EXHIBIT 10.31
APOLLO GROUP, INC.
EMPLOYMENT AGREEMENT
ROB WRUBEL
August 6, 2007
Dear Rob:
     As you know, Apollo Group, Inc. (“Apollo”) proposes to purchase all of the
stock and interest in your current employer, Aptimus, Inc. (“Aptimus”). If this
acquisition is completed, Apollo will hold Aptimus as a wholly-owned subsidiary
of Apollo (such subsidiary to be referred to herein as “Apollo Marketing”) which
will likely be re-named some time after the closing of the acquisition (the
“Closing”). We are pleased to offer you employment with Apollo or Apollo
Marketing effective upon the Closing pursuant to the terms of this Employment
Agreement (the “Agreement”). If you accept this offer, and the contingencies of
this offer are satisfied, the terms of your employment will be as follows after
the date of the Closing (the “Closing Date”).
1. Your Position
     You will initially have the full-time regular position of Chief Executive
Officer of Apollo Marketing and will report to the Vice President of Marketing
of Apollo. You shall have such duties as are commensurate with your position and
such duties as may be assigned to you by the Vice President of Marketing of
Apollo.
2. Compensation
     You will be paid as compensation for services a base salary at the annual
rate of $275,000, or at such higher rate as Apollo may determine from time to
time. Such salary shall be payable in accordance with the standard payroll
procedures of Apollo. The annual compensation specified in this Section 2,
together with any increases in such compensation that may be granted from time
to time, is referred to in this Agreement as “base salary.”
3. Annual Performance Bonus
     You shall be eligible to receive a bonus of up to 75% of your base salary
each fiscal year (September 1 – August 31) (the “Annual Performance Bonus”).
This bonus shall be paid quarterly based upon the achievement of certain
individual and Apollo Marketing performance criteria as agreed upon by Apollo
and you. Payment of the bonus, if any, shall be made within sixty (60) calendar
days following the end of the relevant quarter.
     Your performance targets for fiscal year 2008 shall be as agreed upon by
Apollo and you within thirty (30) days following the date that the merger
agreement between Aptimus and Apollo is signed. Performance targets for any
years after FY08 shall be as agreed upon by Apollo and you.

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4. One-Time Integration/Retention Bonus
     You shall be eligible to receive a one-time integration/retention bonus of
up to Two Hundred Six Thousand Two Hundred and Fifty Dollars ($206,250). 50% of
this one-time integration/retention bonus will be paid based upon the
achievement of certain quarterly performance targets related to the transition
and integration of Aptimus into Apollo during the first four full quarters
(based on Apollo’s fiscal quarters) following the Closing Date (the “Integration
Bonus”). These performance targets shall be as agreed upon by Apollo and you
within thirty (30) days following the date that the merger agreement between
Aptimus and Apollo is signed. Because employee retention is one of the
objectives of this bonus, you must be actively employed by Apollo/Apollo
Marketing on the last day of each quarter to earn a bonus for the preceding
quarter. The determination of whether a quarterly Integration Bonus has been
earned and the amount of the bonus earned, if any, will be made by Apollo in its
discretion which shall be exercised in good faith. Such a determination shall be
made and the bonus paid, if any, within sixty (60) calendar days following the
end of the relevant quarter.
     Except as set forth in Section 8, the remaining 50% of this bonus shall be
earned if you remain actively employed on a full time basis by Apollo/Apollo
Marketing through the end of the sixth (6th) full month following the Closing
Date (the “Retention Bonus”). This bonus, if earned, shall be paid by no later
than the end of the seventh (7th) month following the Closing Date.
5. Benefits
     It is currently anticipated that Apollo/Apollo Marketing will continue
Aptimus’ employee benefit plans until employees can be transitioned onto
Apollo’s benefit plans. Notwithstanding the forgoing, you will be entitled to no
less than three (3) weeks vacation per year, which shall be accrued in
accordance with Apollo’s vacation accrual policies. After you have transitioned
to Apollo’s benefit plans, you will receive credit for the period of your
service with Aptimus for purposes of eligibility and vesting under such plans.
The benefits you will be eligible to receive will be equivalent to those
generally applicable to Apollo’s management employees.
6. Equity
     (a) Apollo Four-Year Options
     The Compensation Committee of Apollo’s Board of Directors (the
“Compensation Committee”) will grant you a stock option to purchase up to 75,000
shares of Apollo Group Inc. Class A common stock (the “Four Year Option”) on the
Closing Date or as soon as practicable thereafter. The per share exercise price
of the Four Year Option will be equal to the fair market value of the common
stock at the close of business on the date the option grant is made to you. The
Four Year Option will be evidenced by a standard stock option agreement (a copy
of which is attached as Exhibit A), and will be subject to the terms and
conditions of that agreement and the stock option plan under which the option is
granted. Such terms and conditions will include, but not be limited to, vesting
annually over four (4) years of active service following the Closing Date and
will expire six (6) years from the date of grant.

 

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     (b) Apollo Two-Year Options
     The Compensation Committee will grant you a second stock option to purchase
up to 25,000 shares of Apollo Group Inc. Class A common stock (the “Two Year
Option”) on the Closing Date or as soon as practicable thereafter. The per share
exercise price of the Two Year Option will be equal to the fair market value of
the common stock at the close of business on the date the option grant is made
to you. The Two Year Option will be evidenced by a stock option agreement (a
copy of which is attached as Exhibit B), and will be subject to the terms and
conditions of that agreement and the stock option plan under which the option is
granted. The shares subject to the Two Year Option shall vest in full after you
have provided two years of active service following the Closing Date. Except as
provided in Section 8, no shares subject to the Two Year Option shall vest on a
pro-rata basis or otherwise unless and until you have provided two years of
active service to Apollo, Apollo Marketing (or any of their affiliates) after
the Closing Date.
     (c) Apollo Marketing Options/Other Benefits
     The mission of Apollo Marketing is to establish a world class internet and
direct advertising company by: (i) maximizing the efficiency, effectiveness and
cost savings of generating the highest quality leads for the University of
Phoenix and other Apollo education institutions, and (ii) building a
substantial, high quality lead generation business targeted at companies other
than educational companies. Apollo recognizes the importance of the people who
will execute the mission described above and will consider implementing a
program that enables such individuals to share in the value created by Apollo
Marketing that is in excess of the value contributed by Apollo. While it will
take some time to finalize the appropriate incentive device and to evaluate the
proper individual incentive potentials, as soon as practicable after the
Closing, Apollo, in consultation with you, will evaluate the feasibility of such
a program, taking into consideration such factors that it deems appropriate. If
such a bonus is implemented, Apollo will consider creating a pool representing
such incremental enterprise value and distributing this pool among appropriate
members of Apollo Marketing, Apollo management and key contributors, in the form
of phantom equity, additional Apollo options, Apollo Marketing options or some
other appropriate incentive grant, as determined in good faith by Apollo. The
final structure of any such program is dependent on many variables and factors,
but Apollo understands the importance of aligning goals and rewards to motivate
a high performing team.
     (d) Future Grants
     Apollo generally issues stock options or other equity awards to its
managers and key employees once a year. Such option awards vary in number from
year to year, and may not be granted at all in a year, depending upon a number
of factors, including individual performance and the performance of Apollo
Marketing. If you are granted such stock options, you will be notified by
Apollo. It is possible that the amount and/or frequency of such grants may be
reduced, or such grants eliminated entirely, if the program described in Section
6(c) above is implemented.

 

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     (e) Assumed Aptimus Awards
     Pursuant to the Merger Agreement, Apollo will assume certain “Aptimus
Awards” previously granted by Aptimus. For this purpose, “Aptimus Awards” shall
mean any prior grant of an Aptimus restricted stock award, stock appreciation
right or an option to purchase Aptimus common stock that was made to you prior
to the Closing Date. One-half (1/2) of the unvested Aptimus Awards outstanding
on the Closing Date shall immediately vest on the Closing Date.
7. Term of Employment
     This Agreement is entered into in connection with Apollo’s acquisition of
Aptimus and your continuing services to Apollo/Apollo Marketing after the
Closing is a material inducement for Apollo to complete the acquisition.
Therefore, because your service to Apollo/Apollo Marketing following the Closing
is critical to the success of the acquisition, you agree that you will remain
actively employed by Apollo or Apollo Marketing for at least two (2) years
following the Closing Date. This period will be referred to herein as the
“Term.” Notwithstanding the foregoing, your employment may be terminated by
Apollo or Apollo Marketing at any time for any reason, with or without cause
during or after the Term by giving you thirty (30) days advance notice of
termination in the case of a termination without Cause (defined below) and
pursuant to Section 8 below in the case of a termination for “Cause”. You agree
that the only reason you may terminate your employment during the Term is for
“Good Reason” in accordance with Section 8 of this Agreement.
8. Severance Benefits
     If your employment is terminated by Apollo (or Apollo Marketing) with
Cause, or by you without Good Reason, then you will receive your salary and
benefits (including accrued, but unused vacation time) earned up to the
effective date of your termination and nothing else.
     If your employment is terminated by Apollo (or Apollo Marketing) without
“Cause” (as defined below) during the first twenty-four (24) months following
the Closing Date or by you with “Good Reason” (as defined below), during the
first twelve (12) months following the Closing Date, and you execute and deliver
to Apollo a signed settlement agreement and general release in a form and manner
provided by Apollo (hereafter “Release”) within thirty (30) days following your
termination of employment and the Release becomes effective and enforceable in
accordance with its terms following any applicable revocation period, in
addition to the amounts described in the preceding paragraph, Apollo will
provide you with the additional benefits set forth in this paragraph. First,
Apollo will continue to pay you your base salary as a severance payment for
twelve (12) months following the date on which the Release becomes effective.
Such payments shall be made in accordance with Apollo’s regularly scheduled
payroll beginning with the first payroll date coincident with or following the
date the Release becomes effective. Second, if your employment termination
occurs prior to the expiration of the first six (6) months following the Closing
Date, you shall also be paid the Retention Bonus no later than fifteen
(15) business days following the date on which the Release becomes effective.
Third, Apollo shall also reimburse you for any COBRA premiums you pay during the
twelve (12) months following such a termination of employment. Any such
reimbursement shall be made within thirty (30) days of your submission for
reimbursement, but no event later than the last day of your taxable

 

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year following the taxable year in which the premiums are paid. Fourth, (A) the
Two Year Option (to the extent not fully vested) shall become fully vested;
(B) any Aptimus Awards (to the extent not fully vested) shall become fully
vested, and (C) you shall immediately be credited with additional employment
with Apollo/Apollo Marketing for purposes of the vesting schedule in effect for
the Four Year Option so that you shall be immediately vested in such option to
the same extent as if you had completed an additional twelve (12) months of
employment with Apollo/Apollo Marketing prior to your termination date.
     Following the expiration of the twenty-fourth (24th) month following the
Closing Date in the case of a termination by Apollo/Apollo Marketing without
Cause and the twelfth (12th) month following the Closing Date in the case of a
termination by you for Good Reason, you will no longer be eligible for severance
benefits hereunder. Instead, you will be eligible to participate in any
severance benefit plan or program that Apollo makes generally available to its
management employees, if any, subject to the terms of such severance benefit
plans and programs.
     For purposes of this Agreement, “Cause” shall be defined as:
          (i) Repeated failure to meet the reasonable and lawful directives of
the Vice President of Marketing of Apollo (or an officer in a higher position
than the Vice President of Marketing of Apollo to whom you have been directed to
report);
          (ii) Conviction of a felony (or a plea of guilty or nolo contendere by
the Executive to a felony) or any other crime against or involving Apollo or
Apollo Marketing;
          (iii) Acts of fraud, dishonesty or misappropriation committed by you
with respect to or that is harmful to Apollo or Apollo Marketing;
          (iv) Willful, reckless or negligent misconduct by you with respect to
or that is harmful to Apollo, Apollo Marketing or any of its officers,
directors, employees, clients, partners, insurers, subsidiaries, parents, or
affiliates;
          (v) A material breach of this Agreement or the PIIA (defined below).
     The foregoing is an exclusive list of the acts or omissions that shall be
considered “Cause” for the termination of your employment by Apollo/Apollo
Marketing. With respect to the acts or omissions set forth in clauses (i),
(iii), (iv) and (v) above, (x) you shall be provided with thirty (30) days
advance written notice detailing the basis for the termination of employment for
Cause, (y) during the thirty (30) day period after you have received such
notice, you shall be on leave status, you shall not report to work, unless
instructed otherwise by Apollo, and shall have the opportunity to present your
case to a committee of independent directors of Apollo’s Board of Directors (the
“Board”) before any termination for Cause is finalized and (z) you shall
continue to receive the compensation and benefits provided by this Agreement
during the 30-day period. In addition, no act or omission shall give rise to a
termination for Cause if performed in good faith and with an objectionably
reasonable belief that the action or inaction was in the best interest of Apollo
or Apollo Marketing.

 

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     For purposes of this Agreement, “Good Reason” shall be defined as one or
more of the following conditions arising without your written consent:
          (i) A material diminution in your base salary or Annual Performance
Bonus target;
          (ii) A material diminution in your authority, duties, or
responsibilities as compared to the authority, duties, and responsibilities
described in this Agreement;
          (iii) A requirement that you report to a corporate officer or employee
instead of reporting directly to the Vice President of Marketing of Apollo (or
an officer in an equal or higher position than the Vice President of Marketing
of Apollo);
          (iv) A requirement that you relocate your principal place of business
by more than fifty (50) miles; or
          (v) Any other action or inaction that constitutes a material breach of
this Agreement by Apollo or Apollo Marketing.
     In order for a termination of employment to be for Good Reason, you must
provide written notice to the Board of the condition described above and your
intent to resign for Good Reason hereunder within a period not to exceed ninety
(90) days of your knowledge of the initial existence of the condition. Following
your providing this Notice, Apollo (and, as appropriate, Apollo Marketing) shall
be provided a period of at least thirty (30) days during which to remedy the
condition. You shall continue to receive the compensation and benefits provided
by this Agreement during the 30-day cure period and if the condition is not
cured at the end of such period your employment shall cease and you will become
entitled to the severance benefits described above. If the condition is cured,
you shall not be deemed to have “Good Reason” to terminate your employment.
9. Compliance with Company Policies
     As an employee of Apollo/Apollo Marketing, you will be expected to comply
with Apollo’s personnel and other policies as are in effect from time to time
including, but not limited to, Apollo’s policy prohibiting discrimination and
unlawful harassment, insider trading, conflicts of interest and violation of
applicable laws in the course of performing services to Apollo and/or Apollo
Marketing.
10. Full-time Services to the Company
     As a full-time employee, Apollo/Apollo Marketing requires that you devote
your full business time, attention, skills and efforts to the duties and
responsibilities of your position. However, you will not be precluded from
providing services to others, so long as such services will not be to the
benefit of a competitor of Apollo or Apollo Marketing and will not otherwise
interfere with your ability to satisfactorily fulfill your duties and
responsibilities to Apollo/Apollo Marketing. You are currently sitting as a
member of the board of directors, acting as an advisor to and/or have an
ownership interest in the entities set forth in Exhibit C hereto.

 

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You shall be permitted to continue such services and ownership interests so long
as they do not interfere or conflict with your duties hereunder or become
competitive in any manner with the business of Apollo or Apollo Marketing; if
you wish to perform services (for any or no form of compensation) to any other
person or business entity while employed by Apollo/Apollo Marketing, please
contact and discuss your plans with the Vice President of Marketing of Apollo in
advance of providing such services so that no problem later arises that could
have been avoided from the outset. Notwithstanding the preceding sentence, you
may serve in any capacity with any civic, educational or charitable organization
without such prior authorization provided such service does not adversely impact
your ability to satisfactorily fulfill your duties and responsibilities to
Apollo/Apollo Marketing or benefit a competitor of Apollo or Apollo Marketing.
11. Documentation/Contingencies
     This offer is contingent upon the Closing, your consent to, and results
satisfactory to Apollo of, a background check (to be completed prior to the
Closing) and your execution of the Apollo Proprietary Information and Inventions
Agreement (“PIIA”) (a copy of which is attached as Exhibit D). The Immigration
Reform and Control Act of 1986 requires that Apollo review proof of all new
employees’ identity and authorization to work in the U.S. Accordingly, this
offer is necessarily contingent upon Apollo’s receipt of satisfactory evidence
that it can comply with these legal requirements with respect to you.
12. Tax Withholdings
     With respect to any and all cash compensation and other benefits paid to
you under this Agreement, Apollo/Apollo Marketing shall comply with all
applicable tax withholding requirements, and shall make such other deductions as
may be required and/or allowed by applicable law and/or as authorized in writing
by you.
13. Change in Control Agreement/Bonus Payment
     Effective as of the Closing Date, you will cease to be subject to the
Change in Control Agreement between you and Aptimus dated May 14, 2007 or any
other change in control agreements that preceded it (collectively, the “CIC
Agreement”) and the CIC Agreement will terminate. In addition to the bonus
payments described above, you shall also receive, within thirty (30) calendar
days following the Closing Date, a lump sum bonus of Forty Two Thousand One
Hundred and Eighty Eight Dollars ($42,188) for the period of October 1, 2007
through December 31, 2007. If the Closing Date occurs after October 1, 2007, you
will receive a pro-rata share of this bonus based upon the number days between
the Closing Date and December 31, 2007. You acknowledge and agree that this
payment is in full satisfaction of any and all bonuses that you are or might
have become due to under any and all Aptimus bonus program, plan or arrangement
through the end of the 2007 calendar year.
14. Legal Fees.
     Aptimus or Apollo will pay all reasonable legal fees and expenses not to
exceed $15,000 incurred in connection with the negotiation, preparation and
execution of this Agreement and

 

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you will be responsible for the remainder, if any. Aptimus or Apollo shall
directly make full payment to your legal counsel within thirty (30) days after
the receipt of any applicable invoice.
15. Section 409A.
     Notwithstanding any provision to the contrary in this Agreement, no
payments or benefits to which you become entitled under Section 8 of this
Agreement shall be made or paid to you prior to the earlier of (i) the
expiration of the 6-month period measured from the date of your “separation from
service” with Apollo/Apollo Marketing (as such term is defined in Treasury
Regulations issued under Section 409A of the Internal revenue Code of 1986, as
amended (the “Code”)) or (ii) the date of your death, if you are deemed at the
time of such separation from service a “key employee” within the meaning of that
term under Code Section 416(i) and such delayed commencement is otherwise
required in order to avoid a prohibited distribution under Code
Section 409A(a)(2). Upon the expiration of the applicable Code
Section 409A(a)(2) deferral period, all payments deferred pursuant to this
Section 15 shall be paid in a lump sum to you, and any remaining payments due
under this Agreement shall be paid in accordance with the normal payment dates
specified for them herein.
16. Arbitration
     Any dispute, controversy, or claim, whether contractual or non-contractual,
between you and Apollo or Apollo Marketing, unless mutually settled, shall be
resolved by binding arbitration in accordance with the Employment Arbitration
Rules of the American Arbitration Association (the “AAA”). You and Apollo each
agree that before proceeding to arbitration, we will mediate disputes before the
AAA by a mediator approved by the AAA. If mediation fails to resolve the matter,
any subsequent arbitration shall be conducted by arbitrators approved by the AAA
and mutually acceptable to you and Apollo. All disputes, controversies, and
claims shall be conducted by a single arbitrator. If you and Apollo are unable
to agree on the mediator or the arbitrator(s), then the AAA shall select the
mediator(s)/arbitrator(s). The resolution of the dispute by the arbitrator(s)
shall be final, binding, nonappealable, and fully enforceable by a court of
competent jurisdiction under the Federal Arbitration Act. The arbitration award
shall be in writing and shall include a statement of the reasons for the award.
The arbitration shall be held in either San Francisco, California or Phoenix,
Arizona at your election. Apollo shall pay all AAA, mediation, and arbitrator’s
fees and costs.
17. Miscellaneous
     You acknowledge and agree that in deciding to sign this Agreement you have
not relied on any representations, promises or commitments concerning your
employment, whether spoken or in writing, made to you by any Aptimus, Apollo or
any other representative, except for what is expressly stated in this Agreement,
and the PIIA. This Agreement can only be changed by another written agreement
signed by you and an authorized representative of Apollo and, to be effective,
must specifically state that it is intended to alter or modify this Agreement.
Except as provided for herein, this Agreement and the PIIA supersede and replace
(i) any prior verbal or written agreements between you and Apollo and (ii) any
prior verbal or written agreements between you and Aptimus and between you and
the shareholders of Aptimus, relating to the subject matter hereof, including,
but not limited to any and all prior employment agreements, the

 

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CIC Agreement, bonus agreements and/or agreements regarding equity in Aptimus
and/or Apollo. Upon the Closing, this Agreement, and the PIIA will be the entire
agreement relating to your employment with Apollo/Apollo Marketing. In addition,
any confidential/proprietary/trade secrets information and inventions
agreement(s) between you and Aptimus, or any predecessor thereto, shall remain
in effect as it pertains to subject matters existing prior to the Closing Date.
     This Agreement shall be construed and interpreted in accordance with the
laws of the State of California. Each provision of this agreement is severable
from the others, and if any provision hereof shall be to any extent
unenforceable, it and the other provisions shall continue to be enforceable to
the full extent allowable, as if such offending provision had not been a part of
this agreement.
     If you have any questions about this offer, please contact me. If you find
this offer acceptable, please sign and date this letter below and return it to
me.

            Sincerely,

APOLLO GROUP, INC.

      /s/ Joseph L. D’Amico       Joseph L. D’Amico      Executive Vice
President &
Chief Financial Officer     

I have read, understand and voluntarily accept the terms and conditions in this
offer.

          Date: August 7, 2007  /s/ Rob Wrubel       Rob Wrubel         

 

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EXHIBIT C
1) Yoga Works, Founder & Chairman of the Board of Directors. Ownership of 10% of
the company
2) Pixsy, Advisor and stock option holder. San Francisco based video search
network company.
3) Double Feature, Advisor and stock option holder. New York based online movie
ticketing business.
4) Zubio, Advisor and stock option holder. Startup chair massage company based
in San Francisco.
5) LeapFrog, Consultant. Consultant for children’s educational company regarding
produce development.
6) Investor in entrepreneur funds for Greylock, Redpoint, and Highland capital.