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Exhibit 10.3
EMPLOYMENT AGREEMENT
THIS AGREEMENT, is entered into as of _____________, 1998, between SkillSoft
Corporation, a Delaware corporation (the "Company"), and Xxxxxxx X. Xxxxx
("Employee").
R E C I T A L S
Company desires to obtain the services of Employee, on its own behalf and on
behalf of all existing and future Affiliated Companies (defined to mean any
corporation or other business entity or entities that directly or indirectly
controls, is controlled by, or is under common control with the Company), and
Employee desires to secure employment from the Company upon the following terms
and conditions.
A G R E E M E N T
ACCORDINGLY, THE PARTIES AGREE AS FOLLOWS:
1. Position, Period of Employment.
(a) Period of Employment. The Company hereby employs Employee to render
services to the Company in the position and with the duties and responsibilities
described in Section 1(b) for the period (the "Period of Employment") commencing
on the date of this Agreement and ending upon the date this Agreement is
terminated in accordance with Section 3 below. Except as provided in Section 3
below, the Company shall pay Employee the compensation to which he is entitled
under Section 2(a) through the end of the Period of Employment, and thereafter
Company's obligations hereunder to pay or otherwise provide compensation and
benefits to Employee shall end.
(b) Position. Employee hereby accepts employment with the Company as
President and Chief Executive Officer. Employee shall devote his best efforts
and his full time and attention to the performance of the services customarily
incident to such office and to such other services as may be reasonably
requested by the Board of Directors of the Company (the "Board"). During the
Period of Employment, Employee will not accept any other employment of any
nature, excluding personal business carried on outside regular business hours
that does not materially interfere with the services required by this Agreement.
The Company shall retain full direction and control of the means and methods by
which Employee performs the above services and, subject to the terms of this
Section 1(b), of the place(s) at which such services are to be rendered. During
the term of this agreement, employee shall be located in New Hampshire.
(c) Service on Board and Management Committee. During the Period of
Employment and subject to this Section 1(c), Employee shall further serve as
Chairman of the Board, provided that (i) the Company shall have the right to
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require Employee to resign or otherwise be removed from the Board if a majority
of the Board shall reasonably determine that it is in the best interest of the
Company that Employee cease to serve on the Board; (ii) Employee shall in his
sole discretion have the right at any time during the Period of Employment to
resign from the Board; and (iii) any right of Employee to continue to serve on
the Board shall be subject to the rights of the shareholders of the Company to
vote their shares of the Company to remove or not re-elect him to the Board.
(d) Non-Compete. Employee, during the Period of Employment (as defined
below), will not engage, directly or indirectly as an employee, director,
consultant, shareholder, partner or independent contractor or in any other
capacity, in any other business activity (whether or not pursued for pecuniary
advantage) that is competitive with, or that might place him in a competing
position to that of the Company or any other corporation or entity that directly
or indirectly is controlled by the Company (an "Affiliated Company"); provided,
however, that Employee may make passive personal investments (not exceeding
ownership of more than one (1) percent of the equity interest in any company) in
publicly-held companies that may compete with the Company or any Affiliated
Company.
2. Compensation, Benefits, Expenses.
(a) Compensation. In consideration of the services to be rendered
hereunder, including, without limitation, services to any Affiliated Company,
Employee shall be paid an annual salary of two hundred fifty thousand
($250,000), payable at the times and pursuant to the procedures regularly
established, and as they may be amended, by the Company during the course of
this Agreement. This rate shall be reviewed annually, in accordance with the
Company's salary review practices, and increased to reflect increases in the
cost of living and such other increases as are awarded in accordance with the
Company's regular salary review practices for giving salary increases to
similarly situated employees.
(b) Bonus. Subsequent the earlier of (i) the end of the second consecutive
quarter that the Company achieves quarterly revenues exceeding $1,000,000, as
determined in accordance with generally accepted accounting principals, (ii) the
date four years after the date of this agreement or (iii) the closing of any
reorganization or merger of the Company with or into any other company or the
sale by the Company of all or substantially all of its assets (or any series of
related transactions resulting in the sale or other transfer of all or
substantially all of its assets) if the Company's stockholders of record
immediately prior to such reorganization or merger own less than 50% of the
equity securities of the surviving corporation or its parent immediately after
such reorganization or merger (for the purpose of this calculation equity
securities owned by any stockholder of the Company immediately prior to such
merger or reorganization as a stockholder of another party to the transaction
shall be disregarded), it shall promptly pay
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Employee a lump sum cash bonus of $600,000. In addition, Employee shall be
eligible to participate in such bonus plans as the Company may from time to time
adopt for the benefit of similarly situated employees of the Company. Employee's
right to receive any such bonus shall be subject to the terms of any Company
bonus plan for which he may become a participant and the terms determined by the
Board or a Committee thereof designating him as a participant or granting him an
award thereunder.
(c) Vacation. Employee shall be entitled to vacation in accordance with
the Company's vacation policies for similarly situated employees, as such
policies may be amended from time to time.
(d) Benefits. As he becomes eligible therefor, the Company shall provide
Employee with the right to participate in and to receive benefits from all
present and future life, accident, disability, medical, pension, and savings
plans and all similar benefits made available generally to executives similarly
situated employees of the Company. The amount and extent of benefits to which
Employee is entitled shall be governed by the specific benefit plan, as it may
be amended from time to time.
(e) Expenses. The Company shall reimburse Employee for reasonable travel
and other business expenses incurred by Employee in the performance of his
duties hereunder in accordance with the Company's general policies, as they may
be amended from time to time during the course of this Agreement.
3. Termination of Employment.
(a) By Death. The Period of Employment shall terminate automatically upon
the death of the Employee. The Company shall pay to the Employee's beneficiaries
or estate, as appropriate, the compensation to which he is entitled pursuant to
Section 2(a) through the end of the month in which death occurs. Thereafter, the
Company's obligations hereunder shall terminate. Nothing in this Section shall
affect any entitlement of the Employee's heirs to the benefits of any life
insurance plan.
(b) By Disability. If, in the sole opinion of the Board, the Employee
shall be prevented from properly performing his duties hereunder by reason of
any physical or mental incapacity for a period of more than one hundred and
twenty (120) consecutive days in any twelve-month period, then, to the extent
permitted by law, the Period of Employment shall terminate on and the
compensation to which Employee is entitled pursuant to Section 2(a) shall be
paid up through the last day of the month in which the one hundred and twentieth
day of incapacity occurs, and thereafter the Company's obligations hereunder
shall terminate. Nothing in this
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Section shall affect Employee's rights under any disability plan in which he is
a participant.
(c) By Company For Cause. The Company may terminate, without liability,
the Period of Employment for Cause (as defined below) at any time with no
advance notice to Employee. The Company shall pay Employee the compensation to
which he is entitled pursuant to Section 2(a) prorated through the date of
termination. Termination shall be for Cause if: (i) because of any intentional
act or failure to act by Employee which, in the reasonable opinion of the Board,
is in bad faith and to the detriment of the Company or any Affiliated Company;
(ii) in the reasonable opinion of the Board, Employee refuses or fails to act in
accordance with any direction or order of the Board; (iii) in the reasonable
opinion of the Board, Employee shall fail in any material respect and on a
continuing basis to perform his duties pursuant to Section 1 hereof (other than
as a result of disability as provided for in Section 3(b)) and shall not have
cured such failure following thirty (30) days notice from a majority of the
members of the Board; (iv) Employee is convicted of a crime relating to his
employment by the Company or that has a material adverse effect on the Company
or, in the reasonable opinion of the Board, Employee's ability to perform
services hereunder; or (v) because Employee, in the reasonable opinion of the
Board, breaches any material term of this Agreement, provided the breach
continues for a period of five (5) days after Employee receives written notice
of that breach from the Board. Employee hereby agrees that the Company may
dismiss him under this Section 3(c) without regard (1) to any general or
specific policies (whether written or oral) of the Company relating to the
employment or termination of its employees, or (2) to any statements made to
Employee, whether made orally or contained in any document (other than this,
Agreement), pertaining to Employee's relationship with the Company.
(d) By Employee For Good Reason. Employee may terminate, without
liability, the Period of Employment for Good Reason (as defined below) upon
twenty (20) days' advance written notice to the Company. The Company shall pay
Employee the compensation to which he is entitled pursuant to Section 2(a)
through the end of the notice period plus the Severance Benefits (as defined in
Section 3(f) below) and thereafter all obligations of the Company hereunder
shall terminate. Good Reason shall exist if: (i) there is an assignment to the
Employee of any duties materially inconsistent with or which constitute a
material change in the Employee's position, duties, responsibilities, or status
with the Company, or a material change in the Employee's reporting
responsibilities, title, or offices; or removal of the Employee from any of such
positions, except in connection with the termination of the Period of Employment
for Cause, or due to disability, early or normal retirement as defined by the
Company's pension plan, death, or termination of the Period of Employment by the
Employee other than for Good Reason (provided that removal and/or failure to
re-elect Employee to the Board in accordance with Section 1(c) shall not be
deemed Good Reason for purposes of this Section 3(d)); (ii)
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there is a reduction by the Company in the Employee's annual salary then in
effect other than a reduction similar in percentage to a reduction generally
applicable to similarly situated employees of the Company; or (iii) the Company
acts in any way that would adversely affect the Employee's participation in or
materially reduce the Employee's benefit under any benefit plan of the Company
in which the Employee is participating or deprive the Employee of any material
fringe benefit enjoyed by the Employee except those changes generally affecting
similarly situated employees of the Company.
(e) At Will. At any time, either the Company or the Employee may
terminate, without liability, the Period of Employment for any reason, with or
without cause, on written notice to the other party. In the event Employee
elects to terminate the Period of Employment pursuant to this Section 3(e),
Employee shall give the Company not less than two (2) months' notice of such
termination. If the Employee terminates his employment pursuant to this Section
3(e), the Company shall have the option, in its sole discretion, to terminate
Employee immediately without the running of the notice period. If the Employee
terminates his employment pursuant to this Section 3(e), the Company shall pay
Employee the compensation to which he is entitled pursuant to Section 2(a)
through the end of the notice period or through the day upon which any early
termination is elected by the Company pursuant to the foregoing sentence, and
thereafter all obligations of the Company shall terminate. In the event the
Company elects to terminate the Period of Employment pursuant to this Section
3(e), the Company shall give Employee not less than three months notice of such
termination. Employee hereby agrees that the Company may dismiss him under this
Section 3(e) without regard (i) to any general or specific policies (whether
written or oral) of the Company relating to the
(f) employment or termination of its employees, or (ii) to any statements
made to Employee, whether made orally or contained in any document, pertaining
to Employee's relationship with the Company.
(g) Severance Benefits.
(1) Employee shall only be entitled to Severance Benefits hereunder in
the event that the Period of Employment shall be terminated (i) by Employee in
accordance with Section 3(d) and subject to the terms of said Section 3(d) or
(ii) by the Company in accordance with Section 3(e) and subject to the terms of
said Section 3(e). Upon full payment of and upon providing of such Severance
Benefits, Employee shall be deemed to have released the Company and each of its
officers, directors and agents from any and all claims, liabilities or causes of
action in favor of the Employee arising in connection with his prior employment
by the Company.
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(2) For purposes of this Agreement, "Severance Benefits" shall
mean a continuation by the Company for a period of twelve (12) months of: (i)
Employee's salary payable in accordance with the Company's payroll procedures
pursuant to Section 2(a) following termination; (ii) those benefits to which
Employee is entitled pursuant to Section 2(f) hereof, including but not limited
to medical benefits substantially similar to those provided Employee prior to
termination of employment; and (iii) the vesting and right to exercise any stock
options held by Employee at the time of termination. As a condition precedent to
the continued vesting and exercisability of Employee's stock options during said
twelve (12) month period, Employee agrees to perform, on request from the
Company, up to ten (10) hours of consulting service per month during said twelve
(12) month period. Subject to Employee fulfilling his consulting obligations to
the Company as provided in this Section 3(f)(2) during the Severance Period (as
defined below), Employee shall be deemed to continue as employee of the Company
during the Severance Period for the purpose of such stock options, and such
stock options shall thereafter terminate in accordance with their terms
following expiration of the Severance Period. No additional compensation shall
be payable by the Company for such consulting services beyond the Severance
Benefits. The period in which Employee shall be entitled to Severance Benefits
shall hereinafter be referred to as the "Severance Period."
(h) Termination Obligations.
(1) Employee hereby acknowledges and agrees that all personal property,
including, without limitation, all books, manuals, records, reports, notes,
contracts, lists, blueprints, and other documents, or materials, or copies
thereof, and equipment furnished to or prepared by Employee in the course of or
incident to his employment, belong to the Company and shall be promptly returned
to the Company upon termination of the Period of Employment. Following
termination, the Employee will not retain any written or other tangible material
containing any proprietary information of the Company.
(2) Upon termination of the Period of Employment, the Employee shall be
deemed to have resigned from all offices and directorships then held with the
Company or any Affiliated Company.
4. Proprietary Information Agreement. As a condition to his employment with
the Company, Employee shall execute and deliver a copy of the Company's standard
form Employee Proprietary Information and Inventions Agreement. Any breach by
Employee of such agreement shall be deemed a breach of this Agreement for
purposes of Section 3(c) hereof. Employee's obligations under such Employee
Proprietary Information and Inventions Agreement shall survive any termination
of the Period of Employment.
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5. Assignment; Successors and Assigns. Employee agrees that he will not
assign, sell, transfer, delegate or otherwise dispose of, whether voluntarily or
involuntarily, or by operation of law, any rights or obligations under this
Agreement, nor shall Employee's rights be subject to encumbrance or the claims
of creditors. Any purported assignment, transfer, or delegation shall be null
and void. Nothing in this Agreement shall prevent the consolidation of the
Company with, or its merger into, any other corporation, or the sale by the
Company of all or substantially all of its properties or assets, or the
assignment by the Company of this Agreement and the performance of its
obligations hereunder to any successor in interest or any Affiliated Company.
Subject to the foregoing, this Agreement shall be binding upon and shall inure
to the benefit of the parties and their respective heirs, legal representatives,
successors, and permitted assigns, and shall not benefit any person or entity
other than those enumerated above.
6. Notices. All notices or other communications required or permitted
hereunder shall be made in writing and shall be deemed to have been duly given
if delivered by hand or mailed, postage prepaid, by certified or registered
mail, return receipt requested, and addressed to the Company at: 0 Xxxxxxxx
Xxxxx, Xxxxxxx, Xxx Xxxxxxxxx 00000
or to the Employee at: 0 Xxxxxxxx Xxxxx, Xxxxxxx, Xxx Xxxxxxxxx 00000
Notice of change of address shall be effective only when done in accordance with
this Section.
7. Entire Agreement. The terms of this Agreement are intended by the parties
to be the final expression of their agreement with respect to the employment of
Employee by the Company and may not be contradicted by evidence of any prior or
contemporaneous agreement. The parties further intend that this Agreement shall
constitute the complete and exclusive statement of its terms and that no
extrinsic evidence whatsoever may be introduced in any judicial, administrative,
or other legal proceeding involving this Agreement.
8. Amendments; Waivers. This Agreement may not be modified, amended, or
terminated except by an instrument in writing, signed by the Employee and by a
duly authorized representative of the Company other than Employee. By an
instrument in writing similarly executed, either party may waive compliance by
the other party with any provision of this Agreement that such other party was
or is obligated to comply with or perform, provided, however, that such waiver
shall not operate as a waiver of, or estoppel with respect to, any other or
subsequent failure. No failure to exercise and no delay in exercising any right,
remedy, or power hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any right, remedy, or power hereunder preclude any
other or further exercise thereof
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or the exercise of any other right, remedy, or power provided herein or by law
or in equity.
9. Severability; Enforcement. If any provision of this Agreement, or the
application thereof to any person, place, or circumstance, shall be held by a
court of competent jurisdiction to be invalid, unenforceable, or void, the
remainder of this Agreement and such provisions as applied to other persons,
places, and circumstances shall remain in full force and effect. It is the
intention of the parties that the covenants contained in Section 1(d) shall be
enforced to the greatest extent (but to no greater extent) in times area, and
degree of participation as is permitted by the law of that jurisdiction whose
law is found to be applicable to any acts allegedly in breach of these
covenants. It being the purpose of this Agreement to govern competition by
Employee anywhere throughout the world, these covenants shall be governed by and
construed according to that law (from among those jurisdictions arguably
applicable to this Agreement and those in which a breach of this Agreement is
alleged to have occurred or to be threatened) which best gives them effect.
10. Governing Law. Subject to Section 9 hereof, the validity, interpretation,
enforceability, and performance of this Agreement shall be governed by and
construed in accordance with the law of the State of California.
11. Employee Acknowledgment. Employee acknowledges (i) that he has consulted
with or has had the opportunity to consult with independent counsel of his own
choice concerning this Agreement and has been advised to do so by the Company,
and (ii) that he has read and understands the Agreement, is fully aware of its
legal effect, and has entered into it freely based on his own judgment.
12. Exclusive. Both parties agree that this Agreement shall provide the
exclusive remedies for any breach by the Company of its terms.
The parties have duly executed this Agreement as of the date first written
above.
COMPANY: EMPLOYEE:
SkillSoft Corporation
By: /s/ Xxxxxxx X. Xxxxx /s/ Xxxxxxx X. Xxxxx
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Title: President & Chief Executive Officer
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