EMPLOYMENT
AGREEMENT
This Employment
Agreement (“ Agreement ”) is dated as
of December 13th , 2006 (the “ Effective
Date ”), by and between netGuru, Inc., a Delaware
corporation (“ NGRU ”) (the “
Company ”), and Koushik Dutta, an individual
(the “ Employee ”).
RECITALS
WHEREAS, BPO
Management Services, Inc., a Delaware corporation
(“BPOMS”), and the Company intend to effect a merger,
as a result of which BPOMS will become a wholly-owned subsidiary of
the Company (the “ Merger Agreement
”);
WHEREAS,
Employee has been employed by the Company on a full time continuous
basis as Chief Technology Officer of the Web4 division since April
2000 and Chief Operating Officer since November 2005;
WHEREAS, the
Company will secure the ongoing services of the Employee upon the
closing (“Closing”) of such Merger Agreement pursuant
to the terms and conditions set forth herein, and therefore the
Employee and the Company intend hereby to enter into an employment
agreement as set forth herein;
WHEREAS, this
Agreement is conditioned upon the Closing and shall be void and of
no effect if for any reason, including, without limitation, a
default or breach by the Company or BPOMS, the Merger Agreement is
terminated.
NOW, THEREFORE, in consideration of the premises
and the mutual covenants set forth below, the parties hereby agree
as follows:
1. Employment. From
and after the Effective Date, the Company hereby agrees to employ
the Employee as Chief Technology Officer of the Company, and the
Employee hereby accepts such employment, on the terms and
conditions set forth below.
2. Term. The term of
this Agreement shall begin on the Effective Date and shall end two
(2) years from the Effective Date or upon termination of the
Employee’s employment by the Company or by the Employee in
accordance with the terms of this Agreement. The two year
employment term herein shall be referred to as the “
Employment Period ”. Thereafter, the Company
may elect, in its sole discretion to either: (i) o enter into a new
employment agreement upon terms and conditions as then mutually
agreed by the Company and the Employee; or (ii) continue
Employee’s employment on an “at will” basis only
and in such case the Company may terminate the Employee’s
employment at any time with or without cause and with or without
notice.
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(a)
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During the
Employment Period, the Employee shall serve as Chief Technology
Officer of the Company with such duties, authority and
responsibilities that are customary for such position and such
other related duties as requested by the Chief Executive Officer or
the President of the Company from time to time. The Employee shall
report directly to the Chief Executive Officer of the Company.
Unless otherwise authorized by the Chief Executive Officer, the
President or the Board of Directors of the Company (“
Board ”), the Employee shall devote
substantially all of his working time, attention and energies
during normal business hours (other than absences due to illness or
vacation) to the performance of his duties for the Company.
Notwithstanding the above, the Employee shall be permitted to (i)
serve on civic or charitable boards or committees, or (ii) serve on
boards of other companies provided such activities do not interfere
with the Employee’s performance of his duties for the
Company. The Employee shall be entitled to receive and retain all
remuneration received by him from the items listed in clauses (i)
and (ii) of this paragraph.
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(b)
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In order to
induce the Company to enter into this Agreement, except for the
employment agreement with the Company concerning employment with
the Company which has been disclosed to BPOMS in writing by the
Company or Employee prior to the execution of the Merger Agreement,
and which employment agreement shall be terminated by the Company
and Employee effective on the Closing, Employee represents and
warrants to the Company that (i) Employee is not a party or subject
to any employment agreement or arrangement with any other person,
firm, company, corporation or other business entity; and (ii)
Employee is subject to no restraint, limitation or restriction by
virtue of any agreement or arrangement, or by virtue of any law or
otherwise which would impair Employee’s right or ability to
enter the employ of the Company or to perform fully his duties and
obligations pursuant to this Agreement.
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(c)
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Effective upon
the Closing, and as a material inducement for the Company to enter
into this Agreement, Employee agrees to execute and deliver to the
Company: (i) the Release Agreement in the form of
Exhibit A attached hereto, which Release Agreement
is intended to release the Company, BPOMS and other parties as
provided for in such Release Agreement from all known and unknown
claims, and as further provided for in such Release Agreement; and
(ii) the Employee Proprietary Information And Inventions
Agreement in the form of Exhibit B
attached hereto.
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4. Place of Performance.
During the Employment Period, the location of employment of the
Employee shall be at the Company’s principal offices, which
currently are located in Yorba Linda, Orange County,
California.
5. Compensation and
Related Matters.
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(a)
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Base Salary.
Commencing on the Effective Date and thereafter during the
Employment Period, the Company shall pay the Employee a base salary
at the rate of not less than $140,000.00 per year (“
Base Salary ”). The Base Salary shall be
paid in approximately equal installments in accordance with the
Company’s customary payroll practices. Effective upon the
occurrence of two consecutive fiscal quarters (i.e. with the first
full fiscal quarter commencing after the Closing )of positive
EBITDA by the Company, as determined by the Company, the Base
Salary shall be increased, on a one time basis only, by an amount
equal to 15% of the then current Base Salary (the “Base
Salary Increase”). Notwithstanding any term in this Agreement
to the contrary, however, Employee shall be entitled to receive no
more than one Base Salary Increase. EBITDA for purposes of this
paragraph means earnings of the Company before interest, taxes, and
depreciation and amortization expenses as determined in accordance
with GAAP by the Company. The Company may not reduce the Base
Salary amount without the prior written consent of the
Employee.
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(b)
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Annual Bonus.
Commencing on January 1, 2007 and ending on the end of the
Employment Period, the Employee shall be eligible to earn an annual
cash bonus (the “ Annual Bonus ”) in
such amount equal to 50% of the then current Base Salary as shall
be determined by the Board based on the achievement of Company and
individual performance goals for the Company as established by the
Board for each applicable calendar year, with such Annual Bonus
being prorated for any Partial Year (as defined below), and except
that no Annual Bonus (or any pro-rated amount thereof for any
Partial Year) shall be accrued, due or payable or deemed earned by
Employee if, prior to the end of a calendar year, Employee
voluntarily terminates his employment with the Company other than
for Good Reason as defined below or if the Company terminates
Employee’s employment for Cause as defined in this Agreement.
The Board shall establish objective and subjective criteria to be
used to determine the extent to which performance goals have been
satisfied. The Annual Bonus shall be prorated for any applicable
partial calendar year (each a “ Partial Year
”).
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(c)
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Business,
Travel and Entertainment Expenses. The Company shall promptly
reimburse the Employee for all business, travel and entertainment
expenses incurred during the Employment Period with respect to the
business or prospective business of the Company, subject to the
Company’s expense reimbursement policies.
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(d)
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Vacation.
During the Employment Period, the Employee shall be entitled to
four (4) weeks of paid vacation per year.
Vacation not taken during the applicable fiscal year (but not in
excess of three weeks) shall be carried over to the next following
fiscal year and no vacation shall accrue during the time period
that Employee has accrued and unused vacation in excess of five (5)
weeks.
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(e)
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Equity Awards.
The Employee is hereby granted (the “Grant”) an
“incentive stock option” (“Option”) as
defined under Section 422 of the Internal Revenue Code of 1986, as
amended, to purchase 75,000 shares of common stock of the Company
at the exercise price per share equal to the fair market value per
share of the Company’s common stock as of the Closing as
determined by the Board and subject to the following: (i) vesting
shall be conditioned upon being employed by the Company on a full
time basis and shall be subject to the following schedule: 25%
shall vest and become exercisable 6 months after the Closing; an
additional 25% shall vest and become exercisable 12 months after
the Closing; an additional 25% shall vest and become exercisable 18
months after the Closing; and 25% shall vest and become exercisable
24 months after the Closing and whereupon the Option shall have
become vested and exercisable as to one hundred percent (100%) of
the stock covered by the Option. (ii) full 100% accelerated vesting
of the Option upon termination of Employee’s employment by
the Company without Cause or by the Employee for Good Reason; (iii)
except as otherwise provided for above in this paragraph 5(e), such
other terms as provided for in the netGuru, Inc. 2003 Stock Option
Plan (“Plan”); and (iv) Employee shall be required to
execute at the Closing a stock option grant agreement in the form
generally utilized by the Company for incentive stock options
granted under the Plan and otherwise consistent with the terms
herein.
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(f)
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Welfare,
Pension and Incentive Benefit Plans. During the Employment Period,
the Employee (and his eligible spouse and dependents) shall be
entitled to participate in all welfare benefit plans and programs
maintained by the Company from time to time for the benefit of its
employees, including, without limitation, all medical,
hospitalization, dental, disability, accidental death and
dismemberment, travel accident and life insurance plans, programs
and arrangements. In addition, during the Employment Period, the
Employee shall be eligible to participate in all pension,
retirement, savings and other employee benefit plans and programs
maintained from time to time by the Company for the benefit if its
employees.
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(g)
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Automobile
Allowance. The Company shall provide the Employee with an
automobile allowance of not less than $600.00 per month in
connection with the performance of his duties.
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(h)
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Additional
Items. The Company shall provide the Employee with the following
additional items in connection with the performance of his duties:
laptop computer, internet connection at home (or wireless
internet), phone cards for overseas business calls from outside
office, Company credit card and mobile telephone.
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6. Termination. The
Employee’s employment hereunder may be terminated during the
Employment Period under the following circumstances:
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(a)
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Death. The
Employee’s employment hereunder shall terminate upon his
death.
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(b)
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Disability. If,
as a result of the Employee’s incapacity due to physical or
mental illness as determined by a physician selected by the
Employee, and reasonably acceptable to the Company (or selected by
the Company if Employee fails to designate a reasonably acceptable
physician after reasonable written notice by the Company), (i) the
Employee shall have been substantially unable to perform his duties
hereunder for four (4) consecutive months, or for an aggregate of
120 days during any period of twelve (12) consecutive months and
(ii) within thirty (30) days after written Notice of Termination is
given to the Employee after such four-month or 120-aggregate-day
period, the Employee shall not have returned to the substantial
performance of his duties on a full-time basis, the Company shall
have the right to terminate the Employee’s employment
hereunder for “Disability.”
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(c)
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Cause. The
Company shall have the right to terminate the Employee’s
employment for “Cause.” For purposes of this Agreement,
the Company shall have “Cause” to terminate the
Employee’s employment only upon the
Employee’s:
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(i) willful gross
misconduct or conviction of a felony after the Effective Date that,
in either case, results in material and demonstrable damage to the
business or reputation of the Company or which involves any crime
or offense involving money or other property of the Company or
BPOMS, or any of their respective subsidiaries or affiliates;
or
(ii) refusal to perform, or
willful breach or neglect of the performance of any of his duties
or obligations hereunder and continued failure to perform his
duties hereunder within ten (10) business days after the Company
delivers to him a written demand for performance that specifically
identifies the actions to be performed; or
(iii) material breach of
Section 3(a) or 3(b) or 3(c) of this Agreement; or
(iv) Employee’s performance of any
act or his failure to act, for which, if Employee were prosecuted
and convicted, a crime or offense involving money or property of
the Company or BPOMS or any of their respective subsidiaries or
affiliates, or which would constitute a felony in the jurisdiction
involved, would have occurred; or
(v) any attempt by Employee to
improperly secure any personal profit in connection with the
business of the Company or BPOMS or any of their respective
subsidiaries or affiliates; or
(vi) chronic alcoholism or drug
addiction; or
(vii) any breach by Employee of the terms
of Section 9 of this Agreement.
Cause shall not
exist unless and until the Company has delivered to the Employee
written notice from the Board or the Chief Executive Officer of the
Company specifying the particulars thereof in detail and unless and
until the Company has given the Employee fifteen (15) days in which
to cure the underlying breach, to the extent such breach is
susceptible of cure.
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(d)
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Without Cause.
The Company shall have the right to terminate the Employee’s
employment hereunder without Cause by providing the Employee with a
Notice of Termination. Termination without cause includes, without
limitation, the Company or its successor and/or its assigns
terminating the Employee solely as a result of a sale of the
Company to a third party.
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(e)
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Good Reason.
The Employee shall have the right to terminate his employment for
“ Good Reason .” For purposes of this
Agreement, the Employee shall have “Good Reason” to
terminate his employment upon:
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(i) a reduction in the
Employee’s Base Salary; or
(ii) the failure of Company to pay
any compensation, or otherwise provide any material benefits, due
to the Employee in accordance with the terms of this Agreement, and
such failure is not cured within 20 days after written notice from
Employee of the failure to make such payment or benefit;
or
(iii) a material diminution of
Employee’s responsibilities, or the assignment to the
Employee of duties materially inconsistent with the
Employee’s position, duties, and status with the Company as
set forth in Section 3(a), if done without the Employee’s
prior written consent and provided such change is not rescinded by
the Company within 20 days after written notice from Employee
specifying the change; or
(iv) the Company moves the
Employee’s place of employment more than one hundred
twenty-five (125) miles from the location specified in
Section 4 hereof without the Employee’s prior written
consent.
7. Termination
Procedure.
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(a)
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Notice of
Termination. Any termination of the Employee’s employment by
the Company or by the Employee during the Employment Period (other
than pursuant to Section 6(a)) shall be communicated by written
Notice of Termination to the other party. For purposes of this
Agreement, a “ Notice of Termination ”
shall mean a notice indicating the specific termination provision
in this Agreement relied upon and setting forth in reasonable
detail the facts and circumstances claimed to provide a basis for
termination of the Employee’s employment under that
provision.
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(b)
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Date of
Termination. “ Date of Termination ”
shall mean
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(i) if the Employee’s
employment is terminated by his death, the date of his
death,
(ii) if the Employee’s
employment is terminated pursuant to Section 6(b), thirty (30) days
after the date on which the Notice of Termination was
trans
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