EXHIBIT 10.8
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AMENDMENT TO
EMPLOYMENT AGREEMENT
This Amendment (the "Amendment") is entered into effective January 7,2002
with respect to that certain Employment Agreement (the "Agreement") entered
into by and between Compass Knowledge Holdings, Inc. (the "Company") and ▇▇▇▇
▇▇▇▇▇ (hereinafter, "Employee"), dated May 1, 2000.
WHEREAS, Employee has forfeited the 300,000 options which were granted to
Employee pursuant to the Agreement (the "Original Options"); and
WHEREAS, the Company has granted Employee an additional 300,000 options
at an exercise price of $0.375 pursuant to that certain Stock Option Agreement
dated April 10, 2001 (the "New Options"); and
WHEREAS, pursuant to Section 3.5 of the Agreement Employment is entitled,
under certain circumstances, to a Liquidation Event Payment which, in part, is
based upon the Fair Market Value of the Original Options; and
WHEREAS, the Original Options have been forfeited and therefore are no
longer available for determining the amount of the Liquidation Event Payment,
if any, and the parties are desirous of substituting the New Options in place
of the Original Options for the purpose of determining whether or not Employee
is entitled to a Liquidation Event payment; and
WHEREAS, the parties are desirous of amending the Agreement to reflect the
forgoing as set forth herein.
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, and the sum of $10.00 and other good consideration the
receipt and sufficiency of which is expressly acknowledged by the parties
hereto, the parties agree as follows:
1. Recitals.
The parties hereby agree that the foregoing recitals are true and
correct in all material respects and by this reference are hereby made
a material part hereof.
2. Modification of Exhibit B.
In order to accomplish the foregoing described purposes, the parties
hereby agree that Exhibit "B" of the Agreement (the "Original Exhibit
"B") is hereby deleted in its entirety and is hereby replaced with a
new Exhibit "B" which is attached to this Amendment and by this
reference is hereby made a material part hereof (the "New Exhibit "B").
All references in the New Exhibit B to Options or Option Shares shall
mean the New Options.
3. Effect of Addendum.
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Except as otherwise provided herein, the terms and conditions of the
Agreement shall remain unchanged and are hereby republished in their
entirety subject to the modifications set forth herein.
IN WITNESS WHEREOF, the parties have executed this Agreement the latter
of the dates written below.
The "Company"
Compass Knowledge Holdings, Inc.
By:/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
"Employee"
By:/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------
▇▇▇▇ ▇▇▇▇▇
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Exhibit B
Liquidation Event Payment
(1) Options vest in accordance with the Option Agreement vesting schedule.
(2) "Liquidation Event Payment Shares" only have value if there is a
Liquidation Event (L.E.P.) and the Fair Market Value per Common Share of the
Company stock dictates as set forth below.
(3) Option Strike Price: $ 0.375
Employee
Entitlement:
FMV Per Number of
Common Share L.E.P. Shares Value Value of Options Total Value
------------------ ------------ -------------- ----------------- ------------------
$ 0.00 -0.375 200,000 $.00 - $75K $ - $.00 - $75,000
$ 0.875 175,000 $ 153,125 $ 150,000 $ 303,125
$ 1.375 100,000 $ 137,500 $ 300,000 $ 437,500
$ 1.875 75,000 $ 140,625 $ 450,000 $ 590,625
$ 2.375 50,000 $ 118,750 $ 600,000 $ 718,750
$ 2.875 25,000 $ 71,875 $ 750,000 $ 821,875
$ 3.375 12,500 $ 42,188 $ 900,000 $ 942,188
$ 3.875 6,250 $ 24,219 $ 1,050,000 $ 1,074,219
$ 4.375 - $ - $ 1,200,000 $ 1,200,000
$ 4.875 - $ - $ 1,350,000 $ 1,350,000
$ 5.375 - $ - $ 1,500,000 $ 1,500,000
$ 5.875 - $ - $ 1,650,000 $ 1,650,000
$ 6.375 - $ - $ 1,800,000 $ 1,800,000
$ 6.875 - $ - $ 1,950,000 $ 1,950,000
$ 7.375 - $ - $ 2,100,000 $ 2,100,000
$ 7.875 - $ - $ 2,250,000 $ 2,250,000
$ 8.375 - $ - $ 2,400,000 $ 2,400,000
$ 8.875 - $ - $ 2,550,000 $ 2,550,000
$ 9.375 - $ - $ 2,700,000 $ 2,700,000
$ 9.875 - $ - $ 2,850,000 $ 2,850,000
$ 10.375 - $ - $ 3,000,000 $ 3,000,000
$ 10.875 - $ - $ 3,150,000 $ 3,150,000
$ 11.375 - $ - $ 3,300,000 $ 3,300,000
$ 11.875 - $ - $ 3,450,000 $ 3,450,000
$ 12.375 - $ - $ 3,600,000 $ 3,600,000
$ 12.875 - $ - $ 3,750,000 $ 3,750,000
$ 13.375 - $ - $ 3,900,000 $ 3,900,000
$ 13.875 - $ - $ 4,050,000 $ 4,050,000
$ 14.375 - $ - $ 4,200,000 $ 4,200,000
$ 14.875 - $ - $ 4,350,000 $ 4,350,000
$ 15.375 - $ - $ 4,500,000 $ 4,500,000
$ 15.875 - $ - $ 4,650,000 $ 4,650,000
$ 16.375 - $ - $ 4,800,000 $ 4,800,000
$ 16.875 - $ - $ 4,950,000 $ 4,950,000
$ 17.375 - $ - $ 5,100,000 $ 5,100,000
$ 17.875 - $ - $ 5,250,000 $ 5,250,000
$ 18.375 - $ - $ 5,400,000 $ 5,400,000
$ 18.875 - $ - $ 5,550,000 $ 5,550,000
$ 19.375 - $ - $ 5,700,000 $ 5,700,000
$ 19.875 - $ - $ 5,850,000 $ 5,850,000
etc.
Note: As indicated, the number of L.E.P. Shares for which Employee is entitled
to receive is based upon the FMV of a share of the Company's common
stock as determined pursuant to Exhibit B-1 attached hereto. In
addition, the levels of FMV as set forth in the first column above are
definitive break points (i.e., not prorata) for determining the number
of L.E.P. Shares which Employee is entitled to receive. For example,
Employee will receive 75,000 if the FMV of a common share is $1.875 up
to $2.375 at which point the number of L.E.P. Shares will be reduced to
50,000.
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Exhibit "B-1"
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Fair Market Value Determination
Fair Market Value of the Company Shares. The term "Fair Market
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Value" of a share of the Company's common stock shall be calculated as follows:
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A. If the Liquidation Event is a sale of the Company's assets
then, in such event, the Fair Market Fair per share shall be determined by
dividing the total purchase price of the assets by the number of issued and
outstanding common (and convertible preferred shares on a post-conversion
basis); or
B. If the Liquidation Event is a sale or exchange of Company
stock or merger or reorganization of the Company with another entity
(hereinafter called a "Transaction") then, in such event, the Fair Market
Valueset of a share of the Company's stock will be as set forth in the
Transaction documents considering for these purposes only the number of issued
and outstanding common shares (and convertible preferred shares on a
post-conversion basis); or
C. With respect to all other Liquidation Events, the Fair
Market Fair per share shall be determined as follows: (1) if the principal
market for the Company's stock is a national securities exchange, the 60 day
trailing average of the closing ask prices of such stock as reported by such
exchange or on a composite tape reflecting transactions on such exchange, (2)
if the principal market for such stock is not a national securities exchange
and such stock is quoted on The NASDAQ Stock Market ("NASDAQ"), and (i) if
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actual closing price information is available with respect to such stock, the
60 day trailing average of the closing ask prices of such stock on NASDAQ, or
(ii) if such information is not available, the 60 day trailing average of the
bid prices per share of such stock on NASDAQ, or (3) if the principal market
for such stock is not a national securities exchange and such stock is not
quoted on NASDAQ, the 60 day trailing average of the closing ask prices of such
stock as reported on the OTC Bulletin Board Service or by National Quotation
Bureau, Incorporated or a comparable service; provided, however, that if
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clauses (1), (2) and (3) of this Section are all inapplicable, or if no trades
have been made or no quotes are available for such day, the fair market value
of such stock shall be determined as follows: The Company shall appoint an
appraiser who shall be engaged in the business of providing appraisals of stock
similar to the Company stock. Such appraiser shall then provide the Company and
the Employee with the Fair Market Fair of a share of the Company's common
stock. Such appraisal shall be final and binding upon the parties.
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EXHIBIT "A"
EMPLOYMENT AGREEMENT
BY AND BETWEEN
COMPASS KNOWLEDGE HOLDINGS, INC.
AND
▇▇▇▇ ▇▇▇▇▇
THIS EMPLOYMENT AGREEMENT (the "Agreement") is executed on May 1,
2000 to be effective as of May 1, 2000 (the "Commencement Date") by and between
Compass Knowledge Holdings, Inc., a Florida corporation (the "Company") and
▇▇▇▇ ▇▇▇▇▇ ("Employee").
WHEREAS, the Company is engaged in the distributed learning
business and other related businesses (such activities, present and future,
being hereinafter referred to as the "Business"); and
WHEREAS, the Company and Employee desire to enter into this
Agreement to memorialize their oral understanding, to assure the Company of the
services of Employee for the benefit of the Company and to set forth the
respective rights and duties of the parties hereto.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants, terms and conditions set forth herein, the Company and Employee
agree as follows:
ARTICLE I
Employment
1.1 Employment and Title. As of the Commencement Date, the
Company employs Employee, and Employee accepts such employment, as Chief
Financial Officer and Treasurer of the Company, all upon the terms and
conditions set forth herein.
1.2 Duties. During the Initial Term and any and all Renewal
Terms (as hereinafter defined) hereof, Employee shall faithfully perform his
duties in accordance with this Agreement and the Bylaws of the Company, serve
the Company faithfully and to the best of his ability and devote substantially
all of his business time and attention, knowledge, energy and skills to the
Company. Employee shall be responsible for such matters as assigned to him by
the Chief Executive Officer and/or President of the Company which shall be the
normal day-to-day management, operation and maintenance of the financial
operations and affairs of the Company in accordance with the Company's annual
business plan, budget and assigned duties. Subject to the directions of and
limitations imposed by the Chief Executive Officer and/or President of the
Company, the Employee shall be responsible for interpretation and executive
implementation of the corporate policies for his assigned area(s) which shall
be the Company's financial operations and functions as set by the Board of
Directors, the Chief Executive Officer and/or President of the Company, and
shall perform all the duties and have and exercise all rights and powers
usually pertaining and attributable, by law, custom, or otherwise, with respect
thereto. Subject to the directions of and limitations imposed by the Chief
Executive Officer and/or President of the Company, the Employee shall have the
authority to effectuate all business matters with respect to his
responsibilities and to execute such legal instruments as may be necessary to
carry out his duties in the name of the Company and on its behalf. Employee
shall coordinate and supervise the activities of all employees of the Company
under his control, have the power to employ and terminate the employment of all
such subordinate officers, agents, clerks, and other employees and have the
authority to fix and
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change, from time to time, the compensation of all such officers, agents,
clerks and other employees subject to the approval of the President of the
Company.
1.3 Location. The principal place of employment and the
location of Employee's principal office shall be in Ocoee, Florida; provided,
however, Employee shall, when requested by the President or Chief Executive
Officer, or may, if he determines it to be reasonably necessary, temporarily
perform outside of Ocoee, Florida such services as are reasonably required for
the proper execution of his duties under this Agreement.
1.4 Representations. Each party represents and warrants to the
other that he/it has full power and authority to enter into and perform this
Agreement and that his/its execution and performance of this Agreement shall
not constitute a default under or breach of any of the terms of any agreement
to which he/it is a party or under which he/it is bound. Each party represents
that no consent or approval of any third party is required for his/its
execution, delivery and performance of this Agreement or that all consents or
approvals of any third party required for his/its execution, delivery and
performance of this Agreement have been obtained.
ARTICLE II
Term
2.1 Term. The term of Employee's employment hereunder (the
"Term") shall commence as of the Commencement Date and shall continue through
the third anniversary of the Commencement Date (the "Scheduled Termination
Date") unless renewed or earlier terminated pursuant to the provisions of this
Agreement. Assuming all conditions of this Agreement have been satisfied and
there has been no breach of the Agreement during its initial term, Employee may
extend the term for an additional three year term at Employee's election
("Extended Term").
ARTICLE III
Compensation
3.1 Salary. As compensation for the services to be rendered by
Employee, the Company shall pay Employee, during the Term of this Agreement, an
annual base salary of not less than One Hundred Thirty Thousand Dollars
($130,000.00), which base salary shall accrue monthly (prorated for periods
less than a month) and shall be paid in equal bi-monthly installments, in
arrears or as the Employee and the Company otherwise agree. The base salary
will be reviewed annually, or, as appropriate, by the Chief Executive Officer
and the Compensation Committee. At any time the Salary may be increased for the
remaining portion of the term if so determined by the Chief Executive Officer
and the Compensation Committee of Company after a review of Employee's
performance of his duties.
3.2 Bonuses. The Company shall pay the Employee an annual
bonus (the "Annual Bonus") as determined by the Compensation Committee in
accordance with the Company's Annual Bonus Plan. The Annual Bonus, if any,
shall be payable within ninety (90) days after the end of the most recent
fiscal year to which the Bonus relates.
3.3 Nonqualified Stock Options. Upon the execution of this
Agreement, and subject to the provisions of this Agreement, the Company shall
grant to Employee nonqualified options to acquire shares of its common stock
(the "Option Shares"), subject to the following terms and conditions:
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(a) The number of Option Shares and their vesting schedule
shall be as set forth in Exhibit "A" attached hereto.
(b) The option price per Option Share will be equal to $3.00.
(c) The right to exercise Option Shares shall expire (unless
previously exercised in accordance with the terms of this Section 3.4),
on the fifth anniversary date of their vesting. Vested Option Shares
shall be exercisable by Employee, in whole or in part, on or before
such expiration by payment in full, in cash, by check, or by any other
consideration permitted by the Company's Board of Directors, to the
Company of the aggregate option price for the Option Shares so
acquired.
(d) All unvested Option Shares shall be subject to immediate
forfeiture upon Termination For Cause (as such term is defined in
Section 7.1 hereof).
(e) In the event of a Termination Without Cause (as such term
is defined in Section 7.2 hereof) all unvested Option Shares shall
immediately vest in full.
3.4 Benefits. Employee shall be entitled, during the Term
hereof, to the same medical, hospital, and dental insurance coverage and
benefits as are available to the Company's most senior executive officers on
the Commencement Date together with the following additional benefits:
(a) An automobile allowance of $400.00 per month.
(b) The Company's normal vacation allowance for all employees
who are executive officers of the Company, but not less than three (3)
weeks annually, with the option to carry over unused vacation days.
(c) The Employee will be entitled to participate in any
benefit plan or program of the Company which may currently be in place
or implemented in the future.
(d) During the Term, Employee will be entitled to receive, in
addition to and not in lieu of base salary, bonus or other compensation,
such as other benefits as Company may provide for its officers in the
future.
3.5 Liquidation Event Payment.
(a) Liquidation Event Payment. If during the term of this
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Agreement there is a Liquidation Event (as defined below) then, in such
event, Employee shall have the right, by providing written notice to
the Company (the "Liquidation Event Payment Notice"), to require the
--------------------------------
Company to pay Employee a Liquidation Event Payment Amount (as defined
below).
(b) Liquidation Event Payment Amount. The Liquidation Event
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Payment Amount shall be equal to that number, not to exceed 200,000
shares, of the Company's common stock, $.001 par value, as set forth
and paid in accordance with the provisions of Exhibit B attached hereto
and by this reference incorporated herein as a material part hereof.
(c) Liquidation Event. A Liquidation Event shall mean any
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transaction of merger or consolidation in which a Change of Control (as
defined below) occurs, or in which there is a conveyance, sell, or
transfer (or an unconditional agreement to do any of the foregoing at
any future time) of all or substantially all (which shall mean at least
80%) of the Company's property or assets, or the outstanding capital
stock in the Company.
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(d) Change of Control. For purposes of this Section 3.5, a
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Change of Control shall be deemed to have occurred
in the event of:
(i) The acquisition by any person or entity, or group
thereof acting in concert, of "beneficial" ownership (as such term is
defined in Securities and Exchange Commission ("SEC") Rule 13d-3 under
the Securities Exchange Act of 1934, as amended) (the "Exchange Act"),
of securities of the Company which, together with securities previously
owned, confer upon such person, entity or group (other than groups
consisting of the present officers and directors of the Company) the
voting power, on any matters brought to a vote of shareholders, of
fifty-one percent (51%) or more of the then outstanding shares of
capital stock of the Company; or
(ii) The sale, assignment or transfer of assets of
the Company, in a transaction or series of transactions, if the
aggregate consideration received or to be received by the Company in
connection with such sale, assignment or transfer is greater than fifty
percent (50%) of the book value, determined by the Company in
accordance with generally accepted accounting principles, of the
Company's assets determined on a consolidated basis immediately before
such transaction or the first of such transactions; or
(iii) The merger, consolidation, share exchange or
reorganization of the Company (or one or more subsidiaries of the
Company) as a result of which the holders of all of the shares of
capital stock of the Company as a group would receive less than fifty
percent (50%) of the voting power of the capital stock or other
interests of the surviving or resulting corporation or entity; or
(iv) The adoption of a plan of liquidation or the
approval of the dissolution of the Company; or
(v) The commencement (within the meaning of SEC Rule
14d-2 under the Exchange Act) of a tender or exchange offer which, if
successful, would result in a Change of Control of the Company; or
(vi) A determination by the Board of Directors of the
Company, in view of then current circumstances or impending events,
that a Change of Control of the Company has occurred or is imminent,
which determination shall be made for the specific purpose of
triggering the operative provisions of this Agreement.
(e) Limitations on Change of Control Compensation. In the
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event that the lump-sum payment payable to Employee under Section 3.5
hereof (the "Liquidation Event Benefits"), or any other payments or
benefits received or to be received by Employee from the Company
whether payable pursuant to the terms of this Agreement, or any other
plan, agreement or arrangement with the Company or any corporation
affiliated with the Company within the meaning of Section 1504 of the
Code, in the opinion of tax counsel selected by the Company acceptable
to Employee, constitute "parachute payments" within the meaning of
Section 280G(b)(2) of the Code and the present value of such "parachute
payments" equals or exceeds three times the average of the annual
compensation payable to Employee by the Company (or an affiliate) and
includable in Employee's gross income for federal income tax purposes
for the five (5) calendar years preceding the year in which a change in
ownership or control (as hereinafter defined) of the Company occurred
("Base Amount"), such Liquidation Event Benefits shall be reduced to an
amount the present value of which (when combined with the present value
of any other payments or benefits otherwise received or to be
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received by Employee from the Company (or an affiliate) that are deemed
"parachute payments" is equal to 2.99 times the Base Amount,
notwithstanding any other provision to the contrary in this Agreement.
The Liquidation Event Benefits shall not be reduced if (i) Employee
shall have effectively waived his receipt or enjoyment of any such
payment or benefit which triggered the applicability of this Section
3.5 or (ii) in the opinion of such tax counsel, the Liquidation Event
Benefits (in their full amount or as partially reduced, as the case may
be) plus all other payments or benefits which constitute "parachute
payments" within the meaning of Section 280G(b)(2) of the Code are
reasonable compensation for the services actually rendered, within the
meaning of Section 280G(b)(4) of the Code and such payments are
deductible by the Company. The Base Amount shall include every type and
form of compensation includable in Employee's gross income in respect
of his employment by the Company (or an affiliate), except to the
extent otherwise provided in temporary or final regulations promulgated
under Section 280G(b) of the Code. For purposes of this Section 3.5, a
"change in ownership or control" shall have the meaning set forth in
Section 280G(b) of the Internal Code of 1986, as amended (the Code"),
and any temporary or final regulations promulgated thereunder. The
present value of any non-cash benefit or any deferred cash payment
shall be determined by the Company's independent auditors in accordance
with the principles of Section 280G of the Code.
Employee shall have the right to request that the
Company obtain a ruling from the Internal Revenue Service ("IRS") as to
whether any or all payments or benefits determined by such tax counsel
are, in the view of the IRS, "parachute payments" under Section 280G.
If a ruling is sought pursuant to Employee's request, no Liquidation
Event Benefits payable under this Agreement in excess of the Section
280G limitations shall be made to Employee until after fifteen (15)
days from the date of such ruling, however, Liquidation Event Benefits
shall continue to be paid during the time up to the amount of that
limitation. For purposes of this Section 3.5, Employee and the Company
shall agree to be bound by the IRS's ruling as to whether payments
constitute "parachute payments" under Section 280G. If the IRS
declines, for any reason, to provide the ruling requested, the tax
counsel's opinion provided with respect to what payments or benefits
constitute "parachute payments" shall control and the period during
which the Liquidation Event Benefits may be deferred shall be extended
to a date fifteen (15) days from the date of the IRS's notice
indicating that no ruling would be forthcoming.
In the event that Section 280G, or any successor
statute is repealed, this Section 3.5(e) shall cease to be effective on
the effective date of such repeal. The parties to this Agreement
recognize that final regulations under Section 280G of the Code may
affect the amounts that may be paid under this Agreement and agree
that, upon issuance of such final regulations, this Agreement may be
modified as in good faith deemed necessary in light of the provisions
of such regulations to achieve the purposes of this Agreement, and that
consent to such modification shall not be unreasonably withheld.
3.6 Withholding. Any and all amounts payable under this
Agreement, including, without limitation, amounts payable under this Article III
and Article VII, which are subject to withholding for such federal, state and
local taxes as the Company, in its reasonable judgment, determines to be
required pursuant to any applicable law, rule or regulation.
ARTICLE IV
Working Facilities, Expenses and Insurance
4.1 Working Facilities and Expenses. Employee shall be
furnished with an office at the principal executive offices of the Company, or
at such other location as agreed to by Employee and the
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Company, and other working facilities and clerical and other assistance
suitable to his position and reasonably required for the performance of his
duties hereunder. The Company shall reimburse Employee for reasonable moving
and relocation expenses in an amount not to exceed $30,000.00 and all of
Employee's reasonable expenses incurred while employed and performing his
duties under and in accordance with the terms and conditions of this Agreement,
subject to Employee's full and appropriate documentation, including, without
limitation, receipts for all such expenses in the manner required pursuant to
Company's policies and procedures and the Internal Revenue Code of 1986, as
amended (the "Code") and applicable regulations as are in effect from
time to time.
4.2 Insurance. The Company may secure in its own name or
otherwise, and at its own expense, life, disability and other insurance
covering Employee or Employee and others, and Employee shall not have any
right, title or interest in or to such insurance other than as expressly
provided herein. Employee agrees to assist the Company in procuring such
insurance by submitting to the usual and customary medical and other
examinations to be conducted by such physicians(s) as the Company or such
insurance company may designate and by signing such applications and other
written instruments as may be required by any insurance company to which
application is made for such insurance.
ARTICLE V
Illness or Incapacity
5.1 Right to Terminate. If, during the Term of this Agreement,
Employee shall be unable to perform in all material respects his duties
hereunder for a period exceeding six (6) consecutive months by reason of illness
or incapacity, this Agreement may be terminated by the Company in its reasonable
discretion pursuant to Section 7.2 hereof.
5.2 Right to Replace. If Employee's illness or incapacity,
whether by physical or mental cause, renders him unable for a minimum period of
sixty (60) consecutive calendar days to carry out his duties and
responsibilities as set forth herein, the Company shall have the right to
designate a person to replace Employee temporarily in the capacity described in
Article I hereof; provided, however, that if Employee returns to work from such
illness or incapacity within the six (6) month period following his inability
due to such illness or incapacity, he shall be entitled to be reinstated in the
capacity described in Article I hereof with all rights, duties and privileges
attendant thereto.
5.3 Rights Prior to Termination. Employee shall be entitled to
his full remuneration and benefits hereunder during such illness or incapacity
unless and until an election is made by the Company to terminate this Agreement
in accordance with the provisions of this Article.
5.4 Determination of Illness or Incapacity. For purposes of
this Article V, the term "illness or incapacity" shall mean Employee's inability
to perform his duties hereunder substantially on a full-time basis due to
physical or mental illness as determined by a physician selected by the Company
and the Employee.
ARTICLE VI
Confidentiality
6.1 Confidentiality. During the Term of this Agreement and
thereafter, Employee shall not divulge, communicate, use to the detriment of the
Company, or for the benefit of any other business, firm, person, partnership or
corporation, or otherwise misuse, any "Confidential Information", pertaining to
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the Company including, without limitation, all (i) data or trade secrets,
including secret processes, formulas or other technical data; (ii) production
methods; (iii) customer lists; (iv) personnel lists; (v) proprietary
information; (vi) financial or corporate records; (vii) operational, sales,
promotional and marketing methods and techniques; (viii) development ideas,
acquisition strategies and plans; (ix) financial information and records; (x)
"know-how" and methods of doing business; and (xi) computer programs, including
source codes and/or object codes and other proprietary, competition-sensitive or
technical information or secrets developed with or without the help of Employee.
Employee acknowledges that any such information or data he may have acquired was
received in confidence and by reason of his relationship to the Company.
Confidential Information, data or trade secrets shall not include any
information which: (a) at the time of disclosure is within the public domain;
(b) after disclosure becomes a part of the public domain or generally known
within the industry through no fault, act or failure to act, error, effort or
breach of this Agreement by Employee; (c) is known to the recipient at the time
of disclosure; (d) is subsequently discovered by Employee independently of any
disclosure by the Company; (e) is required by order, statute or regulation, of
any governmental authority to be disclosed to any federal or state agency, court
or other body; or (f) is obtained from a third party who has acquired a legal
right to possess and disclose such information.
6.2 Records. All documents, papers, materials, notes, books,
correspondence, drawings and other written and graphic records relating to the
Business of the Company which Employee shall prepare or use, or come into
contact with, shall be and remain the sole property of the Company and,
effective immediately upon the termination of the Employee's employment with the
Company for any reason, shall not be removed from the Company's premises without
the Company's prior written consent and any such documents, papers, materials,
notes, books, correspondence, drawings and other written and graphic records
under Employee's control shall be immediately returned to the Company.
ARTICLE VII
Termination
7.1 Termination For Cause. This Agreement and the
employment of Employee may be terminated by the Company "For
Cause" under any one of the following circumstances:
(a) Employee has committed any material act of fraud,
misappropriation or theft against the Company or any of
its subsidiaries or affiliates.
(b) Employee's default breach of any material provision of
this Agreement; provided, that Employee shall not be in default
hereunder unless (i) he shall have failed to cure such default or
breach within fifteen (15) days of written notice thereof by the
Company to Employee or (ii) Employee shall have duly received notice of
at least three (3) prior instances of such breach or default (whether
or not cured by Employee).
(c) Employee engages in gross negligence, malfeasance or
willful misconduct in the performance of his duties hereunder;
provided, that Employee shall not be in default hereunder unless (i) he
shall have failed to cure such default or breach within fifteen (15)
days of written notice thereof by the Company to Employee, or (ii)
Employee shall have duly received notice of at least three (3) prior
instances of such breach or default (whether or not cured by Employee).
(d) Employee has been or is subsequently convicted of a first
degree misdemeanor or felony offense other than traffic offenses which
do not result in an incarceration of Employee for a period greater than
3 days.
(e) Upon termination by Employee.
11
A termination For Cause under this Section 7.1 shall be
effective upon the date set forth in a written notice of termination delivered
to Employee.
7.2 Termination Without Cause. This Agreement and the
employment of the Employee may be terminated "Without
Cause" as follows:
(a) By mutual agreement of the parties hereto.
(b) At the election of the Company by its giving not less than
thirty (30) days prior written notice to Employee in the event of an
illness or incapacity described in Article 5.1.
(c) Upon the removal of Employee from the office of Chief
Financial Officer and Treasurer of the Company or in the event the
Company fails to afford Employee the power and authority generally
commensurate with the position of Chief Financial Officer and
Treasurer.
(d) Upon Employee's death.
A termination Without Cause under Section 7.2(b) hereof shall
be effective upon the date set forth in a written notice of termination
delivered in accordance with the notice provisions of such sections. A
termination Without Cause under Sections 7.2(a) or (d) shall be automatically
effective upon the date of mutual agreement or the date of death of the
Employee, as the case may be. A termination Without Cause under Section 7.2(c)
shall be automatically effective upon the date such event takes place.
7.3 Effect of Termination For Cause. If Employee's
employment is terminated "For Cause":
(a) Employee shall be entitled to accrued base salary under
Section 3.1 hereof through the date of termination.
(b) Employee shall be entitled to accrued bonuses,
if any, under Section 3.2 and benefits under Section 3.4 hereof
through the date of termination.
(c) Employee shall be entitled to reimbursement for expenses
accrued through the date of termination in accordance with the provisions
of Section 4.1 hereof.
(d) All unvested Option Shares under Section 3.3 hereof shall
be forfeited and all vested Option Shares shall be subject to the
provisions of the Company's year 2000 Stock Option Plan.
(e) The Liquidation Event Payment under Section 3.5 hereof
shall be forfeited.
(f) Except as provided in Article XI, this Agreement shall
thereupon terminate and cease to be of any further force or effect.
7.4 Effect of Termination Without Cause. If Employee's
employment is terminated "Without Cause":
(a) Employee shall be entitled to the lesser of: (i) one (1)
years base salary, or (ii) the base salary for the remaining Term of
this Agreement, if the remaining Term is less than one (1) year.
12
(b) Employee shall be entitled to reimbursement for expenses
accrued through the date of termination in accordance with the provisions
of Section 4.1 hereof.
(c) Employee shall be entitled to receive all amounts, if any,
of bonuses under Section 3.2 hereof through the period which is the lesser
of : (i) one (1) year from the date of termination, or (ii) the remaining
Term of this Agreement, if the remaining Term is less than one (1) year,
which amounts shall be paid upon termination.
(d) Employee shall be entitled to receive all benefits as would
have been awarded under Section 3.4 hereof through the period which is the
lesser of : (i) one (1) year from the date of termination, or (ii) the
remaining Term of this Agreement, if the remaining Term is less than one
(1) year, which benefits shall be awarded as and when the same would have
been awarded under the Agreement had it not been terminated.
(e) All unvested Option Shares under Section 3.3 hereof shall
immediately vest in full but shall be subject to the provisions of the
Company's year 2000 Stock Option Plan.
(f) The Liquidation Event Payment under Section 3.5 shall be
paid within 30 days of such termination.
(g) Except as provided in Article XI, this Agreement shall
thereupon terminate and cease to be of any further force or effect.
ARTICLE VIII
Non-Competition and Non-Interference
8.1 Noncompetition; Nonsolicitation. As an inducement to the
-------------------------------
Company to execute this Agreement and in order to preserve the goodwill
associated with the business of the Company, its parent company and their
subsidiaries and in addition to and not in limitation of any covenants
contained in any agreements executed and delivered herewith, Employee hereby
covenants and agrees as follows:
(a) Covenant Not to Compete. During the term of this
-----------------------
Agreement and for a period of two (2) years after the effective date of a
Termination For Cause, Employee will not directly or indirectly, within the
Territory, act as an officer, manager, executive, consultant, advisor or agent
or controlling shareholder, partner or member to any business or otherwise
engage in any business which is, in any respect, competitive, either directly
or indirectly, with the Business, as defined herein, nor shall employee become
employed by such a business in a capacity which would require Employee to carry
out, in whole or in part, either directly or indirectly, the duties Employee
has performed or is expected to perform for the Company or which are
competitive in any respect with the Business or otherwise engage in any
practice the purpose of which is to evade the provisions of this covenant not
to compete or to commit any act which adversely affects the Company, its parent
company and their subsidiaries or their business. For purposes of this Article
VIII, the "Business" shall be defined as creating, designing, developing,
owning, leasing and/or operating distributed learning and education business
and other related businesses as are being conducted by the Company (or such
business as is under development) at the time of such termination. For purposes
of this Article VIII, the "Territory" shall be defined as the United States of
America.
(b) Nonsolicitation; Employees. Employee agrees that during
--------------------------
the Term of this Agreement and for two (2) years after the effective date of a
Termination For Cause, Employee will not
13
offer employment to any person who was employed by the Company, its
subsidiaries as of the effective date of a Termination For Cause without the
prior written consent of the Company.
(c) Nonsolicitation; Customers. Employee agrees that, during
--------------------------
the Term of this Agreement and for two (2) years after the effective date of a
Termination For Cause, Employee will not solicit customers or clients patients
of the Company, its parent company or their subsidiaries, with a view to
interfering or competing with the business of the Company, its parent company
or their subsidiaries or providing any product or service that is provided by
the Company, its parent company or their subsidiaries.
Notwithstanding the foregoing, the restrictive covenants shall not
prohibit the ownership of securities of corporations which are listed on a
national securities exchange or traded in the national over-the-counter market
in an amount which shall not exceed 5% of the outstanding shares of any such
corporation. The parties agree that the Company may sell, assign or otherwise
transfer this covenant not to compete, in whole or in part, to any person,
corporation, firm or entity that purchases all or substantially all of the
Company's assets or stock. In the event a court of competent jurisdiction
determines that the provisions of the restrictive covenants are excessively
broad as to duration, geographical scope or activity, it is expressly agreed
that the restrictive covenants shall be construed so that the remaining
provisions shall not be affected, but shall remain in full force and effect,
and any such over broad provisions shall be deemed, without further action on
the part of any person, to be modified, amended and/or limited, but only to the
extent necessary to render the same valid and enforceable in such jurisdiction.
8.2. Equitable Relief for Violations. Employee agrees that the
-------------------------------
provisions and restrictions contained in this Section are necessary to protect
the legitimate continuing interests of the Company, its parent company and
their subsidiaries and that any violation or breach of these provisions will
result in irreparable injury to the Company, its parent company and their
subsidiaries for which a remedy at law would be inadequate and that, in
addition to any relief at law which may be available to the Company, its parent
company or their subsidiaries for such violation or breach and regardless of
any other provision contained in this Agreement, the Company, its parent
company and their subsidiaries shall be entitled to injunctive and other
equitable relief as a court may grant after considering the intent of this
Section.
8.3 Severability. If any covenant or provision contained in
Article VIII is determined to be void or unenforceable in whole or in part, it
shall not be deemed to affect or impair the validity of any other covenant or
provision. If, in any arbitration or judicial proceeding, a tribunal shall
refuse to enforce all of the separate covenants deemed included in this Article
VIII, then such unenforceable covenants shall be deemed eliminated from the
provisions hereof for the purpose of such proceedings to the extent necessary
to permit the remaining separate covenants to be enforced in such proceedings.
8.4 Equitable Relief for Violations. Employee agrees that the
provisions and restrictions contained in this Section are necessary to protect
the legitimate continuing interests of the Company, its parent company and
their subsidiaries and that any violation or breach of these provisions will
result in irreparable injury to the Company, its parent company and their
subsidiaries for which a remedy at law would be inadequate and that, in
addition to any relief at law which may be available to the Company, its parent
company or their subsidiaries for such violation or breach and regardless of
any other provision contained in this Agreement, the Company, its parent
company and their subsidiaries shall be entitled to injunctive and other
equitable relief as a court may grant after considering the intent of this
Section.
14
ARTICLE IX
Indemnification
9.1. Indemnification. The Company shall to the full extent
permitted by law indemnify, defend and hold harmless Employee from and against
any and all claims, demands, liabilities, damages, losses and expenses
(including reasonable attorney's fees, court costs and disbursements) arising
out of the performance by him of his duties hereunder except in the case of his
willful misconduct and will carry reasonable directors and officers' insurance.
ARTICLE X
Miscellaneous
10.1 No Waivers. The failure of either party to enforce any
provision of this Agreement shall not be construed as a waiver of any such
provision, nor prevent such party thereafter from enforcing such provision or
any other provision of this Agreement.
10.2 Notices. Any notice to be given to the Company and
Employee under the terms of this Agreement may be delivered personally, by
telecopy, telex or other form of written electronic transmission, or by
registered or certified mail, postage prepaid, and shall be addressed as
follows:
If to the Company: ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
If to Employee: _______________________
_______________________
Either party may hereafter notify the other in writing of any change in
address. Any notice shall be deemed duly given (i) when personally delivered,
(ii) when telecopied, telexed or transmitted by other form of written
electronic transmission (upon confirmation of receipt) or (iii) on the third
day after it is mailed by registered or certified mail, postage prepaid, as
provided herein.
10.3 Severability. The provisions of this Agreement are
severable and if any provision of this Agreement shall be held to be invalid or
otherwise unenforceable, in whole or in part, the remainder of the provisions,
or enforceable parts thereof, shall not be affected thereby.
10.4 Successors and Assigns. The rights and obligations of the
Company under this Agreement shall inure to the benefit of and be binding upon
the successors and assigns of the Company, including the survivor upon any
merger, consolidation, share exchange or combination of the Company with any
other entity. Employee shall not have the right to assign, delegate or
otherwise transfer any duty or obligation to be performed by him hereunder to
any person or entity.
10.5 Entire Agreement. This Agreement supersedes all prior and
contemporaneous agreements and understandings between the parties hereto, oral
or written, and may not be modified or terminated orally. No modification,
termination or attempted waiver shall be valid unless in writing, signed
15
by the party against whom such modification, termination or waiver is sought to
be enforced. This Agreement was the subject of negotiation by the parties
hereto and their counsel. The parties agree that no prior drafts of this
Agreement shall be admissible as evidence (whether in any arbitration or court
of law) in any proceeding which involves the interpretation of any provisions
of this Agreement.
10.6 Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Florida without
reference to the conflict of law principles thereof.
10.7 Section Headings. The section headings contained herein
are for the purposes of convenience only and are not intended to define or
limit the contents of said sections.
10.8 Further Assurances. Each party hereto shall cooperate and
shall take such further action and shall execute and deliver such further
documents as may be reasonably requested by the other party in order to carry
out the provisions and purposes of this Agreement.
10.9 Gender. Whenever the pronouns "he" or "his" are used
herein they shall also be deemed to mean "he" or "his" or "it" or "its"
whenever applicable. Words in the singular shall be read and construed as
though in the plural and words in the plural shall be read and construed as
though in the singular in all cases where they would so apply.
10.10 Counterparts. This Agreement may be executed in
counterparts, all of which taken together shall be deemed one original.
ARTICLE XI
Survival
11.1 Survival. The provisions of Articles VI, VII, VIII, and
X, of this Agreement shall survive the termination of this Agreement.
16
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
Compass Knowledge Holdings, Inc.,
a Florida Corporation,
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
-------------------------
Title: CEO
EMPLOYEE
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------
▇▇▇▇ ▇▇▇▇▇
17
--------------------
EXHIBIT A
TO
EMPLOYMENT AGREEMENT
BY AND BETWEEN
COMPASS KNOWLEDGE HOLDINGS, INC.
AND
▇▇▇▇ ▇▇▇▇▇
----------------------------
INITIAL OPTIONS
Year of Vesting # of Options
--------------- ------------
2000 Signing Bonus Options 100,000
-------
Commencement Date, 2001 50,000
Commencement Date, 2002 50,000
Commencement Date, 2003 50,000
Commencement Date, 2004 50,000
Total 2000-2004 300,000
=======
These Options shall be governed in accordance with the Company's Year 2000
Stock Option Plan.
18
Exhibit A
Liquidation Event Payment
(1) Options vest in accordance with the Employment Agreement vesting schedule.
(2) "Liquidation Event Payment Shares" only have value if there is a
Liquidation Event and the Fair Market Value per Common Share dictates as set
forth below.
(3) Option Strike Price: $ 2.00
FMV Per Number of Value Value of Options Total Value
-------------- ------------------ -------------------
Common Share L.E.P. Shares
------------- ----------------
$ 0.50 200,000 $ 100,000 $ - $ 100,000
$ 1.00 200,000 $ 200,000 $ - $ 200,000
$ 1.50 200,000 $ 300,000 $ - $ 300,000
$ 2.00 200,000 $ 400,000 $ - $ 400,000
$ 2.50 140,000 $ 350,000 $ 150,000 $ 500,000
$ 3.00 100,000 $ 300,000 $ 300,000 $ 600,000
$ 3.50 71,429 $ 250,002 $ 450,000 $ 700,002
$ 4.00 50,000 $ 200,000 $ 600,000 $ 800,000
$ 4.50 33,334 $ 150,003 $ 750,000 $ 900,003
$ 5.00 20,000 $ 100,000 $ 900,000 $ 1,000,000
$ 5.50 9,091 $ 50,001 $ 1,050,000 $ 1,100,001
$ 6.00 - $ - $ 1,200,000 $ 1,200,000
$ 6.50 - $ - $ 1,350,000 $ 1,350,000
$ 7.00 - $ - $ 1,500,000 $ 1,500,000
$ 7.50 - $ - $ 1,650,000 $ 1,650,000
$ 8.00 - $ - $ 1,800,000 $ 1,800,000
$ 8.50 - $ - $ 1,950,000 $ 1,950,000
$ 9.00 - $ - $ 2,100,000 $ 2,100,000
$ 9.50 - $ - $ 2,250,000 $ 2,250,000
$ 10.00 - $ - $ 2,400,000 $ 2,400,000
$ 10.50 - $ - $ 2,550,000 $ 2,550,000
$ 11.00 - $ - $ 2,700,000 $ 2,700,000
$ 11.50 - $ - $ 2,850,000 $ 2,850,000
$ 12.00 - $ - $ 3,000,000 $ 3,000,000
$ 12.50 - $ - $ 3,150,000 $ 3,150,000
$ 13.00 - $ - $ 3,300,000 $ 3,300,000
$ 13.50 - $ - $ 3,450,000 $ 3,450,000
$ 14.00 - $ - $ 3,600,000 $ 3,600,000
$ 14.50 - $ - $ 3,750,000 $ 3,750,000
$ 15.00 - $ - $ 3,900,000 $ 3,900,000
$ 15.50 - $ - $ 4,050,000 $ 4,050,000
$ 16.00 - $ - $ 4,200,000 $ 4,200,000
$ 16.50 - $ - $ 4,350,000 $ 4,350,000
$ 17.00 - $ - $ 4,500,000 $ 4,500,000
$ 17.50 - $ - $ 4,650,000 $ 4,650,000
$ 18.00 - $ - $ 4,800,000 $ 4,800,000
$ 18.50 - $ - $ 4,950,000 $ 4,950,000
$ 19.00 - $ - $ 5,100,000 $ 5,100,000
$ 19.50 - $ - $ 5,250,000 $ 5,250,000
$ 20.00 - $ - $ 5,400,000 $ 5,400,000
etc.
19
