EMPLOYMENT AGREEMENT
THIS AGREEMENT by and between ENHERENT CORP., a Delaware corporation (the
"COMPANY"), and XXXXXX X. XXXXXXXX (the "EXECUTIVE") is to be effective as of
the Effective Date (as defined below).
W I T N E S S E T H:
WHEREAS, the Company wishes to provide for the employment by the Company
of the Executive, and the Executive wishes to serve the Company, in the
capacities and on the terms and conditions set forth in this Agreement.
NOW, THEREFORE, it is hereby agreed as follows:
1. TERM.
(a) The term of this Agreement (the "TERM") shall commence on April 1,
2005 (the "EFFECTIVE DATE") and, unless earlier terminated pursuant to Section 4
below and subject to Section 1(b) below, end at 11:59 PM, March 31, 2008.
(b) The Term shall automatically be extended on a year-by-year basis,
unless the Company shall give the Executive no less than ninety (90) days'
notice that the Term shall not be so renewed.
(c) Upon the Executive receiving notice of non-renewal of the Term, the
Executive may resign for Good Reason (as defined in Section 4(c) below).
2. POSITION AND DUTIES
(a) During the Term, the Executive shall serve as the President and Chief
Executive Officer of the Company with such duties and responsibilities as are
customarily assigned to such position.
(b) As of the Effective Date, the Company shall cause the Executive to be
appointed to the Board of Directors of the Company (the "BOARD") and elected
Chairman of the Board. Thereafter, the Company shall cause the Executive to be
included in the slate of persons nominated to serve as directors on the Board
and shall use its best efforts (including, without limitation, the solicitation
of proxies) to have the Executive elected and reelected to the Board for the
duration of the Term and shall use its best efforts to cause Executive to be
elected the Chairman of the Board. With the written agreement of the Executive,
the obligation of the Company to use its best efforts to cause the Executive to
be elected Chairman of the Board shall be vacated and the election of someone
other than the Executive to the position of Chairman of the Board will not be a
violation of such obligations. Upon any termination of her employment with the
Company, the Executive shall promptly resign from the Board. The Executive shall
report solely to the Board.
(c) During the Term, the Executive shall devote her full attention and
time during normal business hours to the business and affairs of the Company
and, to the extent necessary to
discharge the responsibilities assigned to the Executive under this Agreement,
use the Executive's reasonable best efforts to carry out such responsibilities
faithfully and efficiently.
(d) The Executive shall be based at the Company's principal headquarters
in New York, New York, except for travel reasonably required for the performance
of the Executive's duties hereunder.
3. COMPENSATION
(a) BASE SALARY. During 2005, the Executive shall receive an annualized
base salary ("ANNUAL BASE SALARY") of $325,000 payable in accordance with the
Company's regular payroll practices for its senior executives, as in effect from
time to time. During the Term, the Annual Base Salary shall not be decreased,
except for a proportional decrease applicable to all executives of the Company,
and shall be reviewed by the Board for possible increase at least annually;
provided, however, that the Annual Base Salary shall not be increased prior to
January 1, 2006. Any increase in the Annual Base Salary shall not limit or
reduce any other obligation of the Company under this Agreement. The term
"Annual Base Salary" shall thereafter refer to the Annual Base Salary as
increased from time to time.
(b) ANNUAL CASH BONUS. For each year of the Term, the Executive shall
participate in an annual cash bonus plan per the terms of Attachment A hereto.
Nothing contained herein shall prevent the Committee from paying an annual bonus
in excess of the amount determined per the terms of the bonus plan.
(c) EQUITY BASED COMPENSATION.
(i) The Company will review the Executive's compensation and
incentive opportunities no less than annually to assess the granting of
equity-based awards. If equity-based awards are made to executives of the
Company generally (specifically excluding grants made to individual executives
for recruitment or retention purposes, or special incentive grants made to
executives only in a certain group or department), the Executive will receive a
similar grant at a level commensurate with her position.
(ii) If the Company files a registration statement under the
Securities Act of 1933 covering the offer and sale by it or any of its equity
holders of equity in the Company for money, the Executive shall be entitled to
piggy-back registration rights for equity she holds at such time and for equity
she will receive in the future due to the exercise of options, the lapse of
restrictions of restricted stock or the acquisition of equity through any other
form of equity-based compensation.
(d) OTHER BENEFITS. While the Executive is employed during the Term:
(i) The Executive shall be entitled to participate in all
tax-qualified and nonqualified savings, employee stock ownership and retirement
plans of the Company and shall be entitled to participate in all fringe benefit
and perquisite practices, policies and programs of the Company made available to
the senior executives of the Company.
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(ii) The Executive and/or the Executive's eligible dependents, as
the case may be, shall be eligible for participation in, and shall receive all
benefits under, all welfare benefit plans, practices, policies and programs
provided by the Company, including any medical, prescription, dental,
disability, employee life insurance, group life insurance, accidental death and
travel accident insurance plans and programs, as applicable to the senior
executives of the Company.
(iii) The Executive shall be entitled to no less than twenty (20)
days paid time off and six (6) personal and sick days per calendar year, to be
administered in accordance with the Company's applicable policies for senior
executives.
(iv) The Company shall provide Executive with an allowance of no
less than $750 per month for automobile expenses and related insurance expense.
(v) The Company shall provide the Executive with a life insurance
benefit with a death benefit of no less than $500,000.
(vi) The Company shall reimburse the Executive for (or pay directly
on the Executive's behalf) reasonable professional fees and related expenses
related to the negotiation and preparation of this Agreement, within fifteen
(15) days following delivery to the Company of an invoice detailing such fees
and expenses.
(vii) The Company shall promptly reimburse the Executive for all
expenses and disbursements reasonably incurred by the Executive in the
performance of her duties hereunder during the Term.
4. TERMINATION OF EMPLOYMENT
(a) DEATH OR DISABILITY. The Executive's employment shall terminate
automatically upon the Executive's death during the Term. The Company shall be
entitled to terminate the Executive's employment because of the Executive's
Disability during the Term. "DISABILITY" shall be deemed the reason for the
termination by the Company of the Executive's employment, if, as a result of the
Executive's incapacity due to physical or mental illness, the Executive shall
have been absent from the full-time performance of the Executive's duties with
the Company for a period of three (3) consecutive months, the Company shall have
given the Executive a notice of termination for Disability, and, within thirty
(30) days after such notice of termination is given, Executive shall not have
returned to the full-time performance of the Executive's duties (the expiration
of such thirty (30)-day notice period, the "DISABILITY EFFECTIVE DATE").
(b) TERMINATION BY THE COMPANY.
(i) The Company may terminate the Executive's employment during the
Term for Cause (as defined below) or without Cause.
(ii) A termination of the Executive's employment by the Company for
Cause shall be effectuated by giving the Executive written notice ("NOTICE OF
TERMINATION FOR CAUSE")
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of the termination. A termination of the Executive's employment for Cause will
be effective no earlier than the Executive's receipt of the Notice of
Termination for Cause.
(iii) A termination of the Executive's employment by the Company
without Cause shall be effectuated by giving the Executive written notice
("NOTICE OF TERMINATION WITHOUT CAUSE") of the termination. A termination of the
Executive's employment by the Company without Cause shall be effective no
earlier than fifteen (15) days following the Executive's receipt of the Notice
of Termination without Cause.
(iv) "CAUSE" for termination by the Company of the Executive's
employment shall mean:
(A) the willful and continued failure by the Executive to
substantially perform her duties with the Company (other than such failure
resulting from the Executive's incapacity due to physical or mental
illness or any such actual or anticipated failure after the issuance of a
Notice of Termination for Good Reason (as defined below) by the Executive)
that has not been cured within thirty (30) days after a written demand for
substantial performance is delivered to the Executive by the Board, which
demand specifically identifies the manner in which the Board believes that
the Executive has not substantially performed the Executive's duties,
(B) the willful engaging by the Executive in conduct which is
demonstrably and materially injurious to the Company, monetarily or
otherwise, or
(C) the Executive's conviction of or plea of guilty or nolo
contendre to (x) any felony or (y) a misdemeanor involving dishonesty or
moral turpitude.
For purposes of clauses (A) and (B) of this definition, no act, or failure to
act, on the Executive's part shall be deemed "willful" unless done, or omitted
to be done, by the Executive not in good faith and without reasonable belief
that the Executive's act, or failure to act, was in the best interest of the
Company.
(c) TERMINATION BY THE EXECUTIVE.
(i) The Executive may terminate employment during the Term for Good
Reason (as defined below) or without Good Reason.
(ii) A termination of employment by the Executive for Good Reason
shall be effectuated by giving the Company written notice ("NOTICE OF
RESIGNATION FOR GOOD REASON") of the termination within ninety (90) days of the
Executive becoming aware of such act or omission that constitutes Good Reason
(such ninety (90)-day requirement does not apply to clause (F) of the Good
Reason definition). A termination of employment by the Executive for Good Reason
shall be effective no earlier than fifteen (15) days following the date when the
Notice of Termination for Good Reason is given.
(iii)A termination of the Executive's employment by the Executive
without Good Reason shall be effected by giving the Company written notice
("NOTICE OF RESIGNATION WITHOUT GOOD REASON") of the termination. A termination
of employment by the Executive
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without Good Reason shall be effective no earlier than fifteen (15) days
following the date when the Notice of Termination without Good Reason is given.
(iv) "GOOD REASON" for termination by the Executive of the
Executive's employment shall mean the occurrence (without the Executive's
express written consent) of any one of the following acts by the Company,
failures by the Company to act or, in the case of (F) below, act by the
Executive:
(A) the assignment to the Executive of any duties inconsistent
with the Executive's status as the President and Chief Executive Officer
of the Company (including by reason of the Company becoming a subsidiary
of another company) or an adverse alteration in the nature or status of
the Executive's title or responsibilities, unless such adverse alteration
is due to a factor beyond the Company's control;
(B) a reduction by the Company in the Executive's annual base
salary or annual bonus opportunity (as either may increase from time to
time), except for a decrease applicable to executives of the Company
generally, or a failure by the Company to (x) provide the Executive with
an opportunity for participation in any stock option plan or other
equity-based plan on a level commensurate with the Executive's position
with the Company or (y) meet its obligations per Section 6(c) above;
(C) the relocation of the Executive's principle place of
employment to a location more than fifty (50) miles from the Executive's
principal place of employment as of the Effective Date, except for
reasonably required travel on the Company's business;
(D) any material breach by the Company of its obligations to
the Executive under the terms of this Agreement;
(E) notice to the Executive that the Company shall not renew
this Agreement per Section 1, above; or
(F) the voluntary termination of the Executive of her
employment with the Company for any reason during the 6-month period
commencing on the date of any Change in Control of the Company, provided
that the Executive has communicated a notice of termination to the Company
at least 1 month prior to the effectiveness of such voluntary termination.
(d) DATE OF TERMINATION. The "DATE OF TERMINATION" means, as the case may
be, the date of the Executive's death, the Disability Effective Date or the date
on which the termination of the Executive's employment by the Company for Cause
or without Cause or by the Executive for Good Reason or without Good Reason is
effective, per the applicable written notice.
5. OBLIGATIONS OF THE COMPANY UPON TERMINATION
(a) TERMINATION OTHER THAN FOR CAUSE, DEATH OR DISABILITY; RESIGNATION FOR
GOOD REASON. If the Company terminates the Executive's
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employment for any reason other than Cause, death or Disability, or the
Executive terminates her employment for Good Reason, then:
(i) the Company shall pay to the Executive, not later than thirty
(30) days following the Date of Termination, any unpaid amounts of the
Executive's Annual Base Salary and annual bonus for periods prior to the Date of
Termination (the "ACCRUED AMOUNTS");
(ii) the Company shall pay to the Executive, not later than thirty
(30) days following the Date of Termination, a lump sum payment equal to the sum
of (i) the Annual Base Salary and (ii) the Executive's most recent annual bonus
payment (or, if prior to the Executive earning a bonus to be paid pursuant to
this Agreement, an amount equal to fifty percent (50%) of the Annual Base
Salary);
(iii)any then-outstanding option to purchase Company stock granted
to the Executive shall become fully vested and exercisable and remain fully
exercisable for three (3) years following the Date of Termination (but not later
than the applicable expiration date);
(iv) the restrictions shall lapse on any then-outstanding shares of
restricted stock held by the Executive;
(v) the Company shall provide to the Executive (and/or the
Executive's eligible dependents, as the case may be), for a period of twelve
(12) months following the Date of Termination, the various welfare benefits to
which she (and/or her eligible dependents, as the case may be) was entitled
immediately before the Date of Termination (on a basis no less favorable than
that in effect immediately before the Date of Termination) and, following the
expiration of such twelve (12)-month period, the rights and benefits to which
she (and/or her eligible dependents, as the case may be) may be entitled under
the provisions of Sections 601-608 of the Employee Retirement Income Security
Act of 1974, as they may be amended from time to time ("COBRA"); and
(vi) the Company shall provide to the Executive all compensation and
benefits payable to the Executive under the terms of the Company's compensation
and benefit plans, programs or arrangements as in effect immediately prior to
the Date of Termination (the "OTHER BENEFITS").
(b) DEATH AND DISABILITY. If the Executive's employment is terminated by
reason of the Executive's death or Disability, the Company shall pay to the
Executive or, in the case of the Executive's death, to the Executive's
designated beneficiaries (or, if there is no such beneficiary, to the
Executive's estate or legal representative), the Accrued Amounts (in a lump sum
in cash within thirty (30) days after the Date of Termination) and the Other
Benefits. All outstanding equity-based awards shall be treated according to the
provisions of the applicable plans and award agreements.
(c) TERMINATION FOR CAUSE; RESIGNATION WITHOUT GOOD REASON. If the
Executive's employment is terminated by the Company for Cause or the Executive
voluntarily terminates her employment without Good Reason, then the Company
shall pay to the Executive the Accrued Amounts (in a lump sum in cash within
thirty (30) days after the Date of
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Termination) and the Other Benefits. All outstanding equity-based awards shall
be treated according to the provisions of the applicable plans and award
agreements.
(d) CHANGE IN CONTROL.
(i) Change in Control Severance Pay and Benefits. During the one
(1)-year period following a Change in Control (as defined below), if the Company
terminates the Executive's employment other than for Cause, death or Disability,
or if the Executive resigns for Good Reason (which, per clause (F) of the
definition of Good Reason, includes resignation for any reason during the
6-month period following a Change in Control), the Executive will receive the
same payments and benefits as described in Section 5(a) above per the terms of
such section, except that the payment pursuant to subsection 5(a)(ii) shall be
equal to two (2) times the sum of clause (x) and (y) of that subsection, and the
benefit continuation period pursuant to subsection 5(a)(v) shall be eighteen
(18) months rather than twelve (12) months; subject, however to subsections
5(d)(iii)(A)III and 5(d)(iii)(C)III.b below.
(ii) Excise Tax Gross-Up. In the event that the aggregate of all
payments or benefits made or provided to, or that may be made or provided to,
the Executive under this Agreement and under all other plans, programs and
arrangements of the Company (with a "payment" including, without limitation, the
vesting of an option or other non-cash benefit or property) (the "AGGREGATE
PAYMENT") is determined to constitute a "parachute payment," as such term is
defined in Section 280G(b)(2) of the Internal Revenue Code of 1986, as amended
(the "CODE"), the Company shall pay to the Executive, prior to the time any
excise tax imposed by Section 4999 of the Code, as amended ("EXCISE TAX") is
payable with respect to such Aggregate Payment, an additional amount which,
after the imposition of all income, payroll and excise taxes thereon, is equal
to the Excise Tax on the Aggregate Payment. The determination of whether the
Aggregate Payment constitutes a parachute payment and, if so, the amount to be
paid to the Executive and the time of payment pursuant to this Section 5(e)
shall be made by an independent auditor (the "AUDITOR") jointly selected by the
Company and the Executive and paid by the Company. The Auditor shall be a
nationally recognized United States public accounting firm which has not, during
the two (2) years preceding the date of its selection, acted in any way on
behalf of the Company or any affiliate thereof. If the Executive and the Company
cannot agree on the firm to serve as the Auditor, then the Executive and the
Company shall each select one accounting firm and those two firms shall jointly
select the accounting firm to serve as the Auditor. Notwithstanding the
foregoing, in the event that the amount of the Executive's Excise Tax liability
is subsequently determined to be greater than the Excise Tax liability with
respect to which an initial payment to the Executive under this Section 5(e) has
been made, the Company shall pay to the Executive an additional amount with
respect to such additional Excise Tax (and any interest and penalties thereon)
at the time and in the amount determined by the Auditor so as to make the
Executive whole, on an after-tax basis, with respect to such Excise Tax (and any
interest and penalties thereon) and such additional amount paid by the Company.
In the event the amount of the Executive's Excise Tax liability is subsequently
determined to be less than the Excise Tax liability with respect to which an
initial payment to the Executive has been made, the Executive shall, as soon as
practical after the determination is made, pay to the Company the amount of the
overpayment by the Company, reduced by the amount of any relevant taxes already
paid by the Executive and not refundable, all as determined by the Auditor. The
Executive and the Company shall cooperate with each other in connection with any
proceeding
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or claim relating to the existence or amount of liability for Excise Tax, and
all expenses incurred by the Executive in connection therewith shall be paid by
the Company promptly upon notice of demand from the Executive.
(iii) A "CHANGE IN CONTROL" shall be deemed to have occurred if:
(A) any "person" (as defined in Section 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")),
excluding for this purpose the Company or any subsidiary of the Company,
or any employee benefit plan of the Company or any subsidiary of the
Company, or any person or entity organized, appointed or established by
the Company for or pursuant to the terms of such plan which acquires
beneficial ownership of voting securities of the Company, is or becomes
the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act)
directly or indirectly of securities of the Company representing thirty
percent (30%) or more of the combined voting power of the Company's then
outstanding securities;
I. provided, however, that no Change in Control
shall be deemed to have occurred as the result of an acquisition of
securities of the Company by the Company which, by reducing the number
of voting securities outstanding, increases the direct or indirect
beneficial ownership interest of any person to thirty percent (30%) or
more of the combined voting power of the Company's then outstanding
securities, but any subsequent increase in the direct or indirect
beneficial ownership interest of such a person in the Company shall be
deemed a Change in Control;
II. and provided further, however, that if the Board
of Directors of the Company determines in good faith that a person who
has become the beneficial owner directly or indirectly of securities of
the Company representing thirty percent (30%) or more of the combined
voting power of the Company's then outstanding securities has
inadvertently reached that level of ownership interest, and if such
person divests as promptly as practicable a sufficient amount of
securities of the Company so that the person no longer has a direct or
indirect beneficial ownership interest in thirty percent (30%) or more
of the combined voting power of the Company's then outstanding
securities, then no Change in Control shall be deemed to have occurred;
III. and further provided, however, that if this
clause (A) is satisfied but (x) the person that has become the
beneficial owner directly or indirectly of securities of the Company
representing thirty percent (30%) or more of the combined voting power
of the Company's then-outstanding securities owns less than forty
percent (40%) of the combined voting power of the Company's
then-outstanding securities, (y) such ownership occurred through the
Company's acquisition of another entity and (z) such acquisition was
recommended in writing to the Board of Directors by the Executive,
then, if the Executive resigns per Section 4(c)(iv)(F) above, the
severance pay and benefits to which the Executive shall be entitled
will be per the terms of Section 5(a) above without effect given to
Section 5(d)(i) above; or
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(B) during any period of two (2) consecutive years (not
including any period prior to the Effective Date), individuals who at the
beginning of such two-year period constitute the Board of Directors of the
Company and any new director (except for a director designated by a person
who has entered into an agreement with the Company to effect a transaction
described elsewhere in this definition) whose election by the Board or
nomination for election by the Company's shareholders was approved by a
vote of at least two-thirds of the directors then still in office who
either were directors at the beginning of the period or whose election or
nomination for election was previously approved, cease for any reason to
constitute at least a majority thereof; or
(C) the shareholders of the Company approve:
I. a plan of complete liquidation of the Company,
II. an agreement for the sale or disposition of the
Company or all or substantially all of the Company's assets,
III. any plan of merger or consolidation of the
Company with any other corporation, except that:
a. shareholder approval of a plan of merger or
consolidation in which the security owners of the Company
immediately prior to the merger or consolidation continue
to own at least seventy percent (70%) of the voting
securities of the new (or continued) entity immediately
after such merger or consolidation shall not be Change in
Control; and
b. shareholder approval of a plan of merger or
consolidation in which the security owners of the Company
immediately prior to the merger or consolidation continue
to own at least fifty-one percent (51%) but less than
seventy percent (70%) of the voting securities of the new
(or continued) entity immediately after such merger or
consolidation and such plan of merger or consolidation was
recommended in writing to the Board of Directors by the
Executive shall be a Change in Control; but, if the
definition of Change in Control is satisfied through this
clause 5(d)(iii)(C)III.b, then, if the Executive resigns
per Section 4(c)(iv)(F) above, the severance pay and
benefits to which the Executive shall be entitled will be
per the terms of Section 5(a) above without effect given
to Section 5(d)(i) above.
6. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall prevent or
limit the Executive's continuing or future participation in any plan,
program, policy or practice provided by the Company or any of its affiliated
companies for which the Executive may qualify nor shall anything in this
Agreement limit or otherwise affect such rights as the Executive may have
under any contract or agreement with the Company or any of its affiliated
companies. Vested benefits and other amounts that the Executive is otherwise
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entitled to receive under any plan, policy, practice or program of, or any
contract of agreement with, the Company or any of its affiliated companies on
or after the Date of Termination shall be payable in accordance with the
terms of each such plan, policy, practice, program, contract or agreement, as
the case may be, except as explicitly modified by this Agreement.
7. NO MITIGATION OR OFFSET. Except as provided herein, the Company's
obligation to make the payments provided for in, and otherwise to perform its
obligations under, this Agreement shall not be affected by any set-off,
counterclaim, recoupment, defense or other claim, right or action that the
Company may have against the Executive or others. In no event shall the
Executive be obligated to seek other employment or take any other action by
way of mitigation of the amounts payable to the Executive under any of the
provisions of this Agreement and such amounts shall not be reduced,
regardless of whether the Executive obtains other employment.
8. CONFIDENTIAL INFORMATION; COMPETITION; SOLICITATION
(a) Confidential Information. The Executive shall hold in a fiduciary
capacity for the benefit of the Company all secret or confidential information,
knowledge or data relating to the Company or any of its affiliated companies and
their respective businesses that the Executive obtains during the Executive's
employment by the Company or any of its affiliated companies and that is not
public knowledge (other than as a result of the Executive's violation of this
Section 8(a) ("CONFIDENTIAL INFORMATION"). The Executive shall not communicate,
divulge or disseminate Confidential Information at any time during or after the
Executive's employment with the Company, except with the prior written consent
of the Company or as otherwise required by law or legal process and except as
needed to conduct the Executive's duties for the Company.
(b) Non-Competition; Non-Solicitation. For a period of one (1) year after
the Date of Termination, the Executive shall not, without the written consent of
the Board, directly or indirectly, (i) engage or be interested in (as owner,
partner, stockholder, employee, director, officer, agent, consultant or
otherwise), with or without compensation, any business which is in direct
competition with any line of business actively being conducted on the Date of
Termination by the Company or any of its subsidiaries (provided that the
Executive shall not be prohibited from employment with a division of a direct
competitor if such division is not in direct competition with any line of
business actively being conducted on the Date of Termination by the Company or
any of its subsidiaries); or (ii) solicit any person to leave the employment of
the Company or any of its subsidiaries or affiliates (other than persons
employed in a clerical or other non-professional position). Nothing herein,
however, will prohibit the Executive from acquiring or holding not more than one
percent of any class of publicly traded securities of any such business;
provided that such securities entitle the Executive to no more than one percent
of the total outstanding votes entitled to be cast by security holders of such
business in matters on which such security holders are entitled to vote.
(c) The Executive agrees that the restrictions set forth in Sections 8(a)
and 8(b) hereof are reasonable and necessary to protect the legal interests of
the Company. The Executive
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further agrees that the Company shall be entitled to seek injunctive relief in
the event of any actual or threatened breach of such restrictions.
9. PATENTS, COPYRIGHTS AND RELATED MATTERS.
(a) Disclosure and Assignment. The Executive shall disclose to the Company
any and all improvements and inventions that the Executive may conceive and/or
reduce to practice individually or jointly or commonly with others while she is
employed with the Company with respect to (i) any methods, processes or
apparatus concerned with the development, use or production of any type of
products, goods or services sold or used by the Company, and (ii) any type of
products, goods or services sold or used by the Company. The Executive also
shall assign, transfer and set over to the Company her entire right, title and
interest in and to any and all of such inventions as are specified in this
Section 9(a) and in and to any and all applications for letters patent that may
be filed on such inventions, and in and to any and all letters patent that may
issue, or be issued, upon such applications. In connection therewith and at no
expense to the Executive, the Executive shall sign any and all instruments
deemed necessary by the Company or its subsidiaries or affiliates for:
(i) the filing and prosecution of any applications for letters
patent of the United States or of any foreign country that the Company or its
subsidiaries or affiliates may desire to file upon such inventions as are
specified in this Section 9(a);
(ii) the filing and prosecution of any divisional, continuation,
continuation-in-part or reissue applications that the Company or its
subsidiaries or affiliates may desire to file upon such applications for letters
patent; and
(iii)the reviving, re-examining or renewing of any of such
applications for letters patent.
(b) Section 9(a) shall not apply to any invention for which no equipment,
supplies, facilities, confidential, proprietary or secret knowledge or
information, or other trade secret information of the Company or its
subsidiaries or affiliates was used and that was developed entirely on the
Executive's own time, and (i) that does not relate (A) directly to the business
of the Company or its subsidiaries or affiliates, or (B) to the Company's or its
subsidiaries or affiliates actual or demonstrably anticipated research or
development, or (ii) that does not result from any work performed by the
Executive for the Company or its subsidiaries or affiliates.
(c) Copyrightable Material. All right, title and interest in all
copyrightable material that the Executive shall, directly or indirectly,
conceive or originate individually or jointly or commonly with others, and that
arise during the term of her employment with the Company and out of the
performance of her duties and responsibilities under this Agreement, shall be
the property of the Company or its subsidiaries or affiliates and are hereby
assigned by the Executive to the Company or its subsidiaries or affiliates,
along with ownership of any and all copyrights in the copyrightable material.
Upon request and at no expense to the Executive, the Executive shall execute any
and all papers and perform all other acts necessary to assist the Company to
obtain and register copyrights on such materials in any and all countries. Where
applicable, works of authorship created by the Executive for the Company or its
subsidiaries or affiliates in
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performing her duties and responsibilities hereunder shall be considered "works
made for hire," as defined in the U.S. Copyright Act.
10. DISPUTE RESOLUTION. Except for the Company's right to seek injunctive
relief as set forth in Section 8(c), all disputes arising under, related to,
or in connection with this Agreement shall be settled by expedited
arbitration conducted before a panel of three arbitrators sitting in New
York, New York, in accordance with the employment rules of the American
Arbitration Association then in effect. The decision of the arbitrators in
that proceeding shall be binding on the Company and the Executive. Judgment
may be entered on the award of the arbitrators in any court having
jurisdiction. All fees and expenses of the arbitrators shall be paid by the
Company. The arbitrators shall have the authority to award attorney's fees
and costs to the prevailing party.
11. KEY-PERSON INSURANCE. At any time during the Term, the Company shall
have the right to insure the life of Executive for the sole benefit of the
Company, in such amounts, and with such terms, as it may determine. All
premiums payable thereon shall be the obligation of the Company. The
Executive shall have no interest in any such policy, but shall cooperate with
the Company in taking out such insurance by submitting to physical
examinations, by supplying all information required by the insurance company,
and by executing all necessary documents, provided that no financial
obligation is imposed upon the Executive by any such documents.
12. D&O INSURANCE; COMPANY INDEMNITY.
(a) The Company shall maintain directors' and officers' liability
insurance for the benefit of the Executive in an amount no less than $5,000,000.
(b) The Company agrees that if the Executive is made a party, or is
threatened to be made a party, to any action, suit or proceeding, whether civil,
criminal, administrative or investigative (a "PROCEEDING"), by reason of the
fact that she is or was a director, officer or employee of the Company or is or
was serving at the request of the Company as a director, officer, member,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, including service with respect to employee benefit plans,
whether or not the basis of such Proceeding is the Executive's alleged action in
an official capacity while serving as a director, officer, member, employee or
agent, the Executive shall be indemnified and held harmless by the Company to
the fullest extent legally permitted or authorized by the Company's certificate
of incorporation or bylaws or resolutions of the Board or, if greater, by the
laws of the State of Delaware against all cost, expense, liability and loss
(including, without limitation, attorney's fees, judgments, fines, ERISA excise
taxes or penalties and amounts paid or to be paid in settlement) reasonably
incurred or suffered by the Executive in connection therewith, and such
indemnification shall continue as to the Executive even if she has ceased to be
a director, member, officer, employee or agent of the Company or other entity
and shall inure to the benefit of the Executive's heirs, executors and
administrators. The Company shall advance to the Executive all reasonable costs
and expenses to be incurred by her in connection with a Proceeding within twenty
(20) days after receipt by the Company of a written request for such advance.
Such request shall include an undertaking by the Executive to repay the amount
of such advance if it shall ultimately be determined that she is not entitled to
be indemnified against
12
such costs and expenses. The provisions of this Section 12(b) shall not be
deemed exclusive of any other rights of indemnification to which the Executive
may be entitled or which may be granted to her, and it shall be in addition to
any rights of indemnification to which she may be entitled under any policy of
insurance.
13. SUCCESSORS
(a) This Agreement is personal to the Executive and, without the prior
written consent of the Company, shall not be assignable by the Executive
otherwise than by will or the laws of descent and distribution. This Agreement
shall inure to the benefit of and be enforceable by the Executive's legal
representatives.
(b) This Agreement shall inure to the benefit of and be binding upon the
Company and its successors and assigns.
(c) The Company shall require any successor (whether direct or indirect,
by purchase, merger, consolidation or otherwise) to all or substantially all of
the business and/or assets of the Company expressly in writing to assume and
agree to perform this Agreement in the same manner and to the same extent that
the Company would have been required to perform it if no such succession had
taken place. As used in this Agreement, the "Company" shall mean both the
Company as defined above and any such successor that assumes and agrees to
perform this Agreement, by operation of law or otherwise.
14. MISCELLANEOUS
(a) This Agreement shall be governed by, and construed in accordance with,
the laws of the State of New York, without reference to principles of conflict
of laws. The captions of this Agreement are not part of the provisions hereof
and shall have no force or effect. This Agreement may not be amended or modified
except by a written agreement executed by the parties hereto or their respective
successors and legal representatives.
(b) All notices and other communications under this Agreement shall be in
writing and shall be given to the other party (i) by hand delivery; (ii) by
reputable overnight carrier; or (iii) by registered or certified mail, return
receipt requested, postage prepaid, addressed as follows:
If to the Executive:
Xxxxxx X. Xxxxxxxx
enherent Corp.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
with a copy to:
Vedder, Price, Xxxxxxx & Kammholz, P.C.
000 X. XxXxxxx Xxxxxx, Xxxxx 0000
00
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxx
If to the Company:
enherent Corp.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: General Counsel
with a copy to:
Xxxxxxx Xxxxxx & Xxxxxxx LLP
000 X. Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxx
or to such other address as either party furnishes to the other in writing in
accordance with this subsection (b). Notices and communications shall be
effective when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision of this
Agreement. If any provision of this Agreement shall be held invalid or
unenforceable in part, the remaining portion of such provision, together with
all other provisions of this Agreement, shall remain valid and enforceable and
continue in full force and effect to the fullest extent consistent with law.
(d) Notwithstanding any other provision of this Agreement, the Company may
withhold from amounts payable under this Agreement all federal, state, local and
foreign taxes that are required to be withheld by applicable laws or
regulations.
(e) The Executive's or the Company's failure to insist upon strict
compliance with any provisions of, or to assert any right under, this Agreement
shall not be deemed to be a waiver of such provision or right or of any other
provision of or right under this Agreement.
(f) The Executive and the Company acknowledge that this Agreement
constitutes the entire understanding of the parties with respect to the subject
matter hereof and supersede any other prior agreement or other understanding,
whether oral or written, express or implied, between them concerning, related to
or otherwise in connection with, the subject matter hereof and that, following
the date hereof, no such agreement or understanding shall be of any further
force or effect.
(g) The rights and benefits of the Executive under this Agreement may not
be anticipated, assigned, alienated or subject to attachment, garnishment, levy,
execution or other legal or equitable process except as required by law. Any
attempt by the Executive to anticipate, alienate, assign, sell, transfer,
pledge, encumber or charge the same shall be void. Payments due hereunder shall
not be considered assets of the Executive in the event of insolvency or
bankruptcy.
14
(h) To the extent necessary to effectuate the terms of this Agreement,
terms of this Agreement which have effect after the termination of the
Executive's employment or the termination of this Agreement shall survive the
expiration of the Term.
(i) This Agreement may be executed in several counterparts, each of which
shall be deemed an original, and said counterparts shall constitute but one and
the same instrument. Facsimile signatures on this Agreement shall be the same as
original signatures.
IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand
and, pursuant to the authorization of its Board, the Company has caused this
Agreement to be executed in its name on its behalf.
ENHERENT CORP.
By: /s/ Xxxxxx X. Xxxxxxx
-----------------------
Name: Xxxxxx X. Xxxxxxx
Title: Director
EXECUTIVE
/s/ Xxxxxx X. Xxxxxxxx
--------------------------
Xxxxxx X. Xxxxxxxx
15
ATTACHMENT A
ENHERENT CORP.
CHIEF EXECUTIVE OFFICER ANNUAL CASH BONUS PLAN
SUMMARY: Annual cash bonus based on EBITDA.
NOTE: MANAGEMENT BONUSES, INCLUDING ANY BONUS PAID TO THE CEO PURSUANT TO THIS
PLAN, ARE EXPENSES FACTORED INTO EBITDA UNDER THIS PLAN.
EBITDA at Tier 1 target levels will result in an annual bonus payment equal to
50% of base salary. EBITDA at 120% or 133% of Tier 1 target level will result in
total annual bonus payment of 75% or 100% of base salary, respectively. EBITDA
at greater than 133% of Tier 1 target level will result in total annual bonus
payment greater than 100% of base salary.
Bonus payments to be made per a combination of quarterly and annual payments, as
described below.
Setting of Tier 1 Targets:
- 2005: During 2005, Tier 1 EBITDA target levels will be the EBITDA
targets per the Ableco loan agreement, as those EBITDA targets may be amended.
- 2006 and 2007: For 2006 and 2007, Tier 1 EBITDA target levels will be as
mutually agreed between the CEO and the Company by no less than 30 days prior to
the commencement of the applicable Q1 performance period, or, if such agreement
cannot be reached, then the Tier 1 EBITDA target levels will be the EBITDA
targets per the Ableco loan agreement, as those EBITDA targets may be amended.
- 2008 and thereafter: Beginning with 2008, Tier 1 EBITDA target levels
will be as mutually agreed between the CEO and the Company, with such agreement
not to be unreasonably withheld, and shall be established no less than 30 days
prior to the commencement of the Q1 performance period.
Tier 1 EBITDA targets will be set for each quarter of the year (Q1, Q2, Q3 and
Q4); only 2005 has EBITDA targets beginning with Q2.
A-1
TIER 1: Annual target bonus equal to 50% of base salary to be paid in quarterly
installments, based on Tier 1 EBITDA targets. For 2005, Tier 1 EBITDA targets
are as follows:
Q1 n/a
Q2 $210K*
Q3 $300K
Q4 $300K
2005 Total: $810K*
Q1: If EBITDA target for Q1 achieved, payment equal to 13% of base salary to be
made as soon as practicable after end of Q1, but no later than the last payroll
date in May of the applicable year (this sentence not applicable for 2005).
Q2: If EBITDA target for Q2 achieved, payment equal to 13% (17% for 2005) of
base salary to be made as soon as practicable after end of Q2, but no later than
the last payroll date in August of the applicable year.
Q3: If EBITDA target for Q3 achieved, payment equal to 12% (17% for 2005) of
base salary to be made as soon as practicable after end of Q3, but no later than
the last payroll date in November of the applicable year.
Q4: If EBITDA target for Q4 achieved, payment equal to 12% (16% for 2005) of
base salary to be made as soon as practicable after end of Q4, but no later than
February 15 of the applicable year.
Year End Look-Back:
(a) If a Tier 1 EBITDA target is not achieved in a certain quarter (the
"Shortfall Quarter"), but the Tier 1 EBITDA target is exceeded in another
quarter or quarters (the "Overage Quarter(s)"), then the Tier 1 EBITDA target
will be deemed satisfied in the Shortfall Quarter and the actual EBITDA for the
Overage Quarter with the greatest EBITDA will be deemed reduced by the EBITDA
credited to the Shortfall Quarter to satisfy the Tier 1 EBITDA target for such
quarter. This adjustment will occur for each such Shortfall Quarter, so long as
there exists an Overage Quarter (after each adjustment under this paragraph the
existence of an Overage Quarter and the Overage Quarter with the greatest EBITDA
will re-determined).
(b) Based on the EBITDA adjustments described in paragraph (a) above and subject
to offset as described below, Tier 1 bonus payments not previously made to the
CEO ("Make-Up Tier 1 Bonus Payments") will be paid as soon as practicable after
end of the applicable year, but no later than the immediately following February
15; provided, however, that such Make-Up Tier 1
------------------------
* Net of "Expense Add-Backs" as defined in Ableco loan agreement.
* 2005 Total EBITDA target is net of "Expense Add-Backs" as defined in Ableco
loan agreement.
A-2
Bonus Payments will be reduced by the amount of any Tier 2, 3 or 4 bonus
payments received by the CEO which were based on EBITDA deemed credited to any
Shortfall Quarter.]
TIER 2: In addition to the total cash payment equal to 50% of base salary that
may be paid under Tier 1, under Tier 2 eligible for a cash payment of up to 25%
of base salary for exceeding Tier 1 EBITDA targets by 20%.
Q1: Tier 2 payment for Q1 will equal (i) 7% of base salary multiplied by (ii) a
fraction with a numerator equal to the percent by which the actual Q1 EBITDA
exceeded the Tier 1 Q1 EBITDA target and a denominator equal to 20% (if such
fraction results in a number greater than 1, it will be deemed to be the number
1). Tier 2 payment for Q1 performance to be made as soon as practicable after
end of Q1, but no later than the last payroll date in May of the applicable
year. (This paragraph not applicable for 2005.)
Q2: Tier 2 payment for Q2 will equal (i) 6% (9% for 2005) of base salary
multiplied by (ii) a fraction with a numerator equal to the percent by which the
actual Q2 EBITDA exceeded the Tier 1 Q2 EBITDA target and a denominator equal to
20% (if such fraction results in a number greater than 1, it will be deemed to
be the number 1). Tier 2 payment for Q2 performance to be made as soon as
practicable after end of Q2, but no later than the last payroll date in August
of the applicable year.
Q3: Tier 2 payment for Q3 will equal (i) 6% (8% for 2005) of base salary
multiplied by (ii) a fraction with a numerator equal to the percent by which the
actual Q3 EBITDA exceeded the Tier 1 Q3 EBITDA target and a denominator equal to
20% (if such fraction results in a number greater than 1, it will be deemed to
be the number 1). Tier 2 payment for Q3 performance to be made as soon as
practicable after end of Q3, but no later than the last payroll date in November
of the applicable year.
Q4: Tier 2 payment for Q4 will equal (i) 6% (8% for 2005) of base salary
multiplied by (ii) a fraction with a numerator equal to the percent by which the
actual Q4 EBITDA exceeded the Tier 1 Q4 EBITDA target and a denominator equal to
20% (if such fraction results in a number greater than 1, it will be deemed to
be the number 1). Tier 2 payment for Q4 performance to be made as soon as
practicable after end of Q4, but no later than February 15 of the applicable
year.
TIER 3: In addition to the total cash payments equal to 50% of base salary that
may be paid under Tier 1 and 25% of base salary that may be paid under Tier 2,
under Tier 3 eligible for a cash payment of up to 25% of base salary for
exceeding Tier 1 EBITDA targets by 33%.
Q1: Tier 3 payment for Q1 will equal (i) 7% of base salary multiplied by (ii) a
fraction with a numerator equal to the percent by which the actual Q1 EBITDA
exceeded the Tier 1 Q1 EBITDA target and a denominator equal to 33% (if such
fraction results in a number greater than 1, it will be deemed to be the number
1). Tier 3 payment for Q1 performance to be made as soon as practicable after
end of Q1, but no later than the last payroll date in May of the applicable
year. (This paragraph not applicable for 2005.)
A-3
Q2: Tier 3 payment for Q2 will equal (i) 6% (9% for 2005) of base salary
multiplied by (ii) a fraction with a numerator equal to the percent by which
actual Q2 EBITDA exceeded the Tier 1 Q2 EBITDA target and a denominator equal to
33% (if such fraction results in a number greater than 1, it will be deemed to
be the number 1). Tier 3 payment for Q2 performance to be made as soon as
practicable after end of Q2, but no later than the last payroll date in August
of the applicable year.
Q3: Tier 3 payment for Q3 will equal (i) 6% (8% for 2005) of base salary
multiplied by (ii) a fraction with a numerator equal to the percent by which the
actual Q3 EBITDA exceeded the Tier 1 Q3 EBITDA target and a denominator equal to
33% (if such fraction results in a number greater than 1, it will be deemed to
be the number 1). Tier 3 payment for Q3 performance to be made as soon as
practicable after end of Q3, but no later than the last payroll date in November
of the applicable year.
Q4: Tier 3 payment for Q4 will equal (i) 6% (8% for 2005) of base salary
multiplied by (ii) a fraction with a numerator equal to the percent by which the
actual Q4 EBITDA exceeded the Q4 Tier 1 EBITDA target and a denominator equal to
33% (if such fraction results in a number greater than 1, it will be deemed to
be the number 1). Tier 3 payment for Q4 performance to be made as soon as
practicable after end of Q4, but no later than February 15 of the applicable
year.
TIER 4: If actual annual EBITDA exceeds 133% of Tier 1 target (for 2005, this
means total annual EBITDA would exceed $1.077 million ($810K x 133% ), in
addition to cash payments made under Tiers 1, 2, and 3 (which would equal 100%
of base salary), will receive an additional payment equal to 25% of actual total
annual EBITDA over 133% of the annual Tier 1 EBITDA target. This Tier 4 payment
will be made as soon as practicable after end of the applicable year, but no
later than the immediately following February 15.
A-4
