EXHIBIT 10.17
DRAFT DATED APRIL 23, 1999 COMPARED AGAINST DRAFT DATED APRIL 23, 1999
EMPLOYMENT AGREEMENT
DATE: April 12, 1999
PARTIES: Real Education, Inc., a Colorado corporation (the "Company")
Xxxxxxx Xxxxxxxxx, a resident of California (the "Employee")
RECITAL:
The Company is engaged in the business of online web production, online
education and online training. The Company desires to employ and retain the
unique experience, abilities, and services of Employee as the Company's
Executive Vice President.
AGREEMENT:
The parties agree as follows:
1) EMPLOYMENT
a) Duties. Company shall employ Employee as Executive Vice President.
Employee accepts employment with the Company on the terms and conditions
set forth in this Agreement, and agrees to devote his full time and
attention (reasonable periods of illness excepted) to the performance of
his duties under this Agreement. In general, such duties shall consist of
the duties and responsibilities described on Schedule A to this Agreement.
In performing such duties, Employee shall be subject to the direction and
control of the CEO of the Company. Employee further agrees that in all
aspects of such employment, Employee shall comply with the policies,
standards, and regulations of the Company established from time to time,
and shall perform his duties faithfully, intelligently, to the best of his
ability, and in the best interest of the Company. The devotion of
reasonable periods of time by Employee for personal purposes or charitable
activities shall not be deemed a breach of this Agreement, provided that
such purposes or activities do not materially interfere with the services
required to be rendered to or on behalf of the Company; however, any
outside business activities (for the purposes of this paragraph, the term
"business services" shall not include passive investment by Employee of
his personal assets) that are not first submitted in writing to the CEO of
the Company, and approved in writing by the CEO shall be deemed a breach
of this Agreement.
b) Term. Employment of the Employee shall begin on or before June,
1999 on a date determined by Employee and the Company's CEO
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DRAFT DATED APRIL 23, 1999 COMPARED AGAINST DRAFT DATED APRIL 23, 1999
("Start Date") and shall end on the date of termination pursuant to
Section 5 of this Employment Agreement (the "Agreement")
2) COVENANT NOT TO COMPETE; CONFIDENTIALITY
a) Noncompetition. During the term of this Agreement and for a period of
six (6) months after the termination of this Agreement, Employee shall
not, within the United States or Canada, directly or indirectly: (1) own
(as a proprietor, partner, stockholder, or otherwise) an interest of
five percent (5%) or more in; or (2) participate (as an officer,
director, or in any other capacity) in the management, operation, or
control of; or (3) perform services as or act in the capacity of an
employee, independent contractor, consultant, or agent of any division
or business unit of an enterprise, to the extent that such division or
business unit is engaged, directly or indirectly, or any company or
other entity engaged primarily, in the online education or online
training business except with the prior written consent of the CEO of
the Company; or, (4) directly or indirectly, contact, solicit or direct
any person, firm, or corporation to contact or solicit, any of the
Company's customers, prospective customers, or business brokers for the
purpose of selling or attempting to sell, any products and/or services
that are the same as, or similar to, the online education or online
training business products and services provided by the Company to its
customers during the term hereof.
In addition, the Employee will not disclose the identity of any such
business brokers, customers, or prospective customers, or any part
thereof, to any person, firm, corporation, association, or other entity
for any reason or purpose whatsoever; and during the period referred to
in the prior paragraph solicit or accept if offered to him, with or
without solicitation, on his own behalf or on behalf of any other
person, the services of any person who is an employee of the Company,
nor solicit any of the Company's employees to terminate employment with
the Company, nor agree to hire any employee of the Company into
employment with himself or any company, individual or other entity.
b) Confidentiality. Employee acknowledges and agrees that all product
specifications, product planning information, lists of the Company's
customers and suppliers, marketing plans, financial information, and
other Company data related to its business ("Confidential Information")
are valuable assets of the Company. Except for information that is a
matter of public record, Employee shall not, during the term of this
Agreement or after the termination of employment with the Company,
disclose any Confidential Information to any person or use any
Confidential Information for the benefit of Employee or any other
person, except with the prior written consent of the Company.
c) Ideas, Inventions. The Employee recognizes and agrees that all ideas,
inventions, enhancements, plans, writings, and other developments or
improvements (the "Inventions") conceived by the Employee, alone or with
others, during the term of his employment, whether or not during working
hours, that are within the scope of the Company's business operations or
that relate to any of the Company's work or projects,
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DRAFT DATED APRIL 23, 1999 COMPARED AGAINST DRAFT DATED APRIL 23, 1999
are the sole and exclusive property of the Company. The Employee further
agrees that (1) he will promptly disclose all Inventions to the Company and
hereby assigns to the Company all present and future rights he has or may
have in those Inventions, including without limitation those relating to
patent, copyright, trademark or trade secrets; and (2) all of the
Inventions eligible under the copyright laws are "work made for hire." At
the request of and without charge to the Company (except for any
associated, reasonable out-of-pocket expenses of Employee which Company
will pay), the Employee will do all things deemed by the Company to be
reasonably necessary to perfect title to the Inventions in the Company and
to assist in obtaining for the Company such patents, copyrights or other
protection as may be provided under law and desired by the Company,
including but not limited to executing and signing any and all relevant
applications, assignments or other instruments.
Notwithstanding the foregoing, the Company hereby notifies the Employee
that the provisions of this Section 2)c) shall not apply to any Inventions
for which no equipment, supplies, facility or trade secret information of
the Company was used and which were developed entirely on the Employee's
own time, unless (1) the Invention relates (i) to the business of the
Company, or (ii) to actual or demonstrably anticipated research or
development of the Company, or (2) the Invention results from any work
performed by the Employee for the Company.
d) Nondisparagement. During the term of this Agreement and for a period of two
years following the voluntary or involuntary termination of the Employee's
employment, the parties shall not make any statements concerning the other
party that would tend to diminish the esteem, respect, good will, or
confidence in which that party is held by members of the community in which
that party, or its officers, directors and employees, conduct their
business affairs or that would provoke adverse or derogatory feelings or
opinions in such members of those communities as to that party.
e) Return of Documents and Computer Data. Employee acknowledges and agrees
that all originals and copies of all computer data, records, reports,
documents, lists, plans, drawings, memoranda, notes, and other
documentation related to the business of the Company or containing any
Confidential Information shall be the sole and exclusive property of the
Company, and shall be returned to the Company upon the termination of
employment with the Company or upon the written request of the Company.
f) Injunction. Employee agrees that it would be difficult to measure damage to
the Company from any breach by Employee of Section 2)a), 2)b), or 2)c) and
that monetary damages would be an inadequate remedy for any such breach.
Accordingly, Employee agrees that if Employee shall breach or take steps
preliminary to breaching Section 2)a), 2)b), or 2)c), the Company shall be
entitled, in addition to all other remedies it may have at law or in
equity, to an injunction or other appropriate orders to restrain any such
breach, without showing or proving any actual damage sustained by the
Company.
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DRAFT DATED APRIL 23, 1999 COMPARED AGAINST DRAFT DATED APRIL 23, 1999
g) No Release. Employee agrees that the termination of employment with the
Company or the expiration of the term of this Agreement shall not release
Employee from any obligations set forth herein pursuant to Section 2)a),
2)b), 2)c), 2)d), or 2)e) or Company from any obligations set forth herein
pursuant to Section 2)d) or 5.
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DRAFT DATED APRIL 23, 1999 COMPARED AGAINST DRAFT DATED APRIL 23, 1999
3) COMPENSATION
a) Base Compensation; Bonus Compensation. In consideration of all services
to be rendered by Employee to the Company, the Company shall pay to
Employee compensation as described on Schedule A of this Agreement.
b) Other Benefits. Employee has been provided with a brochure that provides
a brief, general description of the Company's benefits. Employee agrees
and acknowledges that the benefits provided by the Company may be
changed or amended from time to time, and at any time, at the sole
discretion of the Company. Employee shall allowed to participate in any
benefit program created by the Compensation Committee of the Board and
approved by the Board and/or created by the Board, as a benefit program
to the members of the Management Committee of the Company.
4) COMPANY POLICIES
a) General Policy Descriptions. Employee has been provided with the Real
Education Employee Benefits Summary, which includes descriptions of
Medical Insurance and Prescription Card, Dental Insurance, Flexible
Reimbursement Program, Personal Days, Paid Holidays, Direct Deposit,
Bonus Programs, Employee Referral Program and Smoke Free Work
Environment as of March 31, 1999. Additional policies and standards of
the Company will be provided to Employee during the New Employee
Orientation, and from time to time during the Employee's employment.
b) Abide by All Policies Established by the Company. Employee agrees to
abide by all rules, policies, standards and regulations of the Company,
and in particular the three rules identified in Schedule B of this
Agreement.
c) Changes to Company Policies. Employee agrees and acknowledges that the
Company's policies may be created, eliminated, changed or amended from
time to time, and at any time, at the sole discretion of the Company.
5) TERMINATION
a) At-Will Employment. Employee agrees and acknowledges that, just as he
has the right to terminate his employment with the Company at any time
for any reason, the Company has the same right, and may terminate his
employment with the Company at any time for any reason.
b) Severance. The Company shall provide Employee with severance pay equal
to six months of Employee's base salary paid on the Company's normal
payroll dates, plus the pro-rata portion of any earned bonus (paid on
the normal date for payment of the bonus), plus/less any
positive/negative accrued vacation days, regardless of whether
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DRAFT DATED APRIL 23, 1999 COMPARED AGAINST DRAFT DATED APRIL 23, 1999
the termination was voluntary or involuntary, provided that the Employee
executes the severance agreement (attached hereto) waiving any claims
against the Company and in which the Company waives claims against the
Employee.
c) Immediate Termination. The employment of Employee by the Company may be
terminated immediately in the sole discretion of the either the CEO or the
Board of Directors of the Company upon the occurrence of any one of the
following events:
i) If the Employee willfully fails or refuses to comply, in a
material manner, with the policies, standards, and regulations of the
Company following written notice of breach and a reasonable opportunity to
cure;
ii) Employee engages in fraud, dishonesty, or any other act of
misconduct in the performance of Employee's duties on behalf of the
Company;
iii) Employee fails to perform any material provision of this
Agreement to be performed by Employee, provided however, that if such
breach can be cured, the Employee will receive reasonable, written notice
of breach and a reasonable opportunity to cure such breach;
iv) Employee violates one or more of the rules identified on
Schedule B.
Termination as a result of the foregoing will be deemed a termination for
cause for the purposes of this Agreement. All other terminations by the
Company will be deemed terminations without cause for the purposes of this
Agreement. A voluntary resignation by Employee resulting from a material
breach of this Agreement by the Company, a material lessening of
Employee's role, duties or status with the Company or requirement that
Employee's principal office be other than in the Denver, Colorado
metropolitan area will be deemed a termination without cause for the
purposes of this Agreement.
6) REPRESENTATIONS AND WARRANTIES OF EMPLOYEE
a) No Other Employment Agreements. Employee represents and warrants to the
Company that there is no employment contract or any other contractual
obligation to which Employee is subject, which prevents Employee from
entering into this Agreement or from performing fully Employee's duties
under this Agreement.
b) Special Needs. There are no special accommodations required to be made by
Company for Employee to perform his duties and responsibilities.
7) MISCELLANEOUS PROVISIONS
a) Notices a) Notices a) Notices . Any notice, election, waiver, consent,
acceptance or other communication required or permitted to be given under
this Agreement shall be in writing and shall be hand delivered,
transmitted via fax, by e-
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DRAFT DATED APRIL 23, 1999 COMPARED AGAINST DRAFT DATED APRIL 23, 1999
mail or sent via nationally recognized third party delivery (such as
Federal Express or UPS) for next day delivery, addressed to the parties as
follows:
If to Company:
--------------
Real Education, Inc.
Attn: Xxxx X. Xxxxxxx
10200 "A" Xxxx Xxxxxx Xxx.
Xxxxxx, Xxxxxxxx 00000
Fax: 0-000-000-0000
If to Employee:
---------------
Xxxxxxx Xxxxxxxxx
00000 "A" Xxxx Xxxxxx Xxx.
Xxxxxx, Xxxxxxxx 00000
Fax: 0-000-000-0000
Any notice or other communication shall be deemed to be given at the date
the notice is hand delivered to the individual, the date the notice is sent
via fax, or the date following the date of deposit with any nationally
recognized third party delivery (such as Federal Express or UPS) for next
day delivery to the addressee. The addresses to which notices or other
communications shall be sent may be changed from time to time by giving
written notice to the other party as provided in this Paragraph.
b) AmendmentsAmendmentsAmendments. This Agreement may be amended only by an
instrument in writing executed by all the parties.
c) Entire AgreementEntire AgreementEntire Agreement. This Agreement (including
the schedules) sets forth the entire understanding of the parties with
respect to the subject matter of this Agreement and supersedes any and all
prior understandings and agreements, whether written or oral, between the
parties with respect to such subject matter.
d) CounterpartsCounterpartsCounterparts. This Agreement may be executed by the
parties in separate counterparts, each of which when executed and delivered
shall be an original, but all of which together shall constitute one and
the same instrument. Fax signatures shall have the same effect as an
original signature.
e) SeverabilitySeverabilitySeverability. If any provision of this Agreement
shall be invalid or unenforceable in any respect for any reason, the
validity and enforceability of any such provision in any other respect and
of the remaining provisions of this Agreement shall not be in any way
impaired; provided, however, that the parties will attempt to agree upon a
valid and enforceable provision which shall be a reasonable substitute for
each invalid provision or unenforceable provision in light of the tenor of
this
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DRAFT DATED APRIL 23, 1999 COMPARED AGAINST DRAFT DATED APRIL 23, 1999
Agreement and, upon so agreeing, shall incorporate such substitute
provision into this Agreement.
f) WaiverWaiverWaiver. A provision of this Agreement may be waived only by a
written instrument executed by the party waiving compliance. No waiver of
any provision of this Agreement shall constitute a waiver of any other
provision, whether or not similar, nor shall any waiver constitute a
continuing waiver. Failure to enforce any provision of this Agreement
shall not operate as a waiver of such provision or any other provision.
g) Further AssurancesFurther AssurancesFurther Assurances. From time to time,
each of the parties shall execute, acknowledge, and deliver any
instruments or documents necessary to carry out the purposes of this
Agreement.
h) No Third-Party BeneficiariesNo Third-Party BeneficiariesNo Third-Party
Beneficiaries-. Nothing in this Agreement, express or implied, is intended
to confer on any person, other than the parties to this Agreement, any
right or remedy of any nature whatsoever.
i) ExpensesExpensesExpenses. Except as otherwise provided herein, each party
shall bear its own expenses in connection with this Agreement and the
transactions contemplated by this Agreement.
j) ExhibitsExhibitsExhibits. The exhibits and schedules referenced in this
Agreement are a part of this Agreement as if fully set forth in this
Agreement.
k) Governing LawGoverning LawGoverning Law. This Agreement shall be governed
by and construed in accordance with the laws of the United States of
America and the State of Colorado.
l) ArbitrationArbitrationArbitration.
i) Any controversy or claim arising out of or relating to this Agreement,
including, without limitation, the making, performance, or
interpretation of this Agreement, any claim for employment
discrimination, wrongful termination or violation of any state or
federal law related to employment, shall be settled by arbitration.
ii) The parties may choose an arbitrator and rules of arbitration by
mutual agreement. Unless the parties agree otherwise, the arbitration
shall be conducted in Denver, Colorado in accordance with the then
current Employment Arbitration Rules of the American Arbitration
Association in Denver, Colorado. The arbitration shall be held before
a single arbitrator (unless otherwise agreed by the parties). The
arbitrator shall be chosen from a panel of attorneys knowledgeable in
the field of business law in accordance with the then current
Employment Arbitration Rules of the American Arbitration Association
and judgment upon the award of the arbitrator may be entered in any
court having jurisdiction thereof and any party to the arbitration
may, if it so elects, institute proceedings in any court having
jurisdiction for the specific
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performance of any such award. The powers of the arbitrator shall
include the granting of injunctive relief. If the arbitration is
commenced, the parties agree to permit reasonable discovery
proceedings as determined by the arbitrator, including production of
material documents, accounting of sources and uses of funds,
interrogatories and the deposition of each party and any witness
proposed by either party.
iii) The parties agree that the arbitrator shall have no jurisdiction to
consider evidence with respect to or render an award or judgment for
punitive damages (or any other amount awarded for the purpose of
imposing a penalty), incidental or consequential damages.
iv) The arbitrator shall award all direct costs of the arbitration,
including arbitrator's fees and arbitration filing fees to the
substantially prevailing party. However, each party shall bear their
own costs related to the arbitration, such as attorneys' fees,
deposition costs, copy costs, express delivery costs, travel costs,
witness costs and postage.
v) The arbitrator shall determine a schedule for the arbitration
proceedings such that a final determination of the matter submitted to
the arbitrator can be rendered and delivered to the parties within
seventy five (75) days following the date that the arbitrator is
appointed.
vi) The parties agree that all facts and other information relating to any
arbitration arising under this Agreement shall be kept confidential to
the fullest extent permitted by law.
REAL EDUCATION, INC.
By:_____________________________________
Xxxxxx X. Xxxxxxx, CEO
_____________________________________
Xxxxxxx Xxxxxxxxx
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SCHEDULE A
COMPENSATION AND DUTIES
1) SALARY. For the period beginning the Start Date through July 31, 2000
(subject to (2), below), compensation to the Employee shall be at the rate
of $195,000 per year, payable on the Company's normal payroll dates.
2) SALARY ADJUSTMENT. Employee base compensation for periods after July 31,
2000 shall be at the rate as set by the Board of the Company, at the
recommendation of the CEO and the Compensation Committee, payable on the
Company's normal payroll dates. Salary adjustments shall be determined in
August of each year, and made retroactive to the Start Date anniversary of
that year. Salary adjustments will include any cost of living increase
provided generally to all members of the Management Committee. Salary will
not be adjusted downward except as part of a general reduction in the
salaries of senior executives of the Company.
3) BONUS/OTHER COMPENSATION. Employee shall be eligible for a an annual bonus
of up to $100,000 based upon reasonable criteria and a bonus plan
established by the Compensation Committee and administered by the CEO. The
bonus will be paid following the annual audit of the Company's financial
records, but no later than March 31 of the year following the year in which
the bonus was earned. In any year in which the Employee is not employed by
the Company for the entire year, the bonus will be prorated according to the
number of days in the year that the Employee was employed by the Company.
4) STOCK OPTIONS. Employee shall be issued non-qualified stock options for
70,000 shares of the common stock, no par value, of the Company with an
exercise price of $28 per share. Options on 17,500 shares shall vest on the
first anniversary of Employee's employment; thereafter, options on 1,458
shares shall vest on the last day of each month following the month of the
Employees first anniversary. The initial 17,500 shares shall immediately
vest upon a termination without cause in the first 364 days of employment.
All unvested options will vest on a change of control of the Company. All
terms of the options shall be more fully described in the Stock Option
Agreement. The Stock Option Agreement shall include a net exercise feature.
6) BONUS; MOVING ALLOWANCE. As a condition of Company's employment of Employee,
Employee has agreed to relocate to the greater Denver Colorado area
(including Boulder and Xxxxxxx County). In recognition of Employee's
obligation to relocate by moving his primary residence to Colorado, and
moving his family and household possessions to Denver Colorado, the Company
shall provide Employee with bonus and moving allowance of $108,000, fifty
percent (50%) paid on the Employees within three (3) business days of the
first day of employment and fifty percent (50%) paid within three (3)
business days following Employee's relocation to Denver, Colorado.
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7) DUTIES AND JOB DESCRIPTION. As Executive Vice President. Employee's duties
shall include:
. Executive Management of the Sales, Marketing and Account Services
departments and activity of the Company;
. Attend and participate in all Management Committee meetings and
activities
. Report directly to CEO and perform such other duties and
responsibilities as assigned by the CEO
Employee acknowledges that he has read and fully understands all terms set forth
in this Schedule A.
_________________________
Xxxxxxx Xxxxxxxxx
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SCHEDULE B
All employees must abide by the following rules of the company:
HONESTY. Employees shall conduct their affairs with honesty and integrity and
shall not engage in fraud, dishonesty or any act of material misconduct.
SIGNING AGREEMENTS. Employees shall not sign any document or agreement that
creates a legally binding obligation on the Company. The only person authorized
to sign agreements is the CEO, Xxxxxx Xxxxxxx.
WRITTEN AGREEMENT. All employees of the Company and all independent contractors
of the Company must have a signed, written agreement with the Company prior to
performing work for the Company.
Any violation of the above rules may result in disciplinary action, including
termination of any employee found to have violated one or more of the above
rules.
Employee acknowledges that he has read and fully understands all terms set forth
in this Schedule B.
____________________________
Xxxxxxx Xxxxxxxxx
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ACKNOWLEDGMENT
I acknowledge that I have received, read, and understood the Employment
Agreement, the Schedules attached thereto, and the Employee Benefits Handbook of
Real Education, Inc., (the "Company"). Further, I understand and agree to the
following:
1. The Employment Agreement, the Schedules attached thereto, and the
Employee Benefits Handbook (the "Employment Documents") contain a brief summary
of some important Company guidelines and policies. Consequently, the Employment
Documents are not all-inclusive and do not include all guidelines and policies
which may affect my employment with the Company.
2. The Company may alter, amend, delete or add to any of the statements
contained in the Employment Documents, or any of its policies or guidelines, at
any time, with or without notice, and my continued employment with the Company
after any such deletion or addition constitutes acceptance.
3. No contract, agreement, understanding, course of dealing, practice, or
statement of any kind by any employee, supervisor, officer, director, or
representative of the Company shall be effective or binding upon the Company
unless it is in writing, refers to and names me personally, and is signed by me
and by an authorized Company representative.
4. Just as I have the right to terminate my employment with the Company at
any time for any reason, with or without cause and with or without notice, the
Company has the same right, and may terminate my employment with the Company at
any time for any reason, with or without cause, and with or without notice.
5. The Employment Documents provide for arbitration of any matter related
to my employment and any matter or claim between the Company any me. I
understand that by signing the Employment Agreement, I am waiving my rights to
have any claim against the Company (including claims relating to employment or
termination) filed and heard in state or federal court, and the Company has also
waived its rights to have any claim against me filed and heard in state or
federal court. Instead, the Company and I have agreed to have all disputes
resolved by arbitration before the American Arbitration Association.
________________________________
Xxxxxxx Xxxxxxxxx
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