Exhibit 10.1
EMPLOYMENT
AGREEMENT
THIS EMPLOYMENT AGREEMENT
(“Agreement”) is entered into on October 23, 2009 and
is effective as of October 1, 2009 (“Effective Date”),
by and between:
CASPIAN SERVICES, INC., a Nevada
corporation (the “Company”), and
DR. MIRGALI S. KUNAYEV, an
individual residing in the city of Almaty, Republic of Kazakhstan
(“Dr. Kunayev”).
PREAMBLE
With the commencement of a new
fiscal year, the Company and Dr. Kunayev enter into this Agreement
to replace the standard statutory employment agreement required in
the Republic of Kazakhstan pursuant to which Dr. Kunayev was
previously employed with the Company. Therefore, the parties
hereto, intending to be legally bound, agree as follows.
AGREEMENT
1. Employment
.
Dr. Kunayev currently serves as the
Chairman of the Company’s Board of Directors
(“Chairman”) and hereby agrees to continue to perform
all duties and accept all responsibilities incident to the position
of Chairman as required by the Company’s Articles of
Incorporation and Bylaws, and from time to time, as may be assigned
to him by the resolution of the Board of Directors of the Company
(the “Board”) for so long as he continues to serve as
the Chairman, or until the expiration of the term of this
Agreement, whichever shall occur earlier. Dr. Kunayev shall
devote his full time, best efforts, knowledge, and experience in
discharging his duties under this Agreement.
2.Compensation
.
(a)
Salary . During the term of this Agreement, the
Company agrees to pay to Dr. Kunayev a base salary at an annual
rate of Two Hundred Fifty Thousand U.S. Dollars ($250,000), payable
in monthly installments in accordance with the Company’s
standard payroll practice. To the extent the salary payment is
being paid and received by Dr. Kunayev in the Republic of
Kazakhstan, income and social taxes in the Republic of Kazakhstan
will be paid by the Company.
(b)
Benefits . Effective October 1, 2009, Dr. Kunayev
shall be entitled to participate in all health insurance and life
insurance benefit plans available on a general basis to the
Company’s executive officers whether residents or
non-residents of the Republic of Kazakhstan; provided, however,
that the Company reserves the right, from time to time, to amend in
any respect and to terminate all such benefit plans; and provided
further that any reduction in such benefits must be applicable to
all employees or a class of employees generally.
(c)
Annual bonus.
Dr. Kunayev shall be eligible to
receive annual bonuses during the employment period, in such
amounts and at such times, if any, as may be approved by the
Company’s Board in its sole discretion. Annual bonuses,
if any, shall be subject to the limitations set forth in this
Employment Agreement and shall not exceed 25% of Dr.
Kunayev’s annual base salary.
(d)
Expenses . The Company will reimburse Dr. Kunayev
for all reasonable expenses incurred by him in the course of
performing his duties under this Agreement which are consistent
with the Company’s policies in effect from time to time with
respect to travel, entertainment and other business expenses and to
the Company’s requirements with respect to reporting and
documentation of such expenses.
(e)
Vacation . Dr. Kunayev shall be entitled to five
(5) weeks vacation annually. Dr. Kunayev also will be
entitled to personal time on an annual basis during the term of
this Agreement, as may be from time to time mutually agreed upon by
Dr. Kunayev and the Board.
(f)
Company Vehicle
. The Company agrees to lease
an executive class vehicle (as mutually agreed to by the Company
and Dr. Kunayev) for his business use (and ancillary personal use).
The Company will cover all repairs and operating expenses of
said vehicle, including the cost of liability insurance,
comprehensive and collision insurance. Upon termination of
Dr. Kunayev’s employment hereunder for any reason, Dr.
Kunayev shall either immediately return the vehicle to the Company
or make arrangement to assume the lease. Upon request by the
Company, Dr. Kunayev shall submit to the Company on a timely basis
documentation which defines the percentage of Dr. Kunayev’s
use of the vehicle which was for business purposes.
(g)
Administrative Staff.
During performance of the his duties
the Company agrees to provide Dr. Kunayev with, or reimburse
reasonable expenses incurred by him not exceeding One Hundred and
Twenty Thousand U.S. Dollars ($120,000) annually associated with:
i) retaining a personal assistant; ii) retaining an executive
secretary; iii) retaining a dedicated vehicle driver; iv)
maintaining a security protocol in the Republic of Kazakhstan; and
v) as approved by the Board, providing for such other
administrative and logistics expenses as may be required for the
purpose of effective discharge of his duties.
3. Term of Employment
.
(a)
The term of this Agreement shall
commence on the Effective Date and shall continue until the next
election of Directors by the Company’s stockholders.
Thereafter, the Agreement shall renew automatically following each
election of Directors by the Company’s stockholders at which
Dr. Kunayev is re-elected to the Board and appointed
Chairman.
(b)
Notwithstanding the provisions of
Section 3(a) of this Agreement, except for provisions which by
their terms extend beyond termination of this Agreement and except
following a Change of Control as defined in Section 4(b) herein,
this Agreement will terminate, and all rights of Dr. Kunayev
hereunder (including, without limitation, rights to any
compensation or other benefits under Section 2 of this Agreement)
shall cease:
i)
upon any meeting of the
Company’s stockholders at which the Chairman is nominated for
re-election but is not elected to serve as a director by the
Company’s stockholders;
ii)
in the event Dr. Kunayev shall fail
to be appointed as Chairman of the Board of Directors following an
election of Directors during the term of this Agreement;
iii)
in the event Dr. Kunayev shall
resign from his positions with the Company; or
iv)
in the event Dr. Kunayev shall be
removed from office as a Director pursuant to a vote of the
stockholders of the Company in accordance with Section 3.12 of the
Company’s Bylaws.
During the term of this Agreement,
the Board shall use its best efforts to nominate and recommend Dr.
Kunayev for election to the Board at each meeting of stockholders
at which Directors are to be elected.
(c)
Notwithstanding the provisions of
Section 3(a) of this Agreement, Company may terminate this
Agreement and Dr. Kunayev’s employment hereunder, at any time
for Cause (as defined below) immediately and automatically upon
giving Dr. Kunayev written notice of such termination. As
used in this Agreement, “Cause” shall mean any of the
following events:
(i)
a material breach of this Agreement
by Dr. Kunayev that is not cured by him within thirty (30) days
following the date he received written notice from the Company of
its intent to terminate his employment for Cause as a result of
such material breach;
(ii)
Dr. Kunayev’scommission of any
act involving dishonesty or fraud or conduct, which brings the
Company into public disgrace or disrepute in any respect, including
but not limited to acts of dishonesty or fraud, commission of a
felony or a crime of moral turpitude; or
(iii)
gross negligence or willful
misconduct by Dr. Kunayev with respect to business affairs of the
Company that is directly or materially harmful to the business or
reputation of the Company or any subsidiary of the
Company.
If this Agreement, and Dr.
Kunayev’s employment hereunder, is terminated for Cause
pursuant to the provisions of this Section 3(c) or Section
3(b)(iii) above, all rights of Dr. Kunayev under this Agreement
(including, without limitation, rights to any compensation or other
benefits under Section 2 of this Agreement) shall cease as of the
effective date of such termination.
(d)
Notwithstanding the provisions of
Section 3(a) of this Agreement, except for provisions which by
their terms extend beyond termination of this Agreement, this
Agreement shall terminate automatically upon Dr. Kunayev’s
voluntary termination of employment (other than in accordance with
Section 4 of this Agreement), his decision to retire or otherwise
not stand for re-election, his death, his removal by vote of the
Company’s stockholders or his failure to be re-elected by the
Company’s stockholders and all his rights hereunder
(including, without limitation, rights to any compensation or other
benefits under Section 2 of this Agreement) shall cease as of the
date of such voluntary termination, retirement or decision not to
stand for re-election at Dr. Kunayev’s election, his failure
to be re-elected, or his death; provided, however, that, if Dr.
Kunayev dies after he delivers a Notice of Termination (as defined
in Section 4(a) of this Agreement), the provisions of Section 16(b)
of this Agreement shall apply. Dr. Kunayev shall provide to
Company not less than thirty (30) days prior written notice of his
voluntary termination of employment (other than in accordance with
Section 3 (a) and Section 4 of this Agreement) or
retirement.
(e)
Notwithstanding the provisions of
Section 3(a) of this Agreement, except for provisions which by
their terms extend beyond termination of this Agreement, this
Agreement and Dr. Kunayev’s employment hereunder shall
terminate automatically upon Dr. Kunayev’s Disability and all
of his rights under this Agreement (including, without limitation,
rights to any compensation or other benefits under Section 2 of
this Agreement) shall cease as of the date of such termination;
provided, however, that, if he becomes Disabled after he delivers a
Notice of Termination (as defined in Section 5(a) of this
Agreement), Dr. Kunayev shall nevertheless be absolutely entitled
to receive all of the compensation and benefits provided for in,
and for the term set forth in, Section 6 of this Agreement.
For purposes of this Agreement, “Disability”
shall mean a mental or physical disability, illness or incapacity
of Dr. Kunayev which renders him unable to perform a substantial
portion ofhisduties as an employee of the Company for a period of
three (3) consecutive months or an aggregate period of six (6)
months in any eighteen (18) month period or that renders Dr.
Kunayev unable to earn a livelihood as an employee of a business
comparable to the Company’s business, unless further time is
required as a reasonable accommodation under any applicable
employee protection legislation. The Company shall provide to
Dr. Kunayev not less than thirty (30) days prior written notice of
its intent to terminate his employment for Disability.
(f)
The Company and Dr. Kunayev agree
that, in the event employment under this Agreement terminates for
any reason, he shall not concurrently resign as a director of the
Company unless such resignation is warranted under the
circumstances.
4. Termination of Employment
Following Change in Control .
(a)
If a Change in Control (as defined in Section 4(b) of this
Agreement) shall occur and if thereafter, at any time during the
term of this Agreement, there shall be:
(i)
any involuntary termination of Dr.
Kunayev’s employment (other than for Cause or
Disability);
(ii)
a reduction in Dr. Kunayev’s
title, responsibilities, including reporting responsibilities, or
authority, including such title, responsibilities, or authority as
such may have been increased from time to time during the term of
this Agreement, which results in a material negative change to Dr.
Kunayev in the employment relationship;
(iii)
the assignment of Dr. Kunayev to
duties inconsistent with his office as existed on the day
immediately prior to the date of a Change in Control, which results
in a material negative change to Dr. Kunayev in the employment
relationship;
(iv)
a reduction in Dr. Kunayev’s
annual base salary in effect on the day immediately prior to the
date of the Change in Control;
(v)
a termination of Dr. Kunayev’s
participation, on substantially similar terms, in any incentive
compensation or bonus plans of the Company in which he participated
immediately prior to the Change in Control, or any change or
amendment to any of the substantive provisions of any of such plans
which would materially decrease the potential benefits to Dr.
Kunayev under any of such plans;
(vi)
a failure by the Company to provide
Dr. Kunayev with benefits at least as favorable as those enjoyed by
him under any pension, life insurance, medical, health and
accident, disability or other employee plans of the Company in
which he participated immediately prior to the Change in Control,
or the taking of any action by the Company that would materially
reduce any of such benefits in effect at the time of the Change in
Control, unless such reduction relates to a reduction in benefits
applicable to all employees generally;
(vii)
a material breach of this Agreement
by the Company;
(viii)
a failure by the Company or its
Board to recommend Dr. Kunayev for election to the Board or failure
by the Board to elect Dr. Kunayev as its Chairman.
Then, at the option of Dr. Kunayev,
exercisable by him within ninety (90) days of the occurrence of any
of the foregoing events, Dr. Kunayev may resign from employment
with the Company (or, if involuntarily terminated, give notice of
intention to collect benefits under this Agreement) by delivering a
notice in writing (the “Notice of Termination”) to the
Company and the provisions of Section 5 of this Agreement shall
apply, provided, however, that such resignation by Dr. Kunayev
shall become effective only if the Company does not cure the
relevant event (excluding the event listed in Section 4(a)(i))
within thirty (30) days of such Notice of Termination.
Notwithstanding the foregoing, any amounts payable upon a
termination under this Section shall be paid only if Dr. Kunayev
actually terminates employment within two (2) years following the
initial existence of the above-referenced event(s) which gives rise
to such termination.
(b)
As used in this Agreement,
“Change in Control” shall mean the occurrence of any of
the following:
(i)
If during the term of this Agreement
any “person” or “group” which is not an
affiliate of the Company or Dr. Kunayev (as those terms are defined
or used in Section 13(d) of the Securities Exchange Act of 1934
(the “Exchange Act”), as enacted and in force on the
date hereof) is or becomes the “beneficial owner” (as
that term is defined in Rule 13d-3 under the Exchange Act, as
enacted and in force on the date hereof) of securities of the
Company representing fifty one percent (51%) or more of the
combined voting power of the Company’s securities then
outstanding; or
(ii)
If during the term of this Agreement
there occurs a merger, consolidation, share exchange, division or
other reorganization involving the Company and another entity which
is not an affiliate of the Company or Dr. Kunayev as defined by the
Exchange Act, in which the Company’s shareholders do not
continue to hold a majority of the capital stock of the resulting
entity, or a sale, exchange, transfer, or other disposition of
substantially all of the assets of the Company to another entity or
other person which is not an affiliate of the Company or Dr.
Kunayev.
(c)
Anything in this Agreement to the
contrary notwithstanding, if Dr. Kunayev’s employment with
the Company is terminated by the Company prior to the date on which
a Change in Control occurs other than for Cause or Disability and
it is reasonably demonstrated that such termination of employment
(i) was at the request of a third party who has taken steps
reasonably calculated to effect the Change in Control or (ii)
otherwise arose in connection with or anticipation of the Change in
Control, then for all purposes of this Section, the termination
shall deemed to have occurred upon a Change in Control and Dr.
Kunayev will be entitled to the compensation and benefits provided
for in Section 6 hereof. Notwithstanding the foregoing, any
benefits received by Dr. Kunayev as a r
