Exhibit 10.5
EMPLOYMENT AGREEMENT
This
Employment Agreement (“Agreement”), dated as of
October 31, 2007 (“Effective Date”), is entered
into by John R. Kline (“Employee”) and National
Education Loan Network, Inc. or its designated affiliated company
(“Company”).
WHEREAS, the
Company desires to employ Employee in the capacity and on the terms
and conditions set forth herein, and Employee is willing to be so
employed.
THEREFORE, in
consideration of the mutual promises, covenants and conditions
hereinafter set forth, Employee and the Company agree as
follows:
1. TERM.
1.1.
The “Initial Term” of this Agreement shall be a four
(4) year period which shall commence on the Effective Date and
shall terminate on the fourth anniversary thereof. Following the
Initial Term this Agreement may be extended for additional periods
and on such terms as determined by mutual agreement of the parties
(each, a “Renewal Term”).
2. DUTIES AND RESPONSIBILITIES.
2.1.
Employee shall be employed as the chief executive in charge a
division and/or a subsidiary of the Company which provides products
and services related to online recruiting, enrollment and education
(the “Online Business”). In this capacity, he shall be
responsible for such duties and responsibilities as the Company may
assign to him from time to time.
2.2. Employee shall participate as a member of the advisory
board or committee of the Company’s enrollment lead
generation businesses, CUnet and Peterson’s, and will be a
member of the Company’s Strategic Coordination and
Communications Team.
2.3.
During the Initial Term and any Renewal Term, Employee shall devote
his full time and efforts to the Company, consistent with Company
policies and procedures.
2.4.
Employee and Company shall enter into one or more separate
agreements providing for partial ownership by Employee and the
employees working for him (the “Online Team”), in
subsidiaries or affiliates of Company utilized in the pursuit of
opportunities by the Online Business. Under the terms of such
agreements, the Online Team shall be entitled to purchase up to
twenty percent (20%) of the Company’s ownership of such
ventures, subject to a maximum of ten percent (10%) of the total
equity in such ventures. For clarity, if the Company owns thirty
percent (30%) of the venture, the Online Team may purchase up to
six percent (6%) of the total [.20 x .30 = .06], but if the Company
owns sixty percent of the venture, the Online Team may purchase
only ten percent (10%) of the total, not twenty percent (20%) of
the Company’s ownership, which would exceed ten percent (10%)
of the total.
3. COMPENSATION AND BENEFITS.
3.1.
Base Salary . Employee shall receive an annual base salary
of three hundred sixty four thousand dollars ($364,000)
(“Salary”), less all required withholding, payable in
accordance with the Company’s normal payroll procedures as
the same may change from time to time. The Salary shall be reviewed
by the Company from time to time and adjusted as determined by the
Company in its discretion.
3.2.
Incentive Opportunity .
(a) Employee Incentive Opportunity. Subject to
Employee’s satisfaction of the terms of this Agreement, and
his continued employment by the Company, Employee shall receive an
annual incentive bonus in the amounts set forth in the table below
for each year of this Agreement (“Incentive
Opportunity”). The Incentive Opportunity for each year will
be paid on or before March 15 of the following year.
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Year |
|
Incentive |
|
2007
|
|
$43,750 |
|
2008
|
|
$266,254 + $175,000 = $441,254 |
|
2009
|
|
$279,566 |
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2010
|
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$293,545 |
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2011
|
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$308,220 |
(b)
Team Incentive Opportunity . In addition to the amounts to
be paid to Employee in Section 3.2(a), the Online Team shall
have an opportunity, based upon the level of their performance as
determined by the Company, to earn an annual incentive equal to ten
percent (10%) of the net income before taxes of the Online
Business, to be divided among the Online Team, at Employee’s
discretion. At Employee’s election, this incentive may be
paid to the Online Team in either cash or in shares of Class A
Common Stock of Nelnet, Inc. (“Stock”), or in a
combination of cash and Stock, and will be paid, if at all, on or
before March 15 of the following year. All amounts elected to
be paid in Stock will be increased by 25% (the
“Kicker”). For clarity, if the incentive opportunity is
$100,000 and Employee elects to have $60,000 paid in Stock and
$40,000 in cash, the amount of Stock paid will be $75,000 (125% of
$60,000) and the amount of cash will be $40,000. The portion of the
original incentive amount paid in Stock will be paid in shares of
Stock vesting immediately, but restricted from sale for one year
following the payment date, and the Kicker will be paid in shares
of Stock vesting over three years, one-third on each anniversary
date of the original award.
The
Company will also consider additional incentive opportunities for
the Online Team in connection with such group’s potential
future involvement in the Company’s lead generation
businesses including CUnet and Peterson’s.
3.3.
Benefits . Employee shall be eligible to participate in such
benefit programs as the Company makes available for its
employees.
3.4.
Restricted Stock Grant . Employee shall receive a grant of
3,750 restricted shares of Class A Common Stock of Nelnet,
Inc., vesting over a ten year period and subject to the terms of a
separate Restricted Stock Agreement to be executed by Employee and
Nelnet, Inc.
4. TERMINATION.
4.1.
For Cause . The Company may terminate this Agreement at any
time for Cause. For purposes of this Agreement, “Cause”
is defined as:
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(a) |
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the willful engaging by the
Employee in conduct that is materially injurious to or contrary to
the best inter
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