Exhibit 2.2
STOCK PURCHASE AGREEMENT
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This Stock Purchase Agreement (the "Agreement") is entered into as of the
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7th day of August, 1998 by and among Linkage, Inc., a Massachusetts corporation
with its principal office at Xxx Xxxxxx Xxxx, Xxxxxxxxx, Xxxxxxxxxxxxx 00000
(the "Buyer"), High, Xxxxx & Xxxxxxx, Inc., a Texas corporation doing business
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as "High Technologies" with its principal office at 0000 Xxxxxx Xxxxxx Xxxx,
Xxxxx 000, Xxxxxx, Xxxxx 00000 (the "Company"), and Xxxxxxx X. High, Xxxxxxx X.
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High, Xxxxx X. Xxxxx and Xxxxxxx X. Xxxxxxx (collectively, the "Stockholders").
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Preliminary Statement
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1. The Stockholders collectively own all of the outstanding shares (the
"Shares") of the capital stock of the Company as set forth on Schedule I hereto.
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2. The Buyer desires to purchase, and the Stockholders desire to sell,
the Shares at the Closing (as defined below), for the consideration set forth
below, subject to the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the mutual promises hereinafter set
forth and other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereby agree as follows:
1. Purchase and Sale of the Shares
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1.1 Purchase of the Shares from the Stockholders. Subject to and
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upon the terms and conditions of this Agreement, at the closing of the
transactions contemplated by this Agreement (the "Closing"), the Stockholders
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shall sell, transfer, convey, assign and deliver to the Buyer, and the Buyer
shall purchase, acquire and accept from the Stockholders, all the Shares owned
by the Stockholders. At the Closing, each Stockholder shall deliver to the
Buyer certificates evidencing the Shares owned by such Stockholder duly endorsed
in blank or with stock powers duly executed by the Stockholder.
1.2 Further Assurances. At any time and from time to time after the
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Closing, at the Buyer's request and without further consideration, each of the
Stockholders shall promptly execute and deliver such instruments of sale,
transfer, conveyance, assignment and confirmation, and take all such other
action or actions as the Buyer may reasonably request, more effectively to
transfer, convey and assign to the Buyer, and to confirm the Buyer's title to,
all of the Shares, to put the Buyer in actual
possession and operating control of the assets, properties and business of the
Company, and to carry out the purpose and intent of this Agreement.
1.3 Consideration for the Shares
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(a) The aggregate purchase price (the "Purchase Price") to be paid
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and delivered by the Buyer to the Stockholders for the Shares shall consist of
(i) $500,000 in cash (the "Initial Cash Payment"), payable by cashiers or
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certified check, (ii) the further consideration determined in accordance with
the provisions of Subsection 1.3(b) (the "Further Consideration"), and (iii) the
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contingent consideration, if any, payable in accordance with the provisions of
Subsection 1.3(c) (the "Contingent Consideration"). The Purchase Price shall be
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subject to adjustment following the Closing as set forth in Subsection 1.4. The
Initial Cash Payment shall be paid and delivered by the Buyer on the date of the
Closing (the "Closing Date") to the Stockholders in the respective proportions
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set forth opposite each Stockholder's name on Schedule I hereto (the
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"Stockholder Proportions").
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(b) On or before the date that is 60 days after the closing of the
Buyer's initial underwritten public offering (the "IPO") of shares of Common
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Stock, no par value per share (the "Buyer Common Stock"), of the Buyer pursuant
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to an effective registration statement under the Securities Act of 1933, as
amended (the "Securities Act"), the Buyer shall issue to the Stockholders in the
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Stockholder Proportions an aggregate number of shares of Buyer Common Stock that
is equal to the quotient obtained by dividing (x) $250,000 by (y) the Per Share
Price to the Public listed on the front cover of the Final Prospectus for the
IPO. Notwithstanding the foregoing, and unless otherwise agreed to in writing
by the parties hereto, in the event that the IPO does not close on or before the
second anniversary of the Closing Date, the Buyer shall pay and deliver to the
Stockholders in the Stockholder Proportions an aggregate of $250,000 in cash,
payable by cashiers or certified check, in lieu of any shares of Buyer Common
Stock pursuant to this Subsection 1.3(b).
(c) The Stockholders shall be entitled to receive up to three payments
of Contingent Consideration (the First Contingent Payment, the Second Contingent
Payment and the Third Contingent Payment) which shall be calculated as follows:
(i) In the event that the Qualifying EBIT (as defined below) for the
period from and including July 1, 1998 through and including December 31, 1998
is greater than or equal to $75,000, then the Buyer shall pay and deliver to the
Stockholders in the Stockholder Proportions within 15 days of the Buyer's
receipt of the final audit report with respect to such period from the Buyer's
Auditors (as defined below), but in any event no later than May 15, 1999, an
aggregate of $35,000 in cash, payable by cashiers or certified check (the "First
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Contingent Payment"). The Stockholders shall not be entitled to any First
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Contingent Payment if the Qualifying EBIT
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for the period from and including July 1, 1998 through and including December
31, 1998 is less than $75,000.
(ii) In the event that the Qualifying EBIT for the period from and
including January 1, 1999 through and including December 31, 1999 is greater
than or equal to $200,000, then the Buyer shall pay and deliver to the
Stockholders in the Stockholder Proportions within 15 days of the Buyer's
receipt of the final audit report with respect to such period from the Buyer's
Auditors, but in any event no later than May 15, 2000, an aggregate of $95,000
in cash, payable by cashiers or certified check (the "Second Contingent
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Payment"). The Stockholders shall not be entitled to any Second Contingent
Payment if the Qualifying EBIT for the period from and including January 1, 1999
through and including December 31, 1999 is less than $200,000.
(iii) In the event that the Qualifying EBIT for the period from and
including January 1, 2000 through and including December 31, 2000 is greater
than or equal to $260,000, then the Buyer shall pay and deliver to the
Stockholders in the Stockholder Proportions within 15 days of the Buyer's
receipt of the final audit report with respect to such period from the Buyer's
Auditors, but in any event no later than May 15, 2001, an aggregate of $120,000
in cash, payable by cashiers or certified check (the "Third Contingent
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Payment"). The Stockholders shall not be entitled to any Third Contingent
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Payment if the Qualifying EBIT for the period from and including January 1, 2000
through and including December 31, 2000 is less than $260,000.
For the purposes of this Subsection 1.3(c), "Qualifying EBIT" shall mean
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all earnings before interest and taxes of the Company, as determined by the
Buyer's Auditors (as defined below) in accordance with generally accepted
accounting principles ("GAAP") and as set forth below. For each of the fiscal
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years ending December 31, 1998, 1999 and 2000, the Buyer shall prepare a
separate income statement for the Company. Each such income statement shall
include all revenues earned by the Company during the period covered thereby,
including but not limited to revenues directly related to courseware, manuals,
license agreement fees, and education and consulting services provided by the
Company, and all expenses directly related to the Company, provided that general
overhead, administrative costs and amortization shall not be included. In the
event that the Buyer sells all or substantially all of the business assets of
the Company prior to January 1, 2001, and the purchaser of such assets does not
agree in connection with such acquisition to assume all of the obligations of
the Buyer pursuant to this Section 1.3, then all Qualifying EBIT calculations
for the remaining term through December 31, 2000 shall be deemed satisfied in
full and the Stockholders shall be entitled to receive the Contingent
Consideration accordingly.
1.4 Net Worth Adjustment. The Purchase Price shall be subject to
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adjustment after the Closing Date as follows:
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(a) Not later than 90 days after the Closing Date, the Buyer (i) shall
prepare a balance sheet of the Company as of the Closing Date (as corrected
pursuant to this Subsection 1.4, the "Closing Balance Sheet"), (ii) may, at its
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option, cause Deloitte & Touche LLP, the Buyer's independent public accountants
(the "Buyer's Auditors"), to conduct an audit of the Closing Balance Sheet and
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deliver an audit report without qualification thereon, and (iii) shall deliver
the Closing Balance Sheet to the Stockholders' Representative (as defined
below). The Closing Balance Sheet shall be prepared in accordance with GAAP,
applied consistently with the Company's past practices and methods (to the
extent applicable under GAAP), without any adjustments applicable solely as a
result of the acquisition of the Shares by the Buyer on the Closing Date. The
Stockholders shall work in good faith and cooperate with the Buyer and, if
applicable, the Buyer's Auditors in the preparation and, if applicable, audit of
the Closing Balance Sheet and the resolution of any dispute in connection
therewith pursuant to paragraph (c) below.
(b) The Stockholders' Representative and one firm of independent
certified public accountants acting on behalf of the Stockholders and the
Stockholders' Representative (the "Stockholders' Advisors") shall have the right
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to review the work papers of the Buyer and, if applicable, the Buyer's Auditors
utilized in auditing the Closing Balance Sheet, and shall have full access to
the books, records, properties and personnel of the Company (and Buyer's
personnel participating in any audit) for the sole purpose of verifying the
accuracy and fairness of the presentation of the Closing Balance Sheet.
(c) The values or amounts for each item reflected on the Closing
Balance Sheet shall be binding upon the Stockholders and the Stockholders'
Representative, unless the Stockholders' Representative gives written notice
within 30 calendar days after receipt of the Closing Balance Sheet of
disagreement with any of the values or amounts shown on the Closing Balance
Sheet, specifying, as to each such item in reasonable detail, the nature and
extent of such disagreement (the "Dispute Notice"). If the Buyer and the
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Stockholders' Representative are unable to resolve any such disagreement within
30 days after the receipt by the Buyer of the Dispute Notice, the disagreement
shall be submitted to arbitration in accordance with the provisions of
Subsection 7.3 hereof. If as a result of the resolution of any disputes by
agreement pursuant to this Subsection 1.4 or by arbitration pursuant to
Subsection 7.3, any amount shown on the Closing Balance Sheet is determined to
be erroneous, such erroneous amount shall be deleted from the Closing Balance
Sheet and the correct amount shall be inserted in lieu thereof. The Closing
Balance Sheet, if and as so corrected, shall constitute the Closing Balance
Sheet for purposes of this Agreement.
(d) The Buyer shall pay the fees and disbursements of the Buyer's
Auditors. The fees and disbursements of the Stockholders' Advisors incurred in
the review of the Closing Balance Sheet shall be paid by the Stockholders in the
Stockholder Proportions. The Buyer shall under no circumstances be liable for
any fees or
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disbursements of the Stockholders' Advisors nor shall the Stockholders be
responsible for the fees or disbursements of the Buyer's Auditors.
(e) Immediately upon the expiration of the 30 calendar-day period
following the Stockholders' Representative's receipt of the Closing Balance
Sheet, if no Dispute Notice is given by the end of such period, or immediately
upon the resolution of disputes, if any, pursuant to this Subsection 1.4, the
Purchase Price shall be adjusted as follows, based upon the Closing Balance
Sheet (as so adjusted, the "Adjusted Purchase Price"):
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(i) If the net worth (defined as depreciated book value of all assets,
including patents, trademarks and other similar intangible items less total
liabilities) of the Company as shown on the Closing Balance Sheet is less than
One Hundred Thousand dollars ($100,000), the deficiency shall be promptly paid
by cashiers or certified check by the Stockholders to the Buyer, with such
payment to be effected on a pro rata basis according to the Stockholder
Proportions. The Buyer shall have the right, in its sole discretion, to set off
any or all of such deficiency against the Further Consideration and/or any
Contingent Consideration payable pursuant to this Agreement.
(ii) If the net worth of the Company as shown on the Closing Balance
Sheet is greater than One Hundred Ten Thousand dollars ($110,000), the excess
shall be promptly paid by cashiers or certified check by the Buyer to the
Stockholders, with such payment to be effected on a pro rata basis according to
the Stockholder Proportions.
(iii) If the net worth of the Company as shown on the Closing Balance
Sheet is equal to or greater than One Hundred Thousand dollars ($100,000) but
less than or equal to One Hundred Ten Thousand dollars ($110,000), there shall
be no adjustment to the Purchase Price pursuant to this Section 1.4.
1.5 Stockholders' Representative
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(a) In order to administer efficiently (i) the determination of the
Adjusted Purchase Price, (ii) the waiver of any condition to the obligations of
the Stockholders to consummate the transactions contemplated hereby, and (iii)
the defense and/or settlement of any claims for which the Stockholders may be
required to indemnify the Buyer or the Company pursuant to Section 5 hereof, the
Stockholders hereby designate Xxxxxxx X. High as their representative (the
"Stockholders' Representative").
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(b) The Stockholders hereby authorize the Stockholders' Representative
(i) to make all decisions and take all action relating to the determination of
the Adjusted Purchase Price, (ii) to make all decisions and take all action
necessary
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in connection with the waiver of any condition to the obligations of the
Stockholders to consummate the transactions contemplated hereby, or the defense
and/or settlement of any claims for which the Stockholders may be required to
indemnify the Buyer or the Company pursuant to Section 5 hereof, (iii) to give
and receive all notices required to be given under this Agreement, and (iv) to
take any and all additional action as is contemplated to be taken by or on
behalf of the Stockholders by the terms of this Agreement.
(c) In the event that the Stockholders' Representative dies, becomes
unable to perform his responsibilities hereunder or resigns from such position,
the Stockholders holding, prior to the Closing, a majority of the Shares set
forth on Schedule I attached hereto shall select another representative to fill
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such vacancy and such substituted representative shall be deemed to be the
Stockholders' Representative for all purposes of this Agreement.
(d) All decisions and actions by the Stockholders' Representative,
including, without limitation, any agreement between the Stockholders'
Representative and the Buyer relating to the determination of the Adjusted
Purchase Price, or the defense or settlement of any claims for which the
Stockholders may be required to indemnify the Buyer and/or the Company pursuant
to Section 5 hereof, shall be binding upon all of the Stockholders, and no
Stockholder shall have the right to object, dissent, protest or otherwise
contest the same.
(e) By their execution of this Agreement, the Stockholders agree
that:
(i) the Buyer shall be able to rely conclusively on the instructions
and decisions of the Stockholders' Representative as to the determination of the
Adjusted Purchase Price, the settlement of any claims for indemnification by the
Buyer or the Company pursuant to Section 5 hereof or any other actions required
to be taken by the Stockholders' Representative hereunder, and no party
hereunder shall have any cause of action against the Buyer for any action taken
by the Buyer in reliance upon the instructions or decisions of the Stockholders'
Representative;
(ii) all actions, decisions and instructions of the Stockholders'
Representative shall be conclusive and binding upon all of the Stockholders and
no Stockholder shall have any cause of action against the Stockholders'
Representative for any action taken, decision made or instruction given by the
Stockholders' Representative under this Agreement, except for fraud or willful
breach of this Agreement by the Stockholders' Representative;
(iii) the provisions of this Subsection 1.5 are independent and
severable, are irrevocable and coupled with an interest and shall be enforceable
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notwithstanding any rights or remedies that any Stockholder may have in
connection with the transactions contemplated by this Agreement;
(iv) remedies available at law for any breach of the provisions of
this Subsection 1.5 are inadequate; therefore, the Buyer, the Company and the
Stockholders' Representative shall be entitled to temporary and permanent
injunctive relief without the necessity of proving damages if either the Buyer,
the Company or the Stockholders' Representative brings an action to enforce the
provisions of this Subsection 1.5; and
(v) the provisions of this Subsection 1.5 shall be binding upon the
executors, heirs, legal representatives and successors of each Stockholder, and
any references in this Agreement to a Stockholder or the Stockholders shall mean
and include the successors to the Stockholders' rights hereunder, whether
pursuant to testamentary disposition, the laws of descent and distribution or
otherwise.
(f) All fees and expenses incurred by the Stockholders' Representative
in connection with this Agreement shall be paid by the Stockholders on a pro
rata basis according to the Stockholder Proportions.
1.6 Closing. The Closing shall take place at the offices of Xxxx and
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Xxxx LLP, 00 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000 at 9:00 a.m., Eastern
Time, on the date of this Agreement or at such other place, time or date as may
be mutually agreed upon in writing by the parties. The transfer of the Shares
by the Stockholders to the Buyer shall be deemed to occur at 9:00 a.m., Eastern
Time, on the Closing Date.
2. Representations of the Stockholders
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Each of the Stockholders severally represents and warrants to the
Buyer as follows:
2.1 Ownership of Stock, Authority.
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(a) He or she has good and marketable title to the Shares which are to
be transferred to the Buyer by such Stockholder pursuant hereto, free and clear
of any and all covenants, conditions, restrictions, voting trust arrangements,
liens, charges, encumbrances, options, voting trusts, voting agreements, and
adverse claims or rights whatsoever ("Stock Claims"). Schedule I attached
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hereto sets forth a true and correct description of all Shares owned by such
Stockholder.
(b) He or she has all requisite right, power and authority to execute
and deliver this Agreement, to perform his or her obligations hereunder and to
transfer, convey and sell to the Buyer at the Closing the Shares to be sold by
such
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Stockholder hereunder and, upon consummation of the purchase contemplated
hereby, the Buyer will acquire good and marketable title to such Shares, free
and clear of all Stock Claims.
(c) The execution, delivery and performance of this Agreement by him
or her and the transfer, conveyance and sale of the Shares to be sold by such
Stockholder to the Buyer pursuant to the terms hereof shall not conflict with,
result in a breach of or constitute a default under any agreement to which he or
she is a party or by which it is bound or any judgment, order, writ, injunction
or decree of any court or other governmental body.
(d) No broker or finder has acted for him or her in connection with
this Agreement or the transactions contemplated hereby, and no broker or finder
is entitled to any brokerage or finder's fee or other commissions in respect of
such transactions based upon agreements, arrangements or understandings made by
or on behalf of him or her.
(e) The execution, delivery and performance of this Agreement by him
or her and the transfer, conveyance and sale of the Shares to be sold by such
Stockholder to the Buyer pursuant to the terms hereof are each actions of his or
her own free will and are not products of duress of any kind.
2.2 Investment Representations. To the extent that shares of Buyer
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Common Stock are issued to the Stockholders pursuant to Subsection 1.3(b) (the
"Buyer Shares"):
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(a) He or she will be acquiring the Buyer Shares to be issued to him
or her for his or her own account for investment only, and not with a view to,
or for sale in connection with, any distribution of such Buyer Shares in
violation of the Securities Act or any rule or regulation under the Securities
Act.
(b) He or she has had adequate opportunity to obtain from
representatives of the Buyer such information, in addition to the
representations set forth in this Agreement, as is necessary to evaluate the
merits and risks of his or her investment in the Buyer.
(c) He or she has sufficient experience in business, financial and
investment matters to be able to evaluate the risks involved in the acquisition
of the Buyer Shares which may be issued to him or her and to make an informed
investment decision with respect to such investment.
(d) He or she can afford a complete loss of the value of the Buyer
Shares and is able to bear the economic risk of holding such Buyer Shares for an
indefinite period.
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(e) He or she understands that the Buyer Shares, if and when issued,
will not have been registered under the Securities Act and will be "restricted
securities" within the meaning of Rule 144 under the Securities Act; and the
Buyer Shares will not be eligible to be sold, transferred or otherwise disposed
of unless they are subsequently registered under the Securities Act or an
exemption from registration is then available.
(f) A legend substantially in the following form will be placed on the
certificate representing any Buyer Shares which may be issued to him or her:
"The shares represented by this certificate have not been registered
under the Securities Act of 1933, as amended, and may not be sold,
transferred or otherwise disposed of in the absence of an effective
registration statement under such Act or an opinion of counsel satisfactory
to the corporation to the effect that such registration is not required."
2.3 Understanding as to IPO. He or she understands and agrees that
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the Buyer is under no obligation to the Stockholders or any third party by this
Agreement, or otherwise, to undertake, commence or close an IPO on or before the
second anniversary of the Closing Date, or at all.
3. Representations of the Stockholders and the Company Regarding the
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Company
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The Company and each of the Stockholders jointly and severally
represent and warrant to the Buyer that the statements contained in this Section
3 are true and correct, except as set forth in the disclosure schedule provided
to the Buyer on the date hereof and forming a part hereof (the "Disclosure
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Schedule"). The Disclosure Schedule shall be initialed by each of the
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Stockholders and shall be arranged in paragraphs corresponding to the numbered
and lettered paragraphs contained in this Section 3, and the disclosures in any
paragraph of the Disclosure Schedule shall qualify only the corresponding
paragraph in this Section 3.
3.1 Organization, Qualification and Corporate Power. The Company is
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a corporation duly organized, validly existing and in corporate and tax good
standing under the laws of the state of its incorporation. The Company is duly
qualified to conduct business and is in corporate and franchise tax good
standing under the laws of each jurisdiction in which the nature of its business
or the ownership or leasing of its properties requires such qualification. The
Company has all requisite power and authority (corporate and other) to carry on
the business in which it is engaged and to own and use the properties owned and
used by it. The Company has delivered to the Buyer true and complete copies of
its charter and by-laws, each as amended and/or
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restated to date and as in effect on the date hereof. The Company is not in
default under or in violation of any provision of its charter or by-laws.
3.2 Capitalization. The authorized capital stock of the Company
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consists of 2,000,000 shares of stock described as follows: 1,000,000 shares of
authorized Class A Voting Common Stock, $.10 par value per share; and 1,000,000
shares of authorized Class B Non-Voting Common Stock, no par value per share.
The Company has 143,350 shares of Class A Voting Common Stock issued and
outstanding on the date hereof and held of record and beneficially by the
Stockholders, as set forth on Schedule I attached hereto. No shares of Class B
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Voting Common Stock are issued or outstanding. All of the issued and
outstanding Shares are duly authorized, validly issued, fully paid,
nonassessable and free of all preemptive rights. There are no outstanding or
authorized options, warrants, rights, agreements or commitments to which the
Company is a party or which are binding upon the Company providing for the
issuance, disposition or acquisition of any of its capital stock. There are no
outstanding or authorized stock appreciation, phantom stock or similar rights
with respect to the Company. There are no agreements, voting trusts, or proxies
or understandings with respect to the voting, or registration under the
Securities Act of any Shares. All of the issued and outstanding Shares were
offered and issued in compliance with applicable federal and state securities
laws.
3.3 Authority. The Company has all requisite right, power and
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authority to execute and deliver this Agreement and to perform its obligations
hereunder. The execution, delivery and performance of this Agreement and the
consummation by the Company of the transactions contemplated hereby have been
duly and validly authorized by all necessary corporate action on the part of the
Company. This Agreement has been duly and validly executed and delivered by the
Company and the Stockholders and constitutes a valid and binding obligation of
the Company and the Stockholders, enforceable against the Company and the
Stockholders in accordance with its terms.
3.4 Noncontravention. Neither the execution and delivery of this
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Agreement or the other agreements contemplated hereby by the Company and the
Stockholders, nor the consummation by the Company and the Stockholders of the
transactions contemplated hereby and thereby, will (a) conflict with or violate
any provision of the charter or by-laws of the Company; (b) require on the part
of the Company any filing with, or any permit, authorization, consent or
approval of, any court, arbitrational tribunal, administrative agency or
commission or other governmental or regulatory authority or agency (a
"Governmental Entity"); (c) conflict with, result in a breach of, constitute
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(with or without due notice or lapse of time or both) a default under, result in
the acceleration of, create in any party the right to accelerate, terminate,
modify or cancel, or require any notice, consent or waiver under, any contract,
lease, sublease, license, sublicense, franchise, permit, indenture, agreement or
mortgage for borrowed money, instrument of indebtedness, Security Interest (as
defined below) or
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other arrangement to which the Company is a party or by which the Company is
bound or to which any of the assets of the Company or the Shares are subject;
(d) result in the imposition of any Security Interest upon any assets of the
Company; or (e) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to the Company or any of the properties or assets of the
Company or the Shares. For purposes of this Agreement, "Security Interest" means
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any mortgage, pledge, security interest, encumbrance, charge, or other lien
(whether arising by contract or by operation of law), other than (i) mechanic's,
materialmen's and similar liens; (ii) liens for taxes not yet due and payable or
for taxes that the taxpayer is contesting in good faith through appropriate
proceedings; (iii) liens arising under worker's compensation, unemployment
insurance, social security, retirement, and similar legislation; (iv) liens on
goods in transit incurred pursuant to documentary letters of credit; (v)
purchase money liens and liens securing rental payments under capital lease
arrangements; and (vi) other liens arising in the ordinary course of business
consistent with past custom and practice (including with respect to frequency
and amount) of the Company ("Ordinary Course of Business").
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3.5 Subsidiaries. The Company does not own or control, directly or
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indirectly, any shares of capital stock of any corporation or have any equity
interest in any partnership, joint venture, trust, association or other non-
corporate business enterprise.
3.6 Financial Statements. The Company has previously provided to the
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Buyer complete and accurate copies of its unaudited balance sheets and related
statements of income, stockholders' equity, retained earnings and cash flows as
of and for each of the fiscal years ended December 31, 1996 and 1997 and the six
months ended June 30, 1998. The foregoing financial statements (the "Financial
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Statements") have been prepared in accordance with GAAP applied on a consistent
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basis throughout the periods covered thereby, fairly present the financial
condition, results of operations and cash flows of the Company as of the
respective dates thereof and for the periods referred to therein and are
consistent with the books and records of the Company.
3.7 Absence of Certain Changes. Since June 30, 1998, (a) there has
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not been any material adverse change in the assets, business, financial
condition, results of operations or future prospects of the Company nor has
there occurred any event or development which could reasonably be foreseen to
result in such a material adverse change in the future, and (b) the Company has
not taken any of the actions set forth below:
(a) issued, sold, delivered or agreed or committed to issue, sell or
deliver (whether through the issuance or granting of options, warrants,
commitments, subscriptions, rights to purchase or otherwise) or authorized the
issuance, sale or delivery of, or redeemed or repurchased, any stock of any
class or any other securities or any rights, warrants or options to acquire any
such stock or other securities;
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(b) split, combined or reclassified any shares of its capital stock;
or declared, set aside or paid any dividend or other distribution (whether in
cash, stock or property or any combination thereof) in respect of its capital
stock;
(c) created, incurred or assumed any debt not currently outstanding
(including obligations in respect of capital leases); assumed, guaranteed,
endorsed or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other person; or made any
loans, advances or capital contributions to, or investments in, any other person
or entity;
(d) entered into, adopted or amended any employee benefit plan or any
employment or severance agreement or arrangement of the type described in
Section 3.20 or (except for normal increases in the Ordinary Course of Business)
increased in any manner the compensation or fringe benefits of, or materially
modified the employment terms of, its directors, officers or employees,
generally or individually, or paid any benefit not required by the terms in
effect on the date hereof of any existing employee benefit plan;
(e) acquired, sold, leased, encumbered or disposed of any assets,
other than purchases of assets and sales of products in the Ordinary Course of
Business;
(f) amended its charter or by-laws;
(g) changed its accounting methods, principles or practices, except
insofar as may be required by GAAP;
(h) discharged or satisfied any Security Interest or paid any
obligation or liability other than in the Ordinary Course of Business;
(i) mortgaged or pledged any of its property or assets or subjected
any such assets to any Security Interest;
(j) sold, assigned, transferred or licensed any Intellectual Property
(as defined below), other than in the Ordinary Course of Business;
(k) entered into, amended, terminated, took or intentionally omitted
to take any action that would constitute a violation of or default under, or
waived any rights under, any contract or agreement other than in the Ordinary
Course of Business; or
(l) made or committed to make any capital expenditure in excess of
$5,000 per item or $25,000 in the aggregate.
-12-
3.8 Undisclosed Liabilities. The Company has no liability (whether
-----------------------
known or unknown, whether absolute or contingent, whether liquidated or
unliquidated and whether due or to become due), except for (a) liabilities shown
on the balance sheet dated June 30, 1998 (the "Most Recent Balance Sheet"), (b)
-------------------------
liabilities which have arisen since the date of the Most Recent Balance Sheet in
the Ordinary Course of Business and that are similar in nature and amount to the
liabilities that arose during the comparable period of time in the immediately
preceding fiscal period, (c) any liabilities arising out of the matter disclosed
in Section 3.17 of the Disclosure Schedule, and (d) contractual liabilities
incurred in the Ordinary Course of Business which are not required by GAAP to be
reflected on the Most Recent Balance Sheet and which are not in the aggregate
material.
3.9 Tax Matters.
-----------
(a) The Company has filed all Tax Returns (as defined below) that it
was required to file and all such Tax Returns were correct and complete. The
Company has paid all Taxes (as defined below) imposed on it, or for which it is
liable, whether to Governmental Entities (as, for example, under law) or to
other persons or entities (as, for example, under a tax allocation agreement),
due on or before the date hereof except for such Taxes that the Company is
contesting in good faith and which are fully reserved for on the Most Recent
Balance Sheet. The unpaid Taxes of the Company for Tax periods through the
date of the Most Recent Balance Sheet do not exceed the accruals and reserves
for Taxes set forth on the Most Recent Balance Sheet or to be set forth on the
Closing Balance Sheet. The Company has no actual or potential liability for any
Tax obligation of any taxpayer other than the Company. All Taxes that the
Company is or was required by law to withhold or collect have been duly withheld
or collected and, to the extent required, have been paid to the proper
Governmental Entity or will be reserved on the Closing Balance Sheet. For
purposes of this Agreement, "Taxes" means all taxes, charges, fees, levies or
-----
other similar assessments or liabilities, including without limitation income,
gross receipts, ad valorem, premium, value-added, excise, real property,
personal property, sales, use, transfer, withholding, employment, payroll and
franchise taxes imposed by the United States of America or any state, local or
foreign government, or any agency thereof, or other political subdivision of the
United States or any such government, and any interest, fines, penalties,
assessments or additions to tax resulting from, attributable to or incurred in
connection with any tax or any contest or dispute thereof. For purposes of this
Agreement, "Tax Returns" means all reports, returns, declarations, statements or
-----------
other information required to be supplied to a taxing authority in connection
with Taxes.
(b) The Company has delivered to the Buyer correct and complete copies
of all Tax Returns, examination reports and statements of deficiencies assessed
against or agreed to by the Company since January 1, 1994. None of the Tax
Returns of the Company has ever been audited by any taxing authority or other
Governmental Entity. No examination or audit of any Tax Returns of the Company
by any
-13-
Governmental Entity is currently in progress or, to the Company's knowledge,
threatened or contemplated.
(c) The Company has not waived any statute of limitations with respect
to Taxes or agreed to an extension of time with respect to a Tax assessment or
deficiency.
(d) The Company is not a "consenting corporation" within the meaning
of Section 341(f) of the Internal Revenue Code of 1986, as amended (the "Code"),
----
and none of the assets of the Company is subject to an election under Section
341(f) of the Code. The Company has not been a United States real property
holding corporation within the meaning of Section 897(c)(2) of the Code during
the applicable period specified in Section 897(c)(l)(A)(ii) of the Code. The
Company is not a party to any Tax allocation or sharing agreement.
(e) The Company is not and has never been a member of an "affiliated
group" of corporations (within the meaning of Section 1504 of the Code).
(f) None of the assets of the Company is "tax exempt use property"
within the meaning of Section 168(h) of the Code. The Company has not agreed to
make, nor is required to make, any adjustments under Section 481(a) of the Code
by reason of a change in accounting method or otherwise.
(g) The Company has not made an election at any time under Section
1362 of the Code to be treated as an "S corporation" as defined in Section
1361(a) of the Code.
3.10 Tangible Assets. The Company owns or leases all tangible assets
---------------
necessary for the conduct of its business as presently conducted. Each such
tangible asset is free from defects, has been maintained in accordance with
normal industry practice, is in good operating condition and repair (subject to
normal wear and tear) and is suitable for the purposes for which it presently is
used. No asset of the Company (tangible or intangible) is subject to any
Security Interest.
3.11 Owned Real Property. The Company owns no real property.
-------------------
3.12 Intellectual Property.
---------------------
(a) The Company owns or has the right to use all Intellectual Property
(as defined below) used in the operation of its business or necessary for the
operation of its business as currently conducted and as presently proposed to be
conducted. Each item of Intellectual Property owned by, or used in the
operation of, the business of the Company will be owned or available for use by
the Company on identical terms and conditions immediately following the Closing.
The Company has
-14-
taken all reasonable measures to protect the proprietary nature of each item of
Intellectual Property, and to maintain in confidence all trade secrets and
confidential information that it owns or uses. Except with respect to non-
exclusive licenses provided in the ordinary course of business, no other person
or entity has any rights to any of the Intellectual Property owned or used by
the Company, and, to the Company's knowledge, no other person or entity is
infringing, violating or misappropriating any of the Intellectual Property that
the Company owns or uses. For purposes of this Agreement, "Intellectual
------------
Property" means all (i) Courseware (as defined below); (ii) patents, patent
--------
applications, patent disclosures and all related continuation, continuation-in-
part, divisional, reissue, reexamination, utility, model, certificate of
invention and design patents, patent applications, registrations and
applications for registrations, including, without limitation, with respect to
the Courseware; (iii) trademarks, service marks, trade dress, logos, trade names
and corporate names and registrations and applications for registration thereof,
including, without limitation, with respect to the Courseware; (iv) copyrights
and registrations and applications for registration thereof, including, without
limitation, with respect to the Courseware; (v) computer software, data and
documentation; (vi) trade secrets, whether patentable or unpatentable and
whether or not reduced to practice, know-how, research and development
information and copyrightable works; (vii) financial, marketing and business
data and information, pricing and cost information, business and marketing plans
and customer and supplier lists and information; (viii) other proprietary rights
relating to any of the foregoing; and (ix) copies and tangible embodiments
thereof. For purposes of this Agreement, "Courseware" shall mean all educational
----------
or instructional materials, tools and aids that (i) the Company possesses,
regardless of the form in which they are reduced including without limitation
hard copy, software and electronic formats, (ii) are referenced in the Company's
course listing attached hereto as Exhibit A, and (iii) are under development by
---------
or on behalf of the Company.
(b) None of the activities or business presently conducted by the
Company, or conducted by the Company at any time within the six years prior to
the date of this Agreement, infringes or violates, or constitutes a
misappropriation of, any Intellectual Property rights of any other person or
entity. The Company has not received any complaint, claim or notice alleging
any such infringement, violation or misappropriation.
(c) Section 3.12(c) of the Disclosure Schedule identifies each item of
Intellectual Property owned by the Company, identifies each pending application
for registration of Intellectual Property which the Company has made, and
identifies each license or other agreement pursuant to which the Company has
granted any rights to any third party with respect to any of its Intellectual
Property, excluding the grant of licenses to customers in the Ordinary Course of
Business. The Company has delivered to the Buyer a correct and complete list of
all such Intellectual Property, registrations, applications, licenses and
agreements (each as amended to date) and has made available to the Buyer correct
and complete copies of all other written documentation evidencing
-15-
ownership of, and any claims or disputes relating to, each such item. Except for
grants of licenses to customers in the Ordinary Course of Business, with respect
to each item of Intellectual Property that the Company owns:
(i) the Company possesses all right, title and interest in and to such
item;
(ii) such item is not subject to any outstanding judgment, order,
decree, stipulation or injunction; and
(iii) the Company has not agreed to indemnify any person or entity for
or against any infringement, misappropriation or other conflict with respect to
such item.
(d) Except for commercially available software subject to standard
"shrinkwrap" licenses and software in the "public domain," Section 3.12(d) of
the Disclosure Schedule identifies each item of Intellectual Property used in
the operation of the business of the Company that is owned by a party other than
the Company. The Company has supplied the Buyer with correct and complete
copies of all licenses, sublicenses or other agreements (as amended to date)
pursuant to which the Company uses such Intellectual Property. With respect to
each such item of Intellectual Property:
(i) the license, sublicense or other agreement covering such item is
legal, valid, binding, enforceable and in full force and effect;
(ii) such license, sublicense or other agreement will continue to be
legal, valid, binding, enforceable and in full force and effect following the
Closing in accordance with the terms thereof as in effect prior to the Closing;
(iii) neither the Company nor, to the Company's knowledge, any other
party to such license, sublicense or other agreement is in breach or default,
and no event has occurred which with notice or lapse of time or both would
constitute a breach or default or permit termination, modification or
acceleration thereunder;
(iv) the underlying item of Intellectual Property is not subject to
any outstanding judgment, order, decree, stipulation or injunction; and
(v) the Company has not agreed to indemnify any person or entity for
or against any interference, infringement, misappropriation or other conflict
with respect to such item.
(e) Except for commercially available software subject to standard
"shrinkwrap" licenses and software in the "public domain," Section 3.12(e) of
the Disclosure Schedule lists each item of Intellectual Property in which the
Company has
-16-
any interest and which is not listed elsewhere in Section 3.12 of the Disclosure
Schedule, including but not limited to all software programs and related
documentation, unregistered trademarks, trade names, service marks, logos and
trade dress.
3.13 Real Property Leases. Section 3.13 of the Disclosure Schedule
--------------------
lists and describes briefly all real property leased or subleased to the Company
and lists the term of such lease, any extension and expansion options, and the
rent payable thereunder. The Company has delivered to the Buyer correct and
complete copies of the leases and subleases (as amended to date) listed in
Section 3.13 of the Disclosure Schedule. With respect to each lease and
sublease listed in Section 3.13 of the Disclosure Schedule:
(a) the lease or sublease is legal, valid, binding, enforceable and in
full force and effect;
(b) the lease or sublease will be legal, valid, binding, enforceable
and in full force and effect immediately following the Closing in accordance
with the terms thereof as in effect prior to the Closing;
(c) neither the Company nor, to the Company's knowledge, the other
party to the lease or sublease is in breach or default thereof, and no event has
occurred which, with notice or lapse of time, would constitute a breach or
default by the Company or permit termination, modification or acceleration by
the other party thereunder;
(d) there are no disputes, oral agreements or forbearance programs
between the Company and the other party to such lease or sublease in effect as
to the lease or sublease;
(e) the Company has not assigned, transferred, conveyed, mortgaged,
deeded in trust or encumbered any interest in the leasehold or subleasehold; and
(f) all facilities leased or subleased thereunder are supplied with
utilities and other services necessary for the operation of said facilities as
presently conducted.
3.14 Contracts. Section 3.14 of the Disclosure Schedule lists the
---------
following agreements (whether written or oral) to which the Company is a party:
(a) any agreement (or group of related agreements) for the lease of
personal property from or to third parties providing for lease payments in
excess of $5,000 per annum;
-17-
(b) any agreement (or group of related agreements) for the purchase or
sale of supplies, products or other personal property or for the furnishing or
receipt of services (i) which calls for performance over a period of more than
one year, (ii) which involves more than the sum of $5,000 or (iii) in which the
Company has granted manufacturing rights, "most favored nation" pricing
provisions or marketing or distribution rights relating to any services,
products or territory or has agreed to purchase a minimum quantity of goods or
services or has agreed to purchase goods or services exclusively from a certain
party;
(c) any agreement (or group of related agreements) under which the
Company has created, incurred, assumed or guaranteed (or may create, incur,
assume or guarantee) indebtedness (including capitalized lease obligations) or
under which it has imposed (or may impose) a Security Interest on any of its
assets, tangible or intangible;
(d) any consulting agreement;
(e) any agreement relating to the design, development or license of
Courseware;
(f) any agreement concerning confidentiality or noncompetition;
(g) any agreement creating a partnership or joint venture;
(h) any agreement involving a Stockholder or his or her affiliates
("Affiliates"), as defined in Rule 12b-2 under the Securities Exchange Act of
------------
1934, as amended, that is not both terminated prior to the Closing and without
any force or effect after the Closing;
(i) any agreement under which the consequences of a default or
termination would reasonably be expected to have a material adverse effect on
the assets, business, financial condition, results of operations or future
prospects of the Company; and
(j) any other agreement (or group of related agreements) either
involving the receipt or payment of more than $10,000 or not entered into in the
Ordinary Course of Business.
The Company has made available to the Buyer a correct and complete
copy or summary of each agreement (as amended to date) listed in Section 3.14 of
the Disclosure Schedule. With respect to each agreement so listed: (i) the
agreement is legal, valid, binding and enforceable and in full force and effect;
(ii) the agreement will be legal, valid, binding and enforceable and in full
force and effect immediately following the Closing in accordance with the terms
thereof as in effect prior to the
-18-
Closing; and (iii) neither the Company nor, to the Company's knowledge, any
other party is in breach or default thereof, and no event has occurred which
with notice or lapse of time would constitute a breach or default by the Company
or permit termination, modification, or acceleration by the other party, under
the agreement.
3.15 Powers of Attorney. There are no outstanding powers of attorney
------------------
executed on behalf of the Company.
3.16 Insurance. Section 3.16 of the Disclosure Schedule sets forth a
---------
list of each insurance policy (including fire, theft, casualty, general
liability, workers compensation, business interruption, environmental, product
liability and automobile insurance policies and bond and surety arrangements) to
which the Company has been a party, a named insured, or otherwise the
beneficiary of coverage at any time within the past five years. Copies of all
such policies have been delivered to the Buyer. The Company and the
Stockholders further represent that: (i) each such insurance policy is
enforceable and in full force and effect; (ii) such policy will continue to be
enforceable and in full force and effect immediately following the Closing in
accordance with the terms thereof as in effect prior to the Closing; (iii) the
Company is not in breach or default (including with respect to the payment of
premiums or the giving of notices) under such policy, and no event has occurred
which, with notice or the lapse of time or both, would constitute such a breach
or default or permit termination, modification or acceleration, under such
policy; and (iv) the Company has not received any notice from the insurer
disclaiming coverage or reserving rights with respect to a particular claim or
such policy in general.
3.17 Litigation. Section 3.17 of the Disclosure Schedule identifies,
----------
and contains a brief description of, (a) any unsatisfied judgement, order,
decree, stipulation or injunction and (b) any claim, complaint, action, suit,
proceeding, hearing or investigation of or in any Governmental Entity or before
any arbitrator to which the Company is a party or, to the Company's knowledge,
is threatened to be made a party. None of the complaints, actions, suits,
proceedings, hearings and investigations set forth in Section 3.17 of the
Disclosure Schedule, if resolved adversely to the Company, would be reasonably
expected to have a material adverse effect on the assets, business, financial
condition, results of operations or future prospects of the Company.
3.18 Legal Compliance. The Company, and its conduct and operations of
----------------
its business, is in compliance with each law (including rules and regulations
thereunder) of any federal, state, local or foreign government, or any
Governmental Entity, which (a) affects or relates to this Agreement or the
transactions contemplated hereby or (b) is applicable to the Company or its
business.
-19-
3.19 Employees, Consultants and Subcontractors.
-----------------------------------------
(a) Section 3.19(a) of the Disclosure Schedule sets forth a list of
(i) all employees of the Company, along with the position and the annual rate of
compensation (or, with respect to employees compensated on an hourly or per diem
basis, the hourly or per diem rate of compensation) and estimated or target
annual incentive compensation of each such employee, (ii) all employment
contracts or agreements relating to employment with the Company, and (iii) all
employees who have executed confidentiality, non-competition or non-solicitation
agreements. To the Company's knowledge, no key employee or group of employees
has any plans to terminate employment with the Company. The Company is not a
party to or bound by any collective bargaining agreement, and has not
experienced any strikes, grievances, claims of unfair labor practices or other
collective bargaining disputes. The Company has no knowledge of any
organizational effort presently being made or threatened by or on behalf of any
labor union with respect to employees of the Company.
(b) Section 3.19(b) of the Disclosure Schedule sets forth (i) a list
of all consultants to the Company currently providing consulting services or
under contract to provide future consulting services to the Company, and (ii)
the start date, type of consulting services provided or to be provided and
hourly or per diem pay rate of such consultants.
(c) Section 3.19(c) of the Disclosure Schedule sets forth (i) a list
of all subcontractors to the Company currently performing services or under
contract to provide future services for the Company, and (ii) the start date,
type of services provided or to be provided and hourly or per diem pay rate of
such subcontractors.
3.20 Employee Benefit Plans
----------------------
(a) Section 3.20 of the Disclosure Schedule sets forth an accurate
schedule of all employee benefit or welfare benefit plans or arrangements of the
Company, including without limitation any pension, profit sharing, bonus, stock
option, incentive, deferred compensation, hospitalization, medical, insurance or
other plan or arrangement, any employment agreement containing "golden
parachute" provisions, and a description of such plans and arrangements,
together with copies of such plans, agreements and any trusts relate thereto,
and classifications of employees covered thereby. All employee benefit plans
listed in Section 3.20 of the Disclosure Schedule are in compliance with any
applicable provisions of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and the regulations issued thereunder, as well as with all
-----
other applicable federal, state, local and foreign statutes, ordinances and
regulations.
(b) All plans listed in Section 3.20 of the Disclosure Schedule that
are intended to qualify (the "Qualified Plans") under Section 401(a) of the Code
---------------
have
-20-
been determined by the Internal Revenue Service to be so qualified, or will be
submitted to the Internal Revenue Service within the relevant amendment period
of Section 401(b) of the Code, and copies of such determination letters are
included as part of Section 3.20 of the Disclosure Schedule. All reports and
other documents required to be filed with any Governmental Entity or distributed
to plan participants or beneficiaries (including, but not limited to, actuarial
reports, audits and Tax Returns) have been timely filed or distributed, and true
copies thereof have been delivered to the Buyer. None of the Stockholders, any
such plan listed in Section 3.20 of the Disclosure Schedule or the Company has
engaged in any transaction prohibited under the provisions of Section 4975 of
the Code or Section 406 of ERISA. No such plan listed in Section 3.20 of the
Disclosure Schedule has incurred an accumulated funding deficiency, as defined
in Section 412(a) of the Code and Section 302(1) of ERISA. The Company has not
incurred any liability for excise tax or penalty due to the Internal Revenue
Service or any liability due to the Pension Benefit Guaranty Corporation. The
Company has never maintained a plan that is subject to Title IV of ERISA or
Section 412 of the Code. The Company has never been required to contribute to a
multiemployer plan as defined in Section 4001 of ERISA.
3.21 Environmental Matters. The Company has not disposed of, or
---------------------
contracted for the disposal of, hazardous wastes, hazardous substances,
infectious or medical waste, as those terms are defined by the Resource
Conservation and Recovery Act of 1976, as amended ("RCRA"), the Comprehensive
----
Environmental Response, Compensation and Liability Act of 1980, as amended
("CERCLA"), or any comparable state laws, rules or regulations. There has been
--------
no storage or treatment of solid wastes or hazardous wastes (as defined in RCRA)
by the Company at any site or other facility owned or operated by the Company in
violation of any applicable law, rule, regulation, order, judgment or permit or
that would require any remedial action under any applicable law. Except as
disclosed in Section 3.21 of the Disclosure Schedule, (a) the Company has not
received any notice of any violation with respect to asbestos or other toxic or
dangerous materials at any of its sites, and (b) there has been no spill,
discharge, leak, emission, injection, escape, dumping or release of any kind by
the Company onto any property leased by Company, or into the environment
surrounding any such property of any toxic or hazardous substances as defined
under any local, state or federal regulations or laws. Except as disclosed in
Section 3.21 of the Disclosure Schedule, no employee of the Company has, in the
course and scope of his or her employment, been exposed by the Company in
violation of any law or regulation to hazardous, infectious or toxic wastes or
substances. In addition, none of the Company or the Stockholders has knowledge
of any assertion by any Governmental Entity of any enforcement action. Section
3.21 of the Disclosure Schedule sets forth a complete list of all disposal sites
utilized in the past five years by Company.
3.22 Permits. Section 3.22 of the Disclosure Schedule sets forth a
-------
list of all permits, licenses, registrations, certificates, orders or approvals
from any Governmental Entity (including without limitation those issued or
required under
-21-
environmental laws and those relating to the occupancy or use of owned or leased
real property) ("Permits") issued to or held by the Company. Such listed Permits
-------
are the only Permits that are required for the Company to conduct its business
as presently conducted or as proposed to be conducted. Each such Permit is in
full force and effect and, to the Company's knowledge, no suspension or
cancellation of such Permit is threatened and there is no basis for believing
that such Permit will not be renewable upon expiration. Each such Permit will be
in full force and effect immediately following the Closing.
3.23 Certain Business Relationships With Affiliates. No Affiliate of
----------------------------------------------
the Company (a) owns any property or right, tangible or intangible, which is
used in the business of the Company, (b) has any claim or cause of action
against the Company, or (c) owes any money to the Company.
3.24 Brokers' Fees. The Company has no liability or obligation to
-------------
pay any fees or commissions to any broker, finder or agent with respect to the
transactions contemplated by this Agreement.
3.25 Books and Records. The minute books and other similar records of
-----------------
the Company contain true and complete records of all actions taken at any
meetings of the Company's stockholders, Board of Directors or any committee
thereof and of all written consents executed in lieu of the holding of any such
meeting. The books and records of the Company accurately reflect the assets,
liabilities, business, financial condition and results of operations of the
Company and have been maintained in accordance with good business and
bookkeeping practices.
3.26 Suppliers and Customers. Except as disclosed in Section 3.26 of
-----------------------
the Disclosure Schedule, no material supplier of the Company has indicated in
writing within the past year that it will stop, or decrease the rate of,
supplying materials, products or services to them and no material customer of
the Company has indicated in writing within the past year that it will stop, or
decrease the rate of, buying, leasing or licensing materials, products or
services from them. Section 3.26 of the Disclosure Schedule sets forth a list
of (a) each supplier that is a supplier of any significant product or component
to the Company, and (b) each customer that accounted for more than 1% of the
revenues of the Company during the last full fiscal year and the amount of
revenues accounted for by such customer during such period.
3.27 Disclosure. No representation or warranty by the Company and the
----------
Stockholders contained in this Agreement, and no statement contained in the
Disclosure Schedule or any other document, certificate or other instrument
delivered by or on behalf of the Company and the Stockholders pursuant to this
Agreement, contains any untrue statement of a material fact or omits to state
any material fact necessary, in light of the circumstances under which it was
made, in order to make the statements herein or therein not misleading.
-22-
4. Representations of the Buyer
----------------------------
The Buyer represents and warrants to the Company and the Stockholders
as follows:
4.1 Organization. The Buyer is a corporation duly organized, validly
------------
existing and in corporate and tax good standing under the laws of the
Commonwealth of Massachusetts, and has all requisite power and authority
(corporate and other) to own its properties and to carry on its business as now
being conducted. The Buyer is not in default under any provision of its charter
or by-laws.
4.2 Authority. The Buyer has all requisite right, power and
---------
authority to execute and deliver this Agreement and to perform its obligations
hereunder. The execution, delivery and performance of this Agreement and the
consummation by the Buyer of the transactions contemplated hereby have been duly
and validly authorized by all necessary corporate action on the part of the
Buyer. This Agreement has been duly and validly executed and delivered by the
Buyer and constitutes a valid and binding obligation of the Buyer, enforceable
against it in accordance with its terms.
4.3 Noncontravention. Neither the execution and delivery of this
----------------
Agreement or the other agreements contemplated hereby by the Buyer, nor the
consummation by the Buyer of the transactions contemplated hereby or thereby,
will (a) conflict with or violate any provision of the charter or by-laws of the
Buyer; (b) require on the part of the Buyer any filing with, or permit,
authorization, consent or approval of, any Governmental Entity; (c) conflict
with, result in a breach of, constitute (with or without due notice or lapse of
time or both) a default under, result in the acceleration of, create in any
party any right to accelerate, terminate, modify or cancel, or require any
notice, consent or waiver under, any contract, lease, sublease, license,
sublicense, franchise, permit, indenture, agreement or mortgage for borrowed
money, instrument of indebtedness, Security Interest or other arrangement to
which the Buyer is a party or by which it is bound or to which any of its assets
are subject; or (d) violate any order, writ, injunction, decree, statute, rule
or regulation applicable to the Buyer or any of its properties or assets.
4.4 Broker's Fees. The Buyer has no liability or obligation to pay
-------------
any fees or commissions to any broker, finder or agent with respect to the
transactions contemplated by this Agreement.
4.5 No Assurance of IPO. The Buyer makes no representation or
-------------------
warranty that an IPO will occur on or before the second anniversary of the
Closing Date or at all.
-23-
4.6 Disclosure. No representation or warranty by the Buyer contained
----------
in this Agreement, and no statement contained in any other document, certificate
or other instrument delivered by or on behalf of the Buyer pursuant to this
Agreement, contains any untrue statement of a material fact or omits to state
any material fact necessary, in light of the circumstances under which it was
made, in order to make the statements herein or therein not misleading.
5. Indemnification
---------------
5.1 By the Stockholders.
-------------------
(a) Subject to the provisions and limitations in this Section 5,
including, without limitation, those in Subsection 5.6, the Stockholders hereby
jointly and severally indemnify and agree to hold harmless the Buyer and the
Company from and against any and all debts, obligations and other liabilities
(whether absolute, accrued, contingent, fixed or otherwise, or whether known or
unknown, or due or to become due or otherwise), monetary damages, fines, fees,
penalties, interest obligations, deficiencies, losses and expenses (including
without limitation amounts paid in settlement; interest; court costs; costs of
investigators; reasonable fees and expenses of attorneys, accountants, financial
advisors and other experts; and other expenses of litigation) incurred or
suffered by the party seeking indemnification ("Damages"):
-------
(i) resulting from or relating to any breach of or failure to perform
any representation, warranty, covenant or agreement of the Company or the
Stockholders contained in this Agreement, with the exception of any
representation, warranty, covenant or agreement of the Stockholders contained in
Section 2; and
(ii) resulting from any claim by a stockholder or former stockholder
of the Company, or any other person, firm, corporation or entity, seeking to
assert, or based upon: (A) ownership or rights to ownership of any shares of
stock of the Company; (B) any rights of a stockholder, including any option,
dissenter's or preemptive rights or rights to notice or to vote; (C) any rights
under the charter or by-laws of the Company; or (D) any claim that his, her or
its shares were wrongfully repurchased by the Company; provided, however, that
this Subsection 5.1(a)(ii) shall not apply to any rights or claims of the Buyer
or any transferee of the Buyer of shares of stock of the Company after the
Closing Date arising solely from the Buyer's or any such transferee's status as
a stockholder of the Company or any claims of additional stockholders to the
Company whose claim to ownership in such stock arises after the Closing Date.
(b) Each of the Stockholders hereby severally indemnifies and agrees
to hold harmless the Buyer and the Company from and against all Damages
-24-
resulting from any breach of the representations and warranties made by such
Stockholder in Section 2 of this Agreement.
5.2 Claims for Indemnification. Whenever any claim shall arise for
--------------------------
indemnification under this Section 5, the Buyer or the Company, as the case may
be, seeking indemnification (the "Indemnified Party"), shall promptly notify the
-----------------
Stockholders' Representative of the claim and, when known, the facts
constituting the basis for such claim. In the event of any such claim for
indemnification hereunder resulting from or in connection with any claim or
legal proceedings by a third party, the notice shall specify, if known, the
amount or an estimate of the amount of the liability arising therefrom. The
Indemnified Party shall not settle or compromise any claim by a third party for
which it is entitled to indemnification hereunder without the prior written
consent, which shall not be unreasonably withheld or delayed, of the
Stockholders' Representative, who shall have the power and authority to bind all
of the Stockholders; provided, however, that if suit shall have been instituted
against the Indemnified Party and the Stockholders' Representative shall not
have taken control of such suit after notification thereof as provided in
Subsection 5.3 of this Agreement, the Indemnified Party shall have the right to
settle or compromise such claim upon giving notice to the Stockholders'
Representative as provided in Subsection 5.3.
5.3 Defense by the Stockholders. In connection with any claim which
---------------------------
may give rise to indemnity hereunder resulting from or arising out of any claim
or legal proceeding by a person other than the Indemnified Party, the
Stockholders' Representative, at the sole cost and expense of the Stockholders,
may, upon written notice to the Indemnified Party, assume the defense of any
such claim or legal proceeding if the Stockholders' Representative acknowledges
to the Indemnified Party in writing the obligation of the Stockholders to
indemnify the Indemnified Party with respect to all elements of such claim. If
the Stockholders' Representative assumes the defense of any such claim or legal
proceeding, the Stockholders' Representative shall select counsel reasonably
acceptable to the Indemnified Party to conduct the defense of such claims or
legal proceedings and at the sole cost and expense of the Stockholders shall
take all steps necessary in the defense or settlement thereof. The
Stockholders' Representative shall not consent to a settlement of, or the entry
of any judgment arising from, any such claim or legal proceeding, without the
prior written consent of the Indemnified Party (which consent shall not be
unreasonably withheld or delayed). The Indemnified Party shall be entitled to
participate in (but not control) the defense of any such action, with its own
counsel and at its own expense; provided, that if the Stockholders'
Representative assumes control of such defense and the Indemnified Party
reasonably concludes that the Stockholders' Representative and the Indemnified
Party have conflicting interests or different defenses available with respect to
such claim or legal proceeding, the reasonable fees and expenses of counsel to
the Indemnified Party shall be considered Damages for purposes of this
Agreement. If the Stockholders' Representative does not assume the defense of
any such claim or litigation resulting therefrom within 30 days after the date
such claim is made: (a) the Indemnified Party
-25-
may defend against such claim or litigation in such manner as it may deem
appropriate, including, but not limited to, settling such claim or litigation,
after giving notice of the same to the Stockholders' Representative, on such
terms as the Indemnified Party may deem appropriate, and (b) the Stockholders'
Representative shall be entitled to participate in (but not control) the defense
of such action, with its counsel and at its own expense. If the Stockholders or
the Stockholders' Representative thereafter seek to question the manner in which
the Indemnified Party defended such third party claim or the amount or nature of
any such settlement, the Stockholders or the Stockholders' Representative shall
have the burden to prove by a preponderance of the evidence that the Indemnified
Party did not defend or settle such third party claim in a reasonably prudent
manner.
5.4 Payment of Indemnification Obligation. All indemnification by
-------------------------------------
the Stockholders hereunder shall be effected by payment of cash or delivery of a
cashier's or certified check to the Buyer in the amount of the indemnification
liability. If the Stockholders' Representative or any of the Stockholders is
required to make any indemnification payment pursuant to this Section 5, he or
they shall not have any rights to contribution from the Company. The Buyer
shall have the right, in its sole discretion, to set off any or all of such
indemnification liability against the Further Consideration and/or any
Contingent Consideration payable pursuant to this Agreement.
5.5 Survival. The representations, warranties, covenants and
--------
agreements of the Company and the Stockholders set forth in this Agreement shall
survive the Closing and the consummation of the transactions contemplated hereby
and continue until three years after the Closing Date. Notwithstanding the
foregoing, the representations and warranties contained in Sections 3.9, 3.12
and 3.21 shall each survive the Closing and the consummation of the transactions
contemplated thereby and continue until the expiration date of the applicable
statute of limitations, and the representations and warranties contained in
Sections 2 and 3.2 shall each survive the Closing and the consummation of the
transactions contemplated thereby and continue in full force and effect ad
infinitum.
5.6 Limitation. Notwithstanding anything to the contrary herein, the
----------
Stockholders shall not be liable under Section 5 unless and until the aggregate
Damages exceed $20,000 (at which point the Stockholders shall become liable for
the aggregate Damages, and not just amounts in excess of $20,000; provided,
however, that the aggregate Damages for which the Stockholders shall be liable
under Subsection 5.1(a)(i) shall not exceed the aggregate Purchase Price
received by the Stockholders.
-26-
6. Ancillary Agreements
--------------------
6.1 Proprietary Information.
-----------------------
(a) The Stockholders shall hold in confidence all knowledge and
information of a secret or confidential nature with respect to the business of
the Company and shall not disclose, publish or make use of the same without the
consent of the Buyer, except to the extent that (i) disclosure is required by
law or legal process, (ii) such information shall have become public knowledge
other than by breach of this Agreement by any of the Stockholders, or (iii) such
information shall have been received by any of the Stockholders from a third
party who has the lawful right to make such disclosure without restriction.
(b) The Stockholders agree that the remedy at law for any breach of
this Subsection 6.1 would be inadequate and that the Buyer shall be entitled to
injunctive relief in addition to any other remedy it may have upon breach of any
provision of this Subsection 6.1.
6.2 Employment Agreements.
---------------------
(a) On the Closing Date, Xxxxxxx X. High shall enter into an
employment agreement with the Buyer substantially in the form attached hereto as
Exhibit B.
---------
(b) On the Closing Date, Xxxxxxx X. High shall enter into an
employment agreement with the Buyer substantially in the form attached hereto as
Exhibit C.
---------
(c) On the Closing Date, Xxxxx X. Xxxxx shall enter into an employment
agreement with the Buyer substantially in the form attached hereto as Exhibit D.
---------
6.3 Bonus Pool. As soon as practicable after the Closing Date, the
----------
Buyer shall establish the 1999 Incentive Plan for High Technologies' Employees
substantially in the form attached hereto as Exhibit E.
---------
6.4 Communications. No public communications concerning this
--------------
Agreement shall be made without the mutual consent and cooperation of the Buyer,
the Company and the Stockholders, except as otherwise required by law or
governmental regulation.
-27-
7. Dispute Resolution
------------------
7.1 General. In the event that any dispute should arise between the
-------
parties hereto with respect to any matter covered by this Agreement, including,
without limitation, the calculation of the Adjusted Purchase Price or claims
under Section 5, the parties hereto shall resolve such dispute in accordance
with the procedures set forth in this Section 7.
7.2 Consent of the Parties. In the event of any dispute between the
----------------------
parties with respect to any matter covered by this Agreement, the parties shall
first use their best efforts to resolve such dispute among themselves. If the
parties are unable to resolve the dispute within 30 calendar days after the
commencement of efforts to resolve the dispute, the dispute will be submitted to
arbitration in accordance with Subsection 7.3 hereof.
7.3 Arbitration
-----------
(a) Either the Buyer or the Stockholders' Representative may submit
any matter referred to in Subsection 7.2 hereof to arbitration by notifying the
Stockholders' Representative or the Buyer, as the case may be, in writing, of
such dispute. Within 15 days after receipt of such notice, the Buyer and the
Stockholders' Representative shall designate in writing one arbitrator to
resolve the dispute; provided, that if the parties hereto cannot agree on an
arbitrator within such 15-day period, the arbitrator shall be selected by the
American Arbitration Association from candidates not selected by the Buyer or
the Stockholders' Representative. The arbitrator so designated shall not be an
employee, consultant, officer, director or stockholder of any party hereto or
any Affiliate of any party to this Agreement.
(b) Within 30 days after the designation of the arbitrator, the
arbitrator, the Buyer and the Stockholders' Representative shall meet, at which
time the Buyer and the Stockholders' Representative shall be required to set
forth in writing all disputed issues and a proposed ruling on each such issue.
(c) The arbitrator shall set a date for a hearing, which shall be no
later than 30 days after the submission of written proposals pursuant to
paragraph (b) above, to discuss each of the issues identified by the Buyer and
the Stockholders' Representative. Each such party shall have the right to be
represented by counsel. The arbitration shall be governed by the rules of the
American Arbitration Association; provided, that the arbitrator shall have sole
discretion with regard to the admissibility of evidence.
(d) The arbitrator shall use his or her best efforts to rule on each
disputed issue within 30 days after the completion of the hearings described in
paragraph (c) above. The determination of the arbitrator as to the resolution
of any
-28-
dispute shall be binding and conclusive upon all parties hereto. All rulings of
the arbitrator shall be in writing and shall be delivered to the parties hereto.
(e) Each party in any arbitration shall pay all fees and expenses
incurred by such party in connection with the arbitration.
(f) Any arbitration pursuant to this Subsection 7.3 shall be conducted
in Boston, Massachusetts. Any arbitration award may be entered in and enforced
by any court having jurisdiction thereover and the parties hereby consent and
commit themselves to the jurisdiction of the courts of the Commonwealth of
Massachusetts and the United States District Court for the District of
Massachusetts for purposes of the enforcement of any arbitration award.
7.4 Injunctive Relief. Notwithstanding any other provision of this
-----------------
Section 7, each party to this Agreement may seek (in addition to any other
rights or remedies which it may have) immediate injunctive relief in a court of
law to enforce the covenants contained in this Agreement. It is further agreed
that if any such action or proceeding is brought in equity, the other party will
not use as a defense that there is an adequate remedy at law or that this
Section 7 precludes such an action or proceeding in equity.
8. Notices
-------
Any notices or other communications required or permitted hereunder
shall be sufficiently given if in writing and delivered personally or sent by
telex, telecopy, Federal Express or other overnight courier, registered or
certified mail, postage prepaid, addressed as follows or to such other address
of which the parties may have given notice:
To the Buyer: Linkage, Inc.
Xxx Xxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxxx X. Xxxx
With a copy to: Xxx X. Xxxxxxxxx, Esq.
Xxxx and Xxxx LLP
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
-29-
To the Stockholders or
Stockholders' Representative: Xxxxxxx X. High
0000 Xxxxxx Xxxxxx Xxxx
Xxxxx 000
Xxxxxx, Xxxxx 00000
With a copy to: Xxxxx X. Xxxxxxxxx, Esq,
Hiersche, Martens, Hayward, Xxxxxxxx &
Xxxxxx, P.C.
The Colonnade-Rolm Tower
Suite 700, LB 17
00000 Xxxxxx Xxxxxxx
Xxxxxx, Xxxxx 00000
Unless otherwise specified herein, such notices or other communications shall be
deemed received (a) on the date delivered, if delivered personally or by telex
or telecopy, (b) the next business day, if delivered by Federal Express or other
overnight courier, charges prepaid, or (c) three business days after being sent,
if sent by registered or certified mail, first class postage prepaid.
9. Successors and Assigns
----------------------
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns, except that the
Buyer, on the one hand, and the Stockholders and the Company, on the other hand,
may not assign their respective obligations hereunder without the prior written
consent of the other party; provided, however, that the Buyer may assign this
Agreement, and its rights and obligations hereunder, to a wholly owned
subsidiary of the Buyer. Any assignment in contravention of this provision
shall be void. No assignment shall release the Buyer, the Stockholders or the
Company from any obligation or liability under this Agreement. In addition, the
Stockholders may not assign any rights to receive payments under this Agreement
without the prior written consent of the Buyer, which consent shall not be
unreasonably withheld.
10. Entire Agreement; Amendments; Attachments
-----------------------------------------
(a) This Agreement, all Schedules and Exhibits hereto, and all
agreements and instruments to be delivered by the parties pursuant hereto
represent the entire understanding and agreement between the parties hereto with
respect to the subject matter hereof and supersede all prior oral and written
and all contemporaneous oral negotiations, commitments and understandings
between such parties. The Buyer,
-30-
by the consent of its Board of Directors or officers authorized by such Board,
the Company, by the consent of its Board of Directors or officers authorized by
such Board, and the Stockholders may amend or modify this Agreement, in such
manner as may be agreed upon, by a written instrument executed by the Buyer, the
Company and the Stockholders.
(b) If the provisions of any Schedule or Exhibit to this Agreement are
inconsistent with the provisions of this Agreement, the provisions of this
Agreement shall prevail. The Schedules and Exhibits attached hereto are hereby
incorporated as integral parts of this Agreement.
11. Severability
------------
Any provision of this Agreement which is invalid, illegal or
unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective
to the extent of such invalidity, illegality or unenforceability, without
affecting in any way the remaining provisions hereof in such jurisdiction or
rendering that or any other provision of this Agreement invalid, illegal or
unenforceable in any other jurisdiction.
12. Investigation of the Parties
----------------------------
All representations and warranties contained herein which are made to
the knowledge of a party shall require that such party make reasonable
investigation and inquiry with respect thereto to ascertain the correctness and
validity thereof.
13. Expenses
--------
Except as otherwise expressly provided herein, the Buyer shall pay all
fees and expenses (including, without limitation, legal and accounting fees and
expenses) incurred by it in connection with the transactions contemplated
hereby, and the Stockholders shall pay all fees and expenses (including, without
limitation, legal and accounting fees and expenses) incurred by the
Stockholders, the Stockholders' Representative or the Company in connection with
the transactions contemplated hereby. Each Stockholder shall be responsible for
payment of all sales or transfer taxes arising out of the conveyance of the
Shares owned by such Stockholder.
14. Governing Law
-------------
This Agreement shall be governed by and construed in accordance with
the laws of the Commonwealth of Massachusetts without regard to conflict of laws
rules.
-31-
15. Section Headings
----------------
The section headings are for the convenience of the parties and in no
way alter, modify, amend, limit or restrict the contractual obligations of the
parties.
16. Counterparts
------------
This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original, but all of which shall be one and the
same document.
17. Construction.
------------
The language used in this Agreement shall be deemed to be the language
chosen by the parties hereto to express their mutual intent, and no rule of
strict construction shall be applied against any party. Any reference to any
federal, state, local or foreign statute or law shall be deemed also to refer to
all rules and regulations promulgated thereunder, unless the context requires
otherwise.
* * * * *
-32-
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties
hereto as of the date first above written.
LINKAGE, INC.
_________________________________
By:
Title:
HIGH, XXXXX & XXXXXXX, INC.,
D/B/A/HIGH TECHNOLOGIES
_________________________________
By:
Title:
STOCKHOLDERS:
_______________________________
Xxxxxxx X. High
_______________________________
Xxxxxxx X. High
_______________________________
Xxxxx X. Xxxxx
_______________________________
Xxxxxxx X. Xxxxxxx
-33-
SCHEDULE I
------------------------------------------------------------------------------------------------------------------------------------
Percent of Initial Further First Second Third
Stockholder Shares Ownership Cash Payment Consideration Contingent Contingent Contingent
Payment Payment Payment
------------------------------------------------------------------------------------------------------------------------------------
Xxxxxxx X. High 57,469 40.09% $200,450 $100,225 $14,031.50 $38,085.50 $ 48,108
------------------------------------------------------------------------------------------------------------------------------------
Xxxxxxx X. High 35,868 25.02% $125,100 $ 62,550 $ 8,757 $ 23,769 $ 30,024
------------------------------------------------------------------------------------------------------------------------------------
Xxxxx X. Xxxxx 39,514 27.57% $137,850 $ 68,925 $ 9,649.50 $26,191.50 $ 33,084
------------------------------------------------------------------------------------------------------------------------------------
Xxxxxxx X. Xxxxxxx 10,499 7.32% $ 36,600 $ 18,300 $ 2,562 $ 6,954 $ 8,784
------------------------------------------------------------------------------------------------------------------------------------
Total 143,350 100.00% $500,000 $250,000 $ 35,000 $ 95,000 $120,000
------------------------------------------------------------------------------------------------------------------------------------
-34-
EXHIBIT A
COURSE LISTING
Advanced "C" Programming (CCC-201)
Advanced DB2 for Programmers (DB2-302)
Advanced QMF - Query Management Facility (DB2-204)
Basic "C" Programming (CCC-101)
C/S Developer New-Hire Program (NHP-101)
C++- Fast Track (CCC-103)
CICS Command Level Programming (CIC-101)
CICS Debugging Using CA-INTERTEST (CIC-102)
Client/Server Fundamentals (CSV-101)
COBOL/370 Fundamentals (COB-301)
Data Modeling (DES-101)
DB2 Concepts and Facilities (DB2-101)
DB2 Database Administration (DB2-203)
DB2 Design and Implementation (DB2-301)
DB2 Performance and Tuning (DB2-303)
DB2 Recovery and Utilities (DB2-304)
DB2/SQL Application Programming & Design (DB2-202)
DB2/SQL Application Programming (DB2-201)
Delphi 3.0 - Fast Track (DEL-103)
Fundamentals of C++ Programming (CCC-102)
IMS Advanced Programming Techniques (IMS-201)
IMS Basic Programming Techniques (IMS-101)
IMS HLPI (High Level Programming Interface) (IMS-104)
IMS Overview (IMS-105)
IMS Teleprocessing Techniques (IMS-102)
Intro to Relational Database Systems (DES-102)
Introduction to Delphi 3.0 (DEL-102)
MS Visual Basic - Fast Track 5.0 (VBP-103)
MS Visual Basic 5.0 - Advanced Programming Using ActivX & the Internet
Oracle - Application Developers Workshop (ORC-201)
OS/VS JCL and Utilities (JCL-101)
QMF - Query Management Facility (DB2-102)
Relational Database Modeling & Architecture (DES-103)
REXX Fundamentals (XXX-101)
SQL - Structured Query Language (SQL-101)
TSO/ISPF (TSO-101)
VS COBOL II Differences (COB-102)
-35-
EXHIBIT B
XXXXXXX X. HIGH EMPLOYMENT AGREEMENT
-36-
EMPLOYMENT AGREEMENT
This Agreement is made as of the 7th day of August, 1998 between Linkage,
Inc., a Massachusetts corporation with its principal offices at Xxx Xxxxxx Xxxx,
Xxxxxxxxx, Xxxxxxxxxxxxx 00000 (the "Company"), and Xxxxxxx X. High, an
-------
individual residing at 0000 Xxxxxxxxxx, Xxxxxx Xxxxx, Xxxxx 00000 (the
"Employee").
--------
RECITALS
--------
The Company desires to employ the Employee and the Employee desires to be
employed by the Company upon the terms and conditions hereinafter set forth.
WITNESSETH:
----------
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto, each intending
to be legally bound hereby, agree as follows:
1. Employment. The Company hereby employs the Employee in such position
----------
and capacity as the Employee and the Company shall from time to time determine,
and the Employee accepts such employment for the term of employment specified in
Section 3 below (the "Employment Term"). During the Employment Term, the
---------------
Employee shall have the duties, responsibilities and authority as are delegated
to him by the Company; provided, however, that during the Employment Term, such
duties shall include general management functions for the High Technologies
regional office of the Company to include profit and loss responsibility for
this business area. In this capacity, he shall have responsibility for the
supervision and performance management of the local staff, control of the
operating budget for the business area as determined in concert with the
Company's senior management, and for the overall quality of products and
services offered by High Technologies. It is also known and understood that the
Employee will serve as the primary instructor for mainframe courses.
2. Performance. The Employee agrees to devote his best efforts and all
-----------
of his business time to the performance of his duties hereunder during the
Employment Term.
3. Employment Term. The Employment Term shall begin on the date of this
---------------
Agreement and continue until December 31, 2000, unless earlier terminated
pursuant to Section 8.
-37-
4. Compensation.
------------
(a) Salary. During the Employment Term, the Company shall pay the
------
Employee an annual base salary, payable in accordance with the Company's normal
payroll practice, subject to withholding and other applicable taxes, at the
annualized rate of $100,000 per year. The Employee's salary shall be subject to
review on an annual basis by senior management of the Company; provided,
however, that in no event shall the Employee's base salary be decreased.
(b) Additional Benefits. The Employee shall be entitled to
-------------------
participate in all benefit programs that the Company establishes and makes
available to its employees generally, if any, to the extent that Employee's
position, venue, tenure, salary, age, health and other qualifications make him
eligible to participate.
5. Expenses. The Employee shall be reimbursed by the Company for all
--------
actual and reasonable expenses incurred by him in connection with the
performance of his duties hereunder, subject to any policy with respect thereto
imposed by the Company from time to time.
6. Non-Competition and Non-Solicitation.
------------------------------------
(a) The Employee recognizes that his willingness to enter into the
restrictive covenants contained in this Section 6 was a critical condition
precedent to the Company's willingness to enter into and perform under this
Agreement. The Employee also acknowledges that the restrictions contained in
this Section 6 will not materially or unreasonably interfere with the Employee's
ability to earn a living, and that such restrictions are necessary to protect
the legitimate business interests of the Company.
(b) The Employee agrees that during the Non-Competition Period (as
defined below) he will not in any capacity, either separately, jointly or in
association with others, directly or indirectly, as an officer, director,
consultant, agent, employee, owner, partner, joint venturer, distributor,
dealer, representative, stockholder, investor, lender or otherwise, engage or
have a financial interest in any business which competes with the Company or
with any affiliate of the Company (excepting only the ownership of not more than
1% of the outstanding securities of any class listed on an exchange or regularly
traded in the over-the-counter market). An entity shall be deemed to compete
with the Company or one of the Company's affiliates as of a particular time if
the entity then produces, distributes or markets any product or service which is
competitive with, and may be purchased in replacement or substitution of, any
product or service which was being distributed or marketed by the Company or
such affiliate during the Employment Term, and which is then still being
marketed or distributed by the Company or such affiliate or which the Company or
such affiliate was considering marketing or distributing during the Employment
Term. The Company or its affiliate
-38-
shall be deemed to be considering marketing or distributing a product or service
as of a particular date only if the Company or such affiliate intends to market
or distribute such product or service within two years of such date. The "Non-
---
Competition Period" is (a) the period during which the Employee is employed by
------------------
the Company, whether or not pursuant to this Agreement, plus (b) a period of two
years thereafter.
(c) The Employee further agrees that during the Non-Competition Period
he will not in any capacity, either separately, jointly or in association with
others, directly or indirectly, solicit, divert or take away, attempt to take
away or otherwise contact any of the Company's clients, customers, accounts,
distributors, dealers or representatives as shown by the Company's records, that
were clients, customers, prospective clients or customers, accounts,
distributors, dealers or representatives of the Company at any time during the
two years immediately preceding the date of termination of the Employee's
employment by the Company if such solicitation or contact is for the specific
purpose of selling products or services that compete with any products or
services that the Company has available for sale to its clients, customers,
accounts, distributors, dealers or representatives or prospects. The Employee
further agrees that during the Non-Competition Period he will not in any
capacity, either separately, jointly or in association with others, directly or
indirectly, recruit, solicit or hire any employee or consultant of the Company
or induce or attempt to induce any employee or consultant of the Company to
terminate his or her employment or consultancy with, or otherwise cease his or
her relationship with, the Company. For purposes of this Agreement,
"prospective clients or customers" shall mean any person, school, college,
university or entity that the Company has actively solicited with respect to the
Company's consulting services or corporate education programs during the term of
the Employee's employment with the Company, whether or not such employment is
pursuant to this Agreement.
(d) If a court determines that the foregoing restrictions are too
broad or otherwise unreasonable under applicable law, including with respect to
time or space, the court is hereby requested and authorized by the parties
hereto to revise the foregoing restrictions to include the maximum restrictions
allowed under the applicable law. The Employee expressly agrees that breach of
the foregoing would result in irreparable injuries to the Company, that the
remedy at law for any such breach will be inadequate and that upon any breach of
this provision, the Company, in addition to all other available remedies, shall
be entitled as a matter of right to injunctive relief in any court of competent
jurisdiction without the necessity of proving the actual damage to the Company.
The parties hereto intend that these non-competition and non-solicitation
provisions shall be deemed to be a series of separate covenants, one for each
and every county of each and every state of the United States of America and
each and every political subdivision of each and every country outside the
United States of America where this provision is intended to be effective. For
purposes of this Section 6 and Section 7, the "Company" refers to the Company
and any subsidiaries of the Company.
-39-
7. Secret Processes and Confidential Information.
---------------------------------------------
(a) For the Employment Term and thereafter, (i) the Employee will not
divulge, directly or indirectly, other than in the regular and proper course of
business of the Company or as required by law, any confidential knowledge or
information with respect to the business, operation or finances of the Company,
including without limitation, inventions, products, machinery, processes,
methods, techniques, compositions, projects, developments, plans, financial
data, personnel data, computer programs and customer and supplier lists
(collectively, "Confidential Information"), and (ii) the Employee will not use,
------------------------
directly or indirectly, any Confidential Information for the benefit of anyone
other than the Company; provided, however, that the Employee has no obligation,
express or implied, to refrain from using or disclosing to others any such
knowledge or information which is or hereafter shall become generally available
to the public other than through disclosure by the Employee or which is received
by the Employee from a third party who has the lawful right to make such
disclosure without restriction. The Employee agrees that all files, letters,
memoranda, reports, records, data, sketches, drawings, program listings or other
written, photographic, or other tangible material containing Confidential
Information, whether created by the Employee or others, which shall come into
his custody or possession, shall be and are the exclusive property of the
Company to be used by the Employee only in the performance of his duties for the
Company.
(b) All new processes, techniques, know-how, inventions, improvements,
discoveries, methods, plans, products, works of authorship, patents and devices
developed, made or invented by the Employee, alone or with others, whether
patentable or not, while an employee of the Company (collectively, the
"Developments"), shall become and be the sole property of the Company unless
-------------
released in writing by the Company. The Employee agrees to assign and does
hereby assign to the Company (or any person or entity designated by the Company)
all his right, title and interest in and to all Developments and all related
patents, patent applications, copyrights and copyright applications. In
addition, the Employee agrees to cooperate fully with the Company, both during
and after his employment with the Company, with respect to the procurement,
maintenance and enforcement of copyrights and patents (both in the United States
and foreign countries) relating to Developments. The Employee shall sign all
papers, including, without limitation, copyright applications, patent
applications, declarations, oaths, formal assignments, assignments of priority
rights, and powers of attorney, which the Company may deem necessary or
desirable in order to protect its rights and interests in any Development. The
Employee also hereby waives all claims to moral rights in any Development.
(c) Notwithstanding the foregoing, if the Employee is required to
disclose or divulge Confidential Information pursuant to any subpoena or other
judicial process he will promptly so notify the Company, and if so requested by
the Company, will assist the Company in seeking a protective order with respect
thereto. If the
-40-
Company cannot or chooses not to obtain such a protective order, the Employee
will divulge only such Confidential Information as he is advised by his counsel
is required to be disclosed, and will use his best efforts to ensure that the
balance of such Confidential Information will be kept confidential.
8. Termination.
-----------
(a) Termination at End of Term. The employment of the Employee
--------------------------
hereunder shall terminate at the end of the Employment Term, at which time the
Employee may become an employee-at-will of the Company upon the mutual agreement
of the Employee and the Company.
(b) Termination by the Company With Cause. The Company shall have the
-------------------------------------
right at any time to terminate the Employee's employment hereunder by written
notice upon the occurrence of any of the following (any such termination being
referred to as a termination for "Cause"):
-----
(i) the commission by the Employee of any deliberate and premeditated
act, or any gross negligence in the performance of his duties, that
materially and adversely affects the business, financial condition or
results of operations of the Company;
(ii) Employee's habitual drunkenness, use of illegal substances or
drugs or the use, possession, distribution or being under the influence of
alcohol or illegal substances or drugs in the workplace;
(iii) the conviction by the Employee of a felony;
(iv) the wilful failure or refusal of the Employee to perform his
duties hereunder, which failure or refusal continues for 30 days after
written notice thereof from the Company to the Employee; or
(v) the breach by the Employee of any terms of this Agreement, which
breach continues for 30 days subsequent to written notice from the Company
to the Employee of the breach.
(c) Termination by Company for Death or Disability. The Company shall
----------------------------------------------
have the right at any time to terminate the Employee's employment hereunder by
30 days' written notice upon the Employee's inability to perform his duties
hereunder by reason of any mental, physical or other disability for a period of
at least six consecutive months (referred to herein as a "disability"), as
----------
determined by an independent physician. The Employee's employment hereunder
shall also terminate upon the death of the Employee.
-41-
(d) Termination by Company without Cause. The Company shall have the
------------------------------------
right at any time by 30 days' written notice to Employee to terminate the
Employee's employment for any other reason without Cause.
(e) Termination by Employee for Good Reason. The Employee shall have
---------------------------------------
the right at any time to terminate the Employee's employment hereunder by
written notice to the Company upon the occurrence of any of the following
events, which event continues for 30 days subsequent to such notice:
(i) a material reduction of the Employee's duties, responsibilities
and authority from those described in Section 1;
(ii) a required relocation of the Employee to a principal place of
business more than 100 miles from the Employee's principal place of
business on the date of this Agreement; or
(iii) the breach by the Company of a material term of this Agreement.
9. Effect of Termination of Employment.
-----------------------------------
(a) With Cause. If the Employee's employment is terminated with Cause
----------
(pursuant to Section 8(b)), all compensation and benefits shall cease at the
time of such termination; provided, however, that the Employee shall be entitled
to continue to participate in the Company's medical benefit plans, at his own
expense, to the extent required by law.
(b) Death or Disability. If the Employee's employment is terminated
-------------------
by the death or disability of the Employee (pursuant to Section 8(c)), all
compensation and benefits shall cease at the time of such death or disability;
provided, however, that the Employee or, in the event of the death of the
Employee, the Employee's estate, shall be entitled to continue to participate in
the Company's medical benefit plans, at his expense or the expense of his
estate, to the extent required by law.
(c) Without Cause or For Good Reason. If the Employee's employment is
--------------------------------
terminated by the Company without Cause (pursuant to Section 8(d)) or for Good
Reason (pursuant to Section 8(e)), then the Employee shall be entitled to the
following benefits in complete discharge of the Company's obligations hereunder:
(i) the Employee's salary specified in Section 4(a) shall continue to
be paid for the duration of the Employment Term; and
(ii) the Employee's additional benefits specified in Section 4(b)
shall terminate at the time of such termination; provided, however, that
the Employee
-42-
shall be entitled to participate in the Company's medical benefit plans, at
the Company's expense, for the duration of the Employment Term.
(d) Survival. The provisions of Sections 6 and 7 of this Agreement
--------
shall survive the termination of the Employee's employment and the termination
of this Agreement.
10. Insurance. The Company may purchase insurance on the life of the
---------
Employee, and if it does so, the Employee shall cooperate fully by performing
all the requirements of the life insurer which are necessary conditions
precedent to the issuance of the life insurance policy issued by it.
Notwithstanding the foregoing, if at the time of termination for any reason
(other than death), the Company is maintaining a life insurance policy on the
Employee which has a cash surrender value, then to the extent permitted under
such policy the Employee may purchase such policy from the Company by paying to
the Company the cash surrender value thereof.
11. Notice. Any notices required or permitted hereunder shall be in
------
writing and shall be deemed to have been given when personally delivered or when
mailed, certified or registered mail, postage prepaid, to the addresses set
forth above or to such other addresses as the parties may hereafter give notice
provided herein.
12. General.
-------
(a) Prior Agreements. This Agreement supersedes and replaces all
----------------
prior agreements between the Company and the Employee, whether written or oral,
relating to his employment by the Company.
(b) Governing Law. The terms of this Agreement shall be governed by
-------------
the internal laws (and not the law of conflicts) of the Commonwealth of
Massachusetts.
(c) Assignability. The Employee may not assign his interest in or
-------------
delegate his duties under this Agreement. The covenants and obligations of the
Employee hereunder shall redound to the benefit of the Company's successors and
assigns.
(d) Binding Effect. This Agreement shall be binding upon and inure to
--------------
the benefit of the Company, its successors and assigns.
(e) Entire Agreement; Modification. This Agreement constitutes the
-------------------------------
entire agreement of the parties hereto with respect to the subject matter hereof
and may not be modified or amended in any way except in writing by the parties
hereto.
(f) Duration. Notwithstanding the term of employment hereunder, this
--------
Agreement shall continue for so long as any obligations remain under this
Agreement.
-43-
(g) Specific Performance. The Employee acknowledges that a breach of
--------------------
this Agreement by the Employee will cause irreparable injury to the Company,
that the Company's remedies at law will be inadequate in case of any such
breach, and that the Company will be entitled to preliminary injunctive relief
in case of any such breach.
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound, have
hereunto executed this Agreement the day and year first written above.
LINKAGE, INC.
By:_________________________________
Name:
Title:
EMPLOYEE
____________________________________
Xxxxxxx X. High
-44-
EXHIBIT C
XXXXXXX X. HIGH EMPLOYMENT AGREEMENT
-45-
EMPLOYMENT AGREEMENT
This Agreement is made as of the 7th day of August, 1998 between Linkage,
Inc., a Massachusetts corporation with its principal offices at Xxx Xxxxxx Xxxx,
Xxxxxxxxx, Xxxxxxxxxxxxx 00000 (the "Company"), and Xxxxxxx X. High, an
-------
individual residing at 0000 Xxxxxxxxxx, Xxxxxx Xxxxx, Xxxxx 00000 (the
"Employee").
--------
RECITALS
--------
The Company desires to employ the Employee and the Employee desires to be
employed by the Company upon the terms and conditions hereinafter set forth.
WITNESSETH:
----------
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto, each intending
to be legally bound hereby, agree as follows:
1. Employment. The Company hereby employs the Employee in such position
----------
and capacity as the Employee and the Company shall from time to time determine,
and the Employee accepts such employment for the term of employment specified in
Section 3 below (the "Employment Term"). During the Employment Term, the
---------------
Employee shall have the duties, responsibilities and authority as are delegated
to her by the Company; provided, however, that during the Employment Term, such
duties shall include coordinating all courseware development, supervising
general office management activities, providing primary support and contact with
Universities for the Client/Server curriculum, and serving as the primary
instructor for Visual Basic courseware.
2. Performance. The Employee agrees to devote her best efforts and all
-----------
of her business time to the performance of her duties hereunder during the
Employment Term.
3. Employment Term. The Employment Term shall begin on the date of this
---------------
Agreement and continue until December 31, 2000, unless earlier terminated
pursuant to Section 8.
-46-
4. Compensation.
------------
(a) Salary. During the Employment Term, the Company shall pay the
------
Employee an annual base salary, payable in accordance with the Company's normal
payroll practice, subject to withholding and other applicable taxes, at the
annualized rate of $80,000 per year. The Employee's salary shall be subject to
review on an annual basis by senior management of the Company; provided,
however, that in no event shall the Employee's base salary be decreased.
(b) Additional Benefits. The Employee shall be entitled to
-------------------
participate in all benefit programs that the Company establishes and makes
available to its employees generally, if any, to the extent that Employee's
position, venue, tenure, salary, age, health and other qualifications make her
eligible to participate.
5. Expenses. The Employee shall be reimbursed by the Company for all
--------
actual and reasonable expenses incurred by her in connection with the
performance of her duties hereunder, subject to any policy with respect thereto
imposed by the Company from time to time.
6. Non-Competition and Non-Solicitation.
------------------------------------
(a) The Employee recognizes that her willingness to enter into the
restrictive covenants contained in this Section 6 was a critical condition
precedent to the Company's willingness to enter into and perform under this
Agreement. The Employee also acknowledges that the restrictions contained in
this Section 6 will not materially or unreasonably interfere with the Employee's
ability to earn a living, and that such restrictions are necessary to protect
the legitimate business interests of the Company.
(b) The Employee agrees that during the Non-Competition Period (as
defined below) she will not in any capacity, either separately, jointly or in
association with others, directly or indirectly, as an officer, director,
consultant, agent, employee, owner, partner, joint venturer, distributor,
dealer, representative, stockholder, investor, lender or otherwise, engage or
have a financial interest in any business which competes with the Company or
with any affiliate of the Company (excepting only the ownership of not more than
1% of the outstanding securities of any class listed on an exchange or regularly
traded in the over-the-counter market). An entity shall be deemed to compete
with the Company or one of the Company's affiliates as of a particular time if
the entity then produces, distributes or markets any product or service which is
competitive with, and may be purchased in replacement or substitution of, any
product or service which was being distributed or marketed by the Company or
such affiliate during the Employment Term, and which is then still being
marketed or distributed by the Company or such affiliate or which the Company or
such affiliate was considering marketing or distributing during the Employment
Term. The Company or its affiliate shall be deemed to be considering marketing
or distributing a product or service as of
-47-
a particular date only if the Company or such affiliate intends to market or
distribute such product or service within two years of such date. The "Non-
----
Competition Period" is (a) the period during which the Employee is employed by
------------------
the Company, whether or not pursuant to this Agreement, plus (b) a period of two
years thereafter.
(c) The Employee further agrees that during the Non-Competition Period
she will not in any capacity, either separately, jointly or in association with
others, directly or indirectly, solicit, divert or take away, attempt to take
away or otherwise contact any of the Company's clients, customers, accounts,
distributors, dealers or representatives as shown by the Company's records, that
were clients, customers, prospective clients or customers, accounts,
distributors, dealers or representatives of the Company at any time during the
two years immediately preceding the date of termination of the Employee's
employment by the Company if such solicitation or contact is for the specific
purpose of selling products or services that compete with any products or
services that the Company has available for sale to its clients, customers,
accounts, distributors, dealers or representatives or prospects. The Employee
further agrees that during the Non-Competition Period she will not in any
capacity, either separately, jointly or in association with others, directly or
indirectly, recruit, solicit or hire any employee or consultant of the Company
or induce or attempt to induce any employee or consultant of the Company to
terminate his or her employment or consultancy with, or otherwise cease his or
her relationship with, the Company. For purposes of this Agreement,
"prospective clients or customers" shall mean any person, school, college,
university or entity that the Company has actively solicited with respect to the
Company's consulting services or corporate education programs during the term of
the Employee's employment with the Company, whether or not such employment is
pursuant to this Agreement.
(d) If a court determines that the foregoing restrictions are too
broad or otherwise unreasonable under applicable law, including with respect to
time or space, the court is hereby requested and authorized by the parties
hereto to revise the foregoing restrictions to include the maximum restrictions
allowed under the applicable law. The Employee expressly agrees that breach of
the foregoing would result in irreparable injuries to the Company, that the
remedy at law for any such breach will be inadequate and that upon any breach of
this provision, the Company, in addition to all other available remedies, shall
be entitled as a matter of right to injunctive relief in any court of competent
jurisdiction without the necessity of proving the actual damage to the Company.
The parties hereto intend that these non-competition and non-solicitation
provisions shall be deemed to be a series of separate covenants, one for each
and every county of each and every state of the United States of America and
each and every political subdivision of each and every country outside the
United States of America where this provision is intended to be effective. For
purposes of this Section 6 and Section 7, the "Company" refers to the Company
and any subsidiaries of the Company.
-48-
7. Secret Processes and Confidential Information.
---------------------------------------------
(a) For the Employment Term and thereafter, (i) the Employee will not
divulge, directly or indirectly, other than in the regular and proper course of
business of the Company or as required by law, any confidential knowledge or
information with respect to the business, operation or finances of the Company,
including without limitation, inventions, products, machinery, processes,
methods, techniques, compositions, projects, developments, plans, financial
data, personnel data, computer programs and customer and supplier lists
(collectively, "Confidential Information"), and (ii) the Employee will not use,
------------------------
directly or indirectly, any Confidential Information for the benefit of anyone
other than the Company; provided, however, that the Employee has no obligation,
express or implied, to refrain from using or disclosing to others any such
knowledge or information which is or hereafter shall become generally available
to the public other than through disclosure by the Employee or which is received
by the Employee from a third party who has the lawful right to make such
disclosure without restriction. The Employee agrees that all files, letters,
memoranda, reports, records, data, sketches, drawings, program listings or other
written, photographic, or other tangible material containing Confidential
Information, whether created by the Employee or others, which shall come into
her custody or possession, shall be and are the exclusive property of the
Company to be used by the Employee only in the performance of her duties for the
Company.
(b) All new processes, techniques, know-how, inventions, improvements,
discoveries, methods, plans, products, works of authorship, patents and devices
developed, made or invented by the Employee, alone or with others, whether
patentable or not, while an employee of the Company (collectively, the
"Developments"), shall become and be the sole property of the Company unless
-------------
released in writing by the Company. The Employee agrees to assign and does
hereby assign to the Company (or any person or entity designated by the Company)
all her right, title and interest in and to all Developments and all related
patents, patent applications, copyrights and copyright applications. In
addition, the Employee agrees to cooperate fully with the Company, both during
and after her employment with the Company, with respect to the procurement,
maintenance and enforcement of copyrights and patents (both in the United States
and foreign countries) relating to Developments. The Employee shall sign all
papers, including, without limitation, copyright applications, patent
applications, declarations, oaths, formal assignments, assignments of priority
rights, and powers of attorney, which the Company may deem necessary or
desirable in order to protect its rights and interests in any Development. The
Employee also hereby waives all claims to moral rights in any Development.
(c) Notwithstanding the foregoing, if the Employee is required to
disclose or divulge Confidential Information pursuant to any subpoena or other
judicial process she will promptly so notify the Company, and if so requested by
the Company, will assist the Company in seeking a protective order with respect
thereto. If the
-49-
Company cannot or chooses not to obtain such a protective order, the Employee
will divulge only such Confidential Information as she is advised by her counsel
is required to be disclosed, and will use her best efforts to ensure that the
balance of such Confidential Information will be kept confidential.
8. Termination.
-----------
(a) Termination at End of Term. The employment of the Employee
--------------------------
hereunder shall terminate at the end of the Employment Term, at which time the
Employee may become an employee-at-will of the Company upon the mutual agreement
of the Employee and the Company.
(b) Termination by the Company With Cause. The Company shall have the
-------------------------------------
right at any time to terminate the Employee's employment hereunder by written
notice upon the occurrence of any of the following (any such termination being
referred to as a termination for "Cause"):
-----
(i) the commission by the Employee of any deliberate and premeditated
act, or any gross negligence in the performance of her duties, that
materially and adversely affects the business, financial condition or
results of operations of the Company;
(ii) Employee's habitual drunkenness, use of illegal substances or
drugs or the use, possession, distribution or being under the influence of
alcohol or illegal substances or drugs in the workplace;
(iii) the conviction by the Employee of a felony;
(iv) the wilful failure or refusal of the Employee to perform her
duties hereunder, which failure or refusal continues for 30 days after
written notice thereof from the Company to the Employee; or
(v) the breach by the Employee of any terms of this Agreement, which
breach continues for 30 days subsequent to written notice from the Company
to the Employee of the breach.
(c) Termination by Company for Death or Disability. The Company shall
----------------------------------------------
have the right at any time to terminate the Employee's employment hereunder by
30 days' written notice upon the Employee's inability to perform her duties
hereunder by reason of any mental, physical or other disability for a period of
at least six consecutive months (referred to herein as a "disability"), as
----------
determined by an independent physician. The Employee's employment hereunder
shall also terminate upon the death of the Employee.
-50-
(d) Termination by Company without Cause. The Company shall have the
------------------------------------
right at any time by 30 days' written notice to Employee to terminate the
Employee's employment for any other reason without Cause.
(e) Termination by Employee for Good Reason. The Employee shall have
---------------------------------------
the right at any time to terminate the Employee's employment hereunder by
written notice to the Company upon the occurrence of any of the following
events, which event continues for 30 days subsequent to such notice:
(i) a material reduction of the Employee's duties, responsibilities
and authority from those described in Section 1;
(ii) a required relocation of the Employee to a principal place of
business more than 100 miles from the Employee's principal place of
business on the date of this Agreement; or
(iii) the breach by the Company of a material term of this Agreement.
9. Effect of Termination of Employment.
-----------------------------------
(a) With Cause. If the Employee's employment is terminated with Cause
----------
(pursuant to Section 8(b)), all compensation and benefits shall cease at the
time of such termination; provided, however, that the Employee shall be entitled
to continue to participate in the Company's medical benefit plans, at her own
expense, to the extent required by law.
(b) Death or Disability. If the Employee's employment is terminated
-------------------
by the death or disability of the Employee (pursuant to Section 8(c)), all
compensation and benefits shall cease at the time of such death or disability;
provided, however, that the Employee or, in the event of the death of the
Employee, the Employee's estate, shall be entitled to continue to participate in
the Company's medical benefit plans, at her expense or the expense of her
estate, to the extent required by law.
(c) Without Cause or For Good Reason. If the Employee's employment is
--------------------------------
terminated by the Company without Cause (pursuant to Section 8(d)) or for Good
Reason (pursuant to Section 8(e)), then the Employee shall be entitled to the
following benefits in complete discharge of the Company's obligations hereunder:
(i) the Employee's salary specified in Section 4(a) shall continue to
be paid for the duration of the Employment Term; and
(ii) the Employee's additional benefits specified in Section 4(b)
shall terminate at the time of such termination; provided, however, that
the Employee
-51-
shall be entitled to participate in the Company's medical benefit plans, at
the Company's expense, for the duration of the Employment Term.
(d) Survival. The provisions of Sections 6 and 7 of this Agreement
--------
shall survive the termination of the Employee's employment and the termination
of this Agreement.
10. Insurance. The Company may purchase insurance on the life of the
---------
Employee, and if it does so, the Employee shall cooperate fully by performing
all the requirements of the life insurer which are necessary conditions
precedent to the issuance of the life insurance policy issued by it.
Notwithstanding the foregoing, if at the time of termination for any reason
(other than death), the Company is maintaining a life insurance policy on the
Employee which has a cash surrender value, then to the extent permitted under
such policy the Employee may purchase such policy from the Company by paying to
the Company the cash surrender value thereof.
11. Notice. Any notices required or permitted hereunder shall be in
------
writing and shall be deemed to have been given when personally delivered or when
mailed, certified or registered mail, postage prepaid, to the addresses set
forth above or to such other addresses as the parties may hereafter give notice
provided herein.
12. General.
-------
(a) Prior Agreements. This Agreement supersedes and replaces all
----------------
prior agreements between the Company and the Employee, whether written or oral,
relating to her employment by the Company.
(b) Governing Law. The terms of this Agreement shall be governed by
-------------
the internal laws (and not the law of conflicts) of the Commonwealth of
Massachusetts.
(c) Assignability. The Employee may not assign her interest in or
-------------
delegate her duties under this Agreement. The covenants and obligations of the
Employee hereunder shall redound to the benefit of the Company's successors and
assigns.
(d) Binding Effect. This Agreement shall be binding upon and inure to
--------------
the benefit of the Company, its successors and assigns.
(e) Entire Agreement; Modification. This Agreement constitutes the
-------------------------------
entire agreement of the parties hereto with respect to the subject matter hereof
and may not be modified or amended in any way except in writing by the parties
hereto.
(f) Duration. Notwithstanding the term of employment hereunder, this
--------
Agreement shall continue for so long as any obligations remain under this
Agreement.
-52-
(g) Specific Performance. The Employee acknowledges that a breach of
--------------------
this Agreement by the Employee will cause irreparable injury to the Company,
that the Company's remedies at law will be inadequate in case of any such
breach, and that the Company will be entitled to preliminary injunctive relief
in case of any such breach.
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound, have
hereunto executed this Agreement the day and year first written above.
LINKAGE, INC.
By:_________________________________
Name:
Title:
EMPLOYEE
____________________________________
Xxxxxxx X. High
-53-
EXHIBIT D
XXXXX X. XXXXX EMPLOYMENT AGREEMENT
-54-
EMPLOYMENT AGREEMENT
This Agreement is made as of the 7th day of August, 1998 between Linkage,
Inc, a Massachusetts corporation with its principal offices at Xxx Xxxxxx Xxxx,
Xxxxxxxxx, Xxxxxxxxxxxxx 00000 (the "Company"), and Xxxxx X. Xxxxx, an
-------
individual residing at 0000 Xxxxx Xxxx, Xxxxxxxxxx, Xxxxx 00000 (the
"Employee").
--------
RECITALS
--------
The Company desires to employ the Employee and the Employee desires to be
employed by the Company upon the terms and conditions hereinafter set forth.
WITNESSETH:
----------
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto, each intending
to be legally bound hereby, agree as follows:
1. Employment. The Company hereby employs the Employee in such position
----------
and capacity as the Employee and the Company shall from time to time determine,
and the Employee accepts such employment for the term of employment specified in
Section 3 below (the "Employment Term"). During the Employment Term, the
---------------
Employee shall have the duties, responsibilities and authority as are delegated
to him by the Company; provided, however, that during the Employment Term such
duties shall include providing instruction for mainframe classes and courseware
modification.
2. Performance. The Employee agrees to devote his best efforts and all
-----------
of his business time to the performance of his duties hereunder during the
Employment Term.
3. Employment Term. The Employment Term shall begin on the date of this
---------------
Agreement and continue until December 31, 2000, unless earlier terminated
pursuant to Section 8.
4. Compensation.
------------
(a) Salary. During the Employment Term, the Company shall pay the
------
Employee an annual base salary, payable in accordance with the Company's normal
payroll practice, subject to withholding and other applicable taxes, at the
annualized rate of $90,000 per year. The Employee's salary shall be subject to
review on an annual basis
-55-
by senior management of the Company; provided, however, that in no event shall
the Employee's base salary be decreased.
(b) Additional Benefits. The Employee shall be entitled to
-------------------
participate in all benefit programs that the Company establishes and makes
available to its employees generally, if any, to the extent that Employee's
position, venue, tenure, salary, age, health and other qualifications make him
eligible to participate.
5. Expenses. The Employee shall be reimbursed by the Company for all
--------
actual and reasonable expenses incurred by him in connection with the
performance of his duties hereunder, subject to any policy with respect thereto
imposed by the Company from time to time.
6. Non-Competition and Non-Solicitation.
------------------------------------
(a) The Employee recognizes that his willingness to enter into the
restrictive covenants contained in this Section 6 was a critical condition
precedent to the Company's willingness to enter into and perform under this
Agreement. The Employee also acknowledges that the restrictions contained in
this Section 6 will not materially or unreasonably interfere with the Employee's
ability to earn a living, and that such restrictions are necessary to protect
the legitimate business interests of the Company.
(b) The Employee agrees that during the Non-Competition Period (as
defined below) he will not in any capacity, either separately, jointly or in
association with others, directly or indirectly, as an officer, director,
consultant, agent, employee, owner, partner, joint venturer, distributor,
dealer, representative, stockholder, investor, lender or otherwise, engage or
have a financial interest in any business which competes with the Company or
with any affiliate of the Company (excepting only the ownership of not more than
1% of the outstanding securities of any class listed on an exchange or regularly
traded in the over-the-counter market). An entity shall be deemed to compete
with the Company or one of the Company's affiliates as of a particular time if
the entity then produces, distributes or markets any product or service which is
competitive with, and may be purchased in replacement or substitution of, any
product or service which was being distributed or marketed by the Company or
such affiliate during the Employment Term, and which is then still being
marketed or distributed by the Company or such affiliate or which the Company or
such affiliate was considering marketing or distributing during the Employment
Term. The Company or its affiliate shall be deemed to be considering marketing
or distributing a product or service as of a particular date only if the Company
or such affiliate intends to market or distribute such product or service within
two years of such date. The "Non-Competition Period" is (a) the period during
----------------------
which the Employee is employed by the Company, whether or not pursuant to this
Agreement, plus (b) a period of two years thereafter.
-56-
(c) The Employee further agrees that during the Non-Competition Period
he will not in any capacity, either separately, jointly or in association with
others, directly or indirectly, solicit, divert or take away, attempt to take
away or otherwise contact any of the Company's clients, customers, accounts,
distributors, dealers or representatives as shown by the Company's records, that
were clients, customers, prospective clients or customers, accounts,
distributors, dealers or representatives of the Company at any time during the
two years immediately preceding the date of termination of the Employee's
employment by the Company if such solicitation or contact is for the specific
purpose of selling products or services that compete with any products or
services that the Company has available for sale to its clients, customers,
accounts, distributors, dealers or representatives or prospects. The Employee
further agrees that during the Non-Competition Period he will not in any
capacity, either separately, jointly or in association with others, directly or
indirectly, recruit, solicit or hire any employee or consultant of the Company
or induce or attempt to induce any employee or consultant of the Company to
terminate his or her employment or consultancy with, or otherwise cease his or
her relationship with, the Company. For purposes of this Agreement,
"prospective clients or customers" shall mean any person, school, college,
university or entity that the Company has actively solicited with respect to the
Company's consulting services or corporate education programs during the term of
the Employee's employment with the Company, whether or not such employment is
pursuant to this Agreement.
(d) If a court determines that the foregoing restrictions are too
broad or otherwise unreasonable under applicable law, including with respect to
time or space, the court is hereby requested and authorized by the parties
hereto to revise the foregoing restrictions to include the maximum restrictions
allowed under the applicable law. The Employee expressly agrees that breach of
the foregoing would result in irreparable injuries to the Company, that the
remedy at law for any such breach will be inadequate and that upon any breach of
this provision, the Company, in addition to all other available remedies, shall
be entitled as a matter of right to injunctive relief in any court of competent
jurisdiction without the necessity of proving the actual damage to the Company.
The parties hereto intend that these non-competition and non-solicitation
provisions shall be deemed to be a series of separate covenants, one for each
and every county of each and every state of the United States of America and
each and every political subdivision of each and every country outside the
United States of America where this provision is intended to be effective. For
purposes of this Section 6 and Section 7, the "Company" refers to the Company
and any subsidiaries of the Company.
-57-
7. Secret Processes and Confidential Information.
---------------------------------------------
(a) For the Employment Term and thereafter, (i) the Employee will not
divulge, directly or indirectly, other than in the regular and proper course of
business of the Company or as required by law, any confidential knowledge or
information with respect to the business, operation or finances of the Company,
including without limitation, inventions, products, machinery, processes,
methods, techniques, compositions, projects, developments, plans, financial
data, personnel data, computer programs and customer and supplier lists
(collectively, "Confidential Information"), and (ii) the Employee will not use,
------------------------
directly or indirectly, any Confidential Information for the benefit of anyone
other than the Company; provided, however, that the Employee has no obligation,
express or implied, to refrain from using or disclosing to others any such
knowledge or information which is or hereafter shall become generally available
to the public other than through disclosure by the Employee or which is received
by the Employee from a third party who has the lawful right to make such
disclosure without restriction. The Employee agrees that all files, letters,
memoranda, reports, records, data, sketches, drawings, program listings or other
written, photographic, or other tangible material containing Confidential
Information, whether created by the Employee or others, which shall come into
his custody or possession, shall be and are the exclusive property of the
Company to be used by the Employee only in the performance of his duties for the
Company.
(b) All new processes, techniques, know-how, inventions, improvements,
discoveries, methods, plans, products, works of authorship, patents and devices
developed, made or invented by the Employee, alone or with others, whether
patentable or not, while an employee of the Company (collectively, the
"Developments"), shall become and be the sole property of the Company unless
-------------
released in writing by the Company. The Employee agrees to assign and does
hereby assign to the Company (or any person or entity designated by the Company)
all his right, title and interest in and to all Developments and all related
patents, patent applications, copyrights and copyright applications. In
addition, the Employee agrees to cooperate fully with the Company, both during
and after his employment with the Company, with respect to the procurement,
maintenance and enforcement of copyrights and patents (both in the United States
and foreign countries) relating to Developments. The Employee shall sign all
papers, including, without limitation, copyright applications, patent
applications, declarations, oaths, formal assignments, assignments of priority
rights, and powers of attorney, which the Company may deem necessary or
desirable in order to protect its rights and interests in any Development. The
Employee also hereby waives all claims to moral rights in any Development.
(c) Notwithstanding the foregoing, if the Employee is required to
disclose or divulge Confidential Information pursuant to any subpoena or other
judicial process he will promptly so notify the Company, and if so requested by
the Company, will assist the Company in seeking a protective order with respect
thereto. If the
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Company cannot or chooses not to obtain such a protective order, the Employee
will divulge only such Confidential Information as he is advised by his counsel
is required to be disclosed, and will use his best efforts to ensure that the
balance of such Confidential Information will be kept confidential.
8. Termination.
-----------
(a) Termination at End of Term. The employment of the Employee
--------------------------
hereunder shall terminate at the end of the Employment Term, at which time the
Employee may become an employee-at-will of the Company upon the mutual agreement
of the Employee and the Company.
(b) Termination by the Company With Cause. The Company shall have the
-------------------------------------
right at any time to terminate the Employee's employment hereunder by written
notice upon the occurrence of any of the following (any such termination being
referred to as a termination for "Cause"):
-----
(i) the commission by the Employee of any deliberate and premeditated
act, or any gross negligence in the performance of his duties, that
materially and adversely affects the business, financial condition or
results of operations of the Company;
(ii) Employee's habitual drunkenness, use of illegal substances or
drugs or the use, possession, distribution or being under the influence of
alcohol or illegal substances or drugs in the workplace;
(iii) the conviction by the Employee of a felony;
(iv) the wilful failure or refusal of the Employee to perform his
duties hereunder, which failure or refusal continues for 30 days after
written notice thereof from the Company to the Employee; or
(v) the breach by the Employee of any terms of this Agreement, which
breach continues for 30 days subsequent to written notice from the Company
to the Employee of the breach.
(c) Termination by Company for Death or Disability. The Company shall
----------------------------------------------
have the right at any time to terminate the Employee's employment hereunder by
30 days' written notice upon the Employee's inability to perform his duties
hereunder by reason of any mental, physical or other disability for a period of
at least six consecutive months (referred to herein as a "disability"), as
----------
determined by an independent physician. The Employee's employment hereunder
shall also terminate upon the death of the Employee.
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(d) Termination by Company without Cause. The Company shall have the
------------------------------------
right at any time by 30 days' written notice to Employee to terminate the
Employee's employment for any other reason without Cause.
(e) Termination by Employee for Good Reason. The Employee shall have
---------------------------------------
the right at any time to terminate the Employee's employment hereunder by
written notice to the Company upon the occurrence of any of the following
events, which event continues for 30 days subsequent to such notice:
(i) a material reduction of the Employee's duties, responsibilities
and authority from those described in Section 1;
(ii) a required relocation of the Employee to a principal place of
business more than 100 miles from the Employee's principal place of
business on the date of this Agreement; or
(iii) the breach by the Company of a material term of this Agreement.
9. Effect of Termination of Employment.
-----------------------------------
(a) With Cause. If the Employee's employment is terminated with Cause
----------
(pursuant to Section 8(b)), all compensation and benefits shall cease at the
time of such termination; provided, however, that the Employee shall be entitled
to continue to participate in the Company's medical benefit plans, at his own
expense, to the extent required by law.
(b) Death or Disability. If the Employee's employment is terminated
-------------------
by the death or disability of the Employee (pursuant to Section 8(c)), all
compensation and benefits shall cease at the time of such death or disability;
provided, however, that the Employee or, in the event of the death of the
Employee, the Employee's estate, shall be entitled to continue to participate in
the Company's medical benefit plans, at his expense or the expense of his
estate, to the extent required by law.
(c) Without Cause or For Good Reason. If the Employee's employment is
--------------------------------
terminated by the Company without Cause (pursuant to Section 8(d)) or for Good
Reason (pursuant to Section 8(e)), then the Employee shall be entitled to the
following benefits in complete discharge of the Company's obligations hereunder:
(i) the Employee's salary specified in Section 4(a) shall continue to
be paid for the duration of the Employment Term; and
(ii) the Employee's additional benefits specified in Section 4(b)
shall terminate at the time of such termination; provided, however, that
the Employee
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shall be entitled to participate in the Company's medical benefit plans, at
the Company's expense, for the duration of the Employment Term.
(d) Survival. The provisions of Sections 6 and 7 of this Agreement
--------
shall survive the termination of the Employee's employment and the termination
of this Agreement.
10. Insurance. The Company may purchase insurance on the life of the
---------
Employee, and if it does so, the Employee shall cooperate fully by performing
all the requirements of the life insurer which are necessary conditions
precedent to the issuance of the life insurance policy issued by it.
Notwithstanding the foregoing, if at the time of termination for any reason
(other than death), the Company is maintaining a life insurance policy on the
Employee which has a cash surrender value, then to the extent permitted under
such policy the Employee may purchase such policy from the Company by paying to
the Company the cash surrender value thereof.
11. Notice. Any notices required or permitted hereunder shall be in
------
writing and shall be deemed to have been given when personally delivered or when
mailed, certified or registered mail, postage prepaid, to the addresses set
forth above or to such other addresses as the parties may hereafter give notice
provided herein.
12. General.
-------
(a) Prior Agreements. This Agreement supersedes and replaces all
----------------
prior agreements between the Company and the Employee, whether written or oral,
relating to his employment by the Company.
(b) Governing Law. The terms of this Agreement shall be governed by
-------------
the internal laws (and not the law of conflicts) of the Commonwealth of
Massachusetts.
(c) Assignability. The Employee may not assign his interest in or
-------------
delegate his duties under this Agreement. The covenants and obligations of the
Employee hereunder shall redound to the benefit of the Company's successors and
assigns.
(d) Binding Effect. This Agreement shall be binding upon and inure to
--------------
the benefit of the Company, its successors and assigns.
(e) Entire Agreement; Modification. This Agreement constitutes the
-------------------------------
entire agreement of the parties hereto with respect to the subject matter hereof
and may not be modified or amended in any way except in writing by the parties
hereto.
(f) Duration. Notwithstanding the term of employment hereunder, this
--------
Agreement shall continue for so long as any obligations remain under this
Agreement.
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(g) Specific Performance. The Employee acknowledges that a breach of
--------------------
this Agreement by the Employee will cause irreparable injury to the Company,
that the Company's remedies at law will be inadequate in case of any such
breach, and that the Company will be entitled to preliminary injunctive relief
in case of any such breach.
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound, have
hereunto executed this Agreement the day and year first written above.
LINKAGE, INC.
By:_________________________________
Name:
Title:
EMPLOYEE
____________________________________
Xxxxx X. Xxxxx
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EXHIBIT E
1999 INCENTIVE PLAN FOR HIGH TECHNOLOGIES' EMPLOYEES
1. Potential Establishment of a Bonus Pool. The Buyer shall establish a
---------------------------------------
"Bonus Pool" for the Company's employees equal to 20% of the Company's unaudited
----------
earnings before income and taxes for the 1999 calendar year ("EBIT"), but only
----
if EBIT divided by net revenues of the Company equals at least 15%. If EBIT
divided by net revenues of the Company equals less than 15%, then the Buyer
shall have no obligation to establish a Bonus Pool or make any distributions
pursuant to paragraph 2 below.
2. Potential Bonus Payments From the Bonus Pool. If the Buyer
--------------------------------------------
establishes a Bonus Pool pursuant to paragraph 1 above, it shall make payments
from such Bonus Pool directly to employees of the Company (the "Bonus
-----
Recipients") in accordance with the written instructions of Xxxxxxx X. High, who
shall solely decide upon the identity of the Bonus Recipients and the
appropriate allocations in light of his evaluation of each Bonus Recipient. The
parties agree and acknowledge that the amount of the payments that the Buyer
delivers to the Bonus Recipients shall collectively equal and not exceed the
amount of the Bonus Pool. The Buyer shall deliver such payments to the Bonus
Recipients within fifteen (15) days of the later to occur of the determination
of EBIT and receipt of the written instructions from Mr. High.
The parties agree and acknowledge that the 1999 Incentive Plan for High
Technologies' Employees shall be in effect for the 1999 calendar year only.
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