Employment Agreement - SkillSoft Corp. and Thomas McDonald
EMPLOYMENT AGREEMENT
THIS AGREEMENT, is entered into as of February 2, 1998, between SkillSoft
Corporation, a Delaware corporation (the "Company"), and Thomas McDonald
("Employee").
RECITALS
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.
AGREEMENT
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 Chief
Financial Officer, Vice President - Finance. 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's principal location shall be in New
Hampshire.
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(c) Non-Compete/Conflict of Interest. 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, Expense.
(a) Compensation. In consideration of the services to be rendered
hereunder, including, without limitation, services to any Affiliated Company,
Employee shall be paid an amount equal to $5,625 (five thousand six hundred
twenty-five dollars) twice per month, 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, in the
Company's sole discretion, 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.
(b) Restricted Stock. The Company shall sell Employee and Employee shall
purchase from Company 300,000 shares of the Company's Common Stock upon the
terms and conditions set forth in that certain Restrictive Stock Purchase
Agreement in the form attached hereto as Exhibit A, which the Company shall
execute and deliver to Employee concurrently with the signing by both parties of
this Agreement.
(c) Bonus. 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.
(d) 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.
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(e) 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.
(f) Expense. 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 Company's Board of
Directors (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 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
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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 terminate his employment with the Company
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) 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
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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 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.
(f) 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.
(2) For purposes of this Agreement, "Severance Benefits" shall mean a
continuation by the Company for a period of six (6) 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 six
(6) month period, Employee agrees to perform, on request from the Company, up to
ten (10) hours of consulting service per month during said six (6) 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
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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." Notwithstanding any other provision herein, if Employee
accepts employment at any entity or engages in any business activity that is or
may be competitive with the Company (or any affiliate thereof) prior to the end
of such six (6) month period, Employee shall then immediately inform the Company
of such employment and immediately cease to be eligible for any continuing
Severance Benefits, including any continued salary payments, medical benefits
and option or share vesting.
(g) 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.
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
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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: 9 Chickadee
Court, Bedford, New Hampshire 03110 or to the Employee at: 218 W. Hickory,
Hinsdale, IL 60521.
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 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
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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 New Hampshire.
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/ Charles E. Moran /s/ Thomas McDonald
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Title: President & Chief Executive Officer
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EXHIBIT A
SKILLSOFT CORPORATION
RESTRICTED STOCK PURCHASE AGREEMENT
THIS AGREEMENT is entered into as of the 24th day of June
1998, between SkillSoft Corporation, a Delaware corporation (the "Company"), and
Thomas J. McDonald (the "Recipient").
RECITALS:
WHEREAS, the Company has adopted the 1998 Stock Incentive Plan
(the "Plan"), which Plan is hereby incorporated in this Agreement by reference
and made a part of it; and
WHEREAS, the Company regards Recipient as a valuable
contributor to the Company, and has determined that it would be in the interest
of the Company and its stockholders to sell the Stock (as defined below) to the
Recipient as a reward for past efforts and an incentive for continued service
with the Company and increased achievements in the future by Recipient;
NOW, THEREFORE, in consideration of the mutual covenants
hereinafter set forth, the parties to this Agreement hereby agree as follows:
1. Restricted Stock Purchase. Contemporaneously with the
execution of this Agreement, the Company will issue to Recipient 300,000 shares
of Common Stock of the Company (the "Stock") for a consideration of $0.175 per
share ("Purchase Price"). Payment of the aggregate Purchase Price of $52,500 for
the Stock shall be made to the Company as follows: (i) $26,250 shall be paid in
cash, and (ii) $26,250 shall be made by delivery of a promissory note, in the
form attached hereto as Exhibit A, each upon execution of this Agreement.
Recipient shall pledge the non-vested Stock as security for the promissory note
pursuant to a security agreement in the form attached hereto as Exhibit B. All
shares of Stock issued hereunder shall be deemed issued to Recipient as fully
paid and nonassessable shares, and Recipient shall have all rights of a
stockholder with respect thereto, including the right to vote, receive dividends
(including stock dividends), participate in stock splits or other
recapitalizations, and exchange such shares in a merger, consolidation or other
reorganization. The Company shall pay any applicable stock transfer taxes.
2. Repurchase Option.
(a) Transfer Restrictions. Except as provided in
Section 3(f), no Stock issued to the Recipient hereunder shall be sold,
transferred by gift, pledged, hypothecated, or otherwise transferred or disposed
of by the Recipient in contravention of Section 2 or Section 3 hereof other than
by will or the laws of descent and distribution (the "Permitted Transfers").
Except for Permitted Transfers, no Stock issued to the Recipient hereunder shall
be sold, transferred by gift, pledged, hypothecated, or otherwise transferred or
disposed of by the
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Recipient prior to the date when the Recipient shall become vested in such Stock
pursuant to Section 4 hereof, and such Stock shall constitute "Non-Vested Stock"
until such date. Any attempt to transfer Stock in violation of this Section 2 or
Section 3 shall be null and void and shall be disregarded by the Company.
(b) Repurchase Option. Non-Vested Stock shall be
subject to a repurchase option in favor of the Company (the "Repurchase
Option"). The Repurchase Option shall be subject to the following terms and
conditions. In the event of the voluntary or involuntary termination of
employment of Recipient with the Company for any reason, with or without cause
(including death or disability), the Company shall, upon the date of such
termination, have an irrevocable, exclusive option for a period of three months
from such date to repurchase any or all of the Non-Vested Stock from Recipient
or any person receiving the Non-Vested Stock by operation of law or other
involuntary transfer, at the original Purchase Price for the Non-Vested Stock.
(c) Exercise of Repurchase Option. The Repurchase
Option shall be exercised by written notice by the Company to Recipient or his
or her executor and, at the Company's option, (i) by delivery to the Recipient
or his or her executor, with such notice, of a check in the amount of the
original Purchase Price for the Non-Vested Stock being repurchased (the
"Repurchase Amount"), or (ii) in the event the Recipient is indebted to the
Company for all or a portion of the Repurchase Amount, by cancellation by the
Company of an amount of such purchase money indebtedness equal to the Repurchase
Amount for the Stock being repurchased, or (iii) by a combination of (i) and
(ii) so that the combined payment and cancellation of indebtedness equals such
Repurchase Amount. Upon delivery by the Company of such notice and payment of
the Repurchase Amount in any of the ways described above, the Company shall
become the legal and beneficial owner of the Non-Vested Stock being repurchased
and all rights and interest therein or related thereto, and the Company shall
have the right to transfer to its own name the number of shares of Stock being
repurchased by the Company, without further action by Recipient.
(d) Assignment of Repurchase Option. The Repurchase
Option may be assigned by the Company to any third party.
(e) Escrow of Stock. For purposes of facilitating the
enforcement of the provisions of this Section 2, Recipient agrees, immediately
upon receipt of the certificate(s) for the Stock, to deliver such
certificate(s), together with an Assignment Separate from Certificate in the
form attached hereto as Exhibit C, executed in blank by Recipient and
Recipient's spouse (if required for transfer) with respect to each such stock
certificate, to the Secretary or Assistant Secretary of the Company, or their
designee, to hold in escrow for so long as such Stock remains subject to any
Repurchase Option of the Company pursuant to this Section 2, with the authority
to take all such actions and to effectuate all such transfers and/or releases as
may be necessary or appropriate to accomplish the objectives of this Agreement
in accordance with the terms hereof. Stock may be held for an additional period
if subject to a Security Agreement as provided in this Agreement. Recipient
hereby acknowledges that the appointment of the Secretary or Assistant Secretary
of the Company (or their designee) as the escrow holder
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hereunder with the stated authorities is a material inducement to the Company to
make this Agreement and that such appointment is coupled with an interest and is
accordingly irrevocable. Recipient agrees that such escrow holder shall not be
liable to any party hereto (or to any other party) for any actions or omissions
unless such escrow holder is grossly negligent relative thereto. The escrow
holder may rely upon any letter, notice or other document executed by any
signature purported to be genuine and may resign at any time.
3. First Refusal Right.
(a) Grant of Right. The Company is hereby granted the
right of first refusal (the "First Refusal Right"), exercisable in connection
with any proposed sale or other transfer of the Stock acquired by Recipient
hereunder. For purposes of this Section 3, the term "transfer" shall include any
assignment, pledge, encumbrance or other disposition for value of the Stock
intended to be made by the Owner (defined below), but shall not include any of
the Permitted Transfers under Section 3(f). For purposes of this Section 3, the
term "Owner" shall include the Recipient or any subsequent holder of the Stock
who derives his or her chain of ownership through a transfer permitted by
Section 3(f).
(b) Notice of Intended Disposition. In the event the
Owner desires to accept a bona fide third-party offer for any or all of the
Stock (the shares subject to such offer to be hereinafter called, solely for the
purposes of this Section 3, the "Target Shares"), Owner shall promptly deliver
to the Secretary of the Company written notice (the "Disposition Notice") of the
offer and the basic terms and conditions thereof, including the proposed
purchase price.
(c) Exercise of Right. The Company (or its assignee)
shall, for a period of twenty (20) days following receipt of the Disposition
Notice, have the right to repurchase any or all of the Target Shares specified
in the Disposition Notice upon substantially the same terms and conditions
specified therein. Such right shall be exercisable by written notice (the
"Exercise Notice") delivered to Owner prior to the expiration of the twenty (20)
day exercise period. If the Exercise Notice pertains to all the Target Shares
specified in the Disposition Notice, then the Company (or its assignees) shall
effect the repurchase of such Target Shares, including payment of the purchase
price, not more than five (5) business days after delivery of the Exercise
Notice; and at such time Owner shall deliver to the Company the certificates
representing the Target Shares to be repurchased, each certificate to be
properly endorsed for transfer. The Target Shares so purchased shall thereupon
be canceled and cease to be issued and outstanding shares of the Company's
common stock. However, should the purchase price specified in the Disposition
Notice be payable in property other than cash or evidences of indebtedness, the
Company (or its assignees) shall have the right to pay the purchase price in the
form of cash equal in amount to the value of such property. If the Owner and the
Company (or its assignees) cannot agree on such cash value within ten (10) days
after the Company's receipt of the Disposition Notice, the valuation shall be
made by an appraiser of recognized standing selected by the Owner and the
Company (or its assignees) or, if they cannot agree on an appraiser within
twenty (20) days after the Company's receipt of the Disposition Notice, each
shall select an appraiser of recognized standing and the two appraisers shall
designate a third appraiser of recognized standing, whose appraisal shall be
determinative of
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such value. The closing shall then be held on the later of (i) the fifth
business day following delivery of the Exercise Notice or (ii) the 15th day
after such cash valuation shall have been made.
(d) Non-Exercise of Right. In the event the Exercise
Notice is not given to Owner within twenty (20) days following the date of the
Company's receipt of the Disposition Notice, Owner shall have a period of ninety
(90) days thereafter in which to sell or otherwise dispose of the Target Shares
upon terms and conditions (including the purchase price) no more favorable to
the third party purchaser than those specified in the Disposition Notice. The
third-party purchaser shall acquire the Target Shares subject to all the terms
and provisions of this Agreement. All transferees of the Target Shares shall be
required as a condition of such transfer to agree in writing (in a form
satisfactory to the Company) that such transferee shall receive and hold the
Target Shares subject to the provisions of this Agreement. In the event Owner
does not sell or otherwise dispose of the Target Shares within the specified
ninety (90) day period, the Company's First Refusal Right shall continue to be
applicable to any subsequent disposition of the Target Shares by Owner until
such right lapses in accordance with Section 5.
(e) Partial Exercise of Right. In the event the
Company (or its assignees) makes a timely exercise of the First Refusal Right
with respect to a portion, but not all, of the Target Shares specified in the
Disposition Notice, Owner shall have the option, exercisable by written notice
to the Company delivered within ninety (90) days after the date of the
Disposition Notice, to effect the sale of the Target Shares pursuant to one of
the following alternatives:
(i) sale or other distribution of all the
Target Shares to a third-party purchaser in compliance with the
requirements of Section 3(d), as if the Company did not exercise the
First Refusal Right hereunder; or
(ii) sale to the Company (or its assignees)
of the portion of the Target Shares which the Company (or its
assignees) has elected to purchase, such sale to be effected in
substantial conformity with the provisions of Section 3(c).
Failure of Owner to deliver timely notification to the Company under this
Section 3(e) shall be deemed to be an election by Owner to sell the Target
Shares pursuant to alternative (ii) above.
(f) Exempt Transfers. The Company's First Refusal
Right under this Section 3 shall not apply to transfers of the Stock by will or
the laws of descent and distribution; provided, however, that all of the terms
of this Agreement shall remain in effect as to such transferred Stock. In
addition, Recipient may transfer all or a portion of the Stock to (i) a
revocable trust for the sole benefit of Recipient, his or her spouse, or his or
her lineal descendants, or (ii) to his or her spouse, siblings, lineal
descendants thereof, parents, or his or her lineal descendants subject to a
nonrevocable voting trust of a duration of 10 years without the written
permission of the Company, provided said Recipient is trustee and prior written
notice (together with a copy of the trust agreement) is given the Company within
thirty (30) days thereafter. The trustee shall hold such Stock subject to all
the provisions hereof, and shall make
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no further transfers other than as provided herein. Upon the death, total
disability, or termination of employment of the transferor Recipient, the
successor trustee or any cotrustee (and any subsequent transferee) shall be
required to sell, transfer or present said Stock for purchase as provided
herein, for the price and on the terms hereafter set forth as if such successor
trustee and subsequent transferee were the transferor Recipient. Transferee
shall make no further transfers other than as provided herein, and any attempted
transfer in violation of this Section 3 shall be null and void and shall be
disregarded by the Company. All references herein to Stock shall be deemed to
include Stock owned by any such successor trustee or subsequent transferee,
except that payment for such trustee and transferee Stock shall be made to the
trustee and transferee instead of to the original Recipient or his or her
estate.
4. Vesting. For purposes of this Agreement, the term "vest"
shall mean with respect to any share of the Stock that such share is no longer
Non-Vested Stock subject to repurchase at the original Purchase Price set forth
in Section 2. If Recipient would become vested in any fraction of a share of
Stock on any date, such fractional share shall not vest and shall remain
Non-Vested Stock until the Recipient becomes vested in the entire share.
Commencing on March 1, 1998 and continuing on the monthly anniversary of such
date, 1/36 of the Stock subject to this Agreement shall vest.
5. Lapse. The Company's First Refusal Right under Section 3
above shall lapse and cease to have effect upon the closing of the first
underwritten public offering of Common Stock of the Company that is pursuant to
a registration statement filed with, and declared effective by, the Securities
and Exchange Commission under the Securities Act of 1933, as amended (the
"Securities Act"), covering the offer and sale of any Common Stock to the public
for the Company's account in a firmly underwritten offering for at least
$20,000,000.
6. Corporate Transactions.
(a) Definition. For purposes of this Section 6, a
"Corporate Transaction" shall include any of the following stockholder-approved
transactions to which the Company is a party:
(i) a merger or consolidation in which the
Company is not the surviving entity, except for (1) a transaction the
principal purpose of which is to change the state of the Company's
incorporation, or (2) a transaction in which the Company's stockholders
immediately prior to such merger or consolidation hold (by virtue of
securities received in exchange for their shares in the Company)
securities of the surviving entity representing more than fifty percent
(50%) of the total voting power of such surviving entity immediately
after such transaction;
(ii) the sale, transfer or other disposition
of all or substantially all of the assets of the Company unless the
Company's stockholders immediately prior to such sale, transfer or
other disposition hold (by virtue of securities received in exchange
for their shares in the Company) securities of the purchaser
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<PAGE>
or other transferee representing more than fifty percent (50%) of the
total voting power of such entity immediately after such transaction;
or
(iii) any merger in which the Company is the
surviving entity but in which the Company's stockholders immediately
prior to such merger do not hold (by virtue of their shares in the
Company) securities of the surviving entity held immediately prior to
such transaction representing more than fifty percent (50%) of the
total voting power of the surviving entity immediately after such
transaction.
(b) Effect. In the event of any Corporate
Transaction, (i) the Company's Repurchase Option under Section 2 shall lapse and
(ii) the Company's First Refusal Right under Section 3 shall lapse.
7. Additional Securities. The term "Stock" also refers to all
securities received in replacement of the Stock, as a stock dividend or as a
result of any stock split, recapitalization, merger, reorganization, exchange or
the like, and all new or additional securities or other properties to which
Recipient is entitled by reason of Recipient's ownership of the Stock
(hereinafter called "Additional Securities"). Recipient shall be entitled to
direct the Company to exercise any warrant or option received as Additional
Securities upon supplying the funds necessary to do so, in which event the
securities so purchased shall constitute Additional Securities, but the
Recipient may not direct Company to sell any such warrant or option. If
Additional Securities consist of a convertible security, Recipient may exercise
any conversion right, and any securities so acquired shall be deemed Additional
Securities. All Stock shall be subject to the restrictions contained in this
Agreement.
8. Investment Representations.
(a) Investment Representations. This Agreement is
made in reliance upon the Recipient's representation to the Company, which by
its acceptance hereof the Recipient hereby confirms, that the shares of Stock to
be received by the Recipient will be acquired for investment for his or her own
account and not with a view to the sale or distribution of any part thereof
within the meaning of the Securities Act.
(b) Availability of Exemptions. The Recipient
understands that the Stock is not registered under the Securities Act on the
basis that the sale provided for in this Agreement and the issuance of
securities hereunder is exempt from registration under the Securities Act
pursuant to Section 4(2) thereof, and that the Company's reliance on such
exemption is predicated on the Recipient's representations set forth herein.
(c) Restrictions on Transfer. The Recipient
understands that the Stock may not be sold, transferred, or otherwise disposed
of without registration under the Securities Act or an exemption therefrom, and
that in the absence of an effective registration statement covering the Stock or
an available exemption from registration under the Securities Act, the Stock
must be held indefinitely. In particular, the Recipient is aware that the Stock
may not be sold pursuant to Rule 144 or Rule 701 promulgated under the
Securities Act unless all of the
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<PAGE>
conditions of the applicable Rules are met. Among the conditions for use of Rule
144 is the availability of current information to the public about the Company.
Such information is not now available, and the Company has no present plans to
make such information available. The Recipient represents that, in the absence
of an effective registration statement covering the Stock, it will sell,
transfer, or otherwise dispose of the Stock only in a manner consistent with its
representations set forth herein and then only in accordance with the provisions
of Section 8(d) hereof.
(d) Procedure for Transfer. The Recipient agrees that
in no event will it make a transfer or disposition of any of the Stock (other
than pursuant to an effective registration statement under the Securities Act),
unless and until (i) the Recipient shall have notified the Company of the
proposed disposition and shall have furnished the Company with a statement of
the circumstances surrounding the disposition, (ii) such transfer is made in
accordance with the provisions of Section 2 and Section 3 above and (iii) if
requested by the Company, at the expense of the Recipient or transferee, the
Recipient shall have furnished to the Company either (A) an opinion of counsel,
reasonably satisfactory to the Company, to the effect that such transfer may be
made without registration under the Securities Act or (B) a "no action" letter
from the Securities and Exchange Commission to the effect that the transfer of
such securities without registration will not result in a recommendation by the
staff of the Securities and Exchange Commission that action be taken with
respect thereto. The Company will not require such a legal opinion or "no
action" letter in any transaction in compliance with Rule 144.
9. Legends; Stop Transfer.
(a) Required Legends. All certificates for shares of
the Stock shall bear the following legends:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED
FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH,
THE SALE OR DISTRIBUTION THEREOF. THESE SECURITIES HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THEY MAY NOT
BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE
SECURITIES UNDER SAID ACT OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED."
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE RESTRICTED BY
THE TERMS OF, AND ARE SUBJECT TO A RIGHT OF FIRST REFUSAL
OPTION AND A RIGHT OF REPURCHASE IN FAVOR OF THE COMPANY, AS
PROVIDED IN A RESTRICTED STOCK PURCHASE AGREEMENT BETWEEN THE
COMPANY AND THE HOLDER HEREOF, OR ITS SUCCESSOR, A COPY OF
WHICH IS AVAILABLE FROM THE COMPANY."
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(b) Additional Legends. The certificates for shares
of the Stock shall also bear any legend required by any applicable state
securities law.
10. Lock-Up Agreement.
(a) Agreement. Recipient, if requested by the Company
and the lead underwriter of any public offering of the Common Stock or other
securities of the Company (the "Lead Underwriter"), hereby irrevocably agrees
not to sell, contract to sell, grant any option to purchase, transfer the
economic risk of ownership in, make any short sale of, pledge or otherwise
transfer or dispose of any interest in any Common Stock or any securities
convertible into or exchangeable or exercisable for or any other rights to
purchase or acquire Common Stock (except Common Stock included in such public
offering or acquired on the public market after such offering) during the
180-day period following the effective date of a registration statement of the
Company filed under the Securities Act, or such shorter period of time as the
Lead Underwriter shall specify. Recipient further agrees to sign such documents
as may be requested by the Lead Underwriter to effect the foregoing and agrees
that the Company may impose stop-transfer instructions with respect to such
Common Stock subject until the end of such period. The Company and Recipient
acknowledge that each Lead Underwriter of a public offering of the Company's
stock, during the period of such offering and for the 180-day period thereafter,
is an intended beneficiary of this Section 10.
(b) Permitted Transfers. Notwithstanding the
foregoing, Section 10(a) shall not prohibit Recipient from transferring any
shares of Common Stock or securities convertible into or exchangeable or
exercisable for the Company's Common Stock to the extent such transfer is not
otherwise prohibited by this Agreement, either during Recipient's lifetime or on
death by will or intestacy to Recipient's immediate family or to a trust the
beneficiaries of which are exclusively Recipient and/or a member or members of
Recipient's immediate family; provided, however, that prior to any such
transfer, each transferee shall execute an agreement pursuant to which each
transferee shall agree to receive and hold such securities subject to the
provisions of Section 10 hereof. For the purposes of this paragraph, the term
"immediate family" shall mean spouse, lineal descendant, father, mother, brother
or sister of the transferor.
(c) No Amendment Without Consent of Underwriter.
During the period from identification as a Lead Underwriter in connection with
any public offering of the Company's Common Stock until the earlier of (i) the
expiration of the lock-up period specified in Section 10(a) in connection with
such offering or (ii) the abandonment of such offering by the Company and the
Lead Underwriter, the provisions of the Section 10 may not be amended or waived
except with the consent of the Lead Underwriter.
11. NO EMPLOYMENT RIGHTS. THIS AGREEMENT SHALL NOT CONFER UPON
RECIPIENT ANY RIGHT WITH RESPECT TO CONTINUATION OF HIS OR HER EMPLOYMENT WITH
THE COMPANY OR ITS AFFILIATES, NOR SHALL IT INTERFERE IN ANY WAY WITH THE RIGHT
OF RECIPIENT OR THE COMPANY, OR ANY OF ITS AFFILIATES, TO TERMINATE RECIPIENT'S
EMPLOYMENT WITH THE
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<PAGE>
COMPANY AT ANY TIME FOR ANY REASON WITH OR WITHOUT CAUSE OR CHANGE THE TERMS OF
EMPLOYMENT OF RECIPIENT.
12. Section 83(b) Election. Recipient hereby represents that
he or she understands (a) the contents and requirements of a timely election
made pursuant to Section 83(b) of the Internal Revenue Code or similar provision
of state law (collectively, an "83(b) Election"), (b) the application of Section
83(b) to the purchase of Stock by Recipient pursuant to this Agreement, (c) the
nature of the election to be made by Recipient under Section 83(b) and (d) the
effect and requirements of the 83(b) Election under relevant state and local tax
laws. Recipient further represents that he or she intends to file an election
pursuant to Section 83(b), the form of which Election is attached hereto as
Exhibit D, with the Internal Revenue Service within thirty (30) days following
purchase of the Stock hereunder, and a copy of such election with his or her
federal tax return for the calendar year in which the date of this Agreement
falls. Recipient covenants to inform the Company of any change in Recipient's
state of residency. Recipient shall provide the Company with a copy of any
timely 83(b) Election. If Recipient makes a timely 83(b) Election, Recipient
shall immediately pay Company the amount necessary to satisfy any applicable
federal, state, and local income and employment tax withholding requirements. If
Recipient does not make a timely 83(b) Election, Recipient shall, either at the
time that the restrictions lapse under this Agreement or at the time withholding
is otherwise required by any applicable law, pay the Company the amount
necessary to satisfy any applicable federal, state, and local income and
employment tax withholding requirements.
13. Withholding. Recipient agrees to withholding of shares
from exercise for satisfaction of any applicable federal, state or local income
tax or employment tax withholding requirements.
14. Distributions. The Company shall disburse to Recipient all
dividends, interest and other distributions paid or made in cash or property
(other than Additional Securities) with respect to Stock and Additional
Securities, less any applicable federal or state withholding taxes.
15. Successors. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective heirs,
executors, administrators, successors and assigns.
16. Notice. Any notice or other paper required to be given or
sent pursuant to the terms of this Agreement shall be sufficiently given or
served hereunder to any party when transmitted by express or certified mail,
postage prepaid, addressed to the party to be served as follows:
Company: SkillSoft Corporation
20 Industrial Park Drive
Nashua, NH 03062
Attn: Secretary
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Recipient: At Recipient's address as it appears under
Recipient's signature to this Agreement, or
to such other address as Recipient may
specify in writing to the Company
Any party may designate another address for receipt of notices so long as notice
is given in accordance with this Section.
17. Spousal Consent. Recipient shall cause his or her spouse
to execute the Consent of Spouse attached hereto as Exhibit E concurrently with
the execution of this Agreement or, if later, at the time Recipient becomes
married.
18. Delaware Law. The interpretation, performance and
enforcement of this Agreement shall be governed by the laws of the State of
Delaware.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Restricted Stock Purchase Agreement as of the date first above written.
SKILLSOFT CORPORATION
a Delaware corporation
By _________________________________________
Its ________________________________________
Recipient:
_____________________________________________
Thomas J. McDonald
Address:
218 W. Hickory
Hinsdale, IL 60521
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<PAGE>
EXHIBIT A
SECURED PROMISSORY NOTE
$26,250 _________________, 1998
FOR VALUE RECEIVED, the undersigned Thomas McDonald, an
individual residing at _______________________________________ ("Maker"), hereby
promises to pay to SkillSoft Corporation, a Delaware corporation ("Payee"), on
the earlier of (i) ________, 2003 or (ii) the date Maker ceases to be an
employee of Payee, for any reason, the principal sum of Twenty-Six Thousand Two
Hundred Fifty Dollars ($26,250), in lawful money of the United States of America
and in immediately available funds, plus simple interest from the date hereof at
the rate of _____ percent (__%) per annum, payable in full on the date such
principal amount is due, provided however, that the last said installment shall
be in an amount necessary to repay in full the unpaid principal and interest
hereof.
Interest shall be computed on the basis of a year of 365 days
for the actual number of days elapsed. Should interest not be paid when due
hereunder, it shall be added to the principal and thereafter bear like interest
as the principal, but such unpaid interest so compounded shall not exceed an
amount equal to simple interest on the unpaid principal at the maximum rate
permitted by law.
This is the Promissory Note referred to in the Security
Agreement of even date herewith between Maker and Payee, and Payee is entitled
to all the benefits provided therein.
(i) Prepayments. Maker reserves the right to prepay the
outstanding principal amount of this Note in full or in part at any time during
the term of this Note without notice and without premium or penalty.
(ii) Events of Default and Remedies. Any one of the following
occurrences shall constitute an "Event of Default" under this Note:
(a) Maker fails to make payment of full principal
amount of this Note as and when the same becomes due and payable in accordance
with the terms hereof.
(b) Maker becomes insolvent or bankrupt, commits any
act of bankruptcy, generally fails to pay its debts as they become due, becomes
the subject of any proceedings or action of any regulatory agency or any court
relating to insolvency, or makes an assignment for the benefit of its creditors,
or enters into any agreement for the composition, extension, or readjustment of
all or substantially all of his or her obligations.
(c) Maker ceases to be an employee of Payee for any
reason.
Upon the occurrence of any Event of Default
hereunder, the entire unpaid principal balance of this Note (including accrued
interest) shall, at the option of the Payee and without notice or demand of any
kind to Maker or any other person,
<PAGE>
immediately become due and payable, and Payee shall have and may exercise any
and all rights and remedies available to it at law or in equity.
(iii) Attorneys' Fees and Costs. Maker promises to pay on
demand all reasonable out-of-pocket costs of and expenses of Payee in connection
with the collection of amounts due hereunder, including, without limitation,
attorneys' fees incurred in connection therewith, whether or not any lawsuit is
ever filed with respect thereto.
(iv) Miscellaneous.
(a) Waiver. Maker waives diligence, presentment,
protest and demand and also notice of protest, demand, dishonor and nonpayment
of this Note. No extension of time for the payment of this Note shall affect the
original liability under this Note of Maker. The pleading of any statute of
limitations as a defense to any demand against Maker is expressly waived by
Maker to the full extent permitted by law.
(b) Setoff. The obligation to pay Payee shall be
absolute and unconditional and the rights of Payee shall not be subject to any
defense, setoff, counterclaim or recoupment or by reason of any indebtedness or
liability at any time owing by Payee to Maker.
IN WITNESS WHEREOF, the undersigned has executed and delivered
this Note as of the date first above written.
MAKER
_____________________________________________
Thomas McDonald
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EXHIBIT B
SECURITY AGREEMENT
THIS SECURITY AGREEMENT is made and entered into as of this
____ day of ________, 1998, by and between SkillSoft Corporation, a Delaware
corporation ("Secured Party"), and Thomas McDonald, an individual residing at
_______________________________________ ("Debtor").
In consideration of the mutual covenants contained herein and
for other good and valuable consideration, the adequacy and receipt of which is
hereby acknowledged, the parties hereby agree as follows:
1. Definitions. The following terms have the following
meanings:
(a) The term "Collateral" shall mean (i) the tangible
assets owned by Debtor as of the date hereof and described in Exhibit A attached
hereto and (ii) all Proceeds of the foregoing Collateral. For purposes of this
Security Agreement, the term "Proceeds" includes whatever is receivable or
received when Collateral or proceeds thereof is sold, collected, exchanged or
otherwise disposed of, whether such disposition is voluntary or involuntary, and
includes, without limitation, all rights to payment, including return premiums,
with respect to any insurance relating thereto.
(b) The term "Obligations" shall mean all of the
unpaid principal sum of that certain Secured Promissory Note in the original
principal amount of $26,250 of even date herewith (the "Note") evidencing the
indebtedness of Debtor to Secured Party.
(c) The term "UCC" shall mean the Uniform Commercial
Code as the same may, from time to time, be in effect in the State of New
Hampshire.
(d) Capitalized terms used herein shall have the
meaning set forth in the UCC unless otherwise set forth herein.
(e) The term "Event of Default" shall have the
meaning set forth in the Note.
2. Grant of Security Interest. As collateral security for
prompt and complete payment and performance under the Obligations, Debtor hereby
assigns, conveys, grants, pledges and transfers to and creates in favor of
Secured Party a security interest in the Collateral, including all Proceeds of
the foregoing and all accessions to, substitutions and replacements for the
foregoing. Debtor shall, upon execution of this Security Agreement, and of the
Note as Payee (as such term is defined in the Note), deliver all certificates
representing the Collateral together with a stock power executed in blank by
Debtor and Debtor's spouse with respect to such stock certificates to the
Secretary of Secured Party to be held in escrow until full satisfaction of
Debtor's obligations hereunder and under the Note with the authority to take all
such actions and to effectuate all such transfers and/or releases as may be
necessary or appropriate to accomplish the objectives of this Security Agreement
and the Note. In the event that the Proceeds from the disposition
<PAGE>
of the Collateral are insufficient to fully satisfy the amounts due and owing
under the Note, Debtor shall, subject to the limitations set forth in the UCC,
be liable for any deficiency.
3. Representations, Warranties and Covenants. Debtor
represents, warrants and covenants that:
(a) Title. Apart from the security interest in the
Collateral granted to Secured Party hereunder, Debtor has good and valid title
to the Collateral, free and clear of any and all liens, charges, claims,
security interests or encumbrances of any kind whatsoever.
(b) Transfer of Collateral. Debtor shall not sell,
assign, transfer, encumber or otherwise dispose of any of the Collateral or any
interest therein without the prior written consent of Secured Party. If any such
encumbrance is imposed, Debtor shall give Secured Party immediate written
notice.
(c) Perfection. Debtor shall, upon demand, do all
such acts as Secured Party may reasonably request to establish and maintain a
perfected security interest in the Collateral, including, without limitation,
executing a financing statement in the form prescribed by the New Hampshire
Secretary of State.
4. Remedies. Upon the occurrence of any Event of Default
hereunder, the entire unpaid principal balance of the Note shall, at the option
of the Payee and without notice or demand of any kind to Debtor or any other
person, immediately become due and payable, and Secured Party may proceed to
exercise any and all of the rights and remedies of a secured party under the UCC
and any other remedies available at law or in equity, with respect to the
Collateral.
IN WITNESS WHEREOF, the parties hereto have caused this
Security Agreement to be executed as of the date first above written.
SECURED PARTY
SKILLSOFT CORPORATION
a Delaware corporation
By:_____________________________________
Its:____________________________________
DEBTOR
________________________________________
Thomas McDonald
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<PAGE>
EXHIBIT A
DESCRIPTION OF COLLATERAL
150,000 shares of Common Stock of SkillSoft Corporation
<PAGE>
EXHIBIT C
STOCK ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED, Thomas McDonald hereby sells, assigns and
transfers unto SkillSoft Corporation, a Delaware corporation (the "Company"),
150,000 (One Hundred Fifty Thousand) shares of the Common Stock of the Company,
standing in his or her name on the books of SkillSoft Corporation, represented
by Certificate No. __ herewith, and does hereby irrevocably constitute and
appoint ________________ attorney to transfer the said stock in the books of
SkillSoft Corporation with full power of substitution.
DATED: ________________
_____________________________________________
(Signature)
_____________________________________________
(Printed Name)
<PAGE>
EXHIBIT D
ELECTION UNDER SECTION 83(b)
OF THE INTERNAL REVENUE CODE OF 1986
The undersigned taxpayer hereby elects, pursuant to the
Internal Revenue Code, to include in gross income for 1998 the amount of any
compensation taxable in connection with the taxpayer's receipt of the property
described below;
1. The name, address, taxpayer identification number and
taxable year of the undersigned are:
TAXPAYER'S NAME: Thomas J. McDonald
SPOUSE'S NAME: Danielle McDonald
TAXPAYER'S SOCIAL SECURITY NO.: - -
SPOUSE'S SOCIAL SECURITY NO.: - -
TAXABLE YEAR: Calendar Year 1998
ADDRESS:
2. The property which is the subject of this election is:
300,000 shares of Common Stock of SkillSoft Corporation, a Delaware corporation.
3. The property was transferred to the undersigned on June 24,
1998.
4. The property is subject to the following restriction: Upon
a termination of the undersigned's employment with the Company, the Company has
the right to repurchase unvested Shares at the original purchase price. The
Shares shall vest, and the Company's repurchase right shall lapse as follows:
The Shares subject to the Agreement shall vest in thirty-six (36) monthly
installments commencing on the monthly anniversary date of the Agreement and
continuing thereafter monthly until all Shares covered by the Agreement have
become vested.
5. The fair market value of the property at the time of
transfer (determined without regard to any restriction other than a restriction
which by its terms will never lapse) is: $0.175 per share x 300,000 shares =
$52,500.
6. The undersigned paid $0.175 per share x 300,000 shares for
the property transferred or a total of $52,500.
The undersigned has submitted a copy of this statement to the
person for whom the services were performed in connection with the undersigned's
receipt of the above-described property. The undersigned taxpayer is the person
performing the services in connection with the transfer of said property.
<PAGE>
The undersigned will file this election with the Internal
Revenue Service office in which he or she files his or her annual income tax
return not later than 30 days after the date of transfer of the property. A copy
of the election also will be furnished to the person for whom the services were
performed. Additionally, the undersigned will include a copy of the election
with his or her income tax return for the taxable year in which property is
transferred. The undersigned understands that this election will also be
effective as an election under New Hampshire law.
Dated: ____________________________ ________________________________________
Taxpayer
The undersigned spouse of taxpayer joins in this election.
Dated: ____________________________ ________________________________________
Spouse of Taxpayer
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EXHIBIT E
CONSENT OF SPOUSE
I, _____________________, spouse of Thomas McDonald, have read
and approved the foregoing Agreement. In consideration of the right of my spouse
to purchase shares of SkillSoft Corporation, as set forth in the Agreement, I
hereby appoint my spouse as my attorney-in-fact in respect to the exercise of
any rights of the Agreement insofar as I may have any rights under such
community property laws of the State of New Hampshire or similar laws relating
to marital property in effect in the state of our residence as of the date of
the signing of the foregoing Agreement.
Dated: _________________________________________ By:________________________
[Signature]
___________________________
Thomas McDonald