Employment Agreement - SmartPros Ltd. and David Gebler
EMPLOYMENT AGREEMENT BETWEEN
SMARTPROS LTD.
AND
DAVID GEBLER
This employment agreement (the "Agreement") dated as of April 1, 2003 is by and
between SmartPros Ltd., a Delaware Corporation (the "Company"), and David
Gebler, an individual residing at 6 Lothrup Way, Sharon, Massachusetts 02067,
(the "Executive").
1. EMPLOYMENT. The Company shall employ the Executive, and the Executive
agrees to serve the Company, on the terms and conditions set forth
herein. The Executive shall serve as Senior Vice President of the
Company, and as head of the Working Values Division. The Executive hereby
accepts such employment hereunder, except for absences occasioned by
illness and reasonable vacation periods, and agrees to undertake the
duties and responsibilities inherent in such position and such other
duties and responsibilities as the Company shall from time to time
reasonably assign to him. The Executive shall report to and be supervised
by the CEO and/or the President of the Company or any other person who
may be designated by the Board of Directors of the Company (the "Board")
from time to time. The Executive shall use his best efforts, including
the highest standards of professional competence and integrity, and shall
devote his full business time and effort to the performance of his duties
hereunder. The Executive shall not engage in any other business activity.
2. COMPENSATION AND BENEFITS.
2.1 SALARY. During the Term (as defined below) of this Agreement, the
Executive shall be paid a salary at the rate of $180,000 per annum
("the Base Salary"), payable as customarily paid by the Company.
During the Term of this Agreement, Executive's base salary shall
be reviewed at least annually by the Board. The first such review
will be made no later than March 31, 2004 and thereafter the Base
Salary shall be reviewed on or before March 31st of each
succeeding year. The Board, in its sole discretion, may increase,
but not decrease the Base Salary.
2.2 BONUS. (a) In addition to his Base Salary, the Executive may be
entitled to bonuses at times and in amounts determined in the
discretion of the Board. The bonus will be based 50% on Company
performance and 50% on individual performance. With the
understanding that bonuses are granted at the discretion of the
Board, it is the parties' understanding that the Executive shall
participate in bonuses granted with respect to Company performance
to the class of executives with similar titles and
responsibilities.
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(b) Non-discretionary Bonus. Executive shall receive a
non-discretionary bonus equal to 23.335% of the net profit of the
Business (as defined in the asset purchase agreement dated March
4, 2003 by and between the Company and The Working Values Group,
Ltd. (the "Asset Purchase Agreement")) in excess of $10,000 in
each of the two years commencing April 1, 2003, but in no event
more than $175,000 for such two years. The first non-discretionary
bonus, if any, shall be paid as soon as practicable after
determining net profits of the Business (as defined in the Asset
Purchase Agreement) for the year ending March 31, 2004, and the
second non-discretionary bonus, if any, shall be paid as soon as
practicable after determining net profits of the Business (as
defined in the Asset Purchase Agreement) for the year ending March
31, 2005.
2.3 BENEFITS. The Executive shall be entitled to participate in all
employee benefit programs or plans maintained by the Company from
time to time on the same basis as other similarly situated
executive employees of the Company. The Executive will be entitled
to 4 weeks paid vacation per year. The Company will reimburse the
lease cost of the automobile currently leased by the Executive
and, upon expiration or termination of the lease, will continue to
reimburse the Executive for a suitable automobile for his business
and/or personal use. The Company will pay or reimburse the
Executive for all repairs, maintenance and insurance expenses of
the automobile currently leased by Executive or any replacement
provided by the Company hereunder.
2.4 REIMBURSEMENT OF EXPENSES. The Company shall reimburse the
Executive in accordance with its general reimbursement policies
for all ordinary and necessary expenses incurred by the Executive
on behalf of the Company upon the presentation of appropriate
supporting documentation.
2.5 STOCK OPTIONS. Pursuant to a Stock Option Agreement in customary
form, the Company will grant to the Executive pursuant and subject
to its Stock Option Plan, stock options to purchase up to 50,000
shares of the Company's common stock ("Common Stock") at $2.75 per
share. The options shall have a term of 10 years, and shall
annually vest over a period of 5 years in equal installments at
the end of each full year with the first installment vesting on
March 31, 2004. The options shall be qualified options.
3. TERM; TERMINATION; RIGHTS UPON TERMINATION.
3.1 TERM. The Company agrees to employ the Executive, and the
Executive agrees to serve the Company for a period commencing on
April 1, 2003 and continuing until March 31, 2006 (the "End Date")
unless otherwise amended or terminated pursuant to the terms
hereof (the "Term").
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3.2 TERMINATION. The Company may at any time, terminate the employment
of the Executive under this Agreement for Cause (as defined
below), or without Cause, immediately and without any requirement
of notice. The rights and obligations of the parties upon any
termination of the Executive's employment shall be as set forth in
Section 3.3. For purposes of this Agreement the term "Cause" shall
mean (i) any act of dishonesty or gross and willful misconduct
with respect to the Company, including without limitation, fraud
or theft, on the part of the Executive, (ii) conviction of the
Executive of a felony, or (iii) the Executive's failure to perform
his assigned duties hereunder after written notice and a 30 day
opportunity to cure.
3.3 RIGHTS UPON TERMINATION. In the event that:
(a) The employment of the Executive is terminated by the
Company without Cause, or is terminated by the Executive for Good
Reason, then, for the remainder of the then current Term of
employment hereunder, (i) the Company shall pay to the Executive,
at the time otherwise due under Section 2, all Base Salary at the
rate in effect at the time of termination, (ii) the Company shall
pay to the Executive, at the time otherwise due under Section 2, a
bonus equal to the highest annual bonus (not including the
non-discretionary bonus provided for under Section 2.2(b))
received by the Executive in the last five years multiplied by the
amount of whole and partial years remaining on the contract, (iii)
the Company shall pay to the Executive, at the time otherwise due
under Section 2, any non-discretionary bonus earned under Section
2.2(b), (iv) the Company shall provide to the Executive all
benefits described in Section 2.3, and (v) all of the options
granted to the Executive pursuant to Section 2.5 shall vest
immediately. The obligations of the Company pursuant to this
Section 3.3(a) shall be in lieu of any other rights of the
Executive hereunder to compensation or benefits in respect of any
period before or after the date of such termination. The term
"Good Reason" shall mean (i) the involuntary assignment to the
Executive of any duties that do not allow him to carry out his
functions as the head of the Working Values Division, or any
change in the Executive's authority, duties or responsibilities as
contemplated in this Agreement; or (ii) the Company's requiring
the Executive to be based at any office or location more than 50
miles away from Sharon, Massachusetts, or to relocate his personal
residence.
(b) The Executive's employment terminates by reason of death or
disability, then the Company shall pay and provide to the
Executive or Executive's estate or other successor in interest at
the time otherwise due under Section 2 (i) all Base Salary and
benefits due to the Executive under Section 2 through the end of
the third month after the month in which the termination occurs,
but reduced in the case of disability by any
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payments received under any disability plan, program or policy
paid for by the Company, and (ii) any non-discretionary bonus
earned under Section 2.2(b). The obligations of the Company
pursuant to this Section 3.3(b) shall be and in lieu of any other
rights of the Executive hereunder to compensation or benefits in
respect of any period before or after the date of such termination
and in lieu of any severance payment, and no other compensation of
any kind or any other amounts shall be due to the Executive by the
Company under this Agreement. For purposes of this Agreement, the
term "disability" shall mean the Executive's failure to perform
the services contemplated by this Agreement as a result of his
physical or mental illness or incapacity for a period of 2
consecutive months, or a total of 60 days in any 365 day period.
(c) The employment of the Executive is terminated by the
Company for Cause, or by the Executive other than under
circumstances described in Section 3.3(a) or (b) above, the
Executive shall not be entitled to compensation or benefits
granted hereunder beyond the date of the termination of the
Executive's employment other than any non-discretionary bonus
earned under Section 2.2(b).
(d) At the end of the original Term the Company shall have the
right, but not the obligation, to extend the Term of the Agreement
for an additional two (2) year period of time under the same terms
and conditions currently in effect at the time of notice to the
Executive. If the Company desires to avail itself of this option
it will notify the Executive at least 90 days prior to the
original End Date. If the Company does not extend the Executive's
employment beyond the original End Date as provided in this
subsection (d), all of the options granted to the Executive
pursuant to Section 2.5 shall vest immediately.
4. PROPRIETARY INFORMATION.
4.1 The Executive agrees that all information and know how, whether or
not in writing, of a private, secret or confidential nature
concerning the business or financial affairs of the Company and
its subsidiaries (collectively, for purposes of this Section 4,
the "Company") that is not within Executive's possession or
knowledge prior to his employment with the Company or that is not
at any later time disclosed to the Executive by a third party not
bound by any obligation of confidentiality to the Company
(collectively, "Proprietary Information"), is and shall be the
exclusive property of the Company. By way of illustration, but not
limitation, Proprietary Information may include inventions,
products, processes, methods, techniques, projects, developments,
plans, research data, financial data, and personnel data. The
Executive will not disclose any Proprietary Information to others
outside of the Company or use the same for any
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unauthorized purposes without the written consent of the Company,
either during or after his employment, unless and until such
Proprietary Information has become public knowledge without fault
of the Executive.
4.2 The Executive agrees that all files, letters, memoranda, reports,
records, data, sketches, drawings, or other written, photographic,
or other tangible material containing Proprietary Information,
whether created by the Executive or others, which shall come into
his custody or possession, shall be and are the exclusive property
of the Company to be used by the Executive only in the performance
of his duties for the Company.
4.3 The Executive agrees that his obligation not to disclose or use
Proprietary Information and records of the type set forth herein
also extends to such types of Proprietary Information, records and
tangible property of other third parties who may have disclosed or
entrusted the same to the Company or to the Executive in the
course of the Company's business.
5. OTHER AGREEMENTS. The Executive hereby represents that his performance of
all the terms of this Agreement and as an employee of the Company does
not and will not breach any agreement to keep in confidence proprietary
information, knowledge or data acquired by him in confidence or in trust
prior to his employment with the Company.
6. NON-COMPETITION, NON- SOLICITATION.
6.1 NON-SOLICITATION OF EMPLOYEES AND CUSTOMERS. The Executive agrees
that during the Term of the Executive's employment with the
Company and for a period of one year thereafter, the Executive
shall not directly or indirectly (i) recruit, solicit or otherwise
induce or attempt to induce any employees of the Company or any of
its subsidiaries to leave their employment or (ii) call upon,
solicit, divert or take away, or attempt to divert or take away,
the business or patronage of any customer licensee, vendor,
collaborator or corporate partner of the Company or any of its
subsidiaries that had a business relationship with the Company or
any of its subsidiaries at the time of termination of Executive's
employment with the Company and that did not have a business or
personal relationship or was known to Executive prior to his
employment with the Company.
6.2 NON-COMPETITION. The Executive agrees that during the Term of the
Executive's employment with the Company, the Executive shall not
directly or indirectly, engage in competition with the Company or
any subsidiaries, or own or control any interest in, or act as
director, officer or employee of, or consultant to, any firm,
corporation or institution directly engaged in competition with
the Company or any of its subsidiaries; provided that the Company
or one of its subsidiaries is actively engaged in such business at
the time the Executive's
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employment by the Company is terminated; and provided that the
foregoing shall not prevent the Executive from holding shares as a
passive investor in a publicly held company which do not
constitute more than 5% of the outstanding shares of such company.
In the event that the Executive (i) voluntarily terminates his
employment, (including at any time on or after the End Date) other
than for Good Reason or as otherwise provided for in this
agreement, or (ii) is terminated by the Company for Cause, the
Executive agrees to not compete in the E-Learning marketplace
until the earlier of April 16, 2004 or one year from the date of
such termination.
7. MISCELLANEOUS.
7.1 NOTICES. All notices required or permitted under this Agreement
shall be in writing and shall be deemed effective upon personal delivery
or upon deposit in the United States Post Office, by registered or
certified mail, postage prepaid, addressed if to the Executive, at the
address shown above and if to the Company, at its principal place of
business at 12 Skyline Drive, Hawthorne, New York, or at such other
address or addresses as either party shall designate to the other in
accordance with this Section 8.1.
7.2 PRONOUNS. Wherever the context may require, any pronouns used in
this Agreement shall include the corresponding masculine, feminine or
neuter forms, and the singular forms of nouns and pronouns shall include
the plural, and vice versa.
7.3 ENTIRE AGREEMENTS. This Agreement constitutes the entire agreement
between the parties and supercedes all prior agreements and
understandings, whether written or oral, relating to the subject matter
of this Agreement.
7.4 AMENDMENT. This Agreement may be amended or modified only by a
written instrument executed by both the Company and the Executive.
7.5 GOVERNING LAW. This Agreement shall be construed, interpreted and
enforced in accordance with the laws of the State of New York.
7.6 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of both parties and their respective successors and
assigns, including any corporation with which or into which the Company
may be merged or which may succeed to its assets or business, provided,
however, that the obligations of the Executive are personal and shall not
be assigned by him.
7.7 WAIVERS. No delay or omission by the Company in exercising any
right under this Agreement shall operate as a waiver of that or any other
right. A waiver or consent given by the Company on any one occasion shall
be effective only
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in this instance and shall not be construed as a bar or waiver of any
right on any other occasion.
7.8 CAPTIONS. The captions of the sections of this Agreement are for
convenience of reference only and in no way define, limit or affect the
scope or substance of any section of this Agreement.
7.9 SEVERABILITY. In case any provision of this Agreement shall be
invalid, illegal or otherwise unenforceable, the validity, legality and
enforceability of the remaining provisions shall in no way be affected or
impaired thereby.
7.10 SPECIFIC ENFORCEMENT. The parties acknowledge that the Executive's
breach of the provisions of Section 4 and 6 of this Agreement will cause
irreparable harm to the Company. It is agreed and acknowledged that the
remedy of damages will not be adequate for the enforcement of such
provisions and that such provisions may be enforced by equitable relief,
including injunctive relief, which relief shall be cumulative and in
addition to any other relief to which the Company may be entitled.
8. ARBITRATION. Any claims, controversies, demands, disputes or differences
between or among the parties hereto or any persons bound hereby arising out of,
or by virtue of, or in connection with, or otherwise relating to this Agreement
shall be submitted to and settled by arbitration conducted in New York, New York
before one or three arbitrators each of which shall be knowledgeable in
employment law. Such arbitration shall otherwise be conducted in accordance with
the rules then obtaining of the American Arbitration Association. The parties
hereto agree to share equally the responsibility for all fees of the
arbitrators, abide by any decision rendered as final and binding, and waive the
right to appeal the decision or otherwise submit the dispute to a court of law
for a jury or non-jury trial. The parties hereto specifically agree that neither
party may appeal or subject the award or decision of any such arbitrator(s) to
appeal or review in any court of law or in equity or by any other tribunal,
arbitration system or otherwise. Judgment upon any award granted by such an
arbitrator(s) may be enforced in any court having jurisdiction thereof. If the
arbitration decision holds that the Company is at fault, the Executive shall be
entitled to reimbursement of fees and expenses from the Company in an amount not
to exceed $50,000. If the arbitration decision holds that the Company is not at
fault, the Company shall be entitled to reimbursement of fees and expenses from
the Executive in an amount not to exceed $25,000.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year set forth above
SMARTPROS LTD.
By: /s/ ALLEN GREENE
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Allen Greene
Title: Chief Executive Officer
/s/ DAVID GEBLER
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DAVID GEBLER
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