APOLLO GROUP, INC. EMPLOYMENT AGREEMENT ROB WRUBEL
EXHIBIT 10.31
APOLLO GROUP, INC.
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT
XXX XXXXXX
August 6, 2007
Dear Rob:
As you know, Apollo Group, Inc. (“Apollo”) proposes to purchase all of the stock and interest
in your current employer, Aptimus, Inc. (“Aptimus”). If this acquisition is completed, Apollo will
hold Aptimus as a wholly-owned subsidiary of Apollo (such subsidiary to be referred to herein as
“Apollo Marketing”) which will likely be re-named some time after the closing of the acquisition
(the “Closing”). We are pleased to offer you employment with Apollo or Apollo Marketing effective
upon the Closing pursuant to the terms of this Employment Agreement (the “Agreement”). If you
accept this offer, and the contingencies of this offer are satisfied, the terms of your employment
will be as follows after the date of the Closing (the “Closing Date”).
1. Your Position
You will initially have the full-time regular position of Chief Executive Officer of Apollo
Marketing and will report to the Vice President of Marketing of Apollo. You shall have such duties
as are commensurate with your position and such duties as may be assigned to you by the Vice
President of Marketing of Apollo.
2. Compensation
You will be paid as compensation for services a base salary at the annual rate of $275,000, or
at such higher rate as Apollo may determine from time to time. Such salary shall be payable in
accordance with the standard payroll procedures of Apollo. The annual compensation specified in
this Section 2, together with any increases in such compensation that may be granted from time to
time, is referred to in this Agreement as “base salary.”
3. Annual Performance Bonus
You shall be eligible to receive a bonus of up to 75% of your base salary each fiscal year
(September 1 – August 31) (the “Annual Performance Bonus”). This bonus shall be paid quarterly
based upon the achievement of certain individual and Apollo Marketing performance criteria as
agreed upon by Apollo and you. Payment of the bonus, if any, shall be made within sixty (60)
calendar days following the end of the relevant quarter.
Your performance targets for fiscal year 2008 shall be as agreed upon by Apollo and you within
thirty (30) days following the date that the merger agreement between Aptimus and Apollo is signed.
Performance targets for any years after FY08 shall be as agreed upon by Apollo and you.
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4. One-Time Integration/Retention Bonus
You shall be eligible to receive a one-time integration/retention bonus of up to Two Hundred
Six Thousand Two Hundred and Fifty Dollars ($206,250). 50% of this one-time integration/retention
bonus will be paid based upon the achievement of certain quarterly performance targets related to
the transition and integration of Aptimus into Apollo during the first four full quarters (based on
Apollo’s fiscal quarters) following the Closing Date (the “Integration Bonus”). These performance
targets shall be as agreed upon by Apollo and you within thirty (30) days following the date that
the merger agreement between Aptimus and Apollo is signed. Because employee retention is one of
the objectives of this bonus, you must be actively employed by Apollo/Apollo Marketing on the last
day of each quarter to earn a bonus for the preceding quarter. The determination of whether a
quarterly Integration Bonus has been earned and the amount of the bonus earned, if any, will be
made by Apollo in its discretion which shall be exercised in good faith. Such a determination
shall be made and the bonus paid, if any, within sixty (60) calendar days following the end of the
relevant quarter.
Except as set forth in Section 8, the remaining 50% of this bonus shall be earned if you
remain actively employed on a full time basis by Apollo/Apollo Marketing through the end of the
sixth (6th) full month following the Closing Date (the “Retention Bonus”). This bonus, if earned,
shall be paid by no later than the end of the seventh (7th) month following the Closing Date.
5. Benefits
It is currently anticipated that Apollo/Apollo Marketing will continue Aptimus’ employee
benefit plans until employees can be transitioned onto Apollo’s benefit plans. Notwithstanding the
forgoing, you will be entitled to no less than three (3) weeks vacation per year, which shall be
accrued in accordance with Apollo’s vacation accrual policies. After you have transitioned to
Apollo’s benefit plans, you will receive credit for the period of your service with Aptimus for
purposes of eligibility and vesting under such plans. The benefits you will be eligible to receive
will be equivalent to those generally applicable to Apollo’s management employees.
6. Equity
(a) Apollo Four-Year Options
The Compensation Committee of Apollo’s Board of Directors (the “Compensation Committee”) will
grant you a stock option to purchase up to 75,000 shares of Apollo Group Inc. Class A common stock
(the “Four Year Option”) on the Closing Date or as soon as practicable thereafter. The per share
exercise price of the Four Year Option will be equal to the fair market value of the common stock
at the close of business on the date the option grant is made to you. The Four Year Option will be
evidenced by a standard stock option agreement (a copy of which is attached as Exhibit A), and will
be subject to the terms and conditions of that agreement and the stock option plan under which the
option is granted. Such terms and conditions will include, but not be limited to, vesting annually
over four (4) years of active service following the Closing Date and will expire six (6) years from
the date of grant.
(b) Apollo Two-Year Options
The Compensation Committee will grant you a second stock option to purchase up to 25,000
shares of Apollo Group Inc. Class A common stock (the “Two Year Option”) on the Closing Date or as
soon as practicable thereafter. The per share exercise price of the Two Year Option will be equal
to the fair market value of the common stock at the close of business on the date the option grant
is made to you. The Two Year Option will be evidenced by a stock option agreement (a copy of which
is attached as Exhibit B), and will be subject to the terms and conditions of that agreement and
the stock option plan under which the option is granted. The shares subject to the Two Year Option
shall vest in full after you have provided two years of active service following the Closing Date.
Except as provided in Section 8, no shares subject to the Two Year Option shall vest on a pro-rata
basis or otherwise unless and until you have provided two years of active service to Apollo, Apollo
Marketing (or any of their affiliates) after the Closing Date.
(c) Apollo Marketing Options/Other Benefits
The mission of Apollo Marketing is to establish a world class internet and direct advertising
company by: (i) maximizing the efficiency, effectiveness and cost savings of generating the
highest quality leads for the University of Phoenix and other Apollo education institutions, and
(ii) building a substantial, high quality lead generation business targeted at companies other than
educational companies. Apollo recognizes the importance of the people who will execute the mission
described above and will consider implementing a program that enables such individuals to share in
the value created by Apollo Marketing that is in excess of the value contributed by Apollo. While
it will take some time to finalize the appropriate incentive device and to evaluate the proper
individual incentive potentials, as soon as practicable after the Closing, Apollo, in consultation
with you, will evaluate the feasibility of such a program, taking into consideration such factors
that it deems appropriate. If such a bonus is implemented, Apollo will consider creating a pool
representing such incremental enterprise value and distributing this pool among appropriate members
of Apollo Marketing, Apollo management and key contributors, in the form of phantom equity,
additional Apollo options, Apollo Marketing options or some other appropriate incentive grant, as
determined in good faith by Apollo. The final structure of any such program is dependent on many
variables and factors, but Apollo understands the importance of aligning goals and rewards to
motivate a high performing team.
(d) Future Grants
Apollo generally issues stock options or other equity awards to its managers and key employees
once a year. Such option awards vary in number from year to year, and may not be granted at all in
a year, depending upon a number of factors, including individual performance and the performance of
Apollo Marketing. If you are granted such stock options, you will be notified by Apollo. It is
possible that the amount and/or frequency of such grants may be reduced, or such grants eliminated
entirely, if the program described in Section 6(c) above is implemented.
(e) Assumed Aptimus Awards
Pursuant to the Merger Agreement, Apollo will assume certain “Aptimus Awards” previously
granted by Aptimus. For this purpose, “Aptimus Awards” shall mean any prior grant of an Aptimus
restricted stock award, stock appreciation right or an option to purchase Aptimus common stock that
was made to you prior to the Closing Date. One-half (1/2) of the unvested Aptimus Awards
outstanding on the Closing Date shall immediately vest on the Closing Date.
7. Term of Employment
This Agreement is entered into in connection with Apollo’s acquisition of Aptimus and your
continuing services to Apollo/Apollo Marketing after the Closing is a material inducement for
Apollo to complete the acquisition. Therefore, because your service to Apollo/Apollo Marketing
following the Closing is critical to the success of the acquisition, you agree that you will remain
actively employed by Apollo or Apollo Marketing for at least two (2) years following the Closing
Date. This period will be referred to herein as the “Term.” Notwithstanding the foregoing, your
employment may be terminated by Apollo or Apollo Marketing at any time for any reason, with or
without cause during or after the Term by giving you thirty (30) days advance notice of termination
in the case of a termination without Cause (defined below) and pursuant to Section 8 below in the
case of a termination for “Cause”. You agree that the only reason you may terminate your
employment during the Term is for “Good Reason” in accordance with Section 8 of this Agreement.
8. Severance Benefits
If your employment is terminated by Apollo (or Apollo Marketing) with Cause, or by you without
Good Reason, then you will receive your salary and benefits (including accrued, but unused vacation
time) earned up to the effective date of your termination and nothing else.
If your employment is terminated by Apollo (or Apollo Marketing) without “Cause” (as defined
below) during the first twenty-four (24) months following the Closing Date or by you with “Good
Reason” (as defined below), during the first twelve (12) months following the Closing Date, and you
execute and deliver to Apollo a signed settlement agreement and general release in a form and
manner provided by Apollo (hereafter “Release”) within thirty (30) days following your termination
of employment and the Release becomes effective and enforceable in accordance with its terms
following any applicable revocation period, in addition to the amounts described in the preceding
paragraph, Apollo will provide you with the additional benefits set forth in this paragraph.
First, Apollo will continue to pay you your base salary as a severance payment for twelve (12)
months following the date on which the Release becomes effective. Such payments shall be made in
accordance with Apollo’s regularly scheduled payroll beginning with the first payroll date
coincident with or following the date the Release becomes effective. Second, if your employment
termination occurs prior to the expiration of the first six (6) months following the Closing Date,
you shall also be paid the Retention Bonus no later than fifteen (15) business days following the
date on which the Release becomes effective. Third, Apollo shall also reimburse you for any COBRA
premiums you pay during the twelve (12) months following such a termination of employment. Any
such reimbursement shall be made within thirty (30) days of your submission for reimbursement, but
no event later than the last day of your taxable
year following the taxable year in which the premiums are paid. Fourth, (A) the Two Year
Option (to the extent not fully vested) shall become fully vested; (B) any Aptimus Awards (to the
extent not fully vested) shall become fully vested, and (C) you shall immediately be credited with
additional employment with Apollo/Apollo Marketing for purposes of the vesting schedule in effect
for the Four Year Option so that you shall be immediately vested in such option to the same extent
as if you had completed an additional twelve (12) months of employment with Apollo/Apollo Marketing
prior to your termination date.
Following the expiration of the twenty-fourth (24th) month following the Closing Date in the
case of a termination by Apollo/Apollo Marketing without Cause and the twelfth (12th) month
following the Closing Date in the case of a termination by you for Good Reason, you will no longer
be eligible for severance benefits hereunder. Instead, you will be eligible to participate in any
severance benefit plan or program that Apollo makes generally available to its management
employees, if any, subject to the terms of such severance benefit plans and programs.
For purposes of this Agreement, “Cause” shall be defined as:
(i) Repeated failure to meet the reasonable and lawful directives of the Vice President of
Marketing of Apollo (or an officer in a higher position than the Vice President of Marketing of
Apollo to whom you have been directed to report);
(ii) Conviction of a felony (or a plea of guilty or nolo contendere by the Executive to a
felony) or any other crime against or involving Apollo or Apollo Marketing;
(iii) Acts of fraud, dishonesty or misappropriation committed by you with respect to or that
is harmful to Apollo or Apollo Marketing;
(iv) Willful, reckless or negligent misconduct by you with respect to or that is harmful to
Apollo, Apollo Marketing or any of its officers, directors, employees, clients, partners, insurers,
subsidiaries, parents, or affiliates;
(v) A material breach of this Agreement or the PIIA (defined below).
The foregoing is an exclusive list of the acts or omissions that shall be considered “Cause”
for the termination of your employment by Apollo/Apollo Marketing. With respect to the acts or
omissions set forth in clauses (i), (iii), (iv) and (v) above, (x) you shall be provided with
thirty (30) days advance written notice detailing the basis for the termination of employment for
Cause, (y) during the thirty (30) day period after you have received such notice, you shall be on
leave status, you shall not report to work, unless instructed otherwise by Apollo, and shall have
the opportunity to present your case to a committee of independent directors of Apollo’s Board of
Directors (the “Board”) before any termination for Cause is finalized and (z) you shall continue to
receive the compensation and benefits provided by this Agreement during the 30-day period. In
addition, no act or omission shall give rise to a termination for Cause if performed in good faith
and with an objectionably reasonable belief that the action or inaction was in the best interest of
Apollo or Apollo Marketing.
For purposes of this Agreement, “Good Reason” shall be defined as one or more of the following
conditions arising without your written consent:
(i) A material diminution in your base salary or Annual Performance Bonus target;
(ii) A material diminution in your authority, duties, or responsibilities as compared to the
authority, duties, and responsibilities described in this Agreement;
(iii) A requirement that you report to a corporate officer or employee instead of reporting
directly to the Vice President of Marketing of Apollo (or an officer in an equal or higher position
than the Vice President of Marketing of Apollo);
(iv) A requirement that you relocate your principal place of business by more than fifty (50)
miles; or
(v) Any other action or inaction that constitutes a material breach of this Agreement by
Apollo or Apollo Marketing.
In order for a termination of employment to be for Good Reason, you must provide written
notice to the Board of the condition described above and your intent to resign for Good Reason
hereunder within a period not to exceed ninety (90) days of your knowledge of the initial existence
of the condition. Following your providing this Notice, Apollo (and, as appropriate, Apollo
Marketing) shall be provided a period of at least thirty (30) days during which to remedy the
condition. You shall continue to receive the compensation and benefits provided by this Agreement
during the 30-day cure period and if the condition is not cured at the end of such period your
employment shall cease and you will become entitled to the severance benefits described above. If
the condition is cured, you shall not be deemed to have “Good Reason” to terminate your employment.
9. Compliance with Company Policies
As an employee of Apollo/Apollo Marketing, you will be expected to comply with Apollo’s
personnel and other policies as are in effect from time to time including, but not limited to,
Apollo’s policy prohibiting discrimination and unlawful harassment, xxxxxxx xxxxxxx, conflicts of
interest and violation of applicable laws in the course of performing services to Apollo and/or
Apollo Marketing.
10. Full-time Services to the Company
As a full-time employee, Apollo/Apollo Marketing requires that you devote your full business
time, attention, skills and efforts to the duties and responsibilities of your position. However,
you will not be precluded from providing services to others, so long as such services will not be
to the benefit of a competitor of Apollo or Apollo Marketing and will not otherwise interfere with
your ability to satisfactorily fulfill your duties and responsibilities to Apollo/Apollo Marketing.
You are currently sitting as a member of the board of directors, acting as an advisor to and/or
have an ownership interest in the entities set forth in Exhibit C hereto.
You shall be permitted to continue such services and ownership interests so long as they do
not interfere or conflict with your duties hereunder or become competitive in any manner with the
business of Apollo or Apollo Marketing; if you wish to perform services (for any or no form of
compensation) to any other person or business entity while employed by Apollo/Apollo Marketing,
please contact and discuss your plans with the Vice President of Marketing of Apollo in advance of
providing such services so that no problem later arises that could have been avoided from the
outset. Notwithstanding the preceding sentence, you may serve in any capacity with any civic,
educational or charitable organization without such prior authorization provided such service does
not adversely impact your ability to satisfactorily fulfill your duties and responsibilities to
Apollo/Apollo Marketing or benefit a competitor of Apollo or Apollo Marketing.
11. Documentation/Contingencies
This offer is contingent upon the Closing, your consent to, and results satisfactory to Apollo
of, a background check (to be completed prior to the Closing) and your execution of the Apollo
Proprietary Information and Inventions Agreement (“PIIA”) (a copy of which is attached as
Exhibit D). The Immigration Reform and Control Act of 1986 requires that Apollo review proof of
all new employees’ identity and authorization to work in the U.S. Accordingly, this offer is
necessarily contingent upon Apollo’s receipt of satisfactory evidence that it can comply with these
legal requirements with respect to you.
12. Tax Withholdings
With respect to any and all cash compensation and other benefits paid to you under this
Agreement, Apollo/Apollo Marketing shall comply with all applicable tax withholding requirements,
and shall make such other deductions as may be required and/or allowed by applicable law and/or as
authorized in writing by you.
13. Change in Control Agreement/Bonus Payment
Effective as of the Closing Date, you will cease to be subject to the Change in Control
Agreement between you and Aptimus dated May 14, 2007 or any other change in control agreements that
preceded it (collectively, the “CIC Agreement”) and the CIC Agreement will terminate. In addition
to the bonus payments described above, you shall also receive, within thirty (30) calendar days
following the Closing Date, a lump sum bonus of Forty Two Thousand One Hundred and Eighty Eight
Dollars ($42,188) for the period of October 1, 2007 through December 31, 2007. If the Closing Date
occurs after October 1, 2007, you will receive a pro-rata share of this bonus based upon the number
days between the Closing Date and December 31, 2007. You acknowledge and agree that this payment
is in full satisfaction of any and all bonuses that you are or might have become due to under any
and all Aptimus bonus program, plan or arrangement through the end of the 2007 calendar year.
14. Legal Fees.
Aptimus or Apollo will pay all reasonable legal fees and expenses not to exceed $15,000
incurred in connection with the negotiation, preparation and execution of this Agreement and
you will be responsible for the remainder, if any. Aptimus or Apollo shall directly make full
payment to your legal counsel within thirty (30) days after the receipt of any applicable invoice.
15. Section 409A.
Notwithstanding any provision to the contrary in this Agreement, no payments or benefits to
which you become entitled under Section 8 of this Agreement shall be made or paid to you prior to
the earlier of (i) the expiration of the 6-month period measured from the date of your “separation
from service” with Apollo/Apollo Marketing (as such term is defined in Treasury Regulations issued
under Section 409A of the Internal revenue Code of 1986, as amended (the “Code”)) or (ii) the date
of your death, if you are deemed at the time of such separation from service a “key employee”
within the meaning of that term under Code Section 416(i) and such delayed commencement is
otherwise required in order to avoid a prohibited distribution under Code Section 409A(a)(2). Upon
the expiration of the applicable Code Section 409A(a)(2) deferral period, all payments deferred
pursuant to this Section 15 shall be paid in a lump sum to you, and any remaining payments due
under this Agreement shall be paid in accordance with the normal payment dates specified for them
herein.
16. Arbitration
Any dispute, controversy, or claim, whether contractual or non-contractual, between you and
Apollo or Apollo Marketing, unless mutually settled, shall be resolved by binding arbitration in
accordance with the Employment Arbitration Rules of the American Arbitration Association (the
“AAA”). You and Apollo each agree that before proceeding to arbitration, we will mediate disputes
before the AAA by a mediator approved by the AAA. If mediation fails to resolve the matter, any
subsequent arbitration shall be conducted by arbitrators approved by the AAA and mutually
acceptable to you and Apollo. All disputes, controversies, and claims shall be conducted by a
single arbitrator. If you and Apollo are unable to agree on the mediator or the arbitrator(s),
then the AAA shall select the mediator(s)/arbitrator(s). The resolution of the dispute by the
arbitrator(s) shall be final, binding, nonappealable, and fully enforceable by a court of competent
jurisdiction under the Federal Arbitration Act. The arbitration award shall be in writing and
shall include a statement of the reasons for the award. The arbitration shall be held in either
San Francisco, California or Phoenix, Arizona at your election. Apollo shall pay all AAA,
mediation, and arbitrator’s fees and costs.
17. Miscellaneous
You acknowledge and agree that in deciding to sign this Agreement you have not relied on any
representations, promises or commitments concerning your employment, whether spoken or in writing,
made to you by any Aptimus, Apollo or any other representative, except for what is expressly stated
in this Agreement, and the PIIA. This Agreement can only be changed by another written agreement
signed by you and an authorized representative of Apollo and, to be effective, must specifically
state that it is intended to alter or modify this Agreement. Except as provided for herein, this
Agreement and the PIIA supersede and replace (i) any prior verbal or written agreements between you
and Apollo and (ii) any prior verbal or written agreements between you and Aptimus and between you
and the shareholders of Aptimus, relating to the subject matter hereof, including, but not limited
to any and all prior employment agreements, the
CIC Agreement, bonus agreements and/or agreements regarding equity in Aptimus and/or Apollo.
Upon the Closing, this Agreement, and the PIIA will be the entire agreement relating to your
employment with Apollo/Apollo Marketing. In addition, any confidential/proprietary/trade secrets
information and inventions agreement(s) between you and Aptimus, or any predecessor thereto, shall
remain in effect as it pertains to subject matters existing prior to the Closing Date.
This Agreement shall be construed and interpreted in accordance with the laws of the State of
California. Each provision of this agreement is severable from the others, and if any provision
hereof shall be to any extent unenforceable, it and the other provisions shall continue to be
enforceable to the full extent allowable, as if such offending provision had not been a part of
this agreement.
If you have any questions about this offer, please contact me. If you find this offer
acceptable, please sign and date this letter below and return it to me.
| Sincerely, APOLLO GROUP, INC. |
||||
| /s/ Xxxxxx X. X’Xxxxx | ||||
| Xxxxxx X. X’Xxxxx | ||||
| Executive Vice President & Chief Financial Officer |
||||
I have read, understand and voluntarily accept the terms and conditions in this offer.
| Date: August 7, 2007 | /s/ Xxx Xxxxxx | |||
| Xxx Xxxxxx | ||||
EXHIBIT C
1) Yoga Works, Founder & Chairman of the Board of Directors. Ownership of 10% of the company
2) Pixsy, Advisor and stock option holder. San Francisco based video search network company.
3) Double Feature, Advisor and stock option holder. New York based online movie ticketing
business.
4) Zubio, Advisor and stock option holder. Startup chair massage company based in San Francisco.
5) LeapFrog, Consultant. Consultant for children’s educational company regarding produce
development.
6) Investor in entrepreneur funds for Greylock, Redpoint, and Highland capital.
