EXHIBIT 10.15
EMPLOYMENT AGREEMENT
This AGREEMENT ("Agreement") is made effective as of January 1, 2001
(the "Effective Date") by and between PLATO Learning, Inc., a Delaware
corporation headquartered in Minneapolis (the "Company"), and John Murray
("Executive").
WITNESSETH THAT:
WHEREAS, the Company currently employs Executive as its President and
Chief Executive Officer, and the Company desires to continue to employ Executive
as its President and Chief Executive Officer; 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 a "rolling" three (3) years,
subject to termination pursuant to Section 6. The Initial Term of this
Agreement will be three (3) years beginning on the Effective Date. On
each annual anniversary of the Effective Date, unless earlier
terminated pursuant to Section 6, this Agreement will automatically
renew for an additional three (3) year term, subject to termination
pursuant to Section 6.
3. Duties. Executive will serve as the Company's President and Chief
Executive Officer, and perform all the responsibilities and duties set
forth in Section 6 and Section 7 of Article IV of the Amended and
Restated Bylaws of PLATO Learning, Inc. dated March 30, 2000, 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 Board of Directors
of the Company ("Board"). 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
his 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
Board's written consent. The time involved in such activities shall not
be treated as vacation time. The Executive shall be entitled to keep
any amounts paid to him 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 Two Hundred
Fifty Thousand Dollars ($250,000.00), payable in accordance
with the Company's then-current payroll policies and
procedures. The Board 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 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, adjusted
for any stock splits, in accordance with the Company Stock
Option Plan (the "Stock Options"), pursuant to the following
schedule:
(i) Executive shall receive options to purchase
sixty-five thousand (65,000) shares of Company stock
in each year during which this Agreement is in
effect, to be granted at the Board's September
meetings in that year, at fair market value as of the
date of the grant.
(ii) Executive shall receive options to purchase
thirty-five thousand (35,000) shares of Company stock
in each year during which this Agreement is in
effect, to be granted at the Board's December
meetings in that year, at fair market value as of the
date of the grant, but with the further condition and
prerequisite that, prior to each such grant,
Executive shall be required to meet annual
performance goals, to be mutually agreed between
Executive and the Board in each of those three (3)
years. Executive's performance goal for the Company's
Fiscal Year 2001 shall be met if the Company's
earning per share equal $0.78 or more.
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(iii) Executive's stock option grants pursuant to
subsections (i) and (ii) shall be subject to a
three-year pro-rata vesting schedule commencing on
the date of grant, except as provided in Section
6(a).
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
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 and
commensurate with his position and salary; provided that,
Executive may not permit or cause an increase or improvement
in benefits under the Benefit Plans without the Board's
approval.
(e) Bonus Compensation. Executive shall be eligible to receive
cash bonus compensation for the Company's Fiscal Year 2001,
based on the performance criteria previously agreed upon by
Executive 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 Executive 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 ninety (90) 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
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whether Executive performs such Executive Services, Executive
shall receive, in case of such termination without Good Cause
by the Company of Executive's employment: (i) severance
payments equivalent to his then-current salary for the
then-remaining balance of the initial or renewal three (3)
year term of this Agreement during which such termination
occurs; (ii) the right to immediate vesting of any shares
previously granted under Section 5(c)(i) and (ii); and (iii)
the immediate right to be granted any options to purchase
shares of Company stock remaining to be granted under Section
5(c)(i) subject to a three year vesting requirement that
Executive must satisfy by fulfilling the requirements of
Section 7 of this Agreement throughout the three year period.
Executive's Eligibility to receive benefits under this Section
6(a) is subject to his abiding by the provisions of Section 7
of this Agreement, and his execution of a general release of
all claims or potential claims against 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 his
employment at any time upon fourteen (14) days' written notice
to the Board 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 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 his principal place of residence
outside the Minneapolis/Saint Paul, Minnesota
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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.
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.
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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.
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, his Employment Security Agreement and his
Indemnification Agreement, and any successors thereto.
(b) Non-Compete. During the period of employment and for the
remaining balance of the Initial Term or and subsequent three
year Term of employment under this Agreement (the "Restricted
Period"), Executive will not directly or indirectly, on his
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.
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(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.
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 one year'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.
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Executive and the Company agree that in the event of a breach or
threatened breach of any of the covenants contained in Section 7, in
addition to any other penalties or restrictions that may apply under
this Agreement, state law, or otherwise, Executive will forfeit the
right to be granted any options to purchase shares of Company stock
remaining to be granted under Section 5(c)(i), pursuant to clause (iii)
of Section 6(a), and any options already granted pursuant to clause
(iii) of Section 6(a), including vested Options.
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 his 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 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
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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 him 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 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.
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(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.
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' 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
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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: Chairman of the Board of Directors
10801 Nesbitt Avenue South
Bloomington, MN 55437-3109
to Executive: Mr. John Murray
PLATO Learning, Inc.
10801 Nesbitt Avenue South
Bloomington, MN 55437-3109
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, pursuant to a duly authorized
resolution of the Board, have executed this Employment Agreement in the State of
Minnesota effective as of the day and year first above written.
PLATO LEARNING, INC.
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JOHN MURRAY By:
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Its:
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