February 13, 2006

 

Mr. Mark Thimmig

773 Kensington Way

Copley, OH 44321

Dear Mark,

On behalf of the Board of Directors of Varsity Group Inc. (the "Company"), I am
pleased to offer you the position of President and Chief Executive Officer.
Speaking for myself, as well as the other members of the Company's Board, we are
all extremely impressed with your credentials and we look forward to your future
success in this position.

The terms of your new position with the Company are as set forth below:

1. Position.

 1. 

a. You will become President and Chief Executive Officer for the Company,
working out of the Company's offices in Washington, DC.

b. You agree to the best of your ability and experience that you will at all
times loyally and conscientiously perform all of the duties and obligations
required of and from you pursuant to the express and implicit terms hereof, and
to the reasonable satisfaction of the Company. During the term of your
employment, you further agree that you will devote all of your business time and
attention to the business of the Company.

2. Start Date. Subject to fulfillment of any conditions imposed by this letter
agreement, you will commence this new position with the Company on or about
February 15, 2006.

3. Proof of Right to Work. For purposes of federal immigration law, you will be
required to provide to the Company documentary evidence of your identity and
eligibility for employment in the United States. Such documentation must be
provided to us within three (3) business days of your date of hire.

 

Compensation.
Salary.
You will be paid a monthly salary of $21,666.67, which is equivalent to $260,000
on an annualized basis. Your salary will be payable in two equal payments per
month pursuant to the Company's regular payroll policy.
Bonus.
You shall be eligible for a discretionary bonus based upon certain sales goals
and individual performance objectives established jointly and agreed upon by you
and the Company's Board, in accordance with Company policy. You must be actively
employed with the Company at the time of bonus payment to be eligible for any
bonus payment. Your cash bonus opportunity shall be equal to 50% of your base
salary and be paid at the end of the calendar year.
Stock Options.
In connection with the commencement of your employment, the Company the Board of
Directors will grant you an option to purchase 100,000 shares of the Company's
Common Stock ("Shares"). These option shares will vest over five years monthly.
Vesting will, of course, depend on your continued employment with the Company.
Options will accelerate over two years (40% after year one, the remaining in
year two) for achieving targets established jointly and agreed upon by you and
the Company's Board. The option will be an incentive stock option to the maximum
extent allowed by the tax code and will be subject to the terms of the Company's
Second Amended and Restated 1998 Stock Option Plan and the Stock Option
Agreement between you and the Company. [See Appendix B: Incentive Stock Option
Agreement]
Stock Grant.
You shall be granted 300,000 shares of restricted stock over four years, with
restrictions lapsing monthly. [See Appendix C: Restricted Stock Agreement]
Severance.
Should you be terminated without Cause or resign for Good Reason, the Company
shall pay you, upon your termination, your base salary through the date of
termination at the rate in effect at the time of your termination and, in lieu
of any further salary or bonus payments to you for periods subsequent to the
date of termination, the Company shall pay, as severance pay to you, an amount
equal to twelve (12) months of your base salary in effect as of the date of
termination, payable monthly in twelve (12) equal installments after termination
of employment

For purposes of this offer, termination "for Cause" shall arise where
termination results from (A) conviction of, or the pleading of nolo contendere
to, a felony; (B) The failure of you for any reason, within ten (10) days after
receipt by you of written notice from the Company, to correct, cease or
otherwise alter any failure to comply with any lawful instruction from the Board
of Directors or its Chairman, or other action or omission to act which will
materially or adversely affect its business or operations; (D) misconduct by you
which is of such a serious and substantial nature that a reasonable likelihood
exists that such misconduct will materially injure the reputation of the Company
if you were to remain employed by the Company; and (E) proven gross negligence

For purposes of this offer, "Good Reason" shall mean (A) the termination of your
employment with the Company other than for Cause, (B) your voluntary termination
of employment with the Company within ninety (90) days following any of (i) a
decrease in Executive's base salary below its level in effect on the date prior
to such termination, (ii) a material reduction in Executive's job
responsibilities without Executive's consent, or (C) a Change of Control of the
Company followed, within two years after such Change of Control, by (i) the
termination of Executive's employment with the Company other than for Cause, or
(ii) the Executive's voluntary termination of employment with the Company within
ninety (90) days following any of (x) a decrease in Executive's base salary
below its level in effect on the date prior to such termination, or (y) a
material reduction in Executive's job responsibilities without Executive's
consent.

5. Benefits.

Insurance Benefits.
You are eligible for Company sponsored medical, dental and vision insurance.
Miscellaneous.
You are eligible to participate in the Company sponsored 401K Plan.
Vehicle Expense.
You shall be eligible for a $700 per month car allowance.
Relocation Expenses.
You shall be eligible to be reimbursed for the following actual relocation
expenses up to an aggregate amount of $100,000. Should you be terminated for
Cause or resign without Good Reason within twelve months of your start date, you
will be responsible for reimbursing the Company for 100% of the relocation
expenses reimbursed to you as part of this offer.
Business Equipment.
You will be provided with Company paid technology tools in support of your role
and responsibilities which will include: Cell Phone, Blackberry, Computers,
printers and software for Office and Homes with high speed connectivity. All
connectivity and usage fees will be paid by the Company. You may select
reasonable equipment to be provided by the Company. Such equipment may also be
exchanged for newer versions or models from time-to-time.
Business Expenses.
You are entitled to full reimbursement for all business related expenses
incurred by you including travel and entertainment with appropriate
documentation provided to the Company to satisfy the substantiation requirements
of Internal Revenue Code Section 274 and the regulations promulgated there
under. You are entitled to utilize and be reimbursed for first class airline,
hotel and restaurant arrangements at your discretion. If a company credit card
is available, you will be offered a card for such expenses with an appropriate
credit limit to meet such typical monthly expenditures. The Company credit card
will only be used for Company related business expenses.
Office Support.
You may hire a dedicated personal secretary/ assistant to manage all customary
executive support functions. Such employment will be at the customary wage and
benefit levels for such positions within the local DC market area.
Professional Meeting and Continuing Education.
You may take time off from work to attend meetings of professional organizations
or industry trade associations and to participate in training or continuing
educational programs or courses. Any fees and expenses associated with such
travel, attendance or participation will be paid by the Company.

6. Confidential Information and Invention Assignment Agreement. Your acceptance
of this offer and commencement of employment with the Company is contingent upon
the execution, and delivery to an officer of the Company, of the Company's
Confidential Information and Invention Assignment Agreement, a copy of which is
enclosed for your review and execution (the "Confidentiality Agreement"), prior
to or on your Start Date.

7. Confidentiality of Terms. You agree to follow the Company's strict policy
that employees must not disclose, either directly or indirectly, any
information, including any of the terms of this agreement, regarding salary,
bonuses, or stock option allocations to any person, including other employees of
the Company; provided, however, that you may discuss such terms with members of
your immediate family and any legal, tax or accounting specialists who provide
you with individual legal, tax or accounting advice.

8. At-Will Employment. Notwithstanding the Company's obligation described above,
your employment with the Company will be on an "at will" basis, meaning that
either you or the Company may terminate your employment at any time for any
reason or no reason, subject to the Company's severance obligations set forth in
Paragraph 4.e.

We are delighted to be able to extend you this offer and look forward to working
with you. To indicate your acceptance of the Company's offer, please sign and
date this letter in the space provided below and return it to me, along with a
signed and dated copy of the Confidentiality Agreement. This letter, together
with the Confidentiality Agreement, set forth the terms of your employment with
the Company and supersedes any prior representations or agreements, whether
written or oral. This letter may not be modified or amended except by a written
agreement, signed by the Company and by you.

 

VARSITY GROUP INC. INC.

By:

/s/ Eric J. Kuhn

Chairman of the Board

 

 

ACCEPTED AND AGREED:

/s/ Mark F. Thimmig

February 14, 2006