EXHIBIT 10.38
EMPLOYMENT AGREEMENT
This AGREEMENT ("Agreement") is made effective as of January 1, 2002 (the
"Effective Date") by and between PLATO Learning, Inc., a Delaware corporation
headquartered in Minneapolis (the "Company"), and ((Name)) ("Executive").
WITNESSETH THAT:
WHEREAS, the Company currently employs Executive as its ((Position)), and
the Company desires to continue to employ Executive as its ((Position)); and
WHEREAS, Executive desires to continue to be employed by the Company in
that capacity.
NOW, THEREFORE, for and in consideration of the promises and of the mutual
covenants hereinafter set forth, it is hereby agreed by and between the parties
as follows:
1. Employment. The Company hereby agrees to employ Executive to perform the
duties set forth in Section 3 hereof ("Executive Services"), and subject
to the restrictions of Section 7. Executive hereby accepts continued
employment to perform Executive Services for the Company under the terms
and conditions of this Agreement.
2. Term. The Term of this Agreement shall be twelve (12) months, subject to
termination pursuant to Section 6. On each annual anniversary of the
Effective Date, unless earlier terminated pursuant to Section 6, this
Agreement will automatically renew for an additional twelve (12) months,
subject to termination pursuant to Section 6.
3. Duties. Executive will serve as the Company's ((Position)), and perform
all the responsibilities and duties set forth in the Executive's job
description, or any successor thereto which does not materially reduce
such responsibilities and duties, and any other consistent
responsibilities and duties assigned or delegated to Executive by the
Company's Chief Executive Officer. Executive represents that
Executive's employment by the Company and performance of the position
will not violate or interfere with any employment-related agreement
Executive may have entered into with any previous employer (a "Prior
Employment Agreement").
4. Time Commitment. Executive will devote Executive's time, attention and
energies to the performance of Executive Services. Executive may not be
associated with, consult, advise, work for, be employed by, contract
with, or otherwise devote any of Executive's time to the pursuit of any
other work or business activities that may interfere with the
performance of Executive Services hereunder. The foregoing shall not
preclude Executive from devoting reasonable time to the supervision of
Executive's personal investments, civic, charitable, educational,
religious and similar types of activities, speaking engagements and
membership on other boards of directors, provided such activities do not
interfere in any way with the business of the Company; and provided
further that, the Executive cannot serve on the board of directors of
more than one publicly-traded company without the Chief Executive
Officer's written consent. The time involved in such activities shall
not be
-E1-
treated as vacation time. The Executive shall be entitled to keep any
amounts paid to Executive in connection with such activities (e.g.,
director fees and honoraria).
5. Compensation and Benefits. The Company will pay the following
compensation to Executive in full consideration for performance of
Executive Services hereunder in accordance with the Company's
then-current payroll policies and procedures.
(a) Salary. Executive will receive an annual salary of ((BaseSalary)),
payable in accordance with the Company's then-current payroll
policies and procedures. The Chief Executive Officer will review
Executive's salary at least annually. Executive's salary will not be
reduced, and after any increase the term "salary" for purposes of
this Agreement shall refer to base salary annualized, as most
recently increased.
(b) Expenses. The Company will reimburse Executive for all reasonable
and necessary expenses incurred by Executive in connection with the
performance of Executive Services upon submission by Executive of
expense reports with substantiating vouchers, in accordance with the
Company's then-current expense reimbursement policy.
(c) Stock Options. Executive shall be entitled to be granted options to
purchase shares of Company common stock in accordance with the
Company Stock Option Plan (the "Stock Options"), pursuant to the
following schedule:
(i) Executive is eligible to participate in the annual September
Stock Option award program in each year during which this
Agreement is in effect. Such options will be granted from an
Executive Team pool at the Board's September meetings, at fair
market value as of the date of the grant.
(ii) Executive is also eligible to participate in the annual
performance-based stock option award plan in each year during
which this Agreement is in effect. Such options will be
granted at the Board's December meetings, at fair market value
as of the date of the grant and will be subject to the Company
achieving its annual goals.
(iii) Executive's stock option grants pursuant to subsections (i)
and (ii) shall be subject to the vesting schedule contained in
the stock option agreement under which they are granted.
The award of the Stock Options under subsections (i) and (ii) is
subject to execution by Executive of the then-current Stock Option
Agreement, provided such agreement contains no terms that are
inconsistent with this Employment Agreement or Executive's
Employment Security Agreement or Indemnification Agreement.
(d) Benefits. Executive shall be entitled to participate in such
group life insurance, major medical, and other employee benefit
plans and programs (collectively "Benefit Plans") as established
by the Company in accordance with the applicable
-2-
terms and conditions of such Benefit Plans, which Benefit Plans may
be modified or discontinued by the Company at any time; provided,
however that Executive shall meet the requirements of the Benefit
Plans for participation and in no event, including breach or
wrongful termination of this Agreement, shall Executive be entitled
to any amount of compensation in lieu of participation, unless
otherwise provided by the terms of the Benefit Plan. The benefits
under the Benefit Plans available to Executive shall be no less
favorable than those available to other senior executives, excluding
the Chief Executive Officer, and commensurate with Executive's
position and salary; provided that, Executive may not permit or
cause an increase or improvement in benefits under the Benefit Plans
without the Company's approval. In the event of termination pursuant
to Section 6, Executive may elect to continue to participate in
Company benefits programs through COBRA. In the event of termination
of Executive without Good Cause or termination by the employee for
Good Cause as defined in Section 6, the Company will pay the
difference between the then-current employee portion of the cost of
said benefits and the COBRA costs.
(e) Bonus Compensation. Executive shall be eligible to receive cash
bonus compensation for the Company's Fiscal Year 2002, based on
the performance criteria previously agreed upon by the Chief
Executive Officer and the Board for that year, and shall remain
eligible for such cash bonus compensation in subsequent fiscal
years of this Agreement based on bonus amounts and performance
criteria to be mutually agreed between the Chief Executive Officer
and the Board for any given fiscal year of the Company. Unless
otherwise specifically agreed, earned cash bonus compensation will
be paid only while Executive is actively employed by the Company;
accordingly, if Executive ceases to be actively employed by the
Company, Executive will only receive a prorated portion of the
earned cash bonus compensation for the portion of the Company's
fiscal year that Executive was actively employed by the Company.
6. Termination.
(a) Either party may terminate this Agreement, without Good Cause and
without any liability on the part of either party, other than as
provided herein, upon forty-five (45) days prior written notice.
In such event, Executive, if requested by the Company, will
continue to render Executive Services and be paid Executive's
salary during such notice period and up to the date of
termination, as well as any earned cash bonus compensation
relative to such period of Executive Services, in accordance with
the Company's then-current payroll policies and procedures.
Irrespective of whether Executive performs such Executive
Services, Executive shall receive, in case of such termination
without Good Cause by the Company of Executive's employment
severance payments equivalent to Executive's then-current salary
for a period of ((Term)).
Executive's Eligibility to receive benefits under this Section 6(a)
is subject to Executive's abiding by the provisions of Section 7 of
this Agreement, and Executive's execution of a general release of
all claims or potential claims against
-3-
the Company, in a form prepared by the Company and mutually agreed
upon between Executive and the Company.
(b) The Company may terminate this Agreement at any time upon fourteen
(14) days written notice for Good Cause. Good Cause, for the
purposes of this Agreement, shall mean Executive's: (i)
conviction of or plea of nolo contendere to any felony or gross
misdemeanor involving dishonesty, fraud, or breach of trust under
any law of the United States or any State thereof; (ii) willful
engagement in any conduct that materially injures the Company or
any of its subsidiaries; or (iii) willful and substantial
nonperformance of assigned duties, provided that such
nonperformance has continued more than ten days after the Company
has given written notice of such nonperformance and of its
intention to terminate Executive's employment because of such
nonperformance.
For purposes of this section, no act on Executive's part shall be
considered "willful" unless it is done by Executive in bad faith or
without reasonable belief that such action was in the Company's best
interests.
(c) Executive may terminate this Agreement and resign Executive's
employment at any time upon fourteen (14) days' written notice to
the Chief Executive Officer for Good Reason. Good Reason, for the
purpose of this Agreement shall exist if the Company, without
Executive's written consent:
(i) materially reduces the nature, scope, level or extent of
Executive's responsibilities, or fails to provide Executive
with adequate office facilities and support services, similar
to those in place at the effective date of this Agreement, to
perform such responsibilities;
(ii) reduces Executive's salary below that in effect as of the
date of this Agreement;
(iii) requires Executive to relocate Executive's principal business
office or Executive's principal place of residence outside the
Minneapolis/Saint Xxxx, Minnesota Standard Metropolitan
Statistical Area (the "Geographical Employment Area"), or
assigns to Executive duties that would reasonably require such
relocation; or
(iv) fails to continue in effect any cash or stock-based incentive
or bonus plan, retirement plan, or Benefit Plan, unless (A)
the aggregate value (as computed by an independent employee
benefits consultant selected by the Company) of all such
compensation, retirement and benefit plans, programs and
arrangements provided to Executive is not materially less than
their aggregate value as of the date of this Agreement, or (B)
the same reduction applies uniformly to all senior executives.
-4-
Severance payments, in case of Executive's termination of this
Agreement and resignation for Good Reason, shall be made to
Executive in the same amounts, for the same periods, and subject to
the same conditions as provided for the Company's termination of
this Agreement without Good Cause in Section 6(a).
(d) Coordination With Employment Security Agreement. If Executive is a
party to an employment security agreement (the "ESA") with the
Company, Executive will be entitled to the greater of the payments
and benefits under this Agreement or the payments and benefits under
the ESA, but not the sum of such payments and benefits.
7. Restrictive Covenants.
(a) Confidentiality. Executive agrees not to directly or indirectly:
(i) use or disclose, for the benefit of any person, firm or entity
other than the Company and its subsidiaries, the Confidential
Business Information of the Company or any of its
subsidiaries;
(ii) distribute or disseminate in any way to anyone other than the
Company employees with a "need to know" any Confidential
Information in any form whatsoever;
(iii) copy any Confidential Information other than for use by the
Company or any of its subsidiaries;
(iv) remove any Confidential Information from the premises of the
Company without prior approval of an authorized officer of
the Company;
(v) fail to safeguard all confidential and/or classified
documents; and
(vi) copy any confidential and/or classified documents belonging
to any of the Company's customers.
Confidential Business Information means information or material that
is not generally available to or used by others or the utility or
value of which is not generally known or recognized as a standard
practice, whether or not the underlying details are in the public
domain, including but not limited to its computerized and manual
systems, procedures, reports, client lists, review criteria and
methods, financial methods and practices, plans, pricing and
marketing techniques, business methods and procedures and other
valuable and proprietary information relating to the pricing,
marketing, design, manufacture and formulation of educational
software, as well as information regarding the past, present and
prospective clients of the Company or any of its subsidiaries, and
their particular needs and requirements, and their own confidential
information.
-5-
Upon termination of employment under this Agreement, with or without
Good Cause, Executive agrees to return to the Company all policy and
procedure manuals, records, notes, data, memoranda, and reports of
any nature (including computerized and electronically stored
information) which are in Executive's possession and/or control
which relate to (i) the Confidential Business Information of the
Company or any of its subsidiaries, (ii) the business activities or
facilities of the Company or its past, present, or prospective
clients, as well as any original documents related to Executive's
employment with the Company, other than Executive's originals of
this Agreement, Executive's Employment Security Agreement and
Executive's Indemnification Agreement, and any successors thereto.
(b) Non-Compete. During the period of employment and for the ((Term))
term of employment under this Agreement (the "Restricted Period"),
Executive will not directly or indirectly, on Executive's behalf,
or as a partner, officer, director, trustee, member, employee, or
otherwise, within the United States or in any foreign market in
which Executive was engaged in activities on behalf of the Company
or any of its subsidiaries, own, engage in or participate in, in
any way, any business that is similar to or competitive with any
actual or planned business activity engaged in or planned by the
Company or any of its subsidiaries at the time the employment
under this Agreement was terminated, if in the course of such
ownership or employment, it could reasonably be anticipated that
Executive would be required to use or disclose the Confidential
Business Information of the Company or any of its subsidiaries.
However, this Agreement shall not prohibit ownership of up to 2%
of the shares of stock of any such corporation whose stock is
listed on a national securities exchange or is traded in the
over-the-counter market.
Executive further agrees that during the Restricted Period,
Executive will promptly notify the Company of any business with
which Executive is associated or in which Executive has an ownership
interest and provide the Company with a description of Executive's
duties or interests.
(c) Non-Solicitation. During the Restricted Period, Executive will
not directly or indirectly, for the purpose of selling services
and/or products provided or planned by the Company or any of its
subsidiaries at the time the employment under this Agreement was
terminated, call upon, solicit or divert any actual customer or
prospective customer of the Company or any of its subsidiaries,
unless employed by the Company to do so. An actual customer, for
purposes of this Section, is any customer to whom the Company or
any of its subsidiaries has provided services and/or products
within one year prior to Executive's termination of employment
under this Agreement. A prospective customer, for purposes of
this Section, is any prospective customer to whom the Company or
any of its subsidiaries sought to provide services and/or products
within one year prior to the date of Executive's termination of
employment under this Agreement when Executive had knowledge of or
was involved in such solicitation.
-6-
Executive further agrees that during the Restricted Period Executive
shall not directly or indirectly induce any person to leave the
employ of the Company or any of its subsidiaries, or solicit any
person who is currently or was an employee of the Company or any of
its subsidiaries at any time during the twelve months prior to
Executive's termination of employment under this Agreement.
(d) Judicial Modification. If the final judgment of a court of
competent jurisdiction declares that any term or provision of this
Section is invalid or unenforceable, the parties agree that (i)
the court making the determination of invalidity or
unenforceability shall have the power to reduce the scope,
duration, or geographic area of the term or provision, to delete
specific words or phrases, or to replace any invalid or
unenforceable term or provision with a term or provision that is
valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision, (ii)
the parties shall request that the court exercise that power, and
(iii) this Agreement shall be enforceable as so modified after the
expiration of the time within which the judgment or decision may
be appealed.
8. Remedies. In the event Executive breaches or threatens to breach and
provision of Section 7 of this Agreement, the Company shall be entitled to
injunctive relief, enjoining or restraining such breach or threatened
breach. Executive acknowledges that the Company's remedy at law is
inadequate and that the Company and its subsidiaries will suffer
irreparable injury if such conduct is not prohibited.
Executive and the Company agree that, because of the difficulty of
ascertaining the amount of damages in the event that Executive breaches
Section 7 of this Agreement, the Company shall be entitled to recover, at
its option, as liquidated damages and not as a penalty, a sum equal to six
(6) month's annual salary of the employee(s) solicited to leave the
Company's employ. The parties further agree that the existence of this
remedy will not preclude employer from seeking or receiving injunctive
relief.
Executive further agrees that the covenants contained in Section 7 shall
be construed as separate and independent of other provisions of this
Agreement and the existence of any claim by Executive against the Company
or any of its subsidiaries, except for a claim that Executive was
terminated without Good Cause or terminated Executive's employment for
Good Reason, shall not constitute a defense to the enforcement by the
Company of either of these Sections.
9. Property Rights. All discoveries, designs, improvements, ideas,
inventions, intellectual property, creations, and works of art, whether
or not patentable or subject to copyright, relating to the business of
the Company or any of its subsidiaries, or its clients, conceived,
developed or made by Executive during employment under this Agreement,
either solely or jointly with others (hereafter "Developments") shall
automatically become the sole property of the Company. Executive shall
immediately disclose to the Company all such Developments and shall,
without additional compensation, execute all assignments, application or
any other documents deemed necessary by the Company to perfect the
Company's rights therein. These obligations shall continue throughout
the Restricted
-7-
Period under this Agreement with respect to Developments conceived,
developed or made by Executive during the period of employment under this
Agreement.
The Company acknowledges and agrees that the provisions of this section
shall not apply to inventions or for which no equipment, supplies,
facility or trade secret information of the Company or its clients were
used by Executive and which were developed entirely on Executive's own
time unless (a) such inventions relate (i) to the business of the Company
or (ii) to the Company's actual or demonstrably anticipated research or
development or (b) such inventions result from any work performed by
Executive for the Company.
10. Assignments. Neither party shall have the right or power to assign any
rights or duties under this Agreement without the written consent of the
other party, provided, however, that the Company shall have the right to
assign this Agreement without consent pursuant to any corporate
reorganization, merger, or other transaction involving a change of
control of the Company or any of its subsidiary companies, in which
case, further rights and duties of the Company and Executive are set
forth in Executive's Employment Security Agreement, or any successor
agreement thereto. Any attempted assignment in breach of this Section
10 shall be void.
If Executive performs services and duties for any subsidiary or other
affiliated entity of the Company, then the provisions of Sections 7 and 9
shall apply to the confidential information and business activities,
property rights, clients, and employees of that subsidiary or other
entity.
11. Certain Reductions of Payments by the Company. If it is determined by
the independent auditor (the "Auditor") jointly selected by Executive
and the Company and paid by the Company that any payment, benefit or
distribution by or on behalf of the Company to or for the benefit of
Executive (whether paid or payable or distributed or distributable
pursuant to the terms of this Agreement or otherwise) (the "Payments")
are or will become subject to any excise taxes, then the Auditor shall
determine if the payment of excise taxes in addition to any federal,
state, local or other income, excise or other taxes ("Other Taxes")
payable by Executive with respect to the Payments will cause Executive
to pay an amount of excise and Other Taxes such that the net payment
Executive will receive after payment of all excise and Other Taxes on
payments under this Agreement is less than if the payment he would
receive was reduced to the maximum amount payable without imposition of
any excise taxes ("Economic Detriment"). If the Auditor determines that
the Executive will incur an Economic Detriment as a result of the
receipt of the full payment, the portion of the Payments made to
Executive under this Agreement will be reduced to the maximum possible
amount that can be paid to Executive without Executive incurring any
Economic Detriment. The Auditor shall be a nationally recognized United
States public accounting firm that has not, during the two years
preceding the date of its selection, acted in any way on behalf of the
Company or any of its subsidiaries.
12. Severability. Each section, paragraph, clause, sub-clause and provision
(collectively "Provisions") of this Agreement shall be severable from each
of the others, and if for any reason the Section, clause, sub-clause or
provision is invalid or unenforceable, such
-8-
invalidity or unenforceability shall not prejudice or in any way affect
the validity or enforceability of any other Provision hereof.
13. Miscellaneous.
(a) This Agreement, Executive's Employment Security Agreement,
Indemnification Agreement, Confidentiality Agreement, and any
successor agreements thereto, contain the entire agreement of the
parties with respect to the employment of Executive and supersede
all other understandings, whether written or oral; provided,
however, that Executive shall comply with all reasonable policies,
procedures and other requirements of the Company which are not
inconsistent with those three agreements.
(b) Failure on the part of either party to insist upon strict compliance
by the other with respect to any of the terms, covenants and
conditions hereof, shall not be deemed a subsequent waiver of such
term, covenant or condition.
(c) The provisions of any Section containing a continuing obligation
after termination shall survive such termination whether with or
without cause and even if occasioned by the Company's breach or
wrongful termination.
(d) This Agreement may not be modified except in a written amendment
signed by the parties; provided, however, that the Company may amend
or terminate its Benefit Plans, cash bonus Plan, and any Company
policies, procedures and other requirements of the Company, subject
to subsection (a) above and to Sections 5(d), 5(e) and 6(c), in its
sole discretion.
(e) Except for action by the Company to enforce the restrictive
covenants of Section 7, any dispute, controversy or difference
that may arise between the parties hereto out of or in relation to
or in connection with this Agreement or for the breach thereof
which cannot be settled amicably by the parties within thirty (30)
days shall be finally and exclusively settled by arbitration in
Minneapolis, Minnesota, in accordance with the Commercial
Arbitration Rules of the American Arbitration Association then in
effect. The arbitrator shall have discretion to award the
prevailing party reasonable attorney's fees. In the event of
litigation under this Agreement, the court shall have discretion
to award the prevailing party reasonable attorney's fees.
(f) The headings in this Agreement are inserted for convenience and
identification only and are not intended to describe, interpret,
define or limit the scope, extent, or intent of this Agreement or
any provision hereof. Each party has cooperated in the preparation
of this Agreement. As a result, this Agreement shall not be
construed against any party on the basis that the party was the
draftsperson.
(g) All forms of compensation referred to in this letter are subject to
reduction to reflect withholding for applicable income, payroll and
other taxes.
-9-
14. Governing Law. It is the intention of the parties hereto that all
questions with respect to the construction, formation, and performance of
this Agreement and the rights and liabilities of the parties hereto shall
be determined in accordance with the laws of the State of Minnesota. The
parties hereto submit to the jurisdiction and venue of the courts of
Hennepin County, Minnesota in respect to any dispute arising out of this
agreement.
15. Insurance. For the period from the date hereof through at least the fifth
anniversary of Executive's termination of employment from the Company, the
Company agrees to maintain Executive as an insured party on all directors'
and officers' liability insurance maintained by the Company for the
benefit of its directors and officers on at least the same basis as all
other covered individuals.
16. Notices. Any notice required pursuant to this Agreement will be in
writing and will be deemed given upon the earlier of (i) delivery
thereof, if by hand, (ii) five business days after mailing if sent by
mail (registered or certified mail, postage prepaid, return receipt
requested), (iii) the next business day after deposit if sent by a
recognized overnight delivery service, or (iv) upon transmission if sent
by facsimile transmission or by electronic mail, with return
notification (provided that any notice sent by facsimile or electronic
mail shall also promptly be sent by one of the means described in
clauses (i) through (iii) of this Section. All notices will be
addressed as follows or to such other address as a party may identify in
a written notice to the other party:
to the Company: PLATO Learning, Inc.
Attn: Chief Executive Officer
00000 Xxxxxxx Xxxxxx Xxxxx
Xxxxxxxxxxx, XX 00000-0000
to Executive: ((Name))
PLATO Learning, Inc.
00000 Xxxxxxx Xxxxxx Xxxxx
Xxxxxxxxxxx, XX 00000-0000
Each party named above may change its address and that of its
representative for notice by the giving of notice thereof in the manner
hereinabove provided.
17. Counterparts. This Agreement may be executed in one or more
counterparts, all of which together shall constitute but one Agreement.
IN WITNESS WHEREOF, the parties hereto, have executed this Employment
Agreement effective as of the day and year first above written.
PLATO LEARNING, INC.
By:
------------------------------ ---------------------------------------
((NAME)) Xxxx Xxxxxx
President and Chief Executive Officer
-10-
EXECUTIVE TEAM EMPLOYMENT AGREEMENT SUMMARY
Dated January 1, 2002
EXECUTIVE EXECUTIVE BASE EXECUTIVE
TYPE EXECUTIVE NAME EXECUTIVE POSITION TERM SALARY OPTIONS
B Xxxxx Xxxxx Vice President Human Resources 6 Months $140,000 N/A
B Xxxx Super Vice President Strategic Planning 6 Months $150,000 N/A
B Xxxx Xxxxxxxx Vice President North American Sales 9 Months $135,000 N/A
B Xxx Xxxxxxxxx Vice President Marketing 6 Months $150,000 N/A
B Xxx Xxxxxx Vice President Instructional Design & Quality Assurance 6 Months $160,000 N/A
