Exhibit 10.7
SETTLEMENT AGREEMENT
This Settlement Agreement (this "Agreement") is made as of May 28, 1997
by and between COLLEGIS, Inc., a Delaware corporation formerly known as TSI
Management Company and the successor to Technology Specialists, Inc.
("COLLEGIS"), and Claire Reid ("Reid").
RECITALS
WHEREAS, COLLEGIS and Reid are parties to a certain Incentive, Put and
Noncompetition Agreement, dated as of April 11, 1996, a copy of which is
attached hereto as EXHIBIT A (the "Incentive Agreement"), a certain
Registration Agreement, dated April 11, 1996, a copy of which is attached
hereto as EXHIBIT B (the "Registration Agreement"), a certain Stock Option
Agreement, dated as of April 11, 1996, a copy of which is attached hereto as
EXHIBIT C (the "Old Option Agreement"), and a certain Stock Option Agreement,
dated as of June 20, 1996, a copy of which is attached hereto as EXHIBIT D
(the "Option Agreement", and, together with the Incentive Agreement, the
Registration Agreement and the Old Stock Option Agreement, the "Operative
Documents");
WHEREAS, Reid was an employee and officer of COLLEGIS until March 3,
1997; and
WHEREAS, COLLEGIS and Reid desire to resolve all issues that have arisen
between them, to release each other from all present and potential mutual
claims and to modify certain contractual arrangements between them;
AGREEMENTS
NOW THEREFORE, the parties agree as follows:
1. TERMINATION OF EMPLOYMENT AND EMPLOYMENT COMPENSATION. Reid's
employment with COLLEGIS terminated as of March 3, 1997. Notwithstanding the
foregoing, COLLEGIS shall continue to (i) pay to Reid an amount equal to her
current annual base salary of $140,000, less any deductions required by law,
until December 31, 1997, in accordance with COLLEGIS' customary payroll
practices and calculated and paid in the same manner as if Reid had been
employed by COLLEGIS for the full 1997 calendar year and (ii) provide Reid
with all life, disability, accident, health insurance and other employment
and fringe benefits and programs currently provided to her by COLLEGIS
through such date in accordance with the terms and provisions of COLLEGIS'
plans and programs as in effect on the date hereof, PROVIDED, HOWEVER, that,
except as set forth in the following sentence, Reid shall have no rights or
claims whatsoever under, pursuant to or with respect to any COLLEGIS
incentive or bonus plan or program, including, but not limited to, the
COLLEGIS Performance Incentive Plan. In addition, COLLEGIS shall pay to Reid
a lump sum payment of $40,000, less any deductions required by law, as
compensation under the COLLEGIS Performance Incentive Plan on or about March
31, 1998.
2. BOARD MEMBERSHIP. Reid's membership on the Board of Directors and
the Executive Committee of COLLEGIS shall terminate on the date hereof. By
executing this
Agreement, Reid resigns as of the date hereof as a member and Vice Chairman
of the Board of Directors of COLLEGIS and as a member of the Executive
Committee of COLLEGIS.
3. INCENTIVE AGREEMENT.
(a) The Incentive Agreement shall remain in full force and effect
without amendment or modification except that:
(i) the term "Restricted Period" in Section 1 of the Incentive
Agreement shall be deemed to be amended by deleting the phrase "twenty-four
(24) months after the termination of the Executive's employment with the
Company for any reason" therein and replacing it with the phrase "on December
31, 1998";
(ii) Section 2 of the Incentive Agreement shall be deemed to be
amended as follows: (A) the phrase "a bonus in the amount of $300,000 (the
"IPO Bonus") upon the IPO Date" in the first sentence thereof shall be
deleted in its entirety and replaced with the phrase "on the IPO Date a bonus
in the amount of $475,000 (the "IPO Bonus") upon the closing of the IPO"; and
(B) the text of clause (b) in the first sentence thereof shall be deleted in
its entirety and replaced with the following phrase "the Executive takes all
appropriate and necessary actions in connection with the closing of the IPO";
(iii) Section 4.1 of the Incentive Agreement shall be deemed to be
amended by deleting the last sentence thereof in its entirety and replacing
it with the following sentence: "Nothing contained herein shall prevent or
prohibit the Executive from (i) during the entire Restricted Period, engaging
in technology outsourcing, systems integration or facilities management in
lines of business or markets other than those included in the Company
Business, (ii) during the entire Restricted Period, being employed by,
teaching at, or providing consulting services which are not competitive with
or similar to those services then or previously offered by the Company to,
universities or other institutions of higher education included in the
Company Business, or (iii) during that portion of the Restricted Period from
January 1, 1998 through December 31, 1998, providing consulting services
which are competitive with or similar to those services then or previously
offered by the Company to colleges or universities which were not existing
clients or customers of the Company as of March 3, 1997, provided that the
provision of such consulting services does not breach or otherwise violate
Section 4.2 of this Incentive Agreement."; and
(iv) Section 4.2 of the Incentive Agreement shall be deemed to be
amended by deleting the last sentence thereof in its entirety and replacing
it with the following two (2) sentences: "For purposes of this Agreement,
"Confidential Information" includes, without limitation, information relating
to the properties, accounts, books, records, suppliers, trade secrets,
contracts, pricing policies, operational methods, marketing plans or
strategies, business acquisition plans and new personnel acquisition plans of
the Company (or of its Parent or any Subsidiary) or any predecessor of any
such entity; PROVIDED, HOWEVER, that Confidential Information shall not
include any information known or available to the public (other than as a
result of unauthorized disclosure by the Executive or any other Person);
PROVIDED FURTHER, HOWEVER, that for all periods after January
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1, 1998, with respect to the provision by the Executive of consulting
services to colleges or universities which were not existing clients or
customers of the Company as of March 3, 1997, Confidential Information shall
not include information relating to the methods, techniques and modes of
effort utilized by the Company in the provision of services or the marketing
of information technology (other than information relating to business
relationship and service models (commonly referred to as the "black box"),
pricing policies, methods, algorithms and related information (the "Company's
Pricing Policies Information")). Notwithstanding anything herein to the
contrary, the Company and the Executive expressly acknowledge and agree that
the term "Confidential Information" shall at all times during and after the
Restricted Period include the Company's Pricing Policies."
(b) It is expressly acknowledged by the parties that (i) the
"Restricted Period (as that term is defined and used in the Incentive
Agreement, as amended by Section 3(a)(i) hereof) is not terminated by this
Agreement and shall continue until December 31, 1998, (ii) the "Restrictive
Covenants" (as that term is defined and used in the Incentive Agreement) are
binding and enforceable, and shall continue in full force and effect, in
accordance with the terms and provisions of the Incentive Agreement, as
amended by this Agreement, and (iii) the "Restrictive Covenants" (as that
term is defined and used in the Incentive Agreement, as amended by this
Agreement) are reasonable and valid in duration and geographic scope and in
all other respects.
4. REGISTRATION AGREEMENT. The Registration Agreement shall remain in
full force and effect without amendment. In the event Reid requests that all
or any portion of the "Reid Shares" (as that term is defined and used in the
Registration Agreement), including, but not limited to, all or any portion of
the "Vested Option Shares" (as that term is defined and used in Section 5(b)
hereof), be registered in the "IPO" (as that term is defined and used in the
Registration Agreement) in accordance with the Registration Agreement (the
"Preferred Reid Shares"), COLLEGIS agrees, to the extent permitted by law, to
use its reasonable best efforts to cause the Preferred Reid Shares to be
included in the IPO in accordance with the Registration Agreement. Without
limiting the generality of the foregoing, COLLEGIS agrees to cause the
"Holders" (as that term is defined and used in the Registration Agreement) of
a majority of the "Registrable Shares" (as that term is defined and used in
the Registration Agreement) to waive compliance with Section 2(b) of the
Registration Agreement if such waiver is necessary in order to effectuate the
registration of the Preferred Reid Shares under this Section 4.
5. STOCK OPTION AGREEMENT.
(a) The Option Agreement shall remain in full force and effect without
amendment except that:
(i) the term "Restricted Period" in Section 2 of the Option
Agreement shall be deemed to be amended by deleting the phrase "twenty-four
(24) months after the termination of the Holder's employment with the Company
for any reason" therein and replacing it with the phrase "on December 31,
1998";
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(ii) Section 6.1 of the Option Agreement shall be deemed to be
amended by deleting the last sentence thereof in its entirety and replacing
it with the following sentence: "Nothing contained herein shall prevent or
prohibit the Holder from (i) during the entire Restricted Period, engaging in
technology outsourcing, systems integration or facilities management in lines
of business or markets other than those included in the Company Business,
(ii) during the entire Restricted Period, being employed by, teaching at, or
providing consulting services which are not competitive with or similar to
those services then or previously offered by the Company to, universities or
other institutions of higher education included in the Company Business, or
(iii) during that portion of the Restricted Period from January 1, 1998
through December 31, 1998, providing consulting services which are
competitive with or similar to those services then or previously offered by
the Company to colleges or universities which were not existing clients or
customers of the Company as of March 3, 1997, provided that the provision of
such consulting services does not breach or otherwise violate Section 6.2 of
this Option Agreement."; and
(iii) Section 6.2 of the Option Agreement shall be deemed to be
amended by deleting the last sentence thereof in its entirety and replacing
it with the following two (2) sentences: "For purposes of this Agreement,
"Confidential Information" includes, without limitation, information relating
to the properties, accounts, books, records, suppliers, trade secrets,
contracts, pricing policies, operational methods, marketing plans or
strategies, business acquisition plans and new personnel acquisition plans of
the Company (or of its Parent or any Subsidiary) or any predecessor of any
such entity; PROVIDED, HOWEVER, that Confidential Information shall not
include any information known or available to the public (other than as a
result of unauthorized disclosure by the Holder or any other Person);
PROVIDED FURTHER, HOWEVER, that for all periods after January 1, 1998, with
respect to the provision by the Holder of consulting services to colleges or
universities which were not existing clients or customers of the Company as
of March 3, 1997, Confidential Information shall not include information
relating to the methods, techniques and modes of effort utilized by the
Company in the provision of services or the marketing of information
technology (other than information relating to business relationship and
service models (commonly referred to as the "black box"), pricing policies,
methods, algorithms and related information (the "Company's Pricing Policies
Information")). Notwithstanding anything herein to the contrary, the Company
and the Holder expressly acknowledge and agree that the term "Confidential
Information" shall at all times during and after the Restricted Period
include the Company's Pricing Policies."
(b) It is expressly acknowledged by the parties that (i) the Old Option
Agreement has previously been terminated and is of no further force or effect,
(ii) the "Termination Date" (as that term is defined and used in the Option
Agreement) shall be March 3, 1997, (iii) 62,500 "Option Shares" (as that term is
defined and used in the Option Agreement), subject to adjustment as set forth in
Section 3.7 of the Option Agreement (the "Vested Option Shares"), shall be
deemed to be vested and exercisable during the period commencing as of the date
hereof and ending on December 31, 1998, (iv) the "Stock Option" (as that term is
defined and used in the Option Agreement) shall terminate and cease to be
exercisable with respect to 187,500 "Option Shares" (as that term is defined and
used in the Option Agreement), subject to adjustment as set forth in Section 3.7
of the Option Agreement, as of the date hereof, (v) the "Restricted Period" (as
that term is defined and used in the Option Agreement, as amended by Section
5(a) hereof is not terminated by this Agreement
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and shall continue until December 31, 1998, (vi) the "Restrictive Covenants"
(as that term is defined and used in the Option Agreement) are binding and
enforceable, and shall continue in full force and effect, in accordance with
the terms of the Option Agreement, as amended by this Agreement, and (vii)
the "Restrictive Covenants" (as that term is defined and used in the Option
Agreement, as amended by this Agreement) are reasonable and valid in duration
and geographic scope and in all other respects.
6. CONSULTING AGREEMENT. COLLEGIS agrees to employ Reid, and Reid
agrees to accept employment, as a consultant under the following terms and
conditions:
(a) The term of the consulting arrangement established by this Section
6 will commence on January 1, 1998 and end on December 31, 1998; unless the
consulting arrangement established by this Section 6 is earlier terminated by
reason of Reid's death or disability, Reid's voluntary termination thereof or
Reid's breach of Section 10 of this Agreement or the "Restrictive Covenants"
(as that term is defined and used in the Incentive Agreement and the Option
Agreement, each as amended by this Agreement).
(b) Throughout the term of the consulting arrangement established by
this Section 6, Reid's obligation to provide services shall be to make
herself reasonably available to COLLEGIS by telephone and, upon not less than
three days' notice, subject to Reid's reasonable availability, in person to
perform such services relating to technology assessment, customer relations,
new business opportunities and employee relations as shall be assigned to her
from time to time by the President of COLLEGIS to advance the interests of
COLLEGIS. The parties hereto acknowledge that in providing services under
this Section 6, Reid will be acting solely as an independent contractor and
will not be considered or deemed to be, or represent to third parties that
she is, an agent, employee, director, joint venturer or partner of COLLEGIS
or any of its affiliates. Neither COLLEGIS nor any of its affiliates shall
be responsible for, and each shall be held harmless by Reid from, any
liability to any governmental authority for any federal or state withholding
tax, payroll tax or unemployment, disability or workers compensation
insurance payments or deductions with respect to the consideration paid to
Reid under this Section 6. Other than an independent contractor relationship,
no other relationship is intended or created by this Section 6 by and between
COLLEGIS or any of its affiliates, on the one hand, and Reid, on the other
hand. Reid acknowledges and agrees that under this Section 6, except as
expressly set forth in Section 6(d) hereof, she is not entitled to
participate in, and shall not claim any right with respect to, any employment
or fringe benefits or programs of COLLEGIS.
(c) During the term of the consulting arrangement established by this
Section 6, COLLEGIS shall pay to Reid $2,000 per day for each day during
which Reid provides such requested services to COLLEGIS; provided, however,
that notwithstanding the foregoing, COLLEGIS shall pay Reid for a minimum of
twelve and one-half (12.5) days during each quarter in calendar year 1998
under this Section 6, with payments to be made for each such calendar quarter
within fifteen (15) days after the end of such calendar quarter.
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(d) During the term of the consulting arrangement established by this
Section 6, COLLEGIS shall provide to Reid medical, hospitalization, health
and accident/disability insurance benefits and plans, as are offered by
COLLEGIS to its executive employees and at the same cost or contribution rate
to Reid as such benefits or plans are offered by COLLEGIS to its executive
employees.
7. DISPOSITION OF ORLANDO HOUSE. Within sixty (60) days after the
date hereof, COLLEGIS shall purchase, or cause to be purchased, Reid's house
in Orlando, Florida (the "Orlando House") for $235,000 upon (i) a showing by
Reid that $235,000 was the purchase price actually paid by Reid for the
Orlando House and (ii) the execution and delivery by Reid to the Company or
its designee of a warranty deed, in appropriate form for recording to be
prepared by the Company and submitted to Reid, conveying the Orlando House to
the Company or its designee. COLLEGIS shall pay, or reimburse Reid with
respect to the payment of, Reid's actual out-of-pocket mortgage interest,
real estate tax, utility, insurance and maintenance expenses incurred with
respect to the Orlando House for the period commencing on February 1, 1997
and ending on the date the closing of the purchase of the Orlando House by
the Company or its designee actually occurs (the "House Closing Date") up to
a maximum of $16,000 upon the delivery to the Company by Reid of reasonably
detailed, itemized bills, invoices or receipts with respect such expenses.
In addition, COLLEGIS shall pay, or reimburse Reid with respect to the
payment of, reasonable out-of-pocket moving expenses actually incurred by
Reid in connection with relocating and moving Reid's household goods and
automobile from Orlando, Florida to Pennsylvania upon the delivery to the
Company by Reid of reasonably detailed, itemized bills, invoices or receipts
with respect such moving expenses. Reid agrees to leave her furniture at the
Orlando House until the House Closing Date. Reid further agrees to cooperate
with the Company, and to take all actions reasonably necessary, in connection
with the consummation of the purchase of the Orlando House by the Company or
its designee.
8. REID RELEASE. In consideration of the payments to be made to Reid
under this Agreement (which Reid hereby acknowledges and agrees represent
additional consideration which she would not otherwise be entitled to receive)
and the promises, covenants and agreements contained herein, Reid, for herself,
her successors, assigns, affiliates, and agents and her and their respective
heirs, executors, administrators, successors, assigns and agents (collectively,
the "Reid Releasing Parties"), hereby releases, waives and forever discharges
COLLEGIS, its affiliates and subsidiaries, and their respective officers,
directors, shareholders, partners, supervisors, employees, agents,
representatives, successors and assigns (collectively, the "COLLEGIS Released
Parties") from any and all actions, suits, damages, claims and demands
heretofore arising out of, under, or in connection with (i) the Operative
Documents, (ii) any Reid Releasing Party's employment by, or business dealing
with, any COLLEGIS Released Party, or (iii) any Reid Releasing Party's ownership
of the shares of common stock of, or any other equity interest in, any COLLEGIS
Released Party, which any Reid Releasing Party may have against any COLLEGIS
Released Party, in law or equity, known or unknown, fixed or contingent,
liquidated or unliquidated, and whether heretofore arising from tort, statute or
contract, including, but not limited to, any claims arising under Title VII of
the Civil Rights Act of 1964, the Civil Rights Act of 1866, the Civil Rights Act
of 1991, the Americans with Disabilities Act, the Rehabilitation Act, the Equal
Pay Act of 1963, the Employee Retirement Income Security Act of 1974, the Family
& Medical Leave Act of 1993, the Age Discrimination in
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Employment Act (the "ADEA"), any other federal or state equal employment
opportunity, gender or age discrimination law, wage payment law, or any other
federal or state law, statute, decision, order, policy or regulation
establishing or relating to claims or rights of employees, the Securities Act
of 1933, and the Securities and Exchange Act of 1934. Notwithstanding the
foregoing, nothing herein is intended to release COLLEGIS from any of its
obligations under this Agreement or any continuing obligations under the
Operative Documents, as amended by this Agreement.
9. COLLEGIS RELEASE. COLLEGIS, for itself and its predecessors,
successors, assigns, affiliates, employees and agents (collectively, the
"COLLEGIS Releasing Parties"), hereby release, waive and forever discharge
Reid and her agents, representatives, successors and assigns (collectively,
the "Reid Released Parties") from any and all actions, suits, damages, claims
and demands heretofore arising out of, under, or in connection with (i)
Operative Documents, (ii) any Reid Released Party's employment by, or
business dealing with, any COLLEGIS Releasing Party, or (iii) any Reid
Released Party's ownership of the shares of common stock of, or any other
equity interest in, any COLLEGIS Releasing Party, which any COLLEGIS
Releasing Party may have against any Reid Released Party, in law or equity,
known or unknown, fixed or contingent, liquidated or unliquidated, and
whether arising from tort, statute or contract, it being the intention of the
parties to make this release as broad and general as the law permits.
Notwithstanding the foregoing, nothing herein is intended to release Reid
from any of her obligations under this Agreement or any continuing
obligations under the Operative Documents, as amended by this Agreement.
10. NONDISCLOSURE; NONDISPARAGEMENT; PUBLICITY. The parties agree not
to disclose the financial terms of this Agreement to any persons inside or
outside of COLLEGIS except members of the Board of Directors of COLLEGIS and
those persons who, for financial, accounting and legal reasons, need to know
such terms. COLLEGIS, on the one hand, and Reid, on the other, regret that
differences have arisen between them and agree not to publicly or privately
disparage one another or to take any action knowingly intended to harm the
other.
11. DELIBERATION. COLLEGIS hereby advises Reid by this writing to consult
with legal counsel prior to executing this Agreement. COLLEGIS hereby notifies
Reid that under the ADEA and the Federal Older Workers Benefit Protection Act,
she has twenty-one (21) calendar days from the date upon which this Agreement is
delivered to her within which to consider the release of any ADEA claims
referenced in Section 8 hereof. COLLEGIS hereby notifies Reid that, if she
executes this Agreement, she may revoke the ADEA portion of the release set
forth in Section 8 hereof within a period of seven (7) calendar days following
the date on which she executes this Agreement (the "Revocation Period"). This
Agreement shall not become effective or enforceable until after the Revocation
Period has expired without Reid exercising her right of revocation. Such
revocation by Reid shall be communicated in writing to the President of
COLLEGIS, and must be received by the President of COLLEGIS, on or before the
expiration of the Revocation Period; otherwise Reid shall be deemed to have
waived her right of revocation and this Agreement shall be binding on all
parties in all respects. If Reid exercises her right of revocation within the
Revocation Period, this Agreement shall have full force and effect as to all of
its terms except the release of claims under the ADEA, and COLLEGIS will have
three (3) business days within which to rescind the entire
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Agreement in writing if it elects to do so. Such election by COLLEGIS shall
be communicated in writing to Reid.
12. NOTICES. All notices, demands and requests required or permitted
to be given under the provisions of this Agreement or under the Employment
Agreement shall be deemed duly given if made in writing and delivered
personally or mailed by postage prepaid certified or registered mail, return
receipt requested, which notices shall be addressed as follows (or addressed
to such other address that a party shall later designate to the other
parties):
If to the Company or to COLLEGIS:
COLLEGIS, Inc.
2300 Maitland Center Parkway
Suite 340
Maitland, FL 32751
Attn: President
with a copy to:
Stanford J. Goldblatt
Hopkins & Sutter
Three First National Plaza
Suite 4100
Chicago, IL 60602
If to Reid:
Claire Reid
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with a copy to:
Lewis Kates, Esq.
Lewis Kates Law Offices
1604 Locust Street
Philadelphia, PA 19103
13. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered
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shall be deemed to be an original and all of which taken together shall
constitute but one and the same instrument.
[Remainder of Page Intentionally Omitted.
Signature Page Follows.]
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The parties hereto indicate their agreement herewith and their
willingness to be bound by the terms of this Agreement by signing this
Agreement.
COLLEGIS, INC.
By:
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Its:
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/s/ Claire Reid
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Claire Reid