Severance Agreement - SmartForce and Thomas Francis McKeagney
SEPARATION AGREEMENT AND RELEASE
This Separation Agreement and Release ("Agreement") is made by and
between SmartForce (the "Company"), and Thomas Francis McKeagney ("Employee")
(jointly referred to as the "Parties"). The Parties desire to enter into this
Agreement for the purposes of reaching an amicable termination of their
employment relationship and to promoting harmonious relations in the future.
WHEREAS, Employee was employed by the Company;
WHEREAS, the Company and Employee have entered into an Employment,
Confidential Information and Invention Assignment Agreement (the
"Confidentiality Agreement");
WHEREAS, the Company has granted Employee options to purchase shares
of the Company's ordinary shares (the "Options") subject to the terms and
conditions of the Company's 1994 Share Option Plan and the 1996 Supplemental
Stock Plan (the "Plans") represented by stock option agreements dated October
16, 1999 (for a total of 28,000 shares), October 16, 1998 (for a total of 6,195
shares), October 16, 1998 (for a total of 5,805 shares), December 9, 1998 (for a
total of 100,000 shares), July 2, 1999 (for a total of 80,000 shares), April 17,
2000 (for a total of 70,000 shares), and April 5, 2001 (for a total of 130,000
shares) (the stock option agreements, shall be referred to as the "Stock Option
Agreements"); and
WHEREAS, Employee shall resign from his position with the Company as
Executive Vice President, Research & Development effective April 8, 2002 (the
"Resignation Date"), and Employee shall resign from his employment with the
Company effective April 30, 2002 (the "Termination Date").
NOW THEREFORE, in consideration of the mutual promises made herein, the Company
and Employee (collectively referred to as "the Parties") hereby agree as
follows:
1. Consideration.
(a) The Company agrees to pay Employee his base salary plus
draw, less applicable withholding, through the
Termination Date.
(b) The Company shall reimburse Employee for the payments he
makes for COBRA coverage through March 31, 2003, or
until Employee has secured other employment, whichever
occurs first, provided Employee timely elects and pays
for COBRA coverage. COBRA reimbursement shall be made by
the Company to Employee within fifteen (15) days of
Employee's provision to the Company of documentation
substantiating his payments for COBRA coverage.
(c) Following Employee's Termination Date and the Effective
Date of this Agreement, Employee shall make himself
available a minimum of 15 hours per week as an
independent contractor to assist with transitional
issues, providing consulting services to the Company
through June 30, 2002 (the "Consulting Term"), pursuant
to the written consulting agreement (the "Consulting
Agreement"), attached hereto as Exhibit A.
(d) The Company shall pay Employee eighteen thousand, seven
hundred and fifty dollars per month ($18,750), less
applicable withholding, for nine months, for the period
beginning July 1, 2002 and ending March 31, 2003 (the
"Payment Period") for a total of one hundred sixty-eight
thousand, seven hundred and fifty dollars ($168,750),
less applicable withholding. The first payment will be
made on July 31, 2002 and the last will be made on March
31, 2003. During the Payment Period, Employee will not
be entitled to accrual of any employee benefits,
including, but not limited to, vesting in stock options
or vacation benefits.
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(e) The Company shall modify Employee's Stock Option
Agreements to provide that the vesting of those shares
which would have otherwise vested during the period
beginning May 1, 2002 and ending March 31, 2003 will be
accelerated so that such shares are fully vested and
exercisable on April 30, 2002. A list of the shares to
be accelerated by option is attached hereto for your
reference as Exhibit B. Additionally, the Company shall
modify the Employee's Stock Option Agreements to provide
for a post-termination exercise period that expires on
May 31, 2003. All other terms of the existing Stock
Option Agreements and Plan shall continue to govern the
exercise and vesting of Employee's options to purchase
common stock of the Company, and if applicable, the
Company's right to repurchase any common stock purchased
pursuant to such options.
(f) The Company agrees to pay Employee, on January 31, 2003,
an amount which represents the same percentage of his
annual bonus opportunity that the CEO's current direct
reports receive. Employee's annual bonus opportunity for
2002 would have been $75,000, less applicable
withholding, at 100%. So, by way of example, if the
CEO's current direct reports receive 50% of their annual
bonus opportunity, Employee will receive $37,500, less
applicable withholding. If no bonuses are paid, Employee
will not receive a payment. At the end of January 2003,
SmartForce will provide written confirmation signed by
an authorized officer of the Company as to the
percentage paid.
(g) The Company agrees to pay for one trip to Ireland for
Employee and his family between April 30, 2002 and March
31, 2003. Travel must be booked through SmartForce's
designated travel agent in Ireland.
2. Payment of Salary. On April 30, 2002, the Company will pay the Employee
all accrued and unused vacation time. No further vacation will accrue after the
Termination Date. Employee acknowledges and represents that the Company has paid
all salary, wages, bonuses, accrued vacation, housing allowances, relocation
costs, interest, severance, fees, stock, stock options, vesting, commissions and
any and all other benefits and compensation due to Employee once the above
mentioned payments are made.
3. Benefits. Employee's health insurance benefits with the Company will
cease on the Termination Date, subject to Employee's right to convert his health
insurance benefits to individual coverage pursuant to COBRA. All other benefits
and incidents of employment will cease on the Termination Date.
4. Trade Secrets and Confidential Information/Company Property. Employee
reaffirms and agrees to observe and abide by the terms of the Confidentiality
Agreement, specifically including the provisions therein regarding nondisclosure
of the Company's trade secrets and confidential and proprietary information, and
non-solicitation of Company employees. Employee's signature below constitutes
his certification under penalty of perjury that he has returned all documents
and other items provided to Employee by the Company, developed or obtained by
Employee as a result of his employment with the Company, or otherwise belonging
to the Company.
5. Release of Claims. Employee agrees that the foregoing consideration
represents settlement in full of all outstanding obligations owed to Employee by
the Company and its officers, directors, agents and employees. Employee hereby
fully and forever releases the Company and its officers, directors, employees,
agents, investors, shareholders, administrators, affiliates, divisions,
subsidiaries, predecessor and successor corporations, and assigns, (the
"Releasees") from, and agrees not to sue concerning, or in any manner to
institute, prosecute or pursue, any claim, complaint, charge, duty, obligation
or cause of action relating to any matters of any kind, whether presently known
or unknown, suspected or unsuspected, that Employee may possess against any of
the Releasees arising from any omissions, acts or facts that have occurred up
until and including the Effective Date of this Agreement including, without
limitation,
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(a) any and all claims relating to or arising out of
Employee's employment relationship with the Company and
the termination of that relationship;
(b) any and all claims relating to, or arising from,
Employee's right to purchase, or actual purchase of
shares of stock of the Company, including, without
limitation, any claims for fraud, misrepresentation,
breach of fiduciary duty, breach of duty under
applicable state corporate law, and securities fraud
under any state or federal law;
(c) any and all claims for wrongful discharge of employment;
termination in violation of public policy;
discrimination; harassment; retaliation; breach of
contract, both express and implied; breach of a covenant
of good faith and fair dealing, both express and
implied; promissory estoppel; negligent or intentional
infliction of emotional distress; negligent or
intentional misrepresentation; negligent or intentional
interference with contract or prospective economic
advantage; unfair business practices; defamation; libel;
slander; negligence; personal injury; assault; battery;
invasion of privacy; false imprisonment; conversion;
workers' compensation and disability benefits;
(d) any and all claims for violation of any federal, state
or municipal statute, including, but not limited to,
Title VII of the Civil Rights Act of 1964; the Civil
Rights Act of 1991; the Americans with Disabilities Act
of 1990; the Fair Labor Standards Act; the Age
Discrimination in Employment Act of 1967; the Employee
Retirement Income Security Act of 1974; the Worker
Adjustment and Restraining Notification Act; the Family
and Medical Leave Act; the California Family Rights Act;
the California Fair Employment and Housing Act, and the
California Labor Code;
(e) any and all claims for violation of the federal, or any
state, constitution;
(f) any and all claims arising out of any other laws and
regulations relating to employment or employment
discrimination; and
(g) any and all claims for attorneys' fees and costs.
Employee acknowledges and agrees that any breach by him of this paragraph or of
his obligations under paragraphs 7 or 10 hereof or of any provision of the
Confidentiality Agreement, shall constitute a material breach of this Agreement,
and shall entitle the Company immediately to recover the consideration provided
to Employee by this Agreement, except as provided by law. Except as provided by
law, Employee shall also be responsible to the Company for all costs, attorneys'
fees and any and all damages incurred by the Company in: (a) enforcing his
obligations under this paragraph, paragraphs 7 and 10 and the Confidentiality
Agreement, including the bringing of any action to recover the consideration,
and (b) defending against a claim brought or pursued by Employee in violation of
the terms of this Agreement.
Employee agrees that the release set forth in this section shall be and remain
in effect in all respects as a complete general release as to the matters
released. This release does not extend to any obligations incurred under this
Agreement.
6. Acknowledgment of Waiver of Claims under ADEA. Employee acknowledges
that he is waiving and releasing any rights he may have under the Age
Discrimination in Employment Act of 1967 ("ADEA") and that this waiver and
release is knowing and voluntary. Employee and the Company agree that this
waiver and release does not apply to any rights or claims that may arise under
ADEA after the Effective Date of this Agreement. Employee acknowledges that the
consideration given for this waiver and release agreement is in addition to
anything of value to which Employee was already entitled. Employee further
acknowledges that he has been advised by this writing that (a) he should consult
with an attorney prior to executing this Agreement; (b) he has twenty-one (21)
days within which to consider this Agreement; (c) he has seven (7) days
following the execution of this Agreement by the parties to revoke the
Agreement; (d) this Agreement shall not be effective until the revocation period
has expired; and (e) nothing in this Agreement
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prevents or precludes Employee from challenging or seeking a determination in
good faith of the validity of this waiver under the ADEA, nor does it impose any
condition precedent, penalties or costs for doing so, unless specifically
authorized by federal law.
7. Civil Code Section 1542. Employee represents that he is not aware of
any claims against any of the Releasees. Employee acknowledges that he has been
advised to consult legal counsel and is familiar with the provisions of
California Civil Code Section 1542, which provides as follows:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR
DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF
EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE
MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.
Employee, being aware of said code section, agrees to expressly waive any rights
he may have thereunder, as well as under any other statute or common law
principles of similar effect.
8. Application for Employment. Employee understands and agrees that, as a
condition of this Agreement, he shall not be entitled to any employment with the
Company, its subsidiaries, or any successor, and he hereby waives any right, or
alleged right, of employment or re-employment with the Company. Employee further
agrees that he will not apply for employment with the Company, its subsidiaries
or related companies, or any successor.
9. No Future Lawsuits. Employee represents that he does not intend to
bring any claims on behalf of Employee or on behalf of any other person or
entity against the Company or any other person or entity referred to herein.
10. No Cooperation. Employee agrees that he will not act in any manner
that might damage the business of the Company. The Parties acknowledge that
Employee's employment with any of the Company's competitors shall not, in and of
itself, constitute a breach of this provision. Employee further agrees that he
will not knowingly counsel or assist any attorneys or their clients in the
presentation or prosecution of any disputes, differences, grievances, claims,
charges, or complaints by any third party against any of the Releasees, unless
under a subpoena or other court order to do so. Employee agrees both to
immediately notify the Company upon receipt of any such subpoena or court order,
and to furnish, within three (3) business days of its receipt, a copy of such
subpoena or court order to the Company. If approached by anyone for counsel or
assistance in the presentation or prosecution of any disputes, differences,
grievances, claims, charges, or complaints against any of the Releasees,
Employee shall state no more than that he cannot provide counsel or assistance.
11. Non-Disparagement. Each party agrees to refrain from any defamation,
libel or slander of the other, or tortious interference with the contracts and
relationships of the other. All inquiries by potential future employers of
Employee will be directed to the Company `s Human Resources Department. Upon
inquiry, the Company shall only state the following: Employee `s last position
and dates of employment.
12. Confidentiality. The Parties hereto each agree to use their best
efforts to maintain in confidence the existence of this Agreement, the contents
and terms of this Agreement, and the consideration for this Agreement
(hereinafter collectively referred to as "Separation Information"). Each Party
hereto agrees to take every reasonable precaution to prevent disclosure of any
Separation Information to third parties, and each agrees that there will be no
publicity, directly or indirectly, concerning any Separation Information. The
Parties hereto agree to take every precaution to disclose Separation Information
only to those employees, officers, directors, attorneys, accountants,
governmental entities, and family members who have a reasonable need to know of
such Separation Information.
<PAGE>
13. No Admission of Liability. Employee understands and acknowledges that
this Agreement constitutes a compromise and settlement of any and all potential
disputed claims. No action taken by the Company hereto, either previously or in
connection with this Agreement shall be deemed or construed to be: (a) an
admission of the truth or falsity of any potential claims; or (b) an
acknowledgment or admission by the Company of any fault or liability whatsoever
to the other party or to any third party.
14. Arbitration. THE PARTIES AGREE THAT ANY AND ALL DISPUTES ARISING OUT
OF THE TERMS OF THIS AGREEMENT, THEIR INTERPRETATION, AND ANY OF THE MATTERS
HEREIN RELEASED, SHALL BE SUBJECT TO ARBITRATION IN SANTA CLARA COUNTY, BEFORE
THE AMERICAN ARBITRATION ASSOCIATION UNDER ITS NATIONAL RULES FOR THE RESOLUTION
OF EMPLOYMENT DISPUTES AND CALIFORNIA LAW. THE ARBITRATOR MAY GRANT INJUNCTIONS
AND OTHER RELIEF IN SUCH DISPUTES. THE DECISION OF THE ARBITRATOR SHALL BE
FINAL, CONCLUSIVE AND BINDING ON THE PARTIES TO THE ARBITRATION. THE PARTIES
AGREE THAT THE PREVAILING PARTY IN ANY ARBITRATION SHALL BE ENTITLED TO
INJUNCTIVE RELIEF IN ANY COURT OF COMPETENT JURISDICTION TO ENFORCE THE
ARBITRATION AWARD. THE PARTIES HEREBY AGREE TO WAIVE THEIR RIGHT TO HAVE ANY
DISPUTE BETWEEN THEM RESOLVED IN A COURT OF LAW BY A JUDGE OR JURY.
15. Authority. The Company represents and warrants that the undersigned
has the authority to act on behalf of the Company and to bind the Company and
all who may claim through it to the terms and conditions of this Agreement.
Employee represents and warrants that he has the capacity to act on his own
behalf and on behalf of all who might claim through him to bind them to the
terms and conditions of this Agreement. Each Party warrants and represents that
there are no liens or claims of lien or assignments in law or equity or
otherwise of or against any of the claims or causes of action released herein.
16. No Representations. Employee represents that he has had the
opportunity to consult with an attorney, and has carefully read and understands
the scope and effect of the provisions of this Agreement. Employee has not
relied upon any representations or statements made by the Company which are not
specifically set forth in this Agreement.
17. Severability. In the event that any provision hereof becomes or is
declared by a court of competent jurisdiction to be illegal, unenforceable or
void, this Agreement shall continue in full force and effect without said
provision.
18. Attorneys' Fees. Except as provided in paragraph 5 hereof, in the
event that either Party brings an action to enforce or effect its rights under
this Agreement, the prevailing party shall be entitled to recover its costs and
expenses, including the costs of mediation, arbitration, litigation, court fees,
plus reasonable attorneys' fees, incurred in connection with such an action.
19. Entire Agreement. This Agreement, and the attached exhibits,
represents the entire agreement and understanding between the Company and
Employee concerning Employee's employment with and separation from the Company
and the events leading thereto and associated therewith, and supersedes and
replaces any and all prior agreements and understandings concerning Employee's
relationship with the Company and his compensation by the Company, with the
exception of the Confidentiality Agreement, the Plan, and the Stock Option
Agreements.
20. No Oral Modification. This Agreement may only be amended in writing
signed by Employee and the President of the Company.
21. Governing Law. This Agreement shall be governed by the laws of the
State of California, without regard to choice of law provisions.
<PAGE>
22. Effective Date. This Agreement will become effective after it has been
signed by both Parties and after seven days have passed since Employee signed
the Agreement (the "Effective Date"). Each party has seven days after that party
signs the Agreement to revoke it.
23. Counterparts. This Agreement may be executed in counterparts and by
facsimile, and each counterpart shall have the same force and effect as an
original and shall constitute an effective, binding agreement on the part of
each of the undersigned.
24. Voluntary Execution of Agreement. This Agreement is executed
voluntarily and without any duress or undue influence on the part or behalf of
the Parties hereto, with the full intent of releasing all claims. The Parties
acknowledge that:
(a) They have read this Agreement;
(b) They have been represented in the preparation, negotiation, and
execution of this Agreement by legal counsel of their own choice or that they
have voluntarily declined to seek such counsel;
(c) They understand the terms and consequences of this Agreement and
of the releases it contains;
(d) They are fully aware of the legal and binding effect of this
Agreement.
IN WITNESS WHEREOF, the Parties have executed this Agreement on the respective
dates set forth below.
SMARTFORCE
Dated: By /s/ Greg Priest
----------------- -------------------------------------
Greg Priest, Chairman & CEO
Thomas Francis McKeagney, an individual
Dated: 5/1/2002 /s/ F. McKeagney
----------------- ----------------------------------------
Thomas Francis McKeagney
<PAGE>
Exhibit A - Consulting Agreement
SMARTFORCE
CONSULTING AGREEMENT
This Consulting Agreement ("AGREEMENT") is entered into as of May 1, 2002 by and
between SmartForce (the "COMPANY") and Thomas Francis McKeagney ("CONSULTANT").
The Company desires to retain Consultant as an independent contractor to perform
consulting services for the Company, and Consultant is willing to perform such
services, on the terms described below. In consideration of the mutual promises
contained herein, the parties agree as follows:
1. Services and Compensation. Consultant agrees to perform for the Company
the services described in Exhibit A (the "SERVICES"), and the Company agrees to
pay Consultant the compensation described in Exhibit A for Consultant's
performance of the Services.
2. Confidentiality.
A. Definition. "CONFIDENTIAL INFORMATION" means any non-public
information that relates to the actual or anticipated business or research and
development of the Company, technical data, trade secrets or know-how,
including, but not limited to, research, product plans or other information
regarding Company's products or services and markets therefor, customer lists
and customers (including, but not limited to, customers of the Company on whom
Consultant called or with whom Consultant became acquainted during the term of
this Agreement), software, developments, inventions, processes, formulas,
technology, designs, drawing, engineering, hardware configuration information,
marketing, finances or other business information. Confidential Information does
not include information that (i) is known to Consultant at the time of
disclosure to Consultant by the Company as evidenced by written records of
Consultant, (ii) has become publicly known and made generally available through
no wrongful act of Consultant or (iii) has been rightfully received by
Consultant from a third party who is authorized to make such disclosure.
B. Nonuse and Nondisclosure. Consultant will not, during or
subsequent to the term of this Agreement, (i) use the Confidential Information
for any purpose whatsoever other than the performance of the Services on behalf
of the Company or (ii) disclose the Confidential Information to any third party.
Consultant agrees that all Confidential Information will remain the sole
property of the Company. Consultant also agrees to take all reasonable
precautions to prevent any unauthorized disclosure of such Confidential
Information. Without the Company's prior written approval, Consultant will not
directly or indirectly disclose to anyone the existence of this Agreement or the
fact that Consultant has this arrangement with the Company.
C. Former Client Confidential Information. Consultant agrees that
Consultant will not, during the term of this Agreement, improperly use or
disclose any proprietary information or trade secrets of any former or current
employer of Consultant or other person or entity with which Consultant has an
agreement or duty to keep in confidence information acquired by Consultant, if
any. Consultant also agrees that Consultant will not bring onto the Company's
premises any unpublished document or proprietary information belonging to any
such employer, person or entity unless consented to in writing by such employer,
person or entity.
D. Third Party Confidential Information. Consultant recognizes that
the Company has received and in the future will receive from third parties their
confidential or proprietary information subject to a duty on the Company's part
to maintain the confidentiality of such information and to use it only for
certain limited purposes. Consultant agrees that, during the term of this
Agreement and thereafter, Consultant owes the Company and such third parties a
duty to hold all such confidential or proprietary information in the strictest
confidence and not to disclose it to any person, firm or corporation or to use
it except as necessary in carrying out the Services for the Company consistent
with the Company's agreement with such third party.
<PAGE>
E. Return of Materials. Upon the termination of this Agreement, or
upon Company's earlier request, Consultant will deliver to the Company all of
the Company's property, including but not limited to all electronically stored
information and passwords to access such property, or Confidential Information
that Consultant may have in Consultant's possession or control.
3. Ownership.
A. Assignment. Consultant agrees that all copyrightable material,
notes, records, drawings, designs, inventions, improvements, developments,
discoveries and trade secrets conceived, discovered, developed or reduced to
practice by Consultant, solely or in collaboration with others, during the term
of this Agreement that relate in any manner to the business of the Company that
Consultant may be directed to undertake, investigate or experiment with or that
Consultant may become associated with in work, investigation or experimentation
in the Company's line of business in performing the Services under this
Agreement (collectively, "INVENTIONS"), are the sole property of the Company.
Consultant also agrees to assign (or cause to be assigned) and hereby assigns
fully to the Company all Inventions and any copyrights, patents, mask work
rights or other intellectual property rights relating to all Inventions.
B. Further Assurances. Consultant agrees to assist Company, or its
designee, at the Company's expense, in every proper way to secure the Company's
rights in Inventions and any copyrights, patents, mask work rights or other
intellectual property rights relating to all Inventions in any and all
countries, including the disclosure to the Company of all pertinent information
and data with respect to all Inventions, the execution of all applications,
specifications, oaths, assignments and all other instruments that the Company
may deem necessary in order to apply for and obtain such rights and in order to
assign and convey to the Company, its successors, assigns and nominees the sole
and exclusive right, title and interest in and to all Inventions, and any
copyrights, patents, mask work rights or other intellectual property rights
relating to all Inventions. Consultant also agrees that Consultant's obligation
to execute or cause to be executed any such instrument or papers shall continue
after the termination of this Agreement.
C. Pre-Existing Materials. Subject to SECTION 3.A, Consultant agrees
that if, in the course of performing the Services, Consultant incorporates into
any Invention developed under this Agreement any pre-existing invention,
improvement, development, concept, discovery or other proprietary information
owned by Consultant or in which Consultant has an interest, (i) Consultant will
inform Company, in writing before incorporating such invention, improvement,
development, concept, discovery or other proprietary information into any
Invention, and (ii) the Company is hereby granted a nonexclusive, royalty-free,
perpetual, irrevocable, worldwide license to make, have made, modify, use and
sell such item as part of or in connection with such Invention. Consultant will
not incorporate any invention, improvement, development, concept, discovery or
other proprietary information owned by any third party into any Invention
without Company's prior written permission.
D. Attorney-in-Fact. Consultant agrees that, if the Company is
unable because of Consultant's unavailability, dissolution, mental or physical
incapacity, or for any other reason, to secure Consultant's signature for the
purpose of applying for or pursuing any application for any United States or
foreign patents or mask work or copyright registrations covering the Inventions
assigned to the Company in SECTION 3.A, then Consultant hereby irrevocably
designates and appoints the Company and its duly authorized officers and agents
as Consultant's agent and attorney-in-fact, to act for and on Consultant's
behalf to execute and file any such applications and to do all other lawfully
permitted acts to further the prosecution and issuance of patents, copyright and
mask work registrations with the same legal force and effect as if executed by
Consultant.
4. Conflicting Obligations.
A. Conflicts. Consultant certifies that Consultant has no
outstanding agreement or obligation that is in conflict with any of the
provisions of this Agreement or that would preclude Consultant from complying
with the provisions of this Agreement. Consultant will not enter into any such
conflicting
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agreement during the term of this Agreement. Consultant's violation of this
Section 4.A will be considered a material breach under SECTION 6.A.
B. Substantially Similar Designs. In view of Consultant's access to
the Company's trade secrets and proprietary know-how, Consultant agrees that
Consultant will not, without Company's prior written approval, design identical
or substantially similar designs as those developed under this Agreement for any
third party during the term of this Agreement and for a period of 12 months
after the termination of this Agreement. Consultant acknowledges that the
obligations in this SECTION 4 are ancillary to Consultant's nondisclosure
obligations under SECTION 2.
5. Reports. Consultant also agrees that Consultant will, from time to time
during the term of this Agreement or any extension thereof, keep the Company
advised as to Consultant's progress in performing the Services under this
Agreement. Consultant further agrees that Consultant will, as requested by the
Company, prepare written reports with respect to such progress. The Company and
Consultant agree that the time required to prepare such written reports will be
considered time devoted to the performance of the Services.
6. Term and Termination.
A. Term. The term of this Agreement will begin on the date of this
Agreement and will continue until June 30, 2002. The Company may terminate this
Agreement immediately and without prior notice if Consultant refuses to or is
unable to perform the Services or is in breach of any material provision of this
Agreement.
B. Survival. Upon such termination, all rights and duties of the
Company and Consultant toward each other shall cease except:
(1) The Company will pay, within 30 days after the effective
date of termination, all amounts owing to Consultant for Services completed and
accepted by the Company prior to the termination date and related expenses, if
any, submitted in accordance with the Company's policies and in accordance with
the provisions of Section 1 of this Agreement; and
(2) Section 2 (Confidentiality), Section 3 (Ownership),
Section 4 (Conflicting Obligations), Section 7 (Independent Contractor;
Benefits), Section 8 (Indemnification) and Section 9 (Arbitration and Equitable
Relief) will survive termination of this Agreement.
7. Independent Contractor; Benefits.
A. Independent Contractor. It is the express intention of the
Company and Consultant that Consultant perform the Services as an independent
contractor to the Company. Nothing in this Agreement shall in any way be
construed to constitute Consultant as an agent, employee or representative of
the Company. Without limiting the generality of the foregoing, Consultant is not
authorized to bind the Company to any liability or obligation or to represent
that Consultant has any such authority. Consultant agrees to furnish (or
reimburse the Company for) all tools and materials necessary to accomplish this
Agreement and shall incur all expenses associated with performance, except as
expressly provided in Exhibit A. Consultant acknowledges and agrees that
Consultant is obligated to report as income all compensation received by
Consultant pursuant to this Agreement. Consultant agrees to and acknowledges the
obligation to pay all self-employment and other taxes on such income.
B. Benefits. The Company and Consultant agree that Consultant will
receive no Company-sponsored benefits from the Company. If Consultant is
reclassified by a state or federal agency or court as Company's employee,
Consultant will become a reclassified employee and will receive no benefits from
the Company, except those mandated by state or federal law, even if by the terms
of the Company's benefit plans or programs of the Company in effect at the time
of such reclassification, Consultant would otherwise be eligible for such
benefits.
<PAGE>
8. Indemnification. Consultant agrees to indemnify and hold harmless the
Company and its directors, officers and employees from and against all taxes,
losses, damages, liabilities, costs and expenses, including attorneys' fees and
other legal expenses, arising directly or indirectly from or in connection with
(i) any negligent, reckless or intentionally wrongful act of Consultant or
Consultant's assistants, employees or agents, (ii) a determination by a court or
agency that the Consultant is not an independent contractor, (iii) any breach by
the Consultant or Consultant's assistants, employees or agents of any of the
covenants contained in this Agreement, (iv) any failure of Consultant to perform
the Services in accordance with all applicable laws, rules and regulations, or
(v) any violation or claimed violation of a third party's rights resulting in
whole or in part from the Company's use of the work product of Consultant under
this Agreement.
9. Arbitration and Equitable Relief.
A. Arbitration. Consultant agrees that any and all controversies,
claims or disputes with anyone (including the Company and any employee, officer,
director, shareholder or benefit plan of the Company, in its capacity as such or
otherwise) arising out of, relating to or resulting from Consultant's
performance of the Services under this Agreement or the termination of this
Agreement, including any breach of this Agreement, shall be subject to binding
arbitration under the Arbitration Rules set forth in California Code of Civil
Procedure Section 1280 through 1294.2, including Section 1283.05 (the "RULES")
and pursuant to California law. CONSULTANT AGREES TO ARBITRATE, AND THEREBY
AGREES TO WAIVE ANY RIGHT TO A TRIAL BY JURY WITH RESPECT TO, ALL DISPUTES
ARISING FROM OR RELATED TO THIS AGREEMENT, INCLUDING BUT NOT LIMITED TO: ANY
STATUTORY CLAIMS UNDER STATE OR FEDERAL LAW, CLAIMS UNDER TITLE VII OF THE CIVIL
RIGHTS ACT OF 1964, THE AMERICANS WITH DISABILITIES ACT OF 1990, THE AGE
DISCRIMINATION IN EMPLOYMENT ACT OF 1967, THE OLDER WORKERS BENEFIT PROTECTION
ACT, THE CALIFORNIA FAIR EMPLOYMENT AND HOUSING ACT, THE CALIFORNIA LABOR CODE,
CLAIMS OF HARASSMENT, DISCRIMINATION OR WRONGFUL TERMINATION AND ANY STATUTORY
CLAIMS. Consultant understands that this Agreement to arbitrate also applies to
any disputes that the Company may have with Consultant.
B. Procedure. Consultant agrees that any arbitration will be
administered by the American Arbitration Association ("AAA"), and that a neutral
arbitrator will be selected in a manner consistent with its National Rules for
the Resolution of Employment Disputes. Consultant agrees that the arbitrator
will have the power to decide any motions brought by any party to the
arbitration, including discovery motions, motions for summary judgment and/or
adjudication and motions to dismiss and demurrers, prior to any arbitration
hearing. Consultant agrees that the arbitrator will issue a written decision on
the merits. Consultant also agrees that the arbitrator will have the power to
award any remedies, including attorneys' fees and costs, available under
applicable law. Consultant understands that the Company will pay for any
administrative or hearing fees charged by the arbitrator or AAA, except that
Consultant shall pay the first $200.00 of any filing fees associated with any
arbitration Consultant initiates. Consultant agrees that the arbitrator will
administer and conduct any arbitration in a manner consistent with the Rules and
that, to the extent that the AAA's National Rules for the Resolution of
Employment Disputes conflict with the Rules, the Rules will take precedence.
C. Remedy. Except as provided by the Rules, arbitration will be the
sole, exclusive and final remedy for any dispute between the Company and
Consultant. Accordingly, except as provided for by the Rules, neither the
Company nor Consultant will be permitted to pursue court action regarding claims
that are subject to arbitration. Notwithstanding the foregoing, the arbitrator
will not have the authority to disregard or refuse to enforce any lawful Company
policy, and the arbitrator shall not order or require the Company to adopt a
policy not otherwise required by law which the Company has not adopted.
D. Availability of Injunctive Relief. In addition to the right under
the Rules to petition the court for provisional relief, Consultant agrees that
any party may also petition the court for injunctive relief where
<PAGE>
either party alleges or claims a violation of Sections 2 (Confidentiality), 3
(Ownership) or 4 (Conflicting Obligations) of this Agreement or any other
agreement regarding trade secrets, confidential information, nonsolicitation or
Labor Code Section 2870. In the event either the Company or Consultant seeks
injunctive relief, the prevailing party will be entitled to recover reasonable
costs and attorneys' fees.
E. Administrative Relief. Consultant understands that this Agreement
does not prohibit Consultant from pursuing an administrative claim with a local,
state or federal administrative body such as the Department of Fair Employment
and Housing, the Equal Employment Opportunity Commission or the workers'
compensation board. This Agreement does, however, preclude Consultant from
pursuing court action regarding any such claim.
F. Voluntary Nature of Agreement. Consultant acknowledges and agrees
that Consultant is executing this Agreement voluntarily and without any duress
or undue influence by the Company or anyone else. Consultant further
acknowledges and agrees that Consultant has carefully read this Agreement and
has asked any questions needed to understand the terms, consequences and binding
effect of this Agreement and fully understand it, including that Consultant is
waiving its right to a jury trial. Finally, Consultant agrees that Consultant
has been provided an opportunity to seek the advice of an attorney of its choice
before signing this Agreement.
10. Miscellaneous.
A. Governing Law. This Agreement shall be governed by the laws of
California without regard to California's conflicts of law rules.
B. Assignability. Except as otherwise provided in this Agreement,
Consultant may not sell, assign or delegate any rights or obligations under this
Agreement.
C. Entire Agreement. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter of this Agreement and
supersedes all prior written and oral agreements between the parties regarding
the subject matter of this Agreement.
D. Headings. Headings are used in this Agreement for reference only
and shall not be considered when interpreting this Agreement.
E. Notices. Any notice or other communication required or permitted
by this Agreement to be given to a party shall be in writing and shall be deemed
given if delivered personally or by commercial messenger or courier service, or
mailed by U.S. registered or certified mail (return receipt requested), or sent
via facsimile (with receipt of confirmation of complete transmission) to the
party at the party's address or facsimile number written below or at such other
address or facsimile number as the party may have previously specified by like
notice. If by mail, delivery shall be deemed effective 3 business days after
mailing in accordance with this Section 10(E).
(1) If to the Company, to:
SmartForce
Attention: Legal Department
900 Chesapeake Drive
Redwood City, CA 94063
(650) 817-5900
(650) 817-5062
(2) If to Consultant, to the address for notice on the
signature page to this Agreement or, if no such address is provided, to the last
address of Consultant provided by Consultant to the Company.
<PAGE>
F. Attorneys' Fees. In any court action at law or equity that is
brought by one of the parties to this Agreement to enforce or interpret the
provisions of this Agreement, the prevailing party will be entitled to
reasonable attorneys' fees, in addition to any other relief to which that party
may be entitled.
G. Severability. If any provision of this Agreement is found to be
illegal or unenforceable, the other provisions shall remain effective and
enforceable to the greatest extent permitted by law.
(Remainder of page intentionally left blank.)
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Consulting
Agreement as of the date first written above.
CONSULTANT SMARTFORCE
By: By:
------------------------------- ----------------------------------
Name: Name:
----------------------------- --------------------------------
Title: Title:
---------------------------- -------------------------------
Address for Notice:
-----------------------------------
-----------------------------------
-----------------------------------
<PAGE>
EXHIBIT A
Services and Compensation
1. Contact. Consultant's principal Company contact:
Name: Greg Priest
Title: Chairman & CEO
2. Services. The Services shall include, but shall not be limited to,
the following:
CONSULTANT SHALL PROVIDE CONSULTING ASSISTANCE DURING THE PERIOD
COMMENCING MAY 1, 2002 AND TERMINATING JUNE 30, 2002. CONSULTANT SHALL BE
AVAILABLE TO PROVIDE ADVICE A MINIMUM OF 15 HOURS PER WEEK.
3. Compensation.
A. The Company will pay Consultant a flat fee of $18,750, less
applicable withholdings, per month for the months of May, 2002 and June, 2002.
The Company will make two payments, one on May 31, 2002 and one on June 30,
2002. Such payments may be made electronically at the Consultant's discretion.
B. The Company will reimburse Consultant for all reasonable expenses
incurred by Consultant in performing the Services pursuant to this Agreement, if
Consultant receives written consent from an authorized agent of the Company
prior to incurring such expenses and submits receipts for such expenses to the
Company in accordance with Company policy.
Accepted and agreed as of [_____], [_____].
CONSULTANT SMARTFORCE
By: By:
------------------------------- -----------------------------------
Name: Name:
----------------------------- --------------------------------
Title: Title:
----------------------------- -------------------------------
<PAGE>
Exhibit B - Accelerated Options Schedule
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Shares to Vest Between
Remaining Shares Which April 30, 2002 and
Are Vested and March 31, 2003 (which
Exercisable on will be accelerated so that
Option Date Shares Granted Exercise Price April 30, 2002 they are fully vested and
exercisable on April 30, 2002
---------------------------------------------------------------------------------------------------------------
10-16-98 28,000 6.9375 3,500(1) 0
10-16-98 6,195 6.9375 2,208 250
10-16-98 5,805 6.9375 292(1) 0
12-9-98 100,000 9.9375 18,750 16,667
7-2-99 80,000 16.4375 46,662 18,333
4-17-00 70,000 31.00 35,000 16,041
4-5-01 130,000 19.0625 32,500 37,916
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(1) The option is fully vested on April 30, 2002. This figure represents those
shares which have not yet been exercised.