Exhibit 10.3
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is made this 1st day of January,
1999, between PROSOFT I-NET SOLUTIONS, INC., a Nevada corporation (the
"Company"), and XXXX X. PABRAI ("Employee").
WHEREAS:
1. The Company is engaged in the provision of internet and intranet
training and other computer training and services.
2. The Company desires to employ Employee as its Chief Technology
Officer, and Employee wishes to accept such employment on the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein set forth, the parties do hereby agree and promise as follows:
1. Employment. The Company hereby employs Employee and Employee hereby
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accepts employment under the terms and conditions set forth below. The
Employee's initial title shall be Chief Technology Officer.
2. Duties.
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2.1 The Employee shall perform such managerial, supervisory,
development or executive duties in connection with the business of the Company
as the board of directors of the Company (the "Board of Directors") and other
more senior officers of the Company may from time to time assign consistent with
Employee's title of Chief Technology Officer.
2.2 Employee will report and be responsible to persons designated by
the Chief Executive Officer of the Company.
2.3 Employee agrees to devote his full business time, energy and
skills to such employment subject to absences and customary vacations and for
temporary illnesses.
2.4 Employee will not engage in other gainful occupation during the
term of this Agreement without prior written consent of the Company; provided,
however, that nothing contained herein shall be construed to prevent the
Employee from trading for his own account and benefit in stocks, bonds,
securities, real estate, commodities and other forms of investments.
2.5 Employee will be permitted to maintain his place of employment in
the Chicago, Illinois metropolitan area and will only be required by the Company
to relocate to another
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location if Employee consents to such relocation. Notwithstanding the foregoing,
Employee shall be required to travel to the Company's various offices and other
locations as part of his employment and he shall be reasonably available to do
so.
3. Term. The term of this Agreement shall begin on January 1, 1999 and
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shall continue until July 31, 2000, unless earlier terminated pursuant to the
provisions hereof.
4. Compensation.
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4.1 Employee shall receive a base salary of $150,000 per year payable
in equal installments on the Company's regular payroll dates ("Base Salary"),
which Base Salary the Company shall continue to pay during the term of this
Agreement until the Company is no longer obligated to pay the same pursuant to
the provisions of Section 6 hereof. By January 1, 2000, Employee's Base Salary
shall be reviewed by the Compensation Committee of the Board of Directors and,
if appropriate, adjusted upward to a level commensurate with executives holding
similar titles in similar companies with similar performance. In addition,
Employee's Base Salary will be adjusted upward such that his total cash
compensation keeps him as one of the four highest compensated associates of the
Company (based on cash compensation only).
4.2 In addition to Employee's Base Salary, Employee shall be entitled
to receive an annual bonus as determined by the Board of Directors of the
Company, in its sole and absolute discretion; provided, however, such bonus
shall not be less than Fifteen Thousand Dollars ($15,000) and shall be payable
in September of each year.
5. Termination.
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5.1 The Company may terminate this Agreement for cause by giving the
Employee written notice. "Cause" shall mean gross negligence or willful
misconduct in the performance of Employee's duties hereunder, willful breach or
habitual neglect of duties, defalcation, fraud, conviction of a felony, or
incarceration for not less than 30 consecutive days, all as determined by the
Board of Directors. If the Employee disputes the Company's right to terminate
this Agreement for Cause, the dispute shall be resolved in accordance with
Section 11 hereof.
5.2 The Company may terminate this Agreement if Employee is mentally
or physically disabled and such disability renders him unable to perform his
duties under this Agreement for 90 consecutive days in any 12-month period.
During the term of this Agreement, the Company will take out a disability
insurance policy providing Employee commensurate compensation in the event of
such a disability.
5.3 This Agreement may be terminated voluntarily by the Employee by
providing the Company with written notice specifying the date of such
termination not less than 90 days prior to the effective date of termination.
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5.4 This Agreement may be terminated by the Company without Cause by
providing Employee with written notice specifying the date of such termination
not less than 30 days prior to the effective date of termination.
6. Effect of Termination.
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6.1 If Employee's employment hereunder is terminated without Cause
pursuant to Section 5.4, the Company shall (i) pay to Employee an amount equal
to Employee's cash compensation from the Company for the previous 12 months or
$150,000, whichever is greater, plus the value of any accrued or unused vacation
and (ii) provide acceleration and immediate vesting of all of Employee's stock
options from the Company which have not yet vested at that time, and such
accelerated options as well as any other options which have vested and are then
exercisable shall be exercisable for a period of three (3) months following the
date of termination and shall then expire and be of no further force or effect.
The Company shall thereafter have no further obligations under this Agreement.
6.2 If Employee's employment hereunder is terminated pursuant to
Sections 5.1, 5.2 or 5.3, the Company shall pay to Employee the Base Salary
through the date of such termination, plus the value of any accrued or unused
vacation, and the Company shall thereafter have no further obligations to
Employee under this Agreement.
6.3 If Employee's employment is terminated as a result of the
expiration of the term of this Agreement, then the Company shall pay to Employee
the Base Salary through the expiration date, plus the value of any accrued or
unused vacation, and the Company shall thereafter have no further obligations
under this Agreement.
7. Change of Control.
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7.1 For purposes of this Agreement, a "Change of Control" shall mean
the occurrence of either one of the following events:
(1) any corporation, partnership, person, other entity or group
(as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended) (collectively, a "Person"), acquires shares of capital stock of the
Company representing more than fifty percent (50%) of the total number of shares
of capital stock that may be voted for the election of directors of the Company;
or
(2) a merger, consolidation or other business combination of the
Company with or into another Person is consummated, or all or substantially all
of the assets of the Company are acquired by another Person, as a result of
which the stockholders of the Company immediately prior to the consummation of
such transaction own, immediately after consummation
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of such transaction, equity ecurities possessing less than fifty percent (50%)
of the voting power of the surviving or acquiring Person (or any Person in
control of the surviving or acquiring Person), the equity securities of which
are issued or transferred in such transaction.
7.2 Upon the occurrence of a Change of Control during the term of
this Agreement, all outstanding employee stock options then held by Employee
shall accelerate and immediately vest, and such accelerated options as well as
any other options which have vested and which are then exercisable shall remain
exercisable until expiration or earlier termination pursuant to the terms of the
respective original option agreements.
7.3 If upon the completion of a Change of Control Employee is not a
senior executive of the ultimate parent organization of which the Company is a
part, then the Company shall immediately make a payment to Employee equal to the
greater of (i) $250,000 or (ii) two times Employee's cash compensation from the
Company for the previous 12 months.
8. Withholding Taxes and Other Deductions. To the extent required by law,
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the Company shall withhold from any payments due Employee under this Agreement
any applicable federal, state or local taxes and such other deductions as are
prescribed by law or Company policy.
9. Proprietary Information.
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9.1 Employee understands that the Company possesses and will continue
to possess information that has been created, discovered, developed or otherwise
become known to the Company (including, without limitation, information created,
discovered, developed or made known by Employee during the period of or arising
out of his employment by the Company, whether prior to or after the date hereof)
or in which property rights have been assigned or otherwise conveyed to the
Company, which information has commercial value in the business in which the
Company is engaged. All such information is hereinafter called "Proprietary
Information." By way of illustration, but not limitation, Proprietary
Information includes processes, formulas, codes, data, programs, know-how,
improvements, discoveries, developments, designs, inventions, techniques,
marketing plans, strategies, forecasts, new products, unpublished financial
statements, budgets, projections, licenses, prices, costs, contracts and
customer and supplier lists.
9.2 In consideration of the compensation received by the Employee
from the Company and the covenants contained in this Agreement, Employee agrees
as follows:
9.2.1 All Proprietary Information shall be the sole property of
the Company and its assigns, and the Company and its assigns shall be the sole
owner of all patents, copyrights, and other rights in connection therewith.
Employee hereby assigns to the Company rights he may have or acquire in such
Proprietary Information. At all times, both during his employment by the Company
and after its termination, Employee will keep in strictest confidence and trust
all Proprietary Information and will not use or disclose any Proprietary
Information without the written
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consent of the Company, except as may be necessary in the ordinary course of
performing his duties under this Agreement.
9.2.2 All documents, records, equipment and other physical
property, whether or not pertaining to Proprietary Information, furnished to
Employee by the Company or produced by Employee or others in connection with
Employee's employment with the Company shall be and remain the sole property of
the Company. In the event of the termination of his employment by him or the
Employee for any reason, Employee will deliver to the Company all documents,
notes, drawings, specifications, programs, data, customer lists and other
materials of any nature pertaining to his work with the Company and Employee
will not take with him or use any of the foregoing, any reproduction of any of
the foregoing, or any Proprietary Information that is embodied in a tangible
medium of expression.
9.3 Employee recognizes that the Company is engaged in a continuous
program of development and marketing respecting its present and future business.
Employee understands that as part of his employment by the Company he has been
and is expected to make new contributions of value to the Company and that his
employment has created a relationship of confidence and trust between him and
the Company with respect to certain information applicable to the business of
the Company or applicable to the business of any customer of the Company, which
has been or may be made known to Employee by the Company or by any customer of
the Company or which may have been or may be learned by Employee during the
period of his employment by the Company.
10. Covenant Not to Compete.
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10.1 In consideration for the payments to be made under this
Agreement, Employee shall, for the greater of (a) a period of three (3) years or
(b) such period as Employee may be employed by the Company, refrain from, either
alone or in conjunction with any other person, or directly or indirectly through
its present or future affiliates:
(1) employing, engaging or seeking to employ or engage any
person who within the prior twenty-four (24) months had been an officer or
employee of the Company;
(2) causing or attempting to cause (A) any client, customer or
supplier of the Company to terminate or materially reduce its business with the
Company, or (B) any officer, employee or consultant of the Company to resign or
sever a relationship with the Company;
(3) disclosing (unless compelled by judicial or administrative
process) or using any confidential or secret information relating to the Company
or any of their respective clients, customers or suppliers; or
(4) participating or engaging in (other than through the
ownership of five percent (5%) or less of any class of securities registered
under the Securities Exchange Act of 1934,
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as amended), or otherwise lending assistance (financial or otherwise) to any
person participating or engaged in, any of the lines of business in which the
Company is participating or engaged on the date hereof in any jurisdiction in
which the Company participates or engages in such line of business on the date
hereof.
Notwithstanding the foregoing, the restrictive covenants set forth in
this Section 10 shall terminate immediately upon a termination of this Agreement
by the Company without Cause.
10.2 The parties hereto recognize that the laws and public policies
of the various states of the United States may differ as to the validity and
enforceability of covenants similar to those set forth in this Section. It is
the intention of the parties that the provisions of this Section be enforced to
the fullest extent permissible under the laws and policies of each jurisdiction
in which enforcement may be sought, and that the unenforceability (or the
modification to conform to such laws or policies) of any provisions of this
Section shall not render unenforceable, or impair, the remainder of the
provisions of this Section. Accordingly, if any provision of this Section shall
be determined to be invalid or unenforceable, such invalidity or
unenforceability shall be deemed to apply only with respect to the operation of
such provision in the particular jurisdiction in which such determination is
made and not with respect to any other provision or jurisdiction.
10.3 The parties hereto acknowledge and agree that any remedy at law
for any breach of the provisions of this Section would be inadequate, and
Employee hereby consents to the granting by any court of an injunction or other
equitable relief, without the necessity of actual monetary loss being proved, in
order that the breach or threatened breach of such provisions may be effectively
restrained.
10.4 The Company and the Employee acknowledge that the foregoing
restrictive covenants in this Section 10 are essential elements of this
Agreement and that, but for the agreement of the Employee to comply with those
covenants, the Company would not have agreed to enter into this Agreement. The
covenants by the Employee shall be construed as agreements independent of any
other provision in this Agreement.
10.5 The Company and the Employee intend that the covenants contained
in this Section 10 shall be construed as a series of separate covenants, one for
each county of the State of Texas and one for each State of the United States
other than Texas.
10.6 The Company and the Employee understand and agree that, if any
portion of the restrictive covenants set forth in this Section 10 is held to be
unreasonable, arbitrary, or against public policy, then that portion of those
covenants shall be considered divisible as to time and geographical area. The
Company and the Employee agree that, if any court of competent jurisdiction
determines that the specified time period or the specified geographical area of
application in any covenant is unreasonable, arbitrary, or against public
policy, then a lesser time period, geographical area, or both, that is
determined to be reasonable, nonarbitrary, and not against public policy may
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be enforced against Employee. The Company and the Employee agree and acknowledge
that they are familiar with the present and proposed operations of the Company
and believe that the restrictive covenants set forth in this Section 10 are
reasonable with respect to their subject matter, duration, and geographical
application.
10.7 The parties acknowledge that the status of the Employee in this
business and industry is unique and the success of the Company in said business
is materially and substantially dependent upon the continued employment of the
Employee, and in the event the employment of the Employee is terminated for any
reason, such business of the Company will be substantially and irrevocably
damaged. In view thereof, the parties acknowledge that monetary damages alone
will not fully compensate the Company in the event the Employee fails or refuses
to comply with the terms of this Section 10 above when applicable, and agree
that the Company, in addition to all other remedies provided in law and in
equity, shall have the remedy of injunctive relief and specific performance to
enforce the terms of said Section.
11. Arbitration. Except as otherwise provide herein, any controversies or
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claims arising out of, or relating to this Agreement or the breach thereof,
shall be settled by arbitration in Austin, Texas in accordance with the rules
of, but not subject to the jurisdiction of, the American Arbitration
Association, which decision shall be final and binding on the parties, and
judgment upon the award rendered may be entered in any court having jurisdiction
thereof. For these purposes the arbitrator shall be an individual who has
demonstrated that such individual is familiar with and has experience in the
legal issues involving employer-employee relationships and has had no prior
prejudicial contacts with either party. In addition to all other remedies
provided in law or in equity, the arbitrator is hereby authorized to assess
costs and attorneys' fees against either party if the arbitrator finds, based on
all the facts and circumstances, that the conduct of or the claims made by such
party were unreasonable or substantially without merit.
12. Notice. All notices, requests and other communications hereunder must
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be in writing and will be deemed to have been duly given only if delivered
personally or by facsimile transmission or mailed (first class postage prepaid)
to the parties at the following addresses or facsimile numbers:
If to Employee: Xxxx X. Pabrai
0000 Xxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Facsimile No.:
If to the Company: Prosoft I-Net Solutions, Inc.
0000 Xxx Xxxxx Xxxx, Xxxxx 000
Xxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attn: Chief Executive Officer
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All such notices, requests and other communications will (i) if delivered
personally to the address as provided in this Section, be deemed given upon
delivery, (ii) if delivered by facsimile transmission to the facsimile number as
provided in this Section, be deemed given upon receipt, and (iii)if delivered by
mail in the manner described above to the address as provided in this Section,
be deemed given upon receipt (in each case regardless of whether such notice,
request or other communication is received by any other person to whom a copy of
such notice, request or other communication is to be delivered pursuant to this
Section). Any party from time to time may change its address, facsimile number
or other information for the purpose of notices to that party by giving notice
specifying such change to the other party hereto.
13. Invalid Provision. The invalidity or unenforceability of any
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particular provision of this Agreement in any jurisdiction shall not affect the
other provisions hereof or the validity of that particular provision in any
other jurisdiction, and the Agreement shall be construed in all respects as
though such invalid or unenforceable provisions were omitted only in the
jurisdiction in which the case is held to be invalid or unenforceable.
14. Interpretation. This Agreement shall be interpreted in accordance with
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the laws of the State of Texas.
15. Successors. This Agreement shall be binding upon and shall inure to
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the benefit of the parties hereto and their respective successors, assigns,
heirs, and legal representatives, including any person, firm, corporation or
other business entity which at any time, by merger, purchase or otherwise,
acquires substantially all of the assets or business of the Company. The duties
and covenants of Employee under this Agreement, being personal, may not be
delegated.
16. Entire Agreement; Modification. This Agreement replaces in its
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entirety the Employment Agreement dated January 1, 1998 between the Company and
Employee, which agreement shall be of no further force or effect. This Agreement
constitutes the entire agreement between the parties, and may be changed only by
an agreement in writing signed by the parties.
17. Headings. Sections and other headings contained in this Agreement are
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for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
18. Counterparts. This Agreement may be executed in two or more
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counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument. Signatures may be
exchanged by telecopy, with original signatures to follow. Each of the parties
hereto agrees that it will be bound by its own telecopied signature and that it
accepts the telecopied signatures of the other parties to this Agreement. The
original signature pages shall be forwarded to the Company or its counsel and
the Company or its counsel will provide all of the parties hereto with a copy of
the entire Agreement.
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IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
the duly authorized officer of each party hereto as of the date first above
written.
THE COMPANY
PROSOFT I-NET SOLUTIONS, INC., a
Nevada corporation
By: ______________________________
Name: ________________________
Title: _______________________
EMPLOYEE
__________________________________
Xxxx X. Pabrai
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