EXHIBIT 10.4

 

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Mark Chernis

Via email

 

Dear Mark,

 

I am pleased and excited to extend to you an offer for the position of Chief
Operating Officer at 2U, Inc. (“2U” or the “Company”), starting on a date to be
mutually agreed upon, but in no case later than June 1, 2018 (your “Start Date”
and with any agreed announcement of your appointment to occur only after the end
of GSV.  In this position, you will report directly to Christopher “Chip”
Paucek, Co-founder and CEO.  Your regular annual salary will be $425,000, paid
semi-monthly in accordance with 2U’s standard payroll practices (as may be
modified from time to time), and subject to all deductions and withholdings
required by law.

 

For each calendar year during your employment, you will be eligible to receive a
bonus of up to 75% of your earned base salary, as in effect at the beginning of
the applicable calendar year (the “Annual Bonus”).  The exact percentage of the
Annual Bonus will be determined in accordance with the 2U Matrix Bonus Plan, as
may be modified from time to time (the “Bonus Plan”).  Please note that the
Annual Bonus is not guaranteed and will be paid according to the terms of the
Bonus Plan for the applicable calendar year.  You will first be eligible for the
Annual Bonus beginning with the 2018 calendar year (which bonus payment will not
be prorated for 2018 and, to the extent earned, will be made in the first
quarter of 2019). In addition, you will be eligible for other executive benefits
including First Class Air Travel and access to Driven Business Car Service.

 

In addition, subject to the annual approval of the Compensation Committee of the
Company’s Board of Directors (the “Compensation Committee”), you will also be
granted the following annual stock option award (the “Annual Stock Option
Award”) and restricted stock unit award (the “Annual RSU Award”, and together
with the Annual Stock Option Award, the “Annual Equity Awards”):

 

i.                  Annual Stock Option Award. A stock option award with a value
equal to $1,450,000, based on the Black-Scholes value (as determined in the
Company’s discretion) of an option to purchase a share of the Company’s common
stock on or around the Grant Date (as defined below).  As will be set forth in
more detail in a stock option award agreement (the “Option Award Agreement”),
the Annual Stock Option Award (i) will have an exercise price per share equal to
the closing price of a share of the Company’s common stock on the Grant Date,
and (ii) will vest over four years, with 25% of the shares subject to the Annual
Stock Option Award vesting on the one-year anniversary of the Vesting
Commencement Date (as defined below), and the remaining 75% of the shares
subject to the Annual Stock Option Award vesting in equal installments each
month thereafter for the next 36 months.

 

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ii.               Annual RSU Award.  The exact number of restricted stock units
issued to you in the Annual RSU Award will equal $1,450,000 divided by the
closing price of a share of the Company’s common stock on the Grant Date.  As
will be set forth in more detail in a restricted stock unit award agreement (the
“RSU Award Agreement”, and together with the Option Award Agreement, the “Equity
Award Agreements”), the Annual RSU Award will vest over four years, with 25% of
the Annual RSU Award vesting on the one-year anniversary of the Vesting
Commencement Date, and the remaining 75% of the Annual RSU Award vesting on each
of the second, third and fourth anniversaries of that date.

 

In addition to the Annual Equity Awards, subject to approval of the Compensation
Committee, you will be granted the following one-time stock option award (the
“One-Time Stock Option Award”) and restricted stock unit award (the “One-Time
RSU Award”, and together with the One-Time Stock Option Award, the “One-Time
Equity Awards”):

 

i.                  One-Time Stock Option Award: A stock option award equal to
$225,000 based on the Black-Scholes value (as determined in the Company’s
discretion) of an option to purchase a share of the Company’s common stock on or
around the Grant Date. As will be set forth in more detail in the Option Award
Agreement, the One-Time Stock Option Award (i) will have an exercise price per
share equal to the closing price of a share of the Company’s common stock on the
Grant Date, and (ii) will vest over four years, with 25% of the shares subject
to the One-Time Stock Option Award vesting on the one-year anniversary of the
Vesting Commencement Date, and the remaining 75% of the shares subject to the
One-Time Stock Option Award vesting in equal installments each month thereafter
for the next 36 months.

 

ii.               One-Time RSU Award: A number of restricted stock units equal
to $225,000 divided by the closing price of a share of the Company’s common
stock on the Grant Date. As will be set forth in more detail in the RSU Award
Agreement, the One-Time RSU Award will vest over four years, with 25% of the
One-Time RSU Award vesting on the one-year anniversary of the Vesting
Commencement Date, and the remaining 75% of the One-Time RSU Award vesting on
each of the second, third and fourth anniversaries of that date.

 

With respect to your 2018 Annual Equity Awards and One-Time Equity Awards,
“Grant Date” means your Start Date and “Vesting Commencement Date” means
April 1, 2018. With respect to any subsequent equity awards, “Grant Date” and
“Vesting Commencement Date” mean the applicable date set by the Compensation
Committee.

 

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Each of the Annual Equity Awards and the One-Time Equity Awards shall be
made pursuant and subject to the Company’s 2014 Equity Incentive Plan and the
Equity Award Agreements, as applicable, all of which you will be required
to electronically accept as a condition of receiving the applicable equity
award.

 

Your position is located in 2U’s office in Brooklyn, New York with travel to
Maryland, is a full time salaried position, and is classified as exempt for wage
and hour purposes.

 

As a full time employee of 2U, you will be eligible for benefits beginning on
the first day of the month following your Start Date.  Additionally, you will be
automatically enrolled in our employee 401(k) plan after six months of
employment.  Additional information regarding benefit plans will be provided to
you after beginning employment. You are also entitled to unlimited days of PTO
per calendar year.

 

Please understand that this letter does not constitute a contract of employment
for any specific period of time, but will create an “employment at will”
relationship. This means that you or 2U may terminate your employment
relationship with or without cause and with or without notice at any time.  Only
the Chief Executive Officer of 2U has the authority to make any agreement or
representation contrary to 2U’s policy of employment at will. Any such agreement
or representation must be in writing and must be signed by you and the Chief
Executive Officer. You acknowledge that no promises or agreements contrary to
our at will relationship have been made to you during any of your pre-employment
discussions with 2U.  In addition, this letter, along with the Confidential
Information, Invention Assignment, Work For Hire and No Solicit/No Hire
Agreement, contain our complete agreement regarding the terms and conditions of
your employment.

 

Lastly, please note that this offer is contingent upon:

 

a)             Verification of your right to work in the United States, as
demonstrated by your completion of the I-9 form upon hire and your submission of
acceptable documentation (as noted on the I-9 form) verifying your identity and
work authorization within three days of your Start Date. For your convenience, a
copy of the I-9 Form’s List of Acceptable Documents is enclosed for your review,
and on your first day of employment, please bring with you the needed
documentation to complete the I-9 form;

b)             Satisfactory completion of a background investigation;

c)              Your execution of our standard Confidential
Information, Invention Assignment, Work For Hire and No Solicit/No Hire
Agreement; and

d)             Your contemporaneous resignation from the Audit Committee of the
Board of Directors of the Company and your resignation from the Board of
Directors, effective on or prior to your commencement of employment.

 

Mark, I am very pleased to extend this offer to you and look forward to working
with you.  You can indicate your formal acceptance of this offer by signing this
letter and returning it to me.  Please call me

 

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at 310-892-4350 if you have any questions.  Welcome to our team!

 

Sincerely,

 

 

/s/ Christopher Paucek

 

Christopher “Chip” Paucek

 

 

I accept this offer of employment with 2U and agree to the terms and conditions
set forth in this letter.

 

 

Date: 5/20/2018

/s/ Mark Chernis

 

Mark Chernis

 

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