Employment Agreement

EXHIBIT 10.16


EMPLOYMENT AGREEMENT


This Employment Agreement (the "Agreement") is entered into as of September 30, 1997 (the "Effective Date") between ASYMETRIX CORPORATION, a Washington corporation with its principal offices located at 110-110th Avenue N.E., Bellevue, Washington 98004-5840, and/or one or more subsidiaries of Asymetrix Corporation (collectively the "Company"), and KEVIN OAKES ("Employee").


In consideration of the promises and the terms and conditions set forth in this Agreement, the parties agree as follows:


1. POSITION.


During the term of this Agreement, Company will employ Employee and Employee will serve as President of the Company, and General Manager of the Company's Professional Services business unit. Employee will report directly to the Chief Executive Officer of the Company.


2. DUTIES.


Employee will be responsible for all aspects of the business of the Professional Services business unit, and will have such other duties as are reasonably determined by the Chief Executrive Officer and/or the Board of Directors. Employee will comply with and be bound by Company's operating policies, procedures, and practices from time to time in effect during Employee's employment. Employee will perform his duties under this Agreement at the offices of Company in Needham, Massachusetts. Employee hereby represents and warrants that he is free to enter into and fully perform this Agreement and the agreements referred to herein without breach of any agreement or contract to which he is a party or by which he is bound.


3. EXCLUSIVE SERVICE.


Employee will devote his full professional time and efforts exclusively to this employment and apply all his skill and experience to the performance of his duties and advancing the Company's interests in accordance with Employee's experience and skills. In addition, Employee will not engage in any consulting activity except with the prior written approval of Company, or at the direction of Company, and Employee will otherwise do nothing incompatible with the performance of his duties hereunder.


4. TERM OF AGREEMENT.


This Agreement will commence on the Effective Date, and will continue until the earlier of one year after the Effective Date or when terminated pursuant to Section 7 hereof. The expiration or termination of this Agreement will not result in the termination of Employee's employment, but Employee will become an "at will" employee upon such termination or expiration.


5. COMPENSATION AND BENEFITS.


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(a) Base Salary. The Company agrees to pay Employee an initial base salary
----------- of $150,000 per year, Employee's salary will be payable as earned in accordance with Company's customary payroll practice, which currently is to pay salary on a bi-weekly basis.


(b) Additional Benefits. Employee will be eligible to participate in
------------------- Company's employee benefit plans of general application, including without limitation the Company's 401(k) Plan and those plans covering life, health, disability, and dental insurance in accordance with the rules established for individual participation in any such plan and applicable law. Employee will receive such other benefits, including health club membership, vacation, holidays and sick leave, as the Company generally provides to its employees holding similar positions as that of Employee.


(c) Bonus Plan. Employee shall be eligible to participate in the Asymetrix
---------- 1997 Bonus Plan and any future bonus plans adopted by the Board of Directors. Bonuses are determined based on several factors including corporate revenue and operating income, business unit revenue and operating income, and individual performance. Individual performance goals will be established shortly after beginning employment. As President, Employee's target bonus is 35% of annual base salary, with a maximum bonus of 100% of base salary. The terms of future bonus plans will be as determined by the Board of Directors.


(d) Business Expenses. The Company will reimburse Employee for all
----------------- reasonable and necessary expenses incurred by Employee in connection with the Company's business, provided that such expenses are deductible to the Company, are in accordance with the Company's applicable policy and are properly documented and accounted for in accordance with the requirements of the Internal Revenue Service.


(e) Stock Options. Effective as of the date of employment, Employee shall
------------- be granted under the Company's Stock Option Plan an incentive stock option to purchase 23,000 shares of Common Stock at the fair market value as determined by the Company's Board on the date of grant, which is subject to ratification by the Board of Directors. Such options shall become exercisable ("vest") one- fourth (1/4) on the first anniversary of Employee's employment and one-thirty- sixth (1/36) of the remainder on the same day of the month for the next 36 months.


6. PROPRIETARY RIGHTS.


Employee hereby agrees to execute an Employee Invention, Confidentiality, Non- raiding and Noncompetition Agreement (the "Invention Agreement") with the Company in substantially the form attached hereto as Exhibit A.
---------


7. TERMINATION.


(a) Events of Termination. Employee's employment with the Company shall
--------------------- terminate upon any one of the following:


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(i) the Company's determination made in good faith that it is terminating the Employee for "cause" as defined under Section 7(b) below
------------ ("Termination for Cause"); or ---------------------


(ii) the effective date of a written notice sent to Employee stating that the Company is terminating his employment, without cause, which notice can be given by the Company at any time after the Effective Date at the Company's sole discretion, for any reason or for no reason ("Termination Without Cause");
------------------------- or


(iii) the effective date of a written notice sent to the Company from Employee stating that Employee is electing to terminate his employment with the Company ("Voluntary Termination").
---------------------


(b) "Cause" Defined. For purposes of this Agreement, "cause" for
--------------- Employee's termination will exist at any time after the happening of one or more of the following events:


(i) a failure or refusal to comply in any material respect with the reasonable policies, standards or regulations of the Company;


(ii) a good faith determination by the Company's Chief Executive Officer and/or Board of Directors that Employee's performance is unsatisfactory after reasonable notice of the ways in which performance is unsatisfactory and an opportunity to correct any such deficiencies;


(iii) a failure or refusal in any material respect to perform his duties determined by the Company in accordance with this Agreement or the customary duties of Employee's employment (except for any failure due to ill health or disability);


(iv) unprofessional, unethical or fraudulent conduct or conduct that materially discredits the Company or is materially detrimental to the reputation, character or standing of the Company;


(v) dishonest conduct or a deliberate attempt to do an injury to the Company;


(vi) Employee's material breach of a term of this Agreement or the Invention Agreement, including, without limitation, Employee's unauthorized disclosure or theft of the Company's proprietary information;


(vii) an unlawful or criminal act which would reflect badly on the Company in the Company's reasonable judgment; or


(viii) Employee's death.


8. EFFECT OF TERMINATION.


(a) Termination for Cause or Voluntary Termination. In the event of any
---------------------------------------------- termination of this Agreement pursuant to Sections 7(a)(i) or 7(a)(iii), the Company shall pay Employee the


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compensation and benefits otherwise payable to Employee under Section 5 through the date of termination. Employee's rights under the Company's benefit plans of general application shall be determined under the provisions of those plans.


(b) Termination Without Cause. In the event of any termination of this
------------------------- Agreement pursuant to Section 7(a)(ii) during the period ending one year after the Effective Date:


(i) The Company shall pay Employee the compensation and benefits otherwise payable to Employee under Section 5 through the date of termination (including a pro rata portion of any bonus compensation that may become payable for the calendar quarter that includes the date of termination, which bonus compensation shall be paid following the end of such calendar quarter);


(ii) for a period ending on the later of one year after the Effective Date or six months following the date of termination, the Company shall continue to pay Employee his base salary under Section 5(a) above at Employee's then-
------------ current salary, less applicable withholding taxes, payable on the Company's normal payroll dates during that period;


(iii) Employee's rights under the Company's benefit plans of general application shall be determined under the provisions of those plans.


9. MISCELLANEOUS.


(a) Arbitration. Employee and the Company shall submit to mandatory
----------- binding arbitration in Boston, Massachusetts any controversy or claim arising out of, or relating to, this Agreement or any breach hereof, provided, however,
-------- ------- that the Company retains its right to, and shall not be prohibited, limited or in any other way restricted from, seeking or obtaining equitable relief from a court having jurisdiction over the parties. Such arbitration shall be conducted in accordance with the commercial arbitration rules of the American Arbitration Association in effect at that time, and judgment upon the determination or award rendered by the arbitrator may be entered in any court having jurisdiction thereof.


(b) Severability. If any provision of this Agreement shall be found by any
------------ arbitrator or court of competent jurisdiction to be invalid or unenforceable, then the parties hereby waive such provision to the extent that it is found to be invalid or unenforceable and to the extent that to do so would not deprive one of the parties of the substantial benefit of its bargain. Such provision shall, to the extent allowable by law and the preceding sentence, be modified by such arbitrator or court so that it becomes enforceable and, as modified, shall be enforced as any other provision hereof, all the other provisions continuing in full force and effect.


(c) Remedies. The Company and Employee acknowledge that the service to be
-------- provided by Employee is of special, unique, unusual, extraordinary and intellectual character, which gives it peculiar value the loss of which cannot be reasonably or adequately compensated in damages in an action at law. Accordingly, Employee hereby consents and agrees that for any breach or violation by Employee of any of the provisions of this Agreement including, without limitation, Section 3, a restraining order and/or injunction may be issued against Employee, in


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addition to any other rights and remedies the Company may have, at law or equity, including without limitation the recovery of money damages.


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