Employment Agreement - SmartForce PLC and Colm Darcy
EMPLOYMENT AGREEMENT
This Employment Agreement among Colm Darcy (the "EXECUTIVE") and
SmartForce PLC, a public company limited by shares formed under the laws of the
Republic of Ireland ("SMARTFORCE PLC") and its wholly-owned subsidiary,
SmartForce, a Delaware corporation ("SMARTFORCE"), is entered into as of
September __, 2002. The effectiveness of this Agreement is subject to the
occurrence of the Closing Date as that term is defined in the Agreement and Plan
of Merger by and among SmartForce, SkillSoft Corporation and Slate Acquisition
Corp. (the "EFFECTIVE DATE"). If such Agreement and Plan of Merger is terminated
prior to the Closing Date, this Agreement shall be null and void. For purposes
of this Agreement, the term "COMPANY" shall be used to refer to both SmartForce
PLC and SmartForce.
WHEREAS, the Company desires to employ the Executive and the Executive
desires to continue employment with the Company on the terms and conditions set
forth below;
NOW, THEREFORE, in consideration of the foregoing recital and the
respective covenants and agreements of the parties contained in this document,
the Company and the Executive agree as follows:
1. Employment and Duties. The Executive shall be employed as
Executive Vice President of Content Development of the Company effective as of
the Effective Date reporting to the Chief Executive Officer, and assuming and
discharging such responsibilities as are mutually agreed upon by the Executive
and the Chief Executive Officer commensurate with such office and position. The
Executive shall perform faithfully the executive duties assigned to him to the
best of his ability.
2. Base Salary. In consideration of the Executive's services, the
Executive shall be paid a minimum base salary at the rate of $200,000 per year
during the period of employment (the "BASE SALARY"), to be paid in installments
in accordance with the Company's standard payroll practices. This Base Salary
shall be reviewed for increases at least annually by the Board of Directors of
the Company (the "Board") on the same basis as the Board shall review the
compensation of other executive officers of the Company. In the event that the
Board of Directors deems it appropriate to decrease such base salary, the
Executive hereby consents to such change provided that the resulting reduced
base salary is consistent with the base salary of the other members of the
executive management team (ie..EVP, Software Development, Chief Financial
Officer and Executive Vice President, Sales).
3. Stock Option. In addition to the Base Salary, Company shall
recommend to the Board of Directors or appropriate committee that Executive be
garnted an option to purchase a total of 50,000 shares of the Company on the
Effective Date. The option will vest as to 25% one year from the Effective Date
and as to 1/48th of the shares each month thereafter and will be evidenced by
the Company's standard form of share option agreement.
4. At-Will Employment. The Company and the Executive acknowledge
that the Executive's employment is and shall continue to be at-will, as defined
under applicable law. If the Executive's employment terminates for any reason,
the Executive shall not be entitled to any
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payments, benefits, damages, awards or compensation other than as provided by
this Agreement, or as may otherwise be available in accordance with the
Company's established employee plans and policies or other written agreements
with the Executive at the time of termination.
5. Benefits; Expenses. The Executive, together with his spouse
and dependent children, shall be permitted, to the extent eligible, to
participate at the Company's expense in any group medical, dental, life
insurance and disability insurance plans, or similar benefit plans of the
Company that are available to other executive officers in each case pursuant to
the terms and conditions of each such plan or program. The Executive shall also
be entitled to four (4) weeks' annual vacation. Without limiting the generality
of the foregoing, the Company shall reimburse the Executive for all reasonable
business and travel expenses actually incurred or paid by the Executive in the
performance of services on behalf of the Company, in accordance with the
Company's expense reimbursement policy as in effect from time to time. The
Company will fund two round trip economy class tickets to Ireland each year for
Executive's spouse, for so long as the Executive is based in the United States.
The Executive shall be entitled to travel business class on coast-to-coast and
international business trips. In addition to any other rights set forth in the
event of the Executive's termination, Executive shall be reimbursed for actual,
reasonable cost to relocate self and family to Ireland in the event that the
Company requests that the Executive relocate to Ireland (and he does so) or an
Involuntarily Termination Event with respect to the Executive's employment
occurs, and he returns to Ireland within three months thereafter.
6. Voluntary Termination and Termination for Cause. In the event
that the Executive terminates his employment with the Company voluntarily (other
than for Good Reason, as defined below) or the Company terminates the
Executive's employment for Cause, Sections 6(a), 6(b) and 6(c) below shall
apply. For purposes of this Agreement, termination for "CAUSE" shall mean (i)
any act of personal dishonesty taken by the Executive in connection with his
responsibilities as an employee which is intended to cause a material personal
financial benefit for the Executive and is intended to cause a material
financial detriment to the Company, (ii) the Executive's conviction of or plea
of nolo contendere to a felony, (iii) a willful act by the Executive which
constitutes misconduct and is injurious to the Company, and (iv) continued
willful violations by the Executive of the Executive's obligations to the
Company under this Agreement.
(a) Covenant Not to Solicit. Beginning with the effective
date of the Executive's voluntary termination (other than for Good Reason) or
termination for Cause and until the later of (i) six (6) months thereafter or
(ii) the date that is one (1) year after the Effective Date (the "NON-COMPETE
PERIOD"), the Executive agrees that he will not:
(i) solicit, encourage, or take any other action
which is intended to induce any other employee of the Company to terminate his
employment with the Company, or
(ii) interfere in any manner with the contractual
or employment relationship between the Company and any such employee of the
Company.
The foregoing shall not prohibit the Executive or any entity with which
the Executive may be affiliated from hiring a former employee of the Company,
provided that such hiring results from
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such employee's affirmative response to a general recruitment effort carried out
through a public solicitation or a general solicitation.
(b) Covenant Not to Compete. During the Non-Compete
Period, the Executive agrees that he will not, directly or indirectly, own,
manage, operate, join, control, advise or participate in, as a shareholder
(other than as a shareholder with less than one percent (1%) of the outstanding
stock of a company), officer, manager, executive, partner, consultant or
technical or business advisor (or any foreign equivalents of the foregoing) any
company that derives more than ten percent (10%) of its revenues from a
Restricted Business, or any company or entity controlling, controlled by or
under common control with any company that derives more than ten percent (10%)
of its revenues from a Restricted Business (any such company, a "RESTRICTED
COMPANY"). For the purposes of this Agreement, the term "RESTRICTED BUSINESS"
shall mean the business of developing or selling computer-based training for
information technology professionals, on-line business degrees, or any other
interactive education business in which the Company is then involved.
The foregoing will not in any way affect the Executive's right to take
any of the foregoing positions if he is involved only in parts of a company that
do not derive any revenues from the Restricted Business.
(i) In the event that the Executive intends to
associate with any Restricted Company during the Non-Compete Period, the
Executive must provide information in writing to the Chief Executive Officer of
the Company relating to the business engaged in or proposed to be engaged in by
such Restricted Company. All such current associations of the Executive are set
out in Exhibit A hereto.
In the event that the Chief Executive Officer authorizes the Executive
to engage in such activity in writing, any activity by the Executive described
in the written information furnished to the Chairman of the Board and so
authorized shall be conclusively deemed not to be a violation of Section 6(a)
and (b) hereof.
(ii) The Executive acknowledges that the Company
will be irreparably injured if the provisions of this Section 6 are not
specifically enforced. If the Executive commits or, in the reasonable belief of
the Company, threatens to commit a breach of any of the provisions of this
Section 6, the Company and each of its subsidiaries and affiliates shall have
the right and remedy, in addition to any other remedy that may be available at
law or in equity, to have the provisions of this Section 6 specifically enforced
by any court having equity jurisdiction together with an accounting for any
benefit or gain by the Executive in connection with any such breach, it being
acknowledged and agreed that any such breach or threatened breach will cause
irreparable injury to the Company and its subsidiaries and that money damages
will not provide an adequate remedy therefor. Such injunction shall be available
without the posting of any bond or other security, and the Executive hereby
consents to the issuance of such injunction.
(c) The Executive shall not receive any compensation or
benefits under this Agreement on account of his voluntary termination or
termination for Cause. The Executive's rights under the Company's benefit plans
upon such a termination shall be determined under the provisions of those plans.
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7. Termination without Cause and Involuntary Termination. If the
Executive's employment with the Company is involuntarily terminated by the
Company other than for Cause or by the Executive for Good Reason (an
"INVOLUNTARY TERMINATION EVENT"), Sections 7(a) and 7(b) below shall apply. For
purposes of this Agreement, the term "GOOD REASON" shall mean (i) without the
Executive's express written consent, the assignment to the Executive of any
duties, or the removal from or reduction or limitation of the Executive's duties
or responsibilities, which in either case is a significant change in the
Executive's position, title, organization level, duties, responsibilities,
compensation and status with the Company after the Effective Date; (ii) without
the Executive's express written consent, a substantial reduction of the
facilities and perquisites (including office space and location), available to
the Executive immediately prior to such reduction, excluding those related to
the potential relocation of the Executive to, at his election, Dublin, Ireland
or Nashua, New Hampshire; (iii) without the Executive's express written consent,
a reduction by the Company in the base salary of the Executive as in effect
immediately prior to such reduction; (iv) without the Executive's express
written consent, a reduction by the Company in the kind or level of employee
benefits to which the Executive is entitled immediately prior to such reduction
with the result that the Executive's overall benefits package is significantly
reduced; excluding changes to benefits that are made in order to bring the
Executive's benefits in line with other members of the executive management
team; (v) without the Executive's express written consent, the relocation of the
Executive to a facility or a location more than twenty (20) miles from the
Executive's then-present work location, excluding the potential relocation of
the Executive to, at his, Dublin, Ireland or Nashua, New Hampshire; (vi) any
purported termination of the Executive by the Company other than for Cause or by
reason of the Executive's death or Disability; (vii) the failure of the Company
to obtain the assumption of this Agreement by any successor as required by
Section 12 below; or (viii) any material breach by the Company of any term of
this Agreement.
(a) Severance. The Company shall, in addition to paying
the Executive all amounts accrued by the Executive on or prior to the date of
the Involuntary Termination Event, make a lump sum payment to him equal to (i)
his then base salary for a period equal to the greater of (A) six (6) months or
(B) the date of the Involuntary Termination Event to the date that is one (1)
year after the Effective Date plus (ii) the greater of (A) $75,000 or (B)
$150,000 multiplied by a fraction, the numerator of which is the number of
months remaining in the period from the date of the Involuntary Termination
Event to the date that is one (1) year after the Effective Date and the
denominator of which is 12.
(b) Stock Options. Notwithstanding that above Sections
6(a) and 6(b) will otherwise not apply to the Executive as a result of the
Involuntary Termination Event, the Executive may elect to be bound by above
Sections 6(a) and 6(b) in exchange for continued vesting of the stock options
granted to him by the Company for the period during which such Sections 6(a) and
(b) apply (i.e., through the later of (i) six (6) months following the
Involuntary Termination Event or (ii) the date that is one (1) year after the
Effective Date); provided, however, that the Executive has to notify the Company
of said election within thirty (30) days of such termination. Otherwise, the
Executive's stock options will discontinue to vest immediately upon termination
of employment.
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8. Death. In the event of the Executive's death, except for
obligations accrued at such time, the Company shall have no obligation to pay or
provide any compensation or benefits under this Agreement. The Executive's
rights under the Company's benefit plans in the event of the Executive's death
shall be determined under the provisions of those plans.
9. Disability. The Company may terminate the Executive's
employment for Disability by giving the Executive thirty (30) days' advance
notice in writing. In the event that the Executive resumes the performance of
substantially all of his duties hereunder before the termination of his
employment under this Section 9 becomes effective, the notice of termination
shall automatically be deemed to have been revoked. Except for such obligations
that have accrued prior to the Executive's Disability, no compensation or
benefits will be paid or provided to the Executive under this Agreement on
account of termination for Disability. The Executive's rights under the
Company's benefit plans shall be determined under the provisions of those plans.
For all purposes under this Agreement, "DISABILITY" shall mean that the
Executive, at the time notice is given, has been unable to substantially perform
his duties under this Agreement for a period of not less than six (6)
consecutive months as the result of his incapacity due to physical or mental
illness.
10. Tax Provisions. In the event that all or any part of the
benefits provided for in the Agreement, when aggregated with any other payments
or benefits received by the Executive, would (i) constitute "parachute payments"
within the meaning of Section 280G of the Internal Revenue Code of 1986, as
amended (the "CODE"), and (ii) would be subject to the excise tax imposed by
Section 4999 of the Code (the "EXCISE TAX"), then the amount of the Executive's
benefits to be paid or delivered hereunder shall be either
(a) the full amount of such benefits determined without
regard to this Section 10, or
(b) such lesser amount which would result in no portion
of such benefits being subject to the Excise Tax, whichever of the foregoing
amounts, taking into account the applicable federal, state and local income
taxes and the Excise Tax, results in the receipt by the Executive on an
after-tax basis, of the greatest amount of benefits, notwithstanding that all or
some portion of such benefits may be taxable under Section 4999 of the Code.
Unless the Company and the Executive otherwise agree in writing, any
determination required under this paragraph shall be made in writing by the
Company's independent public accountants (the "ACCOUNTANTS") whose determination
shall be conclusive and binding upon the Executive and the Company for all
purposes. For purposes of making the calculations required by this paragraph,
the Accountants may make reasonable assumptions and approximations concerning
applicable taxes and may rely on reasonable, good faith interpretations
concerning the application of Sections 280G and 4999 of the Code. The Company
and the Executive shall furnish to the Accountants such information and
documents as the Accountants may reasonably request in order to make a
determination under this paragraph. The Company shall bear all costs the
Accountants may reasonably incur in connection with any calculations
contemplated by this paragraph.
11. Proprietary Information Agreement. In connection with
commencement of the Executive's employment with the Company, the Executive will
sign the Company's standard
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executive proprietary information agreement, provided that its provisions, if
any, concerning non-solicitation and non-competition shall be deleted in favor
of the provisions herein.
12. Successors. The Company shall require any successor or
assignee, in connection with any sale, transfer or other disposition of all or
substantially all of the assets or business of SmartForce PLC, whether by
purchase, merger, consolidation or otherwise, expressly to assume and agree to
perform the Company's obligations under this Agreement in the same manner and to
the same extent that the Company would be required to perform if no such
succession or assignment had taken place. In such event, the term SmartForce PLC
as used in this Agreement, shall mean SmartForce PLC as defined above and any
successor or assignee to the business and assets which by reason hereof becomes
bound by the terms and provisions of this Agreement.
13. Confidentiality. Except as required by applicable laws,
neither party shall disclose the contents of this Agreement without first
obtaining the prior written consent of the other party, provided, however, that
(i) the Executive may disclose this Agreement to his attorney, financial planner
and tax advisor if such persons agree to keep the terms hereof confidential and
(ii) the Company may disclose this Agreement if its counsel advises that it is
required to do so under applicable law.
14. Arbitration. Any claim, dispute or controversy arising out of
this Agreement, the interpretation, validity or enforceability of this Agreement
or the alleged breach thereof shall be submitted by the parties to binding
arbitration before the American Arbitration Association in San Francisco County,
California; provided, however, that this arbitration provision shall not
preclude either party from seeking injunctive relief from any court having
jurisdiction with respect to any disputes or claims relating to or arising out
of this Agreement or Executive's conduct as an officer, director or employee of
the Company. All costs and expenses of arbitration, excluding attorneys' fees,
shall be paid by the Company. The arbitrator shall have the power to award
attorneys' fees where provided by statute or rule. The arbitrator shall be
neutral, and shall issue all decisions in writing. Judgment may be entered on
the award of the arbitration in any court having jurisdiction.
15. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of California applicable to
agreements made and to be performed entirely within such state.
16. Integration. This Agreement, any written agreements or other
documents evidencing matters referred to herein and any written Company existing
plans that are referenced herein represent the entire agreement and
understanding between the parties as to the subject matter hereof and thereof
and supersede all prior or contemporaneous agreements as to the subject matter
hereof and thereof, whether written or oral. No waiver, alteration, or
modification, if any, of the provisions of this Agreement shall be binding
unless in writing and signed by duly authorized representatives of the parties
hereto.
17. Voluntary Execution; Conflict Waiver. The Executive has been
advised to obtain independent legal counsel regarding this Agreement. The
Executive is signing this Agreement knowingly and voluntarily. The Company and
the Executive acknowledge that Wilson Sonsini Goodrich & Rosati, Professional
Corporation ("WSGR") has acted as counsel to the Company in
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negotiating this Agreement and will continue to serve as the Company's general
counsel in the future, and each acknowledges that each has received full
disclosure of any potential conflict of interest which may result from such
representation, and knowingly and voluntarily waive any such conflict of
interest.
18. Notices. Notices and all other communications contemplated by
this Agreement shall be in writing and shall be deemed to have been duly given
when personally delivered or when mailed by U.S. registered or certified mail,
return receipt requested and postage prepaid. In the case of the Executive,
mailed notices shall be addressed to him at the home address that he most
recently communicated to the Company in writing. In the case of the Company,
mailed notices shall be addressed to its corporate headquarters, and all notices
shall be directed to the attention of its Secretary.
19. No Mitigation. In the event the Executive's employment with
the Company terminates, the Executive shall not be required to mitigate damages
or the amount of any payment provided under this Agreement by seeking other
employment or otherwise, nor shall the amount of any payment provided under this
Agreement be reduced by any compensation earned by the Executive as a result of
employment by another employer or by retirement benefits after such termination,
or otherwise.
20. Waiver. If either party should waive any breach of any
provisions of this Agreement, he or it shall not thereby be deemed to have
waived any preceding or succeeding breach of the same or any other provision of
this Agreement.
21. Counterparts. This Agreement may be executed in counterparts,
which together will constitute one instrument.
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EXECUTIVE SMARTFORCE PLC
By: /s/ Colm Darcy By: /s/ Charles E. Moran
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Name: Charles E. Moran
Title: President & CEO
SMARTFORCE
By: /s/ Charles E. Moran
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Name: Charles E. Moran
Title: President & CEO
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CONSENT OF SPOUSE: I hereby consent to this Agreement for purposes of any
community property interest I may have in the foregoing arrangements. I have had
the opportunity to seek independent counsel with regard to this consent and
knowingly and voluntarily waive the right to such counsel.
/s/ Carol Radic
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Signature of Spouse
Carol Radic
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Printed Name of Spouse
November 19, 2002
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Date Signed
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