EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the
"Agreement") is made and entered into as of April 1, 2010 (the "Effective
Date"), by and between NetSol Technologies, Inc., a Nevada corporation (the
"Company") and Boo-Xxx Xxxxxxxx, an individual ("Executive").
BACKGROUND
A. The
Company desires assurance of the association and services of Executive in order
to retain Executive's experience, skills, abilities, background and knowledge,
and is willing to engage Executive's services on the terms and conditions set
forth in this Agreement.
B. Executive
desires to be in the employ of the Company, and is willing to accept such
employment on the terms and conditions set forth in this Agreement.
AGREEMENT
In consideration of the foregoing
recitals and the mutual promises and covenants herein contained, and for other
good and valuable consideration, the parties, intending to be legally bound,
agree as follows:
1. EMPLOYMENT.
1.1 The
Company hereby enters into this Agreement with Executive, and Executive hereby
accepts employment under the terms and conditions set forth in this Agreement
for a period of one year thereafter (the "Employment Period"); provided,
however, that the Employment Period may be terminated earlier pursuant as
provided herein. The Employment Period shall be automatically
extended for additional thirty day periods unless either party notifies the
other in writing two weeks before the end of the term to elect not to so extend
the Employment Period.
1.2 Executive
shall serve as Chief Financial Officer of the Company.
1.3 Executive
shall perform all services, acts or things necessary or advisable to manage and
conduct the business of the Company and which are normally associated with the
position of Chief Financial Officer and consistent with the bylaws and policies,
including, but not limited to the committee charters and Code of Ethics of the
Company.
1.4 The
employment relationship between the parties shall be governed by the policies
and practices established by the Company, except that when the terms of this
Agreement differ from or are in conflict with the Company's policies or
practices, this Agreement shall control.
1.5 Unless
the parties otherwise agree in writing, during the term of this Agreement,
Executive shall perform the services he is required to perform pursuant to this
Agreement at the Company's offices, located at its present or future locations
in the Lahore, Pakistan; provided, further, that the Company may from time to
time require Executive to travel temporarily to other locations in connection
with the Company's business and in accordance with the Company's standard
policies regarding travel for executive and senior management
employees.
2. LOYAL
AND CONSCIENTIOUS PERFORMANCE; NONCOMPETITION.
2.1 During
the Employment Period, Executive shall devote substantially all his business
energies, interest, abilities and productive time to the proper and efficient
performance of his duties under this Agreement. The foregoing shall
not preclude Executive from engaging in civic, charitable or religious
activities, or from serving on boards of directors of companies or organizations
which will not present any direct conflict with the interest of the Company or
affect the performance of Executive's duties hereunder.
2.2 Except
with the prior written consent of the Company's Board of Directors (“Board”),
Executive will comply with all the restrictions set forth below at all times
during his employment and for a period of six months after the termination of
his employment:
2.2.1
Executive will not, either individually or in conjunction with any person, as
principal, agent, director, officer, employee or in any other manner whatsoever,
directly or indirectly engage in or become financially interested in any
competitive business within North America or Pakistan, except as a passive
investor holding not more than one percent of the publicly traded stock of a
corporation in which Executive is not involved in management;
2.2.2
Executive will not, either directly or indirectly, on his own behalf of on
behalf of others, solicit, divert or appropriate or attempt to solicit, divert
or appropriate to any competitive business, any business or actively sought
prospective business of the Company or any customers with whom the Company or
any affiliate of the Company has current agreements relating to the business of
the Company, or with whom Executive has dealt, or with whom Executive has
supervised negotiations or business relations, or about whom Executive has
acquired confidential information in the course of Executive's
employment;
2.2.3
Executive will not, either directly or indirectly, on Executive's behalf or on
behalf of others, solicit, divert or hire away, or attempt to solicit, divert,
or hire away, any independent contractor or any person employed by the Company
or any affiliate of the Company or persuade or attempt to persuade any such
individual to terminate his or her employment with the Company;
and,
2.2.4
Executive will not directly or indirectly impair or seek to impair the
reputation of the Company or any affiliate of the Company, nor any relationship
that the Company or any affiliate of the Company has with its employees,
customers, suppliers, agents or other parties with which the Company or any
other affiliate of the Company does business or has contractual relation;
and,
2.2.5
Executive will not receive or accept for his own benefit, either directly or
indirectly, any commission, rebate, discount, gratuity or profit from any person
having or proposing to have one or more business transactions with the Company
or any affiliate of the Company, without the prior approval of the Board, which
may be withheld; and,
2.2.6
Executive will, during the term of this employment with the Company, communicate
and channel to the Company all knowledge, business and customer contacts and any
other information that could concern or be in any way beneficial to the business
of the Company. Any such information communicated to the Company as aforesaid
will be and remain the property of the Company notwithstanding any subsequent
termination of Executive's employment.
Failure
to comply with the terms of this section 2 shall be ground for immediate
termination, and if applicable during the post-termination period shall be
grounds for an immediate cessation of any and all payments due to Executive
under section 4.4 of this Agreement.
3. COMPENSATION
OF EXECUTIVE.
3.1 The
Company shall pay Executive a base salary of Eighty-Four Thousand Dollars
($84,000) per year (the "Base Salary"), payable in accordance with the Company
policy. Such salary shall be pro rated for any partial year of
employment on the basis of a 365-day fiscal year. Executive will be
eligible for bonuses from time to time as determined by the Board.
3.2 Executive's
Base Salary and other compensation may be changed from time to time by mutual
agreement of Executive and the Board and shall be evaluated on an at least
annual basis by the Board of Director’s Compensation Committee.
3.3 All
of Executive's compensation shall be subject to customary withholding taxes and
any other employment taxes applicable to Executive’s jurisdiction of employment
as are commonly required to be collected or withheld by the
Company.
3.4 During
the Employment Period, the Company agrees to reimburse Executive for all
reasonable and necessary business expenses subject to the Company's standard
requirements with respect to reporting and documentation of such
expenses.
3.5 Executive
shall, in accordance with the Company policy and the terms of the applicable
plan documents, be eligible to participate in benefits under any Executive
benefit plan or arrangement which may be in effect from time to time and made
available to its executive or key management employees, including, as
applicable, health and disability insurance, dental insurance, and participation
in Employer’s 401(k) plan. Provided, however, that Executive shall
only be entitled to those benefits as an employee working from a foreign
subsidiary and a non-U.S. citizen would be eligible. The Company may modify or
cancel its benefit plan(s) as it deems necessary.
3.6 Executive
shall receive the vacation according to the standard policies of the Company in
Pakistan.
3.7 Executive
shall be granted Fifty Thousand shares (50,000) of common stock to vest in equal
25% tranches (12,500) upon the conclusion of each quarter of
service. The shares are granted from the Company’s 2008 Equity
Incentive Plan. Executive shall be deemed to have earned the initial
12,500 shares on June 30, 2010; the next 12,500 on September 30, 2010; the next
12,500 on December 31, 2010 and the final 12,500 shares on March 31,
2011.
3.8 The
Company and Executive shall enter into an Indemnity Agreement to provide
indemnification of and the advancing of expenses to Executive to the fullest
extent (whether partial or complete) permitted by law, and, to the extent the
Company maintains insurance, for the coverage of Executive under the Company’s
directors’ and officers’ liability insurance policies.
4. TERMINATION.
4.1 Termination
by the Company. Executive's employment with the Company may be
terminated under the following conditions:
4.1.1 Death
or Disability. Executive's employment with the Company shall
terminate effective upon the date of Executive's death or "Complete Disability"
(as defined in Section 4.5.1).
4.1.2 For
Cause. The Company may terminate Executive's employment under this
Agreement for "Cause" (as defined in Section 4.5.3) by delivery of written
notice to Executive specifying the cause or causes relied upon for such
termination. Any notice of termination given pursuant to this Section
4.1.2 shall effect termination as of the date specified in such notice or, in
the event no such date is specified, on the last day of the month in which such
notice is delivered or deemed delivered as provided in Section 8
below.
4.1.3 Without
Cause. The Company may terminate Executive's employment under this
Agreement at any time and for any reason by delivery of written notice of such
termination to Executive. Any notice of termination given pursuant to
this Section 4.1.4 shall effect termination as of the date specified in such
notice (which shall be no earlier than 30 days after such notice is given) or,
in the event no such date is specified, on the last day of the month following
the month in which such notice is delivered or deemed delivered as provided in
Section 8 below.
4.2 Termination
By Executive. Executive may terminate his employment with the Company
for "Good Reason" (as defined below in Section 4.5.2) by (i) delivery of written
notice to the Company specifying the "Good Reason" relied upon by Executive for
such termination, provided that such notice is delivered within six (6) months
following the occurrence of any event or events constituting Good Reason, or
(ii) at any time during the Employment Period without Good Reason.
4.3 Termination
by Mutual Agreement of the Parties. Executive's employment pursuant
to this Agreement may be terminated at any time upon a mutual agreement in
writing of the parties. Any such termination of employment shall have
the consequences specified in such agreement.
4.4 Compensation
Upon Termination.
4.4.1 Death
or Complete Disability. If Executive's employment shall be terminated
by death or Complete Disability as provided in Section 4.4.1, the Company shall
(i) pay Executive his accrued Base Salary and accrued and unused vacation
benefits earned through the date of termination at the rate in effect at the
time of termination, and (ii) continue Executive's annual Base Salary, in effect
at the time of termination, for a period of two (2) months after the termination
date, in both cases subject to standard deductions and withholding, and the
Company shall thereafter have no further obligations to Executive under this
Agreement.
4.4.2 Cause
or Without Good Reason. If Executive's employment shall be terminated
by the Company for Cause, or if Executive terminates employment hereunder
without Good Reason, the Company shall pay Executive his accrued Base Salary and
accrued and unused vacation benefits earned through the date of termination at
the rate in effect at the time of the notice of termination, and the Company
shall thereafter have no further obligations to Executive under this
Agreement.
4.4.3 Without
Cause or Good Reason. If Executive shall terminate Executive's
employment with the Company without Good Reason or the Company shall terminate
Executive's employment without Cause, Executive shall be entitled to the
following:
(i) Executive's
Base Salary, and accrued and unused vacation earned through the date of
termination;
(ii) Continuation
of Executive's annual Base Salary, in effect at the time of termination, for a
period of two (2) months after the termination date subject to standard
deductions and withholding;
(iii) Continuation
of Executive's medical, disability and other benefits for a period
for two (2) months after the termination date, as if Executive had
continued in employment during said period, or in lieu thereof, cash (including
a tax-equivalency payment for Federal, state and local income and payroll taxes
assuming Executive is in the maximum tax bracket for all such purposes) where
such benefits may not be continued (or where such continuation would adversely
affect the tax status of the plan pursuant to which the benefit is being
provided) under applicable law or regulation; and,
(iv) 100%
vesting of all of Executive's Options, all other options granted to Executive
and all restricted stock received upon early exercise.
(v) in
the event such termination occurs within twelve (12) months after a Change of
Control, the Company shall pay Executive (a) a one-time payment equal to the
product of 2.99 and Executive’s salary for the previous six (6) months and (b) a
one-time payment equal to the higher of (i) Executive’s bonus for the previous
year and (ii) one-half a percent of the Company’s consolidated gross revenues
for the previous six (6) months (the “Change of Control Termination
Payment”).
4.5 Definitions. As
used herein, the following terms shall have the following meanings:
4.5.1 Complete
Disability. "Complete Disability" shall mean the inability of
Executive to perform Executive's duties under this Agreement because Executive
has become permanently disabled within the meaning of any policy of disability
income insurance covering employees of the Company then in force. In
the event the Company has no policy of disability income insurance covering
employees of the Company in force when Executive becomes disabled, the term
"Complete Disability" shall mean the inability of Executive to perform
Executive's duties under this Agreement by reason of any incapacity, physical or
mental, which the Board, based upon medical advice or an opinion provided by a
licensed physician acceptable to the Board, determines to have incapacitated
Executive from satisfactorily performing all of Executive's usual services for
the Company for a period of at least 120 days. Based upon such
medical advice or opinion, the determination of the Board shall be final and
binding and the date such determination is made shall be the date of such
Complete Disability for purposes of this Agreement.
4.5.2 Good
Reason. "Good Reason" shall be limited to the occurrence of any of
the following events:
(i) If
the Company is in material breach of any provision of this Agreement;
or
(ii) If
the Company asks Executive to perform any act which is illegal, including
commission of any crime involving moral turpitude; or,
(iii) If
there shall be a material diminution in Executive's position, status, offices,
authority, duties or responsibilities as set forth in the
Agreement.
4.5.3
For Cause. "For Cause" shall be limited to the occurrence of any of
the following events:
(i) Executive's
engaging or in any manner participating in any activity which is directly
competitive with or intentionally injurious to the Company or which violates any
material provision of Section 6 hereof; or the use of alcohol or illegal drugs,
materially interfering with the performance of Executive's obligations under
this Agreement, continuing after written warning;
(ii) Executive's
commission of any fraud against the Company or use or intentional appropriation
for his personal use or benefit of any material funds or properties of the
Company not authorized by the Board to be so used or appropriated;
(iii) Executive's
conviction of any crime involving moral turpitude; or
(iv) Executive's
failure or refusal to materially perform his duties and responsibilities set
forth in this Agreement, if such failure or refusal is not cured within two
weeks after written notice thereof to Executive by the Company.
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5.
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CHANGE
IN CONTROL.
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5.1 A
"Change of Control" shall, for purposes of this Section mean: (1) a
dissolution or liquidation of the Company; (2) any sale or transfer of more than
25% of the total assets of the Company; (3) any merger, consolidation or other
business reorganization in which the holders of the Company's outstanding voting
securities immediately prior to such transaction do not hold, immediately
following such transaction, securities representing fifty percent (50%) or more
of the combined voting power of the outstanding securities of the surviving
entity; (4) the acquisition by any person (within the meaning of Section
13(d)(3) or Section 14(d)(2) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), of beneficial ownership (within the meaning of Rule 13d-3
or any successor rule or regulation promulgated under the Exchange Act) of
securities representing fifty percent (50%) or more of the combined voting power
of the then-outstanding securities of the Company; or (5) a majority of the
incumbent Board of Directors has been changed.
5.2 If
a Change In Control occurs, Executive shall be entitled to full acceleration of
the vesting of the then-unvested portion of the Options granted to Executive
under Section 3.9 hereof and of any other options granted to Executive (or any
restricted shares received upon early exercise). If Executive is
terminated due to a Change In Control, Executive’s medical, disability and other
benefits shall continue for a period of six (6) months, as if Executive had
continued in employment during said period, or in lieu thereof, cash (including
a tax equivalency payment for Federal, state and local income and payroll taxes
assuming Executive is in the maximum tax bracket for all such purposes) where
such benefits may not be continued (or where such continuation would adversely
affect the tax status of the plan pursuant to which the benefit is being
provided) under applicable law or regulation.
5.3 Anything
in this Agreement to the contrary notwithstanding, in the event that it shall be
determined that any payment or distribution by the Company to or for the benefit
of Executive, whether paid or payable or distributed or distributable pursuant
to the terms of this Agreement, including, without limitation, the Change of
Control Termination Payment, or otherwise (the "Payment"), would constitute an
"excess parachute payment" within the meaning of Section 280G of the Internal
Revenue Code of 1986, as amended (the "Code"), Executive shall be paid an
additional amount (the "Gross-Up Payment") such that the net amount retained by
Executive after deduction of any excise tax imposed under Section 4999 of the
Code, and any federal, state and local income and employment tax and excise tax
imposed upon the Gross-Up Payment, and any interest and penalties imposed upon
Executive, shall be equal to the Payment. For purposes of determining
the amount of the Gross-Up Payment, Executive shall be deemed to pay federal
income tax and employment taxes at the highest marginal rate of federal income
and employment taxation in the calendar year in which the Gross-Up Payment is to
be made and state and local income taxes at the highest marginal rate of
taxation in the state and locality of Executive's residence on the date of
Payment, net of the maximum reduction in federal income taxes that may be
obtained from the deduction of such state and local taxes.
5.4 All
determinations to be made under Section 5.3 shall be made by the Company's
independent public accountant (the "Accounting Firm"), which firm shall provide
its determinations and any supporting calculations both to the Company and
Executive within 10 days of the date of Payment. Any such
determination by the Accounting Firm shall be binding upon the Company and
Executive. Within five days after the Accounting Firm's
determination, the Company shall pay (or cause to be paid) or distribute (or
cause to be distributed) to or for the benefit of Executive such amounts as are
then due to Executive.
5.5 In
the event that upon any audit by the Internal Revenue Service, or by a state or
local taxing authority, of the Payment or Gross-Up Payment, a change is finally
determined to be required in the amount of taxes paid by Executive, appropriate
adjustments shall be made under this Agreement such that the net amount which is
payable to Executive after taking into account the provisions of Section 4999 of
the Code shall reflect the intent of the parties as expressed in Section 5.3
above, in the manner determined by the Accounting Firm.
5.6 All
of the fees and expenses of the Accounting Firm in performing the determinations
referred to above shall be borne solely by the Company. The Company
agrees to indemnify and hold harmless the Accounting Firm of and from any and
all claims, damages and expenses resulting from or relating to its
determinations above, except for claims, damages or expenses resulting from the
gross negligence or willful misconduct of the Accounting Firm.
6. CONFIDENTIAL
AND PROPRIETARY INFORMATION
6.1 Executive
recognizes that his employment with the Company will involve contact with
information of substantial value to the Company, which is not old and generally
known in the trade, and which gives the Company an advantage over its
competitors who do not know or use it, including but not limited to, techniques,
designs, drawings, processes, inventions, developments, equipment, prototypes,
sales and customer information, and business and financial information relating
to the business, products, practices and techniques of the Company, (hereinafter
referred to as "Confidential and Proprietary Information"). Executive
will at all times regard and preserve as confidential such Confidential and
Proprietary Information obtained by Executive from whatever source and will not,
either during his employment with the Company or thereafter, publish or disclose
any part of such Confidential and Proprietary Information in any manner at any
time, or use the same except on behalf of the Company, without the prior written
consent of the Company.
7. ASSIGNMENT
AND BINDING EFFECT.
7.1 This
Agreement shall be binding upon and inure to the benefit of Executive and
Executive's heirs, executors, personal representatives, assigns, administrators
and legal representatives. Due to the unique and personal nature of Executive's
duties under this Agreement, neither this Agreement nor any rights or
obligations under this Agreement shall be assignable by
Executive. This Agreement shall be binding upon and inure to the
benefit of the Company and its successors, assigns and legal
representatives. The Company shall require any successor (whether
direct or indirect, by purchase, merger, consolidation, reorganization or
otherwise) to all or substantially all of the business or assets of the Company,
by agreement in form and substance satisfactory to Executive, expressly to
assume and agree to perform this Agreement in the same manner and to the same
extent the Company would be required to perform it if no succession had taken
place.
8. NOTICES.
8.1 All
notices or demands of any kind required or permitted to be given by the Company
or Executive under this Agreement shall be given in writing and shall be
personally delivered, which shall include overnight courier, (and receipted for)
or mailed by certified mail, return receipt requested, postage prepaid,
addressed as follows:
8.1.1 If
to the Company:
NetSol Technologies, Inc.
00000 Xxxxxxxxx Xxxx, 0000
Xxxxxxxxx, XX 00000
Attn: Chairman
8.1.2 If
to Executive:
Boo-Xxx
Xxxxxxxx
c/o
NetSol Technologies Ltd
XxxXxx
Xxxxxx, Xxxxxxx Xxxx
Xxxxxx
Xxxxx, 00000 Xxxxxxxx
Any such
written notice shall be deemed received when personally delivered or three (3)
days after its deposit in the United States mail as specified
above. Either party may change its address for notices by giving
notice to the other party in the manner specified in this section.
9. TRADE
SECRETS OF OTHERS.
9.1 It
is the understanding of both the Company and Executive that Executive shall not
divulge to the Company and/or its subsidiaries any confidential information or
trade secrets belonging to others, including Executive's former employers, nor
shall the Company and/or its affiliates seek to elicit from Executive any such
information. Consistent with the foregoing, Executive shall not
provide to the Company and/or its affiliates, and the Company and/or its
affiliates shall not request, any documents or copies of documents containing
such information.
10. CHOICE
OF LAW.
10.1 This
Agreement shall be construed and interpreted in accordance with the laws of the
State of Nevada.
11. INTEGRATION.
11.1 This
Agreement contains the complete, final and exclusive agreement of the parties
relating to the subject matter of this Agreement, and supersedes all prior oral
and written employment agreements or arrangements between the
parties.
12. AMENDMENT.
12.1 This
Agreement cannot be amended or modified except by a written agreement signed by
Executive and the Company.
13. WAIVER.
13.1 No
term, covenant or condition of this Agreement or any breach thereof shall be
deemed waived, except with the written consent of the party against whom the
wavier is claimed, and any waiver or any such term, covenant, condition or
breach shall not be deemed to be a waiver of any preceding or succeeding breach
of the same or any other term, covenant, condition or breach.
14. SEVERABILITY.
14.1 The
finding by a court of competent jurisdiction of the unenforceability, invalidity
or illegality of any provision of this Agreement shall not render any other
provision of this Agreement unenforceable, invalid or illegal. Such
court shall have the authority to modify or replace the invalid or unenforceable
term or provision with a valid and enforceable term or provision which most
accurately represents the parties' intention with respect to the invalid or
unenforceable term or provision.
15. INTERPRETATION;
CONSTRUCTION.
15.1 The
headings set forth in this Agreement are for convenience of reference only and
shall not be used in interpreting this Agreement. This Agreement has
been drafted by legal counsel representing the Company, but Executive has been
encouraged, and has consulted with, his own independent counsel and tax advisors
with respect to the terms of this Agreement. The parties acknowledge
that each party and its counsel has reviewed and revised, or had an opportunity
to review and revise, this Agreement, and the normal rule of construction to the
effect that any ambiguities are to be resolved against the drafting party shall
not be employed in the interpretation of this Agreement.
16. REPRESENTATIONS
AND WARRANTIES.
16.1 Executive
represents and warrants that he is not restricted or prohibited, contractually
or otherwise, from entering into and performing each of the terms and covenants
contained in this Agreement, and that his execution and performance of this
Agreement will not violate or breach any other agreements between Executive and
any other person or entity.
17. LITIGATION
COSTS.
17.1 Should
any litigation, arbitration, or administrative action be commenced between the
parties or their personal representatives concerning any provision of this
agreement or the rights and duties of any person in relation to this agreement,
the party or parties prevailing in such action shall be entitled, in addition to
such other relief as may be granted to a reasonable sum as and for that party's
attorney's fees in such litigation which shall be determined by the court,
arbitrator, or administrative agency, in such action or in a separate action
brought for that purpose.
18.
COUNTERPARTS.
18.1 This
Agreement may be executed in two counterparts, each of which shall be deemed an
original, all of which together shall constitute one and the same
instrument.
19. ARBITRATION.
19.1 To
ensure rapid and economical resolution of any disputes which may arise under
this Agreement, Executive and the Company agree that any and all disputes or
controversies of any nature whatsoever, arising from or regarding the
interpretation, performance, enforcement or breach of this Agreement shall be
resolved by confidential, final and binding arbitration (rather than trial by
jury or court or resolution in some other forum) to the fullest extent permitted
by law. Any arbitration proceeding pursuant to this Agreement shall
be conducted by the American Arbitration Association ("AAA") in Los Angeles
under the then existing AAA arbitration rules. If for any reason all
or part of this arbitration provision is held to be invalid, illegal, or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not effect
any other portion of this arbitration provision or any other jurisdiction, but
this provision will be reformed, construed and enforced in such jurisdiction as
if such invalid, illegal or unenforceable part or parts of this provision had
never been contained herein, consistent with the general intent of the parties
insofar as possible.
20.
PAYMENTS. Any amount hereunder not paid when due shall
be subject until paid to an interest charge equal to the lesser of (i)
one-and-one-half percent of the amount due per month and (ii) the highest rate
allowable by applicable law. The late-paying party shall pay all of
the other party’s costs and expenses (including reasonable attorney's fees) to
collect any amount due.
IN WITNESS WHEREOF, the parties have
executed this Agreement as of the date first above written.
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NETSOL
TECHNOLOGIES, INC.
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By:
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/s/Xxxxxx
Xxxxxx
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Xxxxxx
Xxxxxx
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Its:
Chief Executive Officer
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EXECUTIVE:
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/s/Boo-Xxx
Xxxxxxxx
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Boo-Xxx
Xxxxxxxx
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Dated:
May 12, 2010
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