree as follows:
1. NOT AN EMPLOYMENT AGREEMENT. This Proprietary
---------------------------
Information Agreement shall not be deemed to be an employment
---
agreement. I understand that nothing in this Proprietary
Information Agreement changes, or is intended to change, the
basic premise that my employment with the Company is governed by
that certain Employment Agreement to which this Agreement is a
part thereof. No representative of the Company has the authority
to enter into an agreement contrary to this. The Company may in
its sole discretion reasonably modify or enlarge any of the
privileges or benefits of my employment at the Company without
notice consistent with applicable law.
2. CONFIDENTIAL INFORMATION AND INVENTIONS. I acknowledge
---------------------------------------
that I will have access to the Company, and its Affiliates'
trade secrets and proprietary information regarding certain test
materials, scoring and reporting processes and other
technologies. The Company and its Affiliates' trade secrets and
proprietary information shall include without limitation ideas,
computer code, source codes, mask works, software development
tools, specifications, schematics, processes, techniques,
designs, know-how, marketing plans, financial data, customer
lists, referral and vendor sources, and scanning, scoring,
reporting and testing methods (collectively "Confidential
Information").
I may also have access to proprietary information or
materials belonging to other parties which the Company is
required to keep confidential (collectively "Third Party
Information"). During my employment, I may also conceive,
develop or produce ideas, inventions, documentation, computer
code, tools, procedures, techniques, know-how, improvements
and/or other materials, whether or not they are reduced to
practice or made or conceived by me solely or jointly with others
that relate to the business of any of the Company and its
Affiliates (collectively "Inventions").
3. CONFIDENTIALITY. During and after my employment, I
---------------
will not disclose or otherwise distribute the Confidential
Information, Inventions or Third Party Information to any third
party that is not otherwise publicly available. I will use the
Confidential Information, Inventions and Third Party Information
only to perform my duties as an employee of the Company, and for
no other purpose. I further agree that after I leave the
Company, I will not incorporate, use or exploit any of the
Confidential Information, Inventions or Third Party Information
(disclosed separately or embodied in the products, procedures or
operations of any of the Company or its Affiliates), or assist
any others in doing so, so long as such information is not
otherwise publicly available.
4. PROPERTY RIGHTS. The Company and its Affiliates shall
---------------
solely own and have exclusive worldwide right, title and interest
in and to the Confidential Information and Inventions, and to all
modifications, enhancements and derivative works thereof, in all
United States and worldwide trademarks, service marks, trade
dress, copyrights, patents, trade secrets and all other
intellectual property rights related thereto (including all
renewals and extensions thereof) (collectively "Intellectual
Property Rights"). No license or other interest of any kind in
the Confidential Information, Inventions or Third Party
Information is directly or indirectly granted to me. During and
after my employment with the Company, I will not challenge or
otherwise impair any of the Company's or its Affiliate's rights
to the Confidential Information, Inventions, its products, and/or
the validity or enforceability of its Intellectual Property
Rights.
5. ASSIGNMENT. I agree that the Inventions are made
----------
within the scope of my employment with the Company, are
commissioned at the specific request and control of the Company,
and shall be deemed "works made for hire" under the United States
copyright laws, and the Company shall be the sole creator and
owner of the Inventions. From the moment of creation, I
irrevocably assign and transfer to the Company all right, title
and interest worldwide in and to all of the Inventions, to all
modifications, enhancements and derivative works thereof, and to
all worldwide Intellectual Property Rights related thereto. The
above assignment includes without limitation the exclusive right
for the Company to exploit the Inventions by and through all
media, platforms, processes, and other means now known or
hereafter devised. I further irrevocably waive all rights to
assert any moral rights in any way regarding the Inventions
and/or the Intellectual Property Rights related thereto.
NOTICE REQUIRED BY MINNESOTA LAW: Pursuant to Minnesota
Statute Section 181.78(3), I am hereby notified that this
Paragraph 5 regarding assignment of Inventions does not apply to
any invention for which no equipment, supplies, facility or trade
secret information of the Company or any of its Affiliates was
used and which was developed entirely on my own time, and (1)
which does not relate (a) directly to the business of any of the
Company or any of its Affiliates; or (b) to any of the Company or
any Affiliate's actual or demonstrably anticipated research or
development, or (2) which does not result from any work performed
by me for the Company.
6. REPRESENTATIONS. I warrant that in performing my job
---------------
at the Company, I have not and will not violate any legal or
equitable duties owed to any of my current or previous employers,
customers or other business or consulting relationships
(collectively "Relationships"), including without limitation
duties relating to protecting confidential information or
refraining from competitive activities. I further warrant that
(a) I have not and will not disclose to anyone at any of the
Company or any other Affiliate any confidential or proprietary
information or material of a current or previous Relationship;
(b) I will not in any way use, incorporate or refer to any
confidential or proprietary information or material of a current
or previous Relationship in performing my work at the Company;
and (c) my Inventions shall be new and original, and shall not
use or incorporate any materials or intellectual properties of
third parties, except for such materials as specifically
authorized in advance by the Company for which the Company has or
obtains a license to use.
7. PRIOR INVENTIONS. I understand that all inventions, if
----------------
any, which I made prior to my employment with the Company are
excluded from this Agreement. I warrant that Exhibit "A"
represents a complete and accurate list of all of my prior
inventions, including numbers of all patent, trademark and
copyright applications or registrations and brief descriptions of
all unpatented, un-trademarked or un-copyrighted inventions which
are not the property of a current or previous Relationship. I
agree to notify the Company in writing before I make any
disclosure or perform any work on behalf of any of the Company or
any of its Affiliates which appears to threaten or conflict with
my rights in a prior invention. In the event I fail to give such
notice, I agree that I will have no right to make any claim at
any time against any of the Company or any of its Affiliates
regarding the prior invention. To the extent that I incorporate
any of my prior inventions into the Company's products or
services, I hereby grant to the Company a non-exclusive,
irrevocable, royalty free, perpetual and worldwide license, with
the right to sublicense, to make, have made, modify, copy,
perform, display, make derivative works, distribute, use and/or
sell such prior inventions as part of or in connection with such
product or service.
8. TERMINATION. In the event my employment is terminated
-----------
for any reason, I resign or otherwise leave the Company 's employ
or at any other time upon the Company 's request, I will
immediately deliver to the Company (a) all Confidential
Information, Third Party Information and Inventions, and (b) all
documents, computer discs, electronic files, computer code,
materials, equipment, documents, drawings and other information
both in hard copy and in machine readable form that in any way
relate to the Confidential Information, Third Party Information,
Inventions or my employment or other work at the Company. I will
not make or retain any hard or electronic copies of any such
information or materials, make or retain any summaries or
descriptions of any such information or materials, and/or erase
any hard drives or otherwise delete any such information or
materials from any laptop or desktop computers, computer networks
or other electronic devices or services of the Company.
Immediately upon my termination or other departure, I agree to
sign and deliver to the Company the "Termination Certificate" in
Exhibit "B." During my employment with the Company and at all
times thereafter, I agree that I will not disparage any of the
Company or any of its Affiliates to third parties.
9. RESTRICTIVE COVENANT. In consideration of the sums
--------------------
paid to me in connection with my employment by the Company, I
agree that I will not, anywhere in the United States, for a
period beginning on the Start Date and continuing for one year
after the date of termination of employment with the Company,
without the prior written consent of the Company, directly or
indirectly:
(a) own, manage, control, operate, participate in,
consult with, render services to (as an officer, director,
employee, partner, consultant or in any similar role) or
have any other interest as a stockholder, lender or other
financial or beneficial interest in any Competitor;
provided, however, that ownership of not more than two
percent (2%) of any class of securities traded actively,
over-the-counter or through a stock exchange shall not
violate this subparagraph (a);
(b) solicit, induce or persuade any employee or
contractor of the Company or any Affiliate to leave
employment with that entity for any reason;
(c) hire or retain or assist others in hiring or
retaining any individuals who are employees or contractors
of the Company or any Affiliate or who were employees or
contractors at any time during the twelve (12) month period
prior to the Start Date of my employment with the Company;
(d) solicit, call on or take away any Customers of the
Company or any Affiliate, on behalf of or for the benefit of
any Competitor or any Competitive Business for myself or for
any third party ("Customer" means any person or entity to
whom the Company or any Affiliate has provided goods or
services, or to whom the Company or such Affiliate has
submitted a proposal to provide goods or services and who I
have been introduced to by or through the Company or have
become acquainted with by working for the Company);
(e) perform or supply any services or products (as an
employee, contractor or otherwise) to such Customers on
behalf of or for the benefit of any Competitor or any
Competitive Business for myself or for any third party;
(f) induce or persuade or assist others in inducing or
persuading any such Customer to reduce or discontinue doing
business with the Company or any Affiliate or to purchase
from another person or entity goods or services supplied or
which could be supplied by the Company or any Affiliate to
that Customer; or
(g) interfere with any business relationship between
the Company and any Affiliate and any other person or entity.
10. DEFINITIONS. For purposes of this Agreement, the
-----------
following terms shall have the following definitions:
(a) "Affiliate" means a company (i) 50% or more of the
voting securities of which are owned, directly or
indirectly, by the Company; (ii) which owns, directly or
indirectly, 50% or more of the voting securities of the
Company; or (iii) any person or entity, directly or
indirectly, controlling, controlled by or under common
control with the Company.
(b) "Competitive Business" means a business that
provides any of the following services, for any of school
grades K through 12 or in the post-secondary educational
market: (i) research, psychometric and test development
services; (ii) development and publication of assessment
materials; (iii) assembling, packaging and distributing
assessment materials; (iv) assessment scanning and
processing of assessment data; (v) developing, producing and
utilizing databases for analysis and reporting of
assessments; (vi) scoring services for standard and
alternative assessments; (vii) performance assessment
services; or (viii) consultation services for clients on
providing project management and professional development
services related to the delivery, scanning or scoring of
assessments. Competitive Business shall also be deemed to
include the licensing, marketing, or distribution of any
Competitive Business. The assessments, referred to herein
and any documents or materials to be provided through the
services performed by any Competitive Business may be in
print, film, tape, electronic, internet or other media or
forms, anywhere in the world, in any language, whether now
known or hereafter developed.
(c) "Competitor" means any person or entity that owns,
manages, controls or engages in any Competitive Business;
provided, however, that, any person or entity which owns,
-----------------
manages, controls or engages in multiple lines of business
shall be deemed a "Competitor" only with respect to any such
line of business which is a Competitive Business and not
with respect to any such line of business which is not a
Competitive Business.
11. ENFORCEMENT. I agree that the Company will be
-----------
irreparably harmed and money damages will be inadequate
compensation to the Company in the event I breach any provision
of this Agreement. Accordingly, I agree that all the provisions
of this Agreement shall be specifically enforceable, and the
Company shall be entitled to injunctive relief against me in
addition to other available remedies, for my breach of any
provision of this Agreement. I further agree that all of the
provisions of this Agreement are reasonable and necessary to
protect Confidential Information of the Company and its
Affiliates, contractual obligations regarding Third Party
Information, Inventions, goodwill of its business and its
competitive position in the marketplace, and that such provisions
are fair and will not prevent me from earning a sufficient
livelihood.
12. GOVERNING LAW AND VENUE. This Agreement shall be
-----------------------
interpreted and enforced according to the substantive laws of the
State of Minnesota, without application of its conflicts or
choice of law rules. I irrevocably submit to the jurisdiction
and venue of the state and/or federal courts located in Minnesota
for any action or proceeding regarding this Agreement.
13. ASSIGNMENT. I agree that I have no right to assign or
----------
otherwise transfer any of my rights or obligations under this
Agreement, in whole or in part. This Agreement shall be binding
upon and inure to the benefit of the Company and each of its
Affiliates and each of their successors, assigns and legal
representatives.
14 WAIVER. I agree that any failure by the Company or any
------
of its Affiliates to enforce any provision of this Agreement
shall not be deemed a waiver unless such waiver is in writing and
signed by the Company.
15. VALIDITY. If any provision of this Agreement is held
--------
by a court of competent jurisdiction to be invalid, void or
unenforceable, the remaining provisions shall remain in full
force and effect.
16. ENTIRE AGREEMENT. This Agreement constitutes the
----------------
entire agreement regarding the subject matter hereof, and
supersedes all prior or contemporaneous understandings, whether
oral or written. This Agreement cannot be modified or amended,
except by a writing signed by both the Company and me. Exhibits
"A" and "B" are fully incorporated herein.
17. SURVIVAL. I agree that all of the provisions of this
--------
Agreement shall survive the termination of this Agreement or my
employment with the Company except for Paragraph 7.
Dated as of _______________ ____________________
Xxx Xxxxxx
(Name of Employee)
EXHIBIT "A"
-----------
LIST OF PRIOR INVENTIONS
__X___ No prior inventions
______ See below
Title Date of Creation Identifying Number
----- ---------------- ------------------
and Brief Description
---------------------
EXHIBIT "B"
-----------
TERMINATION CERTIFICATE
I hereby certify that:
(a) I have delivered and returned to the Company (i) all
Confidential Information, Third Party Information and Inventions,
and (ii) all notes, records, computer discs, electronic files,
computer code, materials, equipment, drawings, documents and
other information in any way related to my employment or other
work for the Company or any Affiliate (collectively "Materials");
(b) I have not made or retained any hard or electronic
copies of any of the Materials, and to not have in my possession,
at home or otherwise, any of the Materials or copies thereof; and
(c) I have fully complied with and will continue to fully
comply with all the provisions of the Employee Proprietary
Information Agreement previously signed by me, including without
limitation reporting Inventions, Non-competition and keeping
confidential all of the Confidential Information, Third Party
Information and Inventions.
DATED: ______________________ _________________________
(Name of Employee)
