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EXHIBIT 10.34
THE TESSERACT GROUP, INC.
0000 Xxxxx 00xx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
EMPLOYMENT AGREEMENT
with
XXXXXX XXXXXXX
THIS AGREEMENT is made as of March 15, 1999, between THE TESSERACT GROUP,
INC., a Minnesota corporation (the "Company"), and XXXXXX X. XXXXXXX
("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 Executive Vice
President.
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 Executive Vice President 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 March 15, 1999, and shall continue upon the terms and
conditions contained herein, until termination in accordance with paragraph
3 thereof.
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.
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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. Extended
severance at the same rate will be provided on a month to month basis
until Employee is re-employed, or up to a maximum of an additional six
months, whichever comes first.
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 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.
4) Compensation.
a) Base Salary. Employee shall receive a base salary of $12,500.00 per
month ($150,000.00 annualized), payable biweekly one week in arrears,
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, at a
target of 50% of base pay.
5) Employee Benefits.
a) Benefit Plans and Programs. During the term of employment, Employee
shall be entitled to participate in such benefit plans and programs as
the Company may make available
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from time to time. The details of the availability and operation of
benefits plans and programs are governed by the plan or program documents.
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 the definitive stock option
agreements between Employee and the Company, Employee shall receive options
to purchase 100,000 shares of the Company's common stock, par value $.01
per share, at the closing sale price of a common share on the date
immediately preceding the date of grant. The Company's Board of Directors
approved the granting of these options. Fifteen thousand (15,000) shares
were granted from the Company's 1988 Stock Option Plan, as Amended and
Restated, on July 14, 1998 at a price of $4.75 per share. These shares vest
pursuant to the following schedule: one third immediately upon date of
grant, one third on the first anniversary of the grant date, and one third
on the second anniversary of the grant date. Thirty-five thousand (35,000)
shares were granted from the Company's 1992 Long-Term Executive Stock
Option Plan on July 14, 1998 at a price of $4.75 per share. The vesting of
these options shall occur one fifth, one fifth, one fifth, one fifth, and
one fifth after years five, six, seven, eight and nine of employment. This
vesting schedule for the 35,000 shares from the 1992 Plan may be
accelerated by the Company's Board of Directors based upon the achievement
of individual and Company goals. The remaining fifty thousand (50,000)
shares were granted on March 15, 1999 from the Company's 1992 Long-Term
Executive Stock Option Plan at a price of $3.38 per share. These options
will vest pursuant to the following schedule: one fifth, one fifth, one
fifth, one fifth and one fifth after years five, six, seven, eight and nine
of employment. Vesting of these 50,000 shares from the 1992 Plan may be
accelerated by the Company's Board of Directors based upon the achievement
of individual and Company goals.
In addition, proposed with this agreement, you may be granted certain stock
awards based upon performance and achieving company targets.
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 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
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unauthorized disclosure by the Employee, (b) that was available to Employee
on a non-confidential 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 of 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 March 15,
1999, and thereafter during the term of this Agreement and without the
express consent of the Board of Directors of the Company, Employee 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 following
termination of this Agreement or last severance payment, whichever comes
later, Employee 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 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
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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 the Employee hereunder shall be deemed
properly given if addressed to:
Xxxxxx X. Xxxxxxx, Ph.D.
0000 Xxx Xx Xxxxxxx, X #0000
Xxxxxxxxxx, XX 00000
13) Governing Law. This Agreement shall be construed under and governed by
the laws of the State of Arizona.
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.
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.
/s/ Xxxx X. Xxxxx 8/17/99
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Chief Executive Officer Date
EMPLOYEE
/s/ Xxxxxx X. Xxxxxxx 8/22/99
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Xxxxxx X. Xxxxxxx, Ph.D. Date
