Exhibit 10.4
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "AGREEMENT"), is made and entered into
as of this 1st day of November, 1997, by and between COLLEGIS, Inc., a
Delaware corporation ("EMPLOYER"), with its principal place of business at
000 Xxxxxxxxx Xxxx, Xxxxx 000, Xxxxxxxx, Xxxxxxx 00000, and Xx. Xxxxxxx X.
Xxxxxx, an individual ("EMPLOYEE").
WHEREAS, Employer is engaged in the business of providing services
related to computing and information technology throughout the United States
including, without limitation, the development, use and application of
Internet technologies and resources in the area of higher education;
WHEREAS, Employer may form a not-for-profit corporation (the "NEW
INSTITUTE") to engage in research and development activities in connection
with the innovation, use and application of distributed learning technologies
and resources; and
WHEREAS, Employee desires to be employed by Employer and Employer
desires to employ Employee pursuant to the terms and conditions set forth
herein;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto hereby
agree as follows:
1. EMPLOYMENT; EXECUTIVE COMMITTEE. Subject to the terms of this
Agreement, Employer hereby employs Employee as "Senior Vice President for
Academic Technology." In this position, Employee shall report to the
Executive Committee and President of Employer.
2. TERM. Unless earlier terminated as provided herein, the term of
this Agreement shall be a period commencing on the date hereof and ending
October 31, 2002. If neither party provides notice within thirty (30) days
prior to the termination of this Agreement, then this Agreement will be
considered renewed for successive one (1) year periods.
3. DUTIES. Employee hereby accepts employment and agrees to serve
Employer on a full-time basis and to perform his duties faithfully,
diligently and to the best of his ability. During the term of this
Agreement, Employee shall perform such duties as may be assigned to him from
time to time by the Executive Committee and President of Employer.
Employee's duties shall consist of duties which are typical for an executive
officer of a business in a similar industry including, without limitation,
the development of a conceptual strategy and detailed business plan (in
coordination with the Executive Committee of Employer) for Employer's
Academic Technology Business Unit (the "Business Unit) and the supervision of
all marketing, sales and other activities conducted by such Business Unit in
respect of the Business (as defined in the Stock Option Agreement described
in SECTION 4(c) below). In the event Employer forms the New Institute,
Employee shall be responsible for managing and directing the activities of
the New Institute, including the supervision of all research and development
related thereto. Employee shall have the power to hire, terminate, promote
and assign titles to employees of Employer employed in connection with the
operation of the Business Unit, subject to review and approval by the
President of Employer. Additionally, Employee shall, as requested, advise
and consult with the Executive Committee and President of Employer on all
major issues affecting the future growth and profitability of Employer as it
pertains to the Business Unit and its conduct of the Business.
4. COMPENSATION. Employer agrees to pay Employee, and Employee agrees
to accept from Employer, in full payment for Employee's services hereunder,
compensation consisting of the following:
(a) an annual salary of $200,000 payable in accordance with
payroll practices in effect from time to time for all salaried employees of
Employer;
(b) aggregate incentive compensation not in excess of $50,000 per
year (the "INCENTIVE AMOUNT") payable annually in arrears upon completion of
Employer's annual audit for each year during the term of this Agreement
(beginning with the audit for the year ended December 31, 1998). Employer
and Employee acknowledge and agree that fifty percent (50%) of the Incentive
Amount shall be payable based on the achievement of certain performance goals
and objectives to be mutually agreed upon by Employer and Employee and fifty
percent (50%) of the Incentive Amount shall be payable in accordance with the
terms and conditions of the COLLEGIS Corporate Profit Incentive Plan as in
effect from time to time, a copy of which has been delivered to Employee by
Employer prior to the date hereof; and
(c) options to purchase an aggregate amount of 100,000 shares of
Series B Common Stock of Employer at a per share price of $2.75 (the "STOCK
OPTIONS"). The Stock Options shall vest at a rate of twenty-five percent
(25%) per annum and shall otherwise be subject to the terms and conditions
set forth in that certain Stock Option Agreement dated the date hereof and
substantially in the form of EXHIBIT A attached hereto.
5. BENEFITS. Employer shall provide to Employee the benefits provided
to salaried employees of Employer in accordance with the terms and conditions
set forth in the Employer's employee manual, as amended from time to time in
Employer's sole and exclusive discretion.
6. INITIAL PUBLIC OFFERING. Employer agrees to pay Employee, and
Employee agrees to accept from Employer, a one-time bonus payment in the
aggregate amount of $250,000 in the event that:
(a) Employer successfully consummates an initial underwritten
public offering of its capital stock pursuant to a registration statement
declared effective under the Securities Act of 1933, as amended, prior to (i)
the transfer (whether by sale, merger or otherwise) of a majority of the
outstanding common stock of Employer or (ii) the sale of all or substantially
all of the assets of Employer (a "QUALIFIED OFFERING"); and
2
(b) Employee has been continuously employed by Employer pursuant
to the terms and conditions of this Agreement from the date hereof to and
including the date of the Qualified Offering and Employee has theretofore
delivered written notice to the University of North Carolina-Chapel Hill of
his resignation therefrom.
Any amount payable pursuant to this SECTION 6 shall be paid no
later than thirty (30) days following the consummation of the Qualified
Offering.
7. EXPENSES. Employer agrees to reimburse Employee for his
out-of-pocket business expenses as may be determined by Employer to be
reasonably necessary in connection with services rendered by Employee
pursuant to this Agreement.
8. TERMINATION. This Agreement shall terminate upon: (a) the death of
Employee; (b) the inability of Employee to perform his duties hereunder by
reason of disability or incapacity, due to physical or mental illness, for a
period of sixty (60) days out of any consecutive 120-day period; (c) the
mutual written consent of Employer and Employee; (d) five (5) days written
notice of Employer without "cause"; or (e) the written notice of Employer for
"cause." For purposes of this Agreement, "cause" shall include, without
limitation, Employee's commission of a felony, fraud, misappropriation or
embezzlement; failure to materially perform his duties hereunder; dishonest
conduct in the performance of his duties; incompetence, insubordination,
gross negligence or violation of any express direction, rule or regulation
established by Employer from time to time; or breach of any covenant
contained in this Agreement.
9. COMPENSATION UPON TERMINATION.
(a) If this Agreement is terminated pursuant to Section 8(a), (b)
or (e), Employee shall not be entitled to receive any compensation or
benefits from Employer other than compensation accrued and unpaid at the time
of termination.
(b) If this Agreement is terminated pursuant to Section 8(c),
Employee shall be entitled to receive such compensation and benefits from
Employer as may be specified in a written agreement, if any, between Employer
and Employee.
(c) If this Agreement is terminated pursuant to Section 8(d),
Employee shall be entitled to receive a lump sum payment equal to
seventy-five percent (75%) of Employee's annual salary then in effect LESS
any required payroll withholding taxes. In addition, Employee shall be
entitled to receive payment in the amount of $250,000 in the event that
Employer consummates a Qualified Offering within the six-month period
following such termination.
10. ASSIGNMENT. This Agreement and all of the provisions hereof shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any party hereto without
the prior written consent of the other parties; PROVIDED, that Employer may
3
assign any or all of his rights, interests and obligations under this
Agreement to any of its affiliates without the consent of Employee.
11. NOTICES. All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally or by overnight
courier service or telecopier, upon receipt, or if mailed by registered or
certified mail (return receipt requested), postage prepaid, upon receipt or
refusal. Notice to either party hereto, if mailed or sent by overnight
courier service, shall be to the following addresses (or to such other
address as the recipient party shall designate in writing to the other party):
IF TO EMPLOYEE:
Xx. Xxxxxxx X. Xxxxxx
X.X. Xxx 0000
Xxxxxx Xxxx, XX 00000
IF TO EMPLOYER:
COLLEGIS, Inc.
000 Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxx 00000
Attn: Xxxxxx Xxxxx, Jr.
Facsimile: 407/660-2471
with a copy to:
Winston & Xxxxxx
00 Xxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxxx X. Xxxxxxxxx
Facsimile: 312/558-5700
12. ENTIRE AGREEMENT. This Agreement and the Exhibits hereto
constitute and contain the entire agreement of the parties and supersede any
and all prior negotiations, correspondence, agreements, representations and
understandings among the parties respecting the subject matter hereof. No
waiver or amendment to this Agreement shall be effective unless reduced to
writing and executed by the parties hereto.
13. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED,
INTERPRETED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
FLORIDA, WITHOUT REGARD TO THE CONFLICT OF LAWS PROVISIONS THEREOF.
4
14. COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall be deemed an original, but all of which together shall
constitute one and the same agreement.
15. AMENDMENT AND MODIFICATION. This Agreement may be amended,
modified or supplemented only by a duly authorized and executed written
agreement of each of the parties hereto.
16. INTERPRETATION. The section headings contained in this Agreement
are solely for the purpose of reference, are not part of the agreement of the
Parties and shall not in any way affect the meaning or interpretation of this
Agreement.
17. PARTIAL INVALIDITY. If any provision of this Agreement shall be
invalid or unenforceable, in whole or in part, or as applied to any
circumstance, under the laws of any jurisdiction which may govern for such
purpose, then such provision shall be deemed to be modified or restricted to
the extent and in the manner necessary to render the same valid and
enforceable, either generally or as applied to such circumstance, or shall be
deemed excised from this Agreement, as the case may require, and this
Agreement shall be construed and enforced to the maximum extent permitted by
law as if such provision had been originally incorporated herein as so
modified or restricted, or as if such provision had not been originally
incorporated herein, as the case may be.
18. OPPORTUNITY TO EMPLOY COUNSEL. Employee hereby acknowledges
receipt of this Agreement prior to his employment with Employer and that he
has had ample time and opportunity to employ legal counsel of his choice
concerning the terms and conditions of this Agreement and his employment with
Employer.
[signature page follows]
5
IN WITNESS WHEREOF, this Employment Agreement has been duly executed by
and on behalf of the parties hereto as of the day and year first above
written.
COLLEGIS, INC.
By: /s/ Xxxxxx X. Xxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxx
----------------------------
Title: EVP
---------------------------
/s/ Xx. Xxxxxxx X. Xxxxxx
------------------------------
Xx. Xxxxxxx X. Xxxxxx
EXHIBIT A
FORM OF STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (this "AGREEMENT"), is made and entered into
as of this 1st day of November, 1997, by and between COLLEGIS, Inc., a
Delaware corporation (the "COMPANY"), and Xxxxxxx X. Xxxxxx (the "HOLDER").
1. BACKGROUND. The Company and Holder have entered into that certain
Employment Agreement dated the date hereof (as amended, restated,
supplemented or otherwise modified from time to time, the "EMPLOYMENT
AGREEMENT") pursuant to which Holder has accepted employment with the
Company. As a condition precedent to such employment, the Company and Holder
have agreed to enter into this Agreement. On June 19, 1996, the Board of
Directors of the Company (the "BOARD") adopted and approved the Company's
1996 Stock Option Plan (the "PLAN"), which has subsequently been amended by
the Board in order to, among other things, (i) increase the number of shares
that may be granted thereunder from 1,252,768 to 1,692,336 (in addition to
300,000 carry-over options) and (ii) provide for the Company's authority, at
the Board's discretion, to issue stock options thereunder to employees of the
Company. This Agreement (a) is being entered into as of the date hereof,
which is the date on which the Company granted a stock option (the "STOCK
OPTION") to the Holder pursuant to the terms and conditions of the Employment
Agreement and (b) documents the relative rights, privileges, powers, duties,
responsibilities and obligations of the parties hereto with respect to the
Stock Option. The Stock Option is issued, and this Agreement is entered
into, in accordance with the terms of the Plan and the provisions of the
Plan, including, but not limited to, Sections 13, 14, 15, 16, 17, 18, 19 and
20 thereof, are hereby incorporated in this Agreement by reference. The
Stock Option is not intended to be an Incentive Stock Option (as defined in
the Plan).
2. DEFINITIONS. In addition to the other terms defined herein, when
used herein, the following capitalized terms shall have the following
meanings:
"BUSINESS" means the business of providing information technology
outsourcing services, facilities management services, Internet-Registered
Trademark- access, distance learning services, systems integration, consulting
and professional services relating to information technology to the
B-1
administrative and academic departments of colleges, community colleges,
medical institutes (other than hospitals in their health care providing
capacity), graduate schools, universities and other institutions of higher
learning and any other business in which the Company or any Subsidiary may
engage while the Holder is employed by, or has a relationship with, the
Company or any Subsidiary.
"EMPLOYMENT AGREEMENT" has the meaning set forth in SECTION 1 hereof.
"EXERCISE PRICE" has the meaning set forth in SECTION 3.1 hereof.
"EXPIRATION DATE" has the meaning set forth in SECTION 3.2 hereof.
"FUNDAMENTAL CHANGE" means (a) a sale or transfer of all or
substantially all the assets of the Company on a consolidated basis in any
transaction or series of related transactions (other than sales in the
ordinary course of business), or (b) any merger, consolidation or
reorganization to which the Company is a party, except for a merger,
consolidation or reorganization in which, after giving effect to such merger,
consolidation or reorganization, the holders of the Company's outstanding
capital stock (on a fully-diluted basis) immediately prior to the merger,
consolidation or reorganization will own immediately following the merger,
consolidation or reorganization the outstanding capital stock (on a fully
diluted basis) of the surviving or resulting corporation or entity having the
voting power (under ordinary circumstances) to elect a majority of the board
of directors of the surviving or resulting corporation or entity.
"INDEPENDENT AUDITOR" has the meaning set forth in SECTION 7.2(d)
hereof.
"IPO" means the Company's first underwritten public offering of its
capital stock pursuant to a registration statement declared effective under
the Securities Act.
"LIQUIDATION" means the dissolution, liquidation or winding-up of
the Company, whether voluntary or involuntary.
"MARKET VALUE" has the meaning set forth in SECTION 7.2(d) hereof.
"NEW INSTITUTE" means a not-for-profit corporation that may be
formed by the Company to engage in research and development activities in
connection with the innovation, use and application of distributed learning
technologies and resources.
"OPTION SHARES" means 100,000 shares of Series B Common Stock, subject
to adjustment as set forth in SECTION 3.7 hereof; PROVIDED, HOWEVER, that upon
the closing of an IPO, the Stock Option shall be exercisable for the same number
of shares of Series C Common Stock as the number of shares of Series B Common
Stock that would have been issuable upon exercise of the
B-2
Stock Option if an IPO had not occurred and all references herein to Series B
Common Stock shall thereafter be deemed to be references to Series C Common
Stock.
"ORIGINAL COST" means, with respect to each Purchased Option Share,
the price per share actually paid by the Holder upon the purchase of such
Purchased Option Share, such amount to be adjusted proportionately in the
event the Purchased Option Shares are subdivided into a greater number
(whether by stock split, stock dividend or otherwise) or combined into a
lesser number (whether by reverse stock split or otherwise) at any time or
from time to time after the purchase of such Purchased Option Shares.
"PERMITTED TRANSFEREES" has the meaning set forth in SECTION 7.3
hereof.
"PERSON" means any individual, corporation, partnership, limited
liability company, firm, joint venture, association, joint-stock company,
trust, unincorporated organization, governmental or regulatory body or other
entity.
"PURCHASED OPTION SHARES" means (a) the Option Shares purchased by
the Holder hereunder, (b) any shares of Series C Common Stock issued upon
conversion of any Purchased Option Shares and (c) any shares of capital stock
of the Company issued as a dividend or other distribution with respect to or
in replacement of other Purchased Option Shares (including, but not limited
to, any shares of capital stock of the Company issued in connection with a
stock dividend, stock split, reverse stock split or similar event).
"REPRESENTATIVE" means the executor(s) or administrator(s) of the
Holder's estate or, if the Holder is incompetent, the Holder's guardian(s).
"RESTRICTED PERIOD" means the period commencing on the date hereof
and ending eighteen (18) months after the termination of the Employment
Agreement.
"RESTRICTIVE COVENANTS" has the meaning set forth in SECTION 6.6
hereof.
"SECURITIES ACT" means the Securities Act of 1933, as amended, or
any similar federal law then in force.
"SERIES B COMMON STOCK" means the Series B Common Stock, par value
$0.01 per share, of the Company.
"SERIES C COMMON STOCK" means the Series C Common Stock, par value
$0.01 per share, of the Company.
"STOCK OPTION" has the meaning set forth in SECTION 1 hereof.
B-3
"STOCK SALE" means any sale or issuance of shares of the capital
stock of the Company by the holders thereof or the Company, if after giving
effect to such sale or issuance the holders of the Company's capital stock
(on a fully diluted basis) prior to such sale or issuance do not own
immediately following such sale or issuance outstanding capital stock of the
Company (on a fully diluted basis) having the voting power (under ordinary
circumstances) to elect a majority of the Board.
"SUBSIDIARY" means any corporation, association or other business
entity of which securities or other ownership interest representing more than
fifty percent (50%) of the ordinary voting power of such corporation,
association or other business entity are, at the time as of which any
determination is being made, owned or controlled by the Company or one or
more Subsidiaries of the Company or the Company and one or more Subsidiaries
of the Company.
"TERMINATION DATE" means the date on which the Employment Agreement
terminates for any reason.
"UNPURCHASED OPTION SHARES" means all Option Shares (whether or not
available for purchase by the Holder pursuant to SECTION 3.3 hereof) which
have not yet been purchased pursuant to this Agreement.
3. TERMS OF STOCK OPTION.
3.1 GRANT OF THE OPTION. Upon the terms and conditions
hereinafter set forth, the Company hereby grants to the Holder an option to
purchase the Option Shares for a purchase price of $2.75 per share, subject
to adjustment as set forth in SECTION 3.7 hereof (the "EXERCISE PRICE").
3.2 PROCEDURES FOR EXERCISE. Subject to the Stock Option
becoming vested and exercisable pursuant to SECTION 3.3 hereof, the Holder,
during his lifetime, may exercise the Stock Option, in whole or in part, at
any time prior to the earlier of (a) 5:00 p.m. (Orlando time) on October 31,
2004 if such date falls on a day on which national banks are open for
business or, if such date falls on a day which is not a business day, on the
next succeeding business day (the "EXPIRATION DATE") and (b) the Stock
Option's earlier termination pursuant to the terms set forth herein. In
order to exercise the Stock Option, the Holder (or, in the event of the
Holder's death or permanent disability, his Representative) shall give to the
Company a written notice specifying the number of Option Shares to be
purchased, accompanied by payment in full of the entire Exercise Price for
such Option Shares in cash or other immediately available funds payable to
the order of the Company.
B-4
3.3 VESTING SCHEDULE. One-fourth of the Option Shares shall
become vested and exercisable on each of the first, second, third and fourth
anniversaries of the date hereof; PROVIDED, however, that if a Fundamental
Change or Stock Sale occurs at any time prior to the earlier of the
Expiration Date or the termination of the Stock Option pursuant to the terms
hereof, the Stock Option will become fully vested and exercisable for all of
the Option Shares immediately prior to the consummation of such Fundamental
Change or Stock Sale, as the case may be; PROVIDED further, however, that if
the Holder's employment with the Company is terminated pursuant to Section
8(a) or (b) of the Employment Agreement at any time prior to the earlier of
the Expiration Date or the termination of the Stock Option pursuant to the
terms hereof, the Stock Option shall become fully vested and exercisable for
all of the Option Shares on the Termination Date.
3.4 FRACTIONAL SHARES. Fractional shares will not be issued upon
the exercise of the Stock Option but in any case where the Holder would,
except for the provisions of this SECTION 3.4, be entitled under the terms of
this Agreement to receive a fractional share upon the complete exercise of
the Stock Option, the Company will, upon the exercise of the Stock Option for
the largest number of whole shares then called for, pay a sum in cash equal
to the excess of the value of such fractional share (determined in such
reasonable manner and in good faith by the Board or an authorized committee
thereof) over the proportional part of the Exercise Price represented by such
fractional share.
3.5 TERMINATION EVENTS. (a) If the Holder's employment with the
Company terminates pursuant to Section 8(a) or (b) of the Employment
Agreement while the Stock Option is outstanding and unexercised, in whole or
in part, the Stock Option shall terminate and cease to be exercisable with
respect to any Unpurchased Option Shares on the first anniversary of the
Termination Date.
(b) If the Holder's employment with the Company terminates
for any reason (other than pursuant to Section 8(a) or (b) of the Employment
Agreement) while the Stock Option is outstanding and unexercised, in whole or
in part, the Stock Option shall terminate and cease to be exercisable (i)
with respect to any Unpurchased Option Shares which have not become vested
and exercisable hereunder as of such Termination Date, and (ii) with respect
to any Unpurchased Option Shares which have become vested and exercisable
hereunder as of the Termination Date, on the first anniversary of such
Termination Date.
B-5
(c) In the event of a Liquidation, the Stock Option shall
terminate for all Unpurchased Option Shares at the close of business on the
business day on which banks are open for business immediately prior to the
effective date of such Liquidation. Upon the consummation of a Fundamental
Change or a Stock Sale, the Stock Option shall terminate for all Unpurchased
Option Shares.
(d) The Company shall use its reasonable best efforts to give
notice to the Holder not less than fifteen (15) days prior to the
consummation of a Fundamental Change, a Stock Sale or a Liquidation.
(e) Notwithstanding subsections (a), (b), (c) or (d) above,
if the Holder (or a Permitted Transferee, if applicable) violates SECTIONS 6,
7 or 8 hereof, the Stock Option shall, at the option of the Board, terminate
and cease to be exercisable as of and after the time of such violation.
3.6 CERTAIN RULES For purposes of this Agreement, (a) employment
of the Holder by any Subsidiary shall be deemed employment by the Company,
(b) a transfer of the Holder's employment, without any intervening period,
from the Company to any Subsidiary or vice versa, from such Subsidiary to
another, shall not be deemed a termination of the Holder's employment and (c)
the term "employment" as used in this Agreement shall also be deemed to
include the Company's engagement of the Holder as a director, officer,
consultant, independent contractor or otherwise. Nothing contained in the
Plan or this Agreement shall confer upon the Holder any right with respect to
the continuation of the Holder's employment by, or relationship with, the
Company or any Subsidiary or interfere in any way with the right of the
Company or any Subsidiary at any time to terminate such employment or
relationship or to increase or decrease the compensation of the Holder.
3.7 ANTIDILUTION PROVISIONS. In the event of (a) any stock
dividend, stock split, combination, or exchange of shares of Series B Common
Stock or any recapitalization or similar change in capitalization affecting
shares of Series B Common Stock or (b) the closing of an IPO and the related
conversion of Series B Common Stock into Series C Common Stock, the number and
kind of shares that are subject to the Stock Option and the Exercise Price may
be proportionately and appropriately adjusted, without any change in the
aggregate Exercise Price to be paid for all Option Shares upon full exercise of
the Stock Option. Any adjustments under this SECTION 3.7 will
B-6
be made by the Board, whose determination as to what adjustments, if any,
will be made and the extent thereof will be final, binding and conclusive.
4. REPRESENTATIONS OF THE HOLDER. The Holder represents and warrants
to the Company as follows:
(a) the Holder will acquire the Option Shares, to the extent that
the Stock Option becomes exercisable pursuant to the terms hereof and the
Holder exercises the Stock Option, in whole or in part, solely for investment
for the Holder's own account and not with a view to the resale or
distribution of all or any part thereof;
(b) the Holder understands that (i) the Holder may purchase the
Option Shares only to the extent that the Stock Option becomes exercisable
pursuant to SECTION 3.3 hereof, (ii) it is possible that the Stock Option
will not become exercisable for any of the Option Shares, (iii) none of the
Company or any Subsidiary is obligated to continue the Holder's employment
other than pursuant to the terms and conditions of the Employment Agreement,
and (iv) none of the Option Shares have been registered under the Securities
Act of 1933, as amended (the "SECURITIES ACT"), and the Holder may have to
hold the Option Shares, to the extent they become Purchased Option Shares
hereunder, for an indefinite period unless the offer and sale thereof is
subsequently registered under the Securities Act (and the Company is under no
obligation to so register any Purchased Option Shares) or an exemption is
available therefrom; and
(c) the Holder's permanent residence is at the address specified
on the signature page hereof.
5. REPRESENTATIONS OF THE COMPANY. The Company represents and
warrants to the Holder that (a) the Company is a corporation validly
existing, and in good standing under the laws of the State of Delaware, (b)
this Agreement has been duly authorized, executed, and delivered by the
Company and has received all necessary approvals from the Company's existing
shareholders and the Board, (c) the Company has the requisite power and
authority to issue the Option Shares and to perform its obligations under
this Agreement, and (d) the execution, delivery, and performance of this
Agreement by the Company do not and will not violate or result in a default
under the Company's certificate of incorporation or by-laws or any material
agreement or instrument to which the Company is a party or by which it or any
of its property is bound.
B-7
6. RESTRICTIVE COVENANTS.
6.1 NON-COMPETE. During the Restricted Period, the Holder shall
not, in the United States or any other place where the Company, New Institute
or any Subsidiary, whether such Subsidiary is now existing or hereafter
formed, conducts the Business or any part thereof, directly or indirectly,
(i) engage in the Business (other than on behalf of and at the written
request of the Company and or any Subsidiary); (ii) enter the employ of, or
render any services to, any Person (other than the Company or any Subsidiary)
engaged in the Business; or (iii) become interested in any such person in any
capacity, including, without limitation, as an individual, partner, member,
manager, shareholder, creditor, officer, director, principal, agent or
trustee; PROVIDED, HOWEVER, that, the foregoing notwithstanding, the Holder
may own, directly or indirectly, solely as an investment, securities of any
publicly-traded person if the Holder is not a controlling person of, or a
member of a group which controls, such person and the Holder does not,
directly or indirectly, own 5 % or more of any class of securities of such
person. Nothing contained herein shall prevent Holder from being employed
by, teaching at or providing consulting services (individually and not as an
employee, partner or owner of a professional consulting company) to, any
entity so long as (i) Holder does not thereby or in connection therewith
violate the terms of subsections 6.2, 6.3, 6.4 or 6.5 hereof and (ii) either
(A) such entity is not providing or making available services or products
similar to or competitive with services or products included in the Business
to any third party in exchange for payment in any form or (B) such
employment, teaching or consulting services are not competitive with services
included in the Business. Without limiting the foregoing, nothing contained
herein shall prevent Holder from participating in any symposiums, conferences
or similar forums (collectively, "CONFERENCES") pertaining to the Business so
long as (i) Holder does not thereby or in connection therewith violate the
terms of subsections 6.2, 6.3, 6.4 or 6.5 hereof, (ii) Holder's affiliation
with the Company and New Institute is disclosed in any program literature or
materials relating to the forum in a manner reasonably satisfactory to the
Company, (iii) the Conferences are not sponsored or promoted by any entity
that is a competitor of the Company or New Institute, (iv) such participation
does not materially interfere with Holder's ability to perform his duties
pursuant to the this Agreement and (v) Holder's compensation for such
participation is limited to the reimbursement of his incidental expenses and
an honorarium or fee that is reasonable and customary for events of such kind.
B-8
6.2 CONFIDENTIAL INFORMATION. At all times during and after the
Restricted Period, the Holder shall keep secret and retain in strictest
confidence, and shall not use for the benefit of himself or others, or
disclose, except as may be required in connection with any judicial or
administrative proceeding or inquiry, to any person or entity, other than an
officer or director of the Company (or of any Subsidiary) or a person or
entity to whom disclosure is reasonably necessary or appropriate in
connection with the performance by the Holder of the Holder's duties as an
employee or director of the Company (or of New Institute or any Subsidiary)
any Confidential Information (as hereinafter defined) obtained by the Holder
while in the employ of, or providing services for, the Company (or New
Institute or any Subsidiary thereof) or any predecessor of any such entity
with respect to the Business or its assets. For purposes of this Agreement,
"CONFIDENTIAL INFORMATION" includes, without limitation, information relating
to the properties, accounts, books, records, suppliers, intellectual
property, trade secrets, contracts, business relationship and service models,
pricing policies, methods, algorithms and relation information, operational
methods, marketing plans or strategies, business acquisition plans and new
personnel acquisition plans of the Company (or of New Institute or any
Subsidiary) or any predecessor of any such entity; PROVIDED, HOWEVER, that
Confidential Information shall not include any information known or available
to the public (other than as a result of unauthorized disclosure by the
Holder or any of his agents or representatives).
6.3 PROPERTY OF THE BUSINESS. All memoranda, notes, lists,
records and other documents or papers (and all copies thereof), including
such items stored in computer memories, or microfiche or by any other means,
made or compiled by or on behalf of the Holder, or made available to the
Holder relating to the Business, are and shall be the Company's property and
shall be delivered to the Company promptly upon the termination of Employment
Agreement or at any other time on request.
6.4 EMPLOYEES OF THE BUSINESS. During the Restricted Period, the
Holder shall not, directly or indirectly, hire or solicit (other than on
behalf of the Company and in accordance with this Agreement) any employee of
the Company, New Institute or any Subsidiary (or any person who was an
employee thereof on or after the date hereof) or encourage any such employee
to leave such employment.
B-9
6.5 CONSULTANTS OF THE BUSINESS. During the Restricted Period,
the Holder shall not, directly or indirectly, hire or solicit (other than on
behalf of the Company) any consultant then under contract with or otherwise
engaged by the Company, New Institute or any Subsidiary unless the engagement
is unrelated to the Business or encourage such consultant to terminate such
relationship.
6.6 RIGHTS AND REMEDIES UPON BREACH. If the Holder breaches, or
threatens to commit a breach of, any of the provisions of this SECTION 6 (the
"RESTRICTIVE COVENANTS"), the Company shall have the following rights and
remedies, each of which shall be independent of the others and severally
enforceable, and each of which is in addition to, and not in lieu of, any
other rights and remedies available to the Company under law or in equity:
6.6.1 SPECIFIC PERFORMANCE. The right and remedy to
have the Restrictive Covenants specifically enforced by any
court of competent jurisdiction, it being agreed that any
breach or threatened breach of the Restrictive Covenants would
cause irreparable injury to the Company and that money damages
would not provide an adequate remedy to the Company.
6.6.2 ACCOUNTING. The right and remedy to require the
Holder to account for and pay over to the Company, all
compensation, monies, accruals, increments and other benefits
derived or received by the Holder as the result of any
transaction constituting a breach of the Restrictive Covenants.
6.6.3 DAMAGES. The right and remedy to require the
Holder to reimburse the Company for all reasonable
out-of-pocket costs and expenses (including, but not limited
to, attorneys' and accountants' fees and disbursements)
incurred by the Company in connection with, or with respect to,
such breach or breaches. In the event a court of competent
jurisdiction ultimately determines that the Holder has not
breached the Restrictive Covenants, the Company will reimburse
the Holder for all reasonable out-of-pocket costs and expenses
(including, but not limited to, reasonable Attorneys' and
accountants' fees and disbursements) incurred by the Holder
B-10
in connection with, or with respect to, the defense of any such
alleged breach or breaches.
6.7 SEVERABILITY OF COVENANTS. The Holder acknowledges and
agrees that the Restrictive Covenants are reasonable and valid in duration
and geographical scope and in all other respects. If any court determines
that any of the Restrictive Covenants, or any part thereof, is invalid or
unenforceable, the remainder of the Restrictive Covenants shall not be
affected thereby and shall be given full effect without regard to the invalid
portions.
6.8 REFORMATION. If any court determines that any of the
Restrictive Covenants, or any part thereof, is unenforceable because of the
duration or geographical scope of such provisions, such court shall have the
power to reform the duration or scope of such provision, as the case may be,
and such provision shall then be enforceable as reformed.
6.9 TERMINATION OF RESTRICTIVE COVENANTS. The provisions of this
SECTION 6 shall survive (a) the exercise or expiration of the Stock Option
and (b) the termination of the Employment Agreement.
7. RESTRICTIONS ON DISPOSITION OF PURCHASED OPTION SHARES.
7.1 DISPOSITION OF PURCHASED-OPTION SHARES. Except (a) in
connection with a Fundamental Change or a Stock Sale or (b) in compliance
with SECTION 7.2 of this Agreement or as permitted by SECTION 7.3 of this
Agreement, the Holder will not transfer, sell, convey, exchange or otherwise
dispose of (herein referred to as a "disposition" or "to dispose of") any
Purchased Option Shares.
7.2 REPURCHASE OPTION.(a) In the event the Employment Agreement
is terminated for any reason, the Purchased Option Shares (including any
Purchased Option Shares then held by any Permitted Transferee) will be
subject to repurchase pursuant to the terms and conditions set forth in this
SECTION 7.2 (the "REPURCHASE OPTION").
(b) If the Employment Agreement is terminated by the Company
for "Cause" (as defined in the Employment Agreement), the purchase price per
share for each Purchased Option Share (the "REPURCHASE PRICE") will be equal
to the lesser of (A) the Original Cost and (B) the Market Value.
(c) If the Employment Agreement is terminated for any reason
other than for Cause, the Repurchase Price will be equal to the Market Value.
B-11
(d) For purposes of this Agreement, "MARKET VALUE" means,
with respect to each Purchase Option Share, such Purchase Option Share's fair
value determined pursuant to this SECTION 7.2. Within thirty (30) days after
the Termination Date, the Board shall determine the fair value of each
Purchased Option Share and notify the Holder thereof (the "VALUATION
NOTICE"). If the Holder does not notify the Company, in writing, of the
Holder's objection to such fair value within fifteen (15) days of the date of
the Valuation Notice, then such fair value, as determined by the Board, shall
be the Market Value. If the Holder notifies the Company, in writing, of the
Holder's objection to such fair value determination within fifteen (15) days
of the date of the Valuation Notice, then the Company and the Holder will
each select an independent auditor of national standing (an "INDEPENDENT
AUDITOR") within ten (10) days after the Company's receipt of such written
objection and such Independent Auditors will select a third Independent
Auditor within ten (10) days after their selection, which third Independent
Auditor must agree to determine the fair value of each Purchased Option
Share. The fair value as determined by the third Independent Auditor shall
be the Market Value. The Holder will pay one hundred percent (100%) of the
fees and expenses for the Independent Auditors if the fair value, as
ultimately determined by the third Independent Auditor, is equal to, or
greater than, ninety percent (90%) of the fair value determined by the Board;
otherwise, the Company will pay one hundred percent (100%) of such fees and
expenses. The Market Value of each Purchased Option Share, as ultimately
determined pursuant to this SECTION 7.2, shall be conclusive and binding on
the parties hereto.
(e) The Company may elect to purchase all or any portion of
the Purchased Option Shares subject to repurchase by delivering written
notice (the "REPURCHASE NOTICE") to the Holder within ninety (90) days after
the later of (i) the Termination Date and (ii) the date on which the Holder
purchased the Purchased Option Shares. The Repurchase Notice will set forth
the number of Purchased Option Shares to be acquired from the Holder and the
time and place for the closing of the transaction, which will be within
thirty (30) days after the date of the Repurchase Notice. The Company will
pay for the Purchased Option Shares to be purchased pursuant to the
Repurchase Option by delivery of a check or wire transfer in the aggregate
amount of the total purchase price. The Company will be entitled to receive
customary representations and warranties from the Holder regarding ownership
of the Purchased Option Shares.
B-12
(f) In the event the Company does not deliver the Repurchase
Notice to the Holder in accordance with SECTION 7.2(e), the provisions of
this SECTION 7.2 shall terminate and be of no further force or effect.
7.3 PERMITTED TRANSFERS. The Holder may transfer Purchased
Option Shares (a) in connection with a Fundamental Change or a Stock Sale or
(b) to any Permitted Transferee who agrees in a writing delivered to the
Company (i) that, upon termination of the Employment Agreement, such
Purchased Option Shares shall be subject to, and such Permitted Transferee
shall be bound by, the Repurchase Option in the same manner as the Holder and
(ii) to otherwise be bound by the terms of this Agreement in the same manner
as the Holder as if an original party hereto. For purposes of this
Agreement, "PERMITTED TRANSFEREES" means the spouse or lineal descendants of
the Holder; any trust for the benefit of the Holder or the benefit of the
spouse or lineal descendants of the Holder; any corporation, limited
liability company, or partnership in which the Holder, the spouse and the
lineal descendants of the Holder are the direct and beneficial owners of all
of the equity interests (provided the Holder, spouse and lineal descendants
agree in writing to remain the direct and beneficial owners of all such
equity interests); and the personal representative of the Holder upon the
Holder's death for purposes of administration of the Holder's estate or upon
the Holder's incompetency for purposes of the protection and management of
the assets of the Holder.
7.4 PLEDGES. The Holder will not pledge or otherwise grant a
security interest in any Purchased Option Shares without the Company's prior
written consent.
7.5 LEGENDS. (a) The Company will cause each certificate or other
instrument representing Purchased Option Shares to be stamped or otherwise
imprinted, throughout the term of the applicability of this SECTION 7, with a
legend in substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
CERTAIN RESTRICTIONS ON TRANSFER AND REPURCHASE RIGHTS SET FORTH IN
A CERTAIN STOCK OPTION AGREEMENT OF COLLEGIS, INC. (THE "COMPANY")
DATED AS OF NOVEMBER 1, 1997, A COPY OF WHICH IS AVAILABLE UPON
REQUEST AT THE PRINCIPAL OFFICE OF THE COMPANY."
(b) Until (i) the Purchased Option Shares represented by such
certificate are effectively registered under the Securities Act (and the
Company, absent an express written
B-13
agreement to the contrary, is under no obligation at any time to so register
any of such Purchased Option Shares), or (ii) the holder of such securities
delivers to the Company a written opinion of counsel, which counsel and
opinion are reasonably acceptable to the Company, to the effect that such
legend is no longer necessary, the Company shall be entitled to cause each
certificate representing Purchased Option Shares to be stamped or otherwise
imprinted with a legend in substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND THUS
MAY NOT BE TRANSFERRED UNLESS SO REGISTERED OR UNLESS AN EXEMPTION
FROM REGISTRATION IS AVAILABLE."'
7.6 TERMINATION OF RESTRICTIONS ON TRANSFERS OF PURCHASED OPTION
SHARES. The provisions of this SECTION 7 shall survive (a) the exercise or
expiration of the Stock Option and (b) the termination of the Employment
Agreement; PROVIDED, HOWEVER, that the provisions of SECTION 7.2 shall
terminate in accordance with their terms and all of the provisions of this
SECTION 7 shall terminate and be of no further force or effect immediately
upon the consummation of an IPO, a Stock Sale or a Fundamental Change.
8. MISCELLANEOUS.
8.1 SUCCESSORS AND ASSIGNS; BINDING AGREEMENT.
Subject to the provisions of the Plan and SECTION 8.2 hereof, this
Agreement shall inure to the benefit of, be enforceable by and binding upon,
the respective successors and assigns of the Company and the Holder and their
respective successors, assigns, trustees, custodians, personal or legal
representatives, executors, administrators, heirs, distributees, devisees and
legatees.
8.2 LIMITATION ON ALIENATION. Except as expressly set forth
herein, the Holder shall not dispose of the Stock Option and rights and
privileges set forth herein, the Option Shares and the Purchased Option
Shares without the prior written consent of the Company.
8.3 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the internal law of, and not the law of
conflicts of, the State of Delaware applicable to contracts entered into and
to be wholly performed in Delaware.
8.4 WAIVERS. The waiver by either party of any right hereunder or
of any failure to perform or breach by the other party shall not be deemed a
waiver of any other right hereunder
B-14
or of any other failure or breach by the other party, whether of the same or
a similar nature or otherwise. No waiver shall be deemed to have occurred
unless set forth in a writing executed by or on behalf of the waiving party.
No such written waiver shall be deemed a continuing waiver unless
specifically stated therein, and each such waiver shall operate only as to
the specific term or condition waived and shall not constitute a waiver of
such term or condition for the future or as to any act other than that
specifically waived.
8.5 NOTICES. All notices and communications that are required or
permitted to be given hereunder shall be in writing and shall be deemed to have
been duly given when delivered personally or upon dispatch by any form of mail
or private express carrier providing for receipted delivery, postage or charges
prepaid, as follows:
If to the Company, to:
COLLEGIS, Inc.
0000 Xxxxxxxx Xxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxx 00000
Attention: Mr. Xxxxxx Xxxxx
If to the Holder, to the address set forth on the signature page hereto; or
to such other address as may be specified in a confirming notice given by one
party to the other
8.6 SEVERABILITY. If for any reason any term or provision of this
Agreement is held to be invalid or unenforceable, all other valid terms and
provisions hereof shall remain in full force and effect, and all of the terms
and provisions of this Agreement shall be deemed to be severable in nature.
8.7 COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
8.8 AMENDMENT. This Agreement may be amended or canceled by mutual
agreement of the parties in writing without the consent of any other person or
entity and, so long as the Holder lives, no person or entity, other than the
parties, shall have any rights under or interest in this Agreement or the
subject matter hereof.
8.9 ENTIRE AGREEMENT. This Agreement and the Plan constitute the
entire agreement between the parties, and supersedes all prior oral or written
understandings between the parties, relating to the Option Shares and the
Purchased Option Shares. The Holder acknowledges
B-15
that he has received a copy of the Plan and in the event that any provision
of this Agreement is inconsistent with any provision of the Plan, the
provisions of the Plan shall be controlling.
8.10 EXHIBITS AND SCHEDULES. All exhibits and schedules hereto are
an integral part of this Agreement.
8.11 NO ATTACHMENT. Except as required by law, no right to receive
Option Shares under this Agreement shall be subject to anticipation,
commutation, alienation, sale, assignment, encumbrance, charge, pledge, or
hypothecation or to execution, attachment, levy, or similar process or
assignment by operation of law, and any attempt, voluntary or involuntary, to
effect any such action shall be null, void and of no effect.
8.12 NO RIGHTS AS SHAREHOLDER. The Holder will not have any of the
rights of a Shareholder with respect to the Option Shares except to the extent
that such Option Shares are actually issued pursuant to exercise of the Stock
Option. The existence of the Stock Option shall not affect in any way the right
or power of the Company or its shareholders to make or authorize any or all
adjustments, recapitalizations, reorganizations, or other changes to the
Company's capital structure or its business, or to effect any sale, merger or
consolidation of the Company, nor create any preemptive right on behalf of the
holder of the Stock Option to acquire any capital stock of the Company or
securities or indebtedness convertible into or exchangeable for capital stock of
the Company.
[signature page follows]
B-16
IN WITNESS WHEREOF, the parties hereto have duly executed this
Stock Option Agreement as of the date first above written.
COLLEGIS, INC.
By: /s/ Xxxxxx X. Xxxxxx
----------------------------
Name: Xxxxxx X. Xxxxxx
--------------------------
Title: Chief Financial Officer
-------------------------
/s/ Xxxxxxx X. Xxxxxx
-------------------------------
Xx. Xxxxxxx X. Xxxxxx
Address:
X.X. Xxx 0000
Xxxxxx Xxxxx, XX 00000
B-17
