EXHIBIT 10.18
EMPLOYMENT AGREEMENT
This employment agreement (the "Agreement"), to be effective on January
6, 2004 (the "Effective Date"), by and between EDT Learning, Inc., a Delaware
corporation (the "Company"), and Nathan Cocozza ("Employee").
WHEREAS, the Company wishes to offer employment to Employee on the
terms and conditions expressed herein; and,
WHEREAS, the Employee wishes to accept employment with the Company on
the terms and conditions described herein;
NOW THEREFORE, in consideration of the mutual premises and conditions
contained herein, including the recitals hereto, which, by this reference, are
incorporated herein and made a part hereof, the parties agree as follows:
1. EMPLOYMENT. The Company hereby agrees to employ Employee, and Employee
hereby accepts employment by the Company, upon the terms and subject to
the conditions hereinafter set forth.
2. DUTIES. Employee shall serve as the Senior Vice President of Sales of
the Company (the "Position") reporting to the Company's President.
Employee's duties and powers shall be those consistent with the
Position, with such additional duties or titles as determined necessary
and appropriate from time to time by the Company's President. Employee
agrees to devote his full time, attention and best efforts to the
Company in the performance of Employee's duties. All of the Employee's
powers and authorities shall be subject to the reasonable direction and
control of the Company's President. Employee acknowledges that the
executive offices of the Company will be located in Phoenix, Arizona
and he shall perform his duties under this Agreement from those
offices.
3. TERM. Unless earlier terminated in accordance with Section 6 hereof,
the term of this Agreement shall be for one (1) year (the "Term"),
beginning on the Effective Date. This Agreement may be extend and
renewed at the Company's election for an additional one (1) year term
by providing to Employee notice of the Company's intent to renew no
later than sixty (60) days prior to the first annual anniversary of the
Effective Date. If this Agreement is extended and renewed beyond the
second anniversary date of the Effective Date, the parties agree to
renegotiate an increase in Employee's Base Salary as defined in Section
4 below.
4. COMPENSATION AND BENEFITS. In consideration for the services of the
Employee hereunder, the Company will compensate Employee as follows:
a. BASE SALARY. Beginning with the Effective Date and continuing
thereafter until this Agreement is terminated, Employee shall
receive a monthly minimum base salary (the "Base Salary")
equal to fourteen thousand five hundred eighty three and
34/100 dollars ($14,583.34) per month. Employee's Base Salary
shall be paid in accordance with Company's standard policy
regarding payment of compensation to employees but no less
frequently than monthly.
b. BONUS. Commencing with the Effective Date and continuing
thereafter until this Agreement is terminated, Employee will
be eligible to receive a yearly cash bonus equal to one
hundred thousand and 00/100 dollars ($100,000.00) (the
"Bonus"). Sixty percent (60%) of the Bonus is to be paid
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quarterly based upon the achievement of established quarterly
targets and forty percent (40%) of the Bonus is to be paid
based upon the achievement of established annual targets, with
such annual targets measured during the period beginning April
1, 2004 through March 31, 2005 and during the subsequent
fiscal year upon renewal of this Agreement, if any, with such
targets and payment terms determined in writing by Employee
and the Company, but in no event will the quarterly or annual
targets be greater than those assigned to the Company's senior
management team. Notwithstanding anything to the contrary
herein or contained in the writing related hereto, any
quarterly Bonus due to Employee shall be due up to and
including the termination date of this Agreement, but no Bonus
shall accrue after the termination date of this Agreement.
Furthermore, if the Employee is terminated (other than "for
cause") prior to the end of the third quarter of the Company's
fiscal year, then the annual Bonus shall not be due, but if
the Employee is terminated (other than "for cause") during the
fourth quarter of the Company's fiscal year then the accrued
but unpaid annual Bonus through and including the termination
date shall be due and payable. By way of example but not
limitation, should Employee accrue a bonus for the quarter
ending September 30th and then this Agreement be terminated on
October 15th, then the bonus for the quarter beginning in
October shall be paid on a pro-rata basis and the annual bonus
shall not be due or payable.
c. BENEFITS. The Company shall grant Employee options to purchase
shares of the Company's Common Stock in such amounts, with
such vesting and at such prices as determined by the President
all in accordance with the terms of the Company's standard
form stock option agreement. In addition, during the term of
this Agreement, Employee shall be allowed to participate in,
and be entitled to benefits, plans and programs, including
improvements or modifications of the same, which are now, or
may hereafter be, those available to officers or employees of
a like position. Employee shall be entitled to medical, dental
and retirement benefits which are generally made available to
employees of a like position, and specifically Company will
pay the total premium costs associated with the medical and
dental insurance, not including deductibles and/or
co-payments, covering the health of Employee, Employee's
spouse and Employee's dependants. Medical, dental and
disability insurance shall become effective ten (10) days
after the Effective Date. During each year of his employment
Employee shall be entitled to fifteen (15) days of vacation,
and such other days of compensated absences, (i.e. sick leave
or personal days) in accordance with the Company's policies
and procedures as determined from time to time by the
President.
5. EXPENSES. It is acknowledged by the parties that Employee, in
connection with the services to be performed by him pursuant to the
terms of this Agreement, will be required to make payments for travel,
meals, hotel, entertainment of business associates, mobile telephone
and similar expenses (the "Out of Pocket Expenses"). The Company will
reimburse Employee for all reasonable and necessary Out of Pocket
Expenses incurred by Employee in the performance of his duties.
Employee will comply with such budget limitations, approval and
reporting requirements with respect to such Out of Pocket Expenses as
the Company may establish from time to time.
6. TERMINATION. Employee's employment will begin on the Effective Date and
continue until the end of the Term, including any renewals thereof,
except that the employment of Employee hereunder will terminate upon
the occurrence of the following events:
a. BY EMPLOYEE. Employee's employment will terminate upon
Employee's notice to Company, in writing at least thirty (30)
days prior to Employee's last day of employment, of Employee's
intent to terminate this Agreement. In the event of the
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termination of this Agreement pursuant to this sub-section
6(a), Employee will not be entitled to any Severance Amount
(as hereinafter defined) or further consideration, except for
any portion of the Base Salary accrued but unpaid from the
last monthly payment date to the date of termination and
expense reimbursements under Section 5 hereof for expenses
incurred in the performance of his duties hereunder prior to
termination.
b. DEATH OR DISABILITY. Employee's employment will terminate
immediately upon the death of Employee during the term of his
employment hereunder or, at the option of the Company, in the
event of Employee's disability, upon 30 days notice to
Employee. Employee will be deemed "disabled" if, as a result
of Employee's incapacity due to physical or mental illness,
Employee shall have been continuously absent from his duties
with the company on a full-time basis for 120 consecutive
business days, and Employee shall not reasonably be expected
to be able to resume his duties within 60 days of the end of
such 120 day period. In the event of the termination of this
Agreement pursuant to this subsection 6(b), Employee will not
be entitled to any Severance Amount (as hereinafter defined)
or other compensation except for any portion of his Base
Salary accrued but unpaid from the last monthly payment date
to the date of termination and expense reimbursements under
Section 5 hereof or for expenses incurred in the performance
of his duties hereunder prior to termination.
c. FOR CAUSE. The Company may terminate the Employee's employment
"for cause" immediately upon written notice by the Company to
Employee. For purposes of this Agreement, a termination will
be for Cause if: (i) Employee willfully and continuously fails
to perform his duties with the Company (other than any such
failure resulting from incapacity due to physical or mental
illness); (ii) Employee willfully engages in gross misconduct
materially and demonstrably injurious to the Company; (iii)
Employee has been convicted of a felony which the President
reasonably believes will result in injury to the Company or
which would disqualify employee for coverage by the Company's
surety bond; (iv) Employee materially breaches the
representations contained in Section 9 (Employee
Representations) after written notice and failure to cure such
breach. In the event of the termination of this Agreement
pursuant to this sub-section 6(c), Employee will not be
entitled to any Severance Amount (as hereinafter defined) or
further consideration, except for any portion of the Base
Salary accrued but unpaid from the last monthly payment date
to the date of termination and expense reimbursements under
Section 5 hereof for expenses incurred in the performance of
his duties hereunder prior to termination.
d. BY COMPANY WITHOUT CAUSE. The Company may terminate this
Agreement during the Term at any time for any reason "without
cause." In the event of the termination of this Agreement
pursuant to this subsection 6(d) and only in that event, then
the Company will pay Employee, as Employee's sole remedy in
connection with such termination, severance (the "Severance
Amount"); (i) if in the first twelve (12) months of the
Agreement an amount determined by multiplying Employee's
monthly Base Salary by six (6) months or (ii) if after the
first twelve (12) months of the Agreement an amount determined
by multiplying Employee's monthly Base Salary by nine (9)
months. The Company will also pay Employee the portion of his
Base Salary and Bonus accrued but unpaid from the last monthly
payment date to the date of termination and expense
reimbursements under Section 5 hereof for expenses incurred in
the performance of his duties hereunder prior to termination.
The Company will also pay the total premium costs associated
with the medical and dental insurance, not including
deductibles and/or co-payments, covering the health of
Employee, Employee's spouse, and Employee's dependants for six
(6) months after the termination date or until employee
obtains other medical and dental insurance, whichever occurs
first. The Company will pay the Severance Amount in a lump sum
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and within thirty (30) days of the Employee's last day of
employment. The Company will not be entitled to offset or
mitigate the amount due under this subsection by any other
amounts payable to Employee, including amounts payable or paid
to Employee by third parties for Employee's services after the
date of termination, except as provided for otherwise in
Section 10(b) hereinafter.
e. CHANGE OF CONTROL. A "Change of Control" shall be deemed to
have occurred: (i) when in a single transaction or a series of
transactions a change of stock ownership of the Company of a
nature that would be required to be reported in response to
Item 6(e) of Schedule 14A promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and any
successor item of a similar nature has occurred; (ii) upon the
acquisition of beneficial ownership, directly or indirectly,
by any person (as such term is used in Section 13(d) and
14(d)(2) of the Exchange Act of securities of the Company) in
a single transaction or a series of transactions representing
thirty three percent (33%) or more of the combined voting
power of the Company's then outstanding securities; or (iii)
sale of substantially all of the assets of the Company in a
single transaction or a series of transactions; provided that
a Change in Control will not be deemed to have occurred for
purposes of clauses (i) and (ii) hereof with respect to any
person meeting the requirements of Rule 13d-1(b)(1)
promulgated under the Securities Exchange Act of 1934, as
amended.
7. STOCK OPTIONS. Employee shall be granted within ten (10) days of the
Effective Date, an option (the "Option") to purchase from the Company
all or any part of a total of 200,000 shares of the Company's Common
Stock, par value $.001 per share, at an exercise price equal to the
closing price of the Company's Common stock on the date of grant (the
"Date of Grant") of the Option. The Option is an "incentive stock
option" within the meaning of Section 422 of the Internal Revenue Code.
The Option will expire on the day prior to the tenth (10th) anniversary
of the Date of Grant, or such earlier date as may be provided in the
1997 Stock Compensation Plan (the "Plan"). Subject to the provisions of
Plan, the Option may be exercised as follows; on the date that is six
(6) months from the Effective Date, twenty-five percent (25.000%) of
the options granted shall be vested, and thereafter beginning on the
first day of the seventh month after the Effective Date, one
thirty-sixth (1/36) of the remaining portion shall vest on the first
day of each month, from month to month, until fully vested. In addition
to the foregoing stock option grant, Employee will be eligible to
participate in the Company's stock option plan and therefore deligible
for an annual grant of additional stock options, if any, that are
awarded to all of the Company's employees. If Employee is terminated
"for cause" under Section 6(c) above, then the effect of the
termination of the Employee's employment on such options shall be
determined by the terms of the Plan under which the options are issued
and the option agreement related to such options, except that Employee
shall retain those options which are already vested and shall have
ninety (90) days to exercise those vested options. Notwithstanding
anything to the contrary herein or in any option agreement, in the
event of a Change of Control, then the Options issued and outstanding
to Employee shall immediately vest (100%), and the Employee may
exercise his options at any time during the original term of the option
agreement (as defined therein), and such termination of this Agreement
shall not cause termination or expiration of the Options.
8. CONFIDENTIAL INFORMATION. Employee recognizes and acknowledges that
certain assets of the Company and its affiliates, including without
limitation information regarding customers, pricing policies, methods
of operation, proprietary computer programs, sales, products, profits,
costs, markets, key personnel, formulae, product applications,
technical processes, and trade secrets (herein called "Confidential
Information") are valuable, special and unique assets of the Company
and its affiliates. Employee will not, during or after the term of his
employment, disclose any of the Confidential Information to any person,
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firm, corporation, association, or any other entity for any reason or
purpose whatsoever, directly or indirectly, except as may be required
pursuant to his employment hereunder, unless and until such
Confidential Information becomes publicly available other than as a
consequence of the breach by Employee of his confidentiality
obligations hereunder. In the Event of the termination of his
employment, whether voluntary or involuntary, and whether by the
Company or Employee, Employee will deliver to the Company all documents
and data pertaining to the Confidential Information and will not take
with him any documents or data of any kind or any reproductions (in
whole or in part) of any items relating to the Confidential
Information.
9. REPRESENTATIONS OF EMPLOYEE.
a. NON-COMPETITION. For the period beginning with the Effective
Date and continuing thereafter until, (x) if before the first
annual anniversary of the Effective Date the expiration of six
(6) months after termination of Employee's employment with the
Company, or (y) if after the first annual anniversary of the
Effective Date the expiration of nine (9) months after
termination of Employee's employment with the Company, then
Employee covenants, warrants and represents that he will not:
(i) engage directly or indirectly, alone or as a shareholder,
partner, officer, director, employee or consultant of any
other business organization that engages in any business
activities that are directly competitive with the Company;
(ii) divert to any competitor of the Company any customer of
the Company or induce a customer to cease doing business with
the Company or, (iii) solicit or encourage any employee of the
Company to leave their employment with the Company or seek
employment by or with any competitor of the Company. The
parties hereto acknowledge that Employee's non-competition
obligations hereunder will not preclude Employee from (i)
owning less than 5% of the common stock of any publicly traded
corporation conducting business activities that are
competitive with the Company or (ii) serving as an officer,
director, stockholder or employee of an entity whose business
operations are not competitive with those of the Company.
Employee will continue to be bound by the provisions of this
Section 9 until their expiration and will not be entitled to
any compensation from the Company with respect thereto. If at
any time the provisions of this Section 9 are determined to be
invalid or unenforceable, by reason of being vague or
unreasonable as to area, duration or scope of activity, this
Section 9 will be considered divisible and will become and be
immediately amended to only such area, duration, scope of
activity as will be determined to be reasonable and
enforceable by the court or other body having jurisdiction
over the matter; and Employee agrees that this Section 9 as so
amended will be valid and binding as though any invalid or
unenforceable provision had not been included herein.
b. GENERAL REPRESENTATIONS. As of the Effective Date, Employee
expressly warrants and represents to the Company that: (i) All
employment agreements, employment letters or employment
relationships, whether as an employee or as an independent
contractor, have been terminated (ii) The execution and
delivery of this Agreement does not violate any provision of
any existing employment agreement to which Employee is a party
and which on the Effective Date remain in effect; and (iii)
Employee is not (by virtue of any act or omission) in
violation of any non-competition or like covenant that would
have the effect of prohibiting Employee from lawfully engaging
in the activities contemplated by this Agreement.
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10. GENERAL.
a. NOTICES. All notices and other communications hereunder will
be in writing or by written telecommunication, and will be
deemed to have been duly given if delivered personally or if
mailed by certified mail, return receipt requested or by
written telecommunication, to the relevant address set forth
below, or to such other address as the recipient of such
notice or communication will have specified to the other party
hereto in accordance with this Section 10(a):
If to the Company, to: If to Employee:
EDT Learning, Inc. Nathan Cocozza
2999 N. 44th Street, Suite 650 15131 East Twilight View Drive
Phoenix, Arizona 85018 Fountain Hills, Arizona 85268
Attn: President
Fax No.: (602) 952-0544
b. WITHHOLDING AND OFFSET. All payments required to be made by
the Company under this Agreement to Employee will be subject
to the withholding of such amounts, if any, relating to
federal, state and local taxes as may be required by law. No
payment under this Agreement will be subject to offset or
reduction attributable to any amount Employee may owe to the
Company or any other person.
c. EQUITABLE REMEDIES. Each of the parties hereto acknowledges
and agrees that upon any breach by Employee of his obligations
under any of the Sections 8 and 9 hereof, the Company will
have no adequate remedy at law, and accordingly will be
entitled to specific performance and other appropriate
injunctive and equitable relief.
d. SEVERABILITY. If any provision of this Agreement is held to be
illegal, invalid or unenforceable, such provision will be
fully severable and this Agreement will be construed and
enforced as if such illegal, invalid or unenforceable
provision never comprised a part hereof; and the remaining
provisions hereof will remain in full force and effect and
will not be affected by the illegal, invalid or unenforceable
provision or by its severance herefrom. Furthermore, in lieu
of such illegal, invalid or unenforceable provision, there
will be added automatically as part of this Agreement a
provision as similar in its terms to such illegal, invalid or
unenforceable provision as may be possible and be legal, valid
and enforceable. Any and all covenants and obligations of
either party hereto which by their terms or by reasonable
implication are to be performed, in whole or in part, after
the termination of this Agreement, shall survive such
termination, including specifically the obligations arising
under Sections: 6, 7, 8 and 9.
e. WAIVERS. No delay or omission by either party hereto in
exercising any right, power or privilege hereunder will impair
such right, power or privilege, nor will any single or partial
exercise of any such right, power or privilege preclude any
further exercise thereof or the exercise of any other right,
power or privilege.
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f. COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which will be deemed an original, and
all of which together will constitute one and the same
instrument.
g. CAPTIONS. The captions in this Agreement are for convenience
of reference only and will not limit or otherwise affect any
of the terms or provisions hereof.
h. REFERENCE TO AGREEMENT. Use of the words "herein," "hereof,"
"hereto " and the like in this Agreement refer to this
Agreement only as a whole and not to any particular subsection
or provision of this Agreement, unless otherwise noted.
i. BINDING AGREEMENT. This Agreement will be binding upon and
inure to the benefit of the parties and will be enforceable by
the personal representatives and heirs of Employee and the
successors of the Company. If Employee dies while any amounts
would still be payable to him hereunder, such amounts will be
paid to Employee's estate. This Agreement is not otherwise
assignable by Employee.
j. ENTIRE AGREEMENT. Except as provided in the benefit plans and
programs referenced herein, this Agreement contains the entire
understanding of the parties, supersedes all prior agreements
and understandings relating to the subject matter hereof and
may not be amended except by a written instrument hereafter
signed by each of the parties hereto. Any modification of this
Agreement shall be effective only if it is in writing and
signed by the parties hereto.
k. GOVERNING LAW. This Agreement and the performance hereof will
be construed and governed in accordance with the laws of the
State of Arizona, without regard to its choice of law
principles.
l. ATTORNEYS' FEES. If legal action is commenced by either party
to enforce or defend its rights under this Agreement, the
prevailing party in such action shall be entitled to recover
its court costs and reasonable attorneys' fees, including
expert witnesses fees actually incurred which shall be awarded
to the that party, in addition to any other relief granted.
m. AUTHORITY. The signatories to this Agreement represent and
warrant that such signatory has the authority to enter into
this Agreement, and that neither that signatory nor the party
on whose behalf this Agreement may be signed has assigned any
claims related to the parties' relationship or this Agreement
to any person or entity.
11. BINDING ARBITRATION. Any controversy or claim arising out of or relating to
this Agreement, or breach thereof, shall be settled exclusively by
arbitration in Phoenix, Arizona, in accordance with the Commercial
Arbitration Rules of the American Arbitration Association then in effect. A
sole arbitrator shall conduct Arbitration and he or she shall render his or
her award within forty five (45) days of appointment. Judgment upon the
award rendered by the arbitrator may be entered in, and enforced by, any
court having jurisdiction thereof. The award of the arbitrator may grant
any relief available to the parties in law or in equity; and the award may
contain a provision for payment of costs and attorney's fees to the
prevailing party, if any.
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EXECUTED to be effective as of the Effective Date first written above.
EDT LEARNING, INC. EMPLOYEE:
NATHAN COCOZZA
By: ______________________________ By: ___________________________________
James M. Powers, Jr.,
President
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