EMPLOYMENT AGREEMENT
EXHIBIT
10.10
This
EMPLOYMENT AGREEMENT (this “Agreement”),
dated
as of June 6, 2006 between Xxxx Xx, residing at Xx. 0 Xxxxxxxx,
Xxxxxxxxxxxxx, Xxxxxxxxxxx, Xxxxxxx Xxxxxxxx, Xxxxxxx (“Executive”), and HLS
Systems International, Ltd. a British Virgin Islands corporation having its
principal office at 000 Xxxxxxxx, Xxxxx 0000, Xxx Xxxxx, XX 00000 (the
“Company”)
WHEREAS,
the Company believes that Executive provides unique management services for
the
Company and wishes to retain the continued services of Executive as its Chairman
of the Board of Directors; and
WHEREAS,
the Company and Executive have reached an understanding with respect to
Executive’s employment with the Company for a three year period commencing as of
the consummation of the stock purchase under the Stock Purchase Agreement dated
as of February 2, 2006 (the “Gifted
Time Transaction”)
and
WHEREAS,
the Company and Executive desire to evidence their agreement in writing and
to
provide for the employment of Executive by the Company on the terms set forth
herein.
NOW,
THEREFORE, IN CONSIDERATION of the foregoing facts, the mutual covenants and
agreements contained herein and other good and valuable consideration, the
parties hereby agree as follows:
1. Employment,
Duties and Acceptance.
1.1 Effective
as of the consummation of the Gifted Time Transaction, the Company hereby agrees
to the employment of Executive as its Chairman of the Board of Directors, and
Executive hereby accepts such employment on the terms and conditions contained
in this Agreement. During the term of this Agreement, Executive shall make
herself available to the Company to pursue the business of the Company subject
to the supervision and direction of the Board of Directors of the Company (the
“Board”
or
“Board
of Directors”).
1.2 The
Board
may assign Executive such general management and supervisory responsibilities
and executive duties for the Company as are appropriate and commensurate with
Executive’s position as Chairman of the Board of the Company and would otherwise
be consistent in stature and prestige with the responsibilities of Chairman
of
the Board.
1.3 Executive
accepts such employment and agrees to devote substantially all of her business
time, energies and attention to the performance of her duties hereunder and
as
Chairman of the Board of the Company; provided, however, that Executive may
continue to be actively involved in educational and civic activities to the
extent that such activities do not materially detract from the reasonable
performance of her duties (such material detraction to be evidenced by a
resolution approved by the majority of the Board and a written notice to
Executive, in which event Executive shall have one hundred and twenty (120)
days
to reduce the level of such activities in a reasonable manner). The Company
recognizes the value to it of Executive’s continued involvement in these
activities taken on behalf of the Company and will
reimburse
Executive for reasonable expenses incurred by her in connection with such
activities. Nothing herein shall be construed as preventing Executive from
(i)
making and supervising investments on a personal or family basis (including
trusts, funds and investment entities in which Executive or members of her
family have an interest) and (ii) serving on the Board of Directors of not
more
than five corporations involved primarily in “for profit” business activities;
provided, however, that these activities do not materially interfere with the
performance of her duties hereunder or violate the provisions of Section 4.4
hereof.
2. Compensation
and Benefits.
2.1 The
Company shall pay to Executive a salary at an annual base rate of not less
than
US$120,000 during the term hereof. During Executive’s employment, salary will be
paid not less frequently than every two weeks without the prior written consent
of Executive.
2.2 The
Company shall also pay to Executive such bonuses as may be determined from
time
to time by the Compensation Committee of the Board of Directors. The amount
of
annual bonus payable to Executive may vary at the discretion of the Compensation
Committee of the Board of Directors; provided, however, that the total annual
bonus shall not exceed 250% of Executive’s annual base rate under Section 2.1 as
of the date the bonus is awarded. In determining the annual bonus to be paid
to
Executive, the Compensation Committee may, among other factors they believe
to
be appropriate, consider, and give varying degrees of importance to, Executive’s
contribution to the following:
(a) achievement
by the Company of specific identified targets selected by the Committee from
time to time;
(b) the
attraction and retention of key executive personnel by the Company;
(c) satisfaction
of the Company’s capital requirements;
(d) the
establishment of strategic direction and significant Company goals;
(e) growth
in
the Company’s per share value; and
(f) such
other criteria as the Compensation Committee deems to be relevant.
2.3 Executive
shall be entitled to such insurance and other benefits including, among others,
medical and disability coverage and life insurance as are afforded to other
senior executives of the Company, subject to applicable waiting periods and
other conditions which may be generally applicable. The Company also shall
purchase if possible (i) long term disability insurance of not less than 50%
of
Executive’s then current annual salary and (ii) split dollar life insurance with
coverage of not less than $1.0 million. The beneficiary of these policies
shall be designated by Executive and these policies shall be transferred to
Executive or her designees by the Company at her written request.
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2.4 Executive
shall be entitled to five weeks of vacation in each calendar year and to a
reasonable number of other days off for religious and personal
reasons.
2.5 Executive
shall be entitled, at her option, to maintain a suitable automobile for business
use. The Company or one of its subsidiaries shall reimburse Executive for the
costs of leasing such automobile and for all other costs associated with the
use
of the vehicle, including insurance costs, repairs and maintenance.
2.6 The
Company will pay or reimburse executive for all transportation, hotel and other
expenses incurred by Executive on business trips (including business or first
class air travel on scheduled flights of more than five (5) consecutive hours)
and for all other ordinary and reasonable out-of-pocket expenses actually
incurred by she in the conduct of the business of the Company against itemized
vouchers submitted with respect to any such expenses.
2.7 The
Company shall not require Executive to move within fifty (50) miles of her
current personal residence located in Beijing, China without Executive’s written
consent. If such consent is provided, the Company will reimburse Executive
for
the following, which may be taxable to Executive:
(a) Usual
and
customary expenses incurred if Executive sells her home herself or through
a
broker; however, reimbursement for the broker’s commission (if Executive
utilizes the services of a broker) may not exceed six (6) percent of the sales
proceeds;
(b) Reasonable
expenses incurred in moving furniture, normal household goods and personal
belongings to the new location and incidental expenses related to the
move;
(c) Reasonable
expenses (including travel and hotel) while house-hunting, including four trips
to the new location with Executive’s spouse and children;
(d) Reasonable
and customary closing costs incurred in buying Executive’s new home;
and
(e) Reasonable
temporary living expenses incurred while awaiting occupancy in Executive’s new
quarters.
3. Term
and Termination.
3.1 The
term
of this Agreement commences as of the consummation of the Gifted Time
Transaction and shall continue for three (3) years unless sooner terminated
as
herein provided.
3.2 If
Executive dies during the term of this Agreement, this Agreement shall thereupon
terminate, except that the Company shall pay to the legal representative of
Executive’s estate the base salary due Executive pursuant to Section 2.1 hereof
through the first anniversary of Executive’s death (or the scheduled expiration
under Section 3.1, if earlier than the first anniversary date) as well as a
pro
rata allocation of bonus payments under Section 2.2 based on the days of service
during the year of death, and all amounts owing to Executive at the time
of
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termination,
including for previously accrued but unpaid bonuses, expense reimbursements
and
accrued but unused vacation pay.
3.3 If
Executive shall be rendered incapable by an incapacitating illness or disability
(either physical or mental) of complying with the terms, provisions and
conditions hereof on her part to be performed for a period in excess of 180
consecutive days during any consecutive twelve (12) month period, then the
Company, at its option, may terminate this Agreement by written notice to
Executive (the “Disability
Notice”)
delivered prior to the date Executive resumes the rendering of services
hereunder; provided, however, if requested by Executive (or a representative
thereof) such termination shall not occur until after examination of Executive
by a medical doctor (retained by the Company with the consent of Executive
which
consent shall not be unreasonably withheld) who certifies in a written report
to
the Board with a copy of such report delivered simultaneously to Executive
that
Executive is and shall be incapable of performing her duties for in excess
of
two additional months because of the continuing existence of such incapacitating
illness or disability. Notwithstanding such termination, the Company (a) shall
make a payment to Executive of a pro rata allocation of payments under Section
2.2 based on the days of service during the year in which the Disability Notice
is delivered and (b) shall pay to Executive the base salary due Executive
pursuant to Section 2.1 hereof through the second anniversary of the date of
such notice (the “Disability
Period”),
less
any amount Executive receives for such period from any Company-sponsored or
Company-paid for source of insurance, disability compensation or governmental
program. The Company shall also pay to Executive all amounts owing to Executive
at the time of termination, including for previously accrued but unpaid bonuses,
expense reimbursements and accrued but unused vacation pay.
3.4 The
Company, by notice to Executive, may terminate this Agreement for Cause. As
used
herein, “Cause”
means
(a) the refusal in bad faith by Executive to carry out specific written
directions of the Board, (b) intentional fraud or dishonest action by Executive
in her relations with the Company (“dishonest” for these purposes shall mean
Executive’s knowingly making of a material misstatement to the Board for the
purpose of obtaining direct personal benefit); or (c) the conviction of
Executive of any crime involving an act of significant moral turpitude after
appeal or the period for appeal has elapsed without an appeal being filed by
Executive. Notwithstanding the foregoing, no Cause for termination shall be
deemed to exist with respect to Executive’s acts described in clause (a) or (b)
above, unless the Board shall have given written notice to Executive (after
five
(5) days advance written notice to Executive and a reasonable opportunity to
Executive to present her views with respect to the existence of Cause),
specifying the Cause with particularity and , within twenty (20) business days
after such notice, Executive shall not have disputed the Board’s determination
or in reasonably good faith taken action to cure or eliminate prospectively
the
problem or thing giving rise to such Cause, provided, however, that a repeated
breach after notice and cure, of any provision of clause (a) or (b) above,
involving the same or substantially similar actions or conduct, shall be grounds
for termination for cause upon not less than five (5) days additional notice
from the Company.
3.5 Executive,
by notice to the Company, may terminate this Agreement if a Good Reason exists.
For purposes of this Agreement, “Good
Reason”
means
the occurrence of any of the following circumstances without Executive’s prior
express written consent: (a) a material adverse change in the nature of
Executive’s title, duties or responsibilities with the
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Company
that represents a demotion from her title, duties or responsibilities as in
effect immediately prior to such change; (b) a material breach of this Agreement
by the Company; (c) a failure by the Company to make any payment to Executive
when due, unless the payment is not material and is being contested by the
Company, in good faith; (d) a liquidation, bankruptcy or receivership of the
Company; or (e) if Executive is at any time not a member of the Board of
Directors of the Company and a member of the Executive Committee thereof (if
such a committee exists), unless she voluntarily resigns therefrom; or (f)
any
person or entity other than the Company and/or any officers or directors of
the
Company as of the date of this Agreement acquires securities of the Company
other than from Executive or her affiliates (in one or more transactions) having
51% or more of the total voting power of all the Company’s securities then
outstanding.
Notwithstanding
the foregoing, no Good Reason shall be deemed to exist with respect to the
Company’s acts described in clauses (a), (b) or (c) above, unless Executive
shall have given written notice to the Company specifying the Good Reason with
reasonable particularity and, within twenty (20) business days after such
notice, the Company shall not have cured or eliminated the problem or thing
giving rise to such Good Reason; provided, however, that a repeated breach
after
notice and cure of any provision of clauses (a), (b) or (c) above involving
the
same or substantially similar actions or conduct, shall be grounds for
termination for Good Reason without any additional notice from
Executive.
3.6 In
the
event that Executive terminates this Agreement for Good Reason, pursuant to
the
provisions of paragraph 3.5, or the Company terminates this Agreement without
Cause, as defined in paragraph 3.4, the Company shall pay to Executive (or
in
the case of her death, the legal representative of Executive’s estate or such
other person or persons as Executive shall have designated by written notice
to
the Company), the compensation at an annual base rate of US$500,000 from the
date of termination to the term of this Agreement; provided, however, that
Executive’s insurance coverage shall terminate upon Executive becoming covered
under a similar program by reason of employment elsewhere. If Executive’s
employment is terminated for Good Reason or without Cause, Executive shall
have
no duty to mitigate awards paid or payable to her pursuant to this subsection,
and any compensation paid or payable to Executive from sources other than the
Company will not offset or terminate the Company’s obligation to pay to
Executive the full amounts pursuant to this subsection 3.6.
4. Protection
of Confidential Information: Non-Competition.
4.1 Executive
acknowledges that:
(a) As
a
result of her current employment with the Company, Executive will obtain secret
and confidential information concerning the business of the Company and its
subsidiaries and affiliates (referred to collectively in this Article 4 as
the
“Company”), including, without limitation, financial information, designs and
other proprietary rights, trade secrets and know-how, customers and sources
(“Confidential
Information”).
(b) The
Company will suffer substantial damage which will be difficult to compute if,
during the period of her employment with the Company or thereafter,
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Executive
should enter a business competitive with the Company or divulge Confidential
Information.
(c) The
provisions of this Agreement are reasonable and necessary for the protection
of
the business of the Company.
4.2 Executive
agrees that she will not at any time, either during the term of this Agreement
or thereafter, divulge to any person or entity any Confidential Information
obtained or learned by she as a result of her employment with the Company,
except (i) in the course of performing her duties hereunder, (ii) to the extent
that any such information is in the public domain other than as a result of
Executive’s breach of any of her obligations hereunder, (iii) where required to
be disclosed by court order, subpoena or other government process or
(iv) if such disclosure is made without Executive’s knowing intent to cause
material harm to the Company. If Executive shall be required to make disclosure
pursuant to the provisions of clause (iii) of the preceding sentence, Executive
promptly, but in no event more than 72 hours after learning of such
subpoena, court order, or other government process, shall notify, by personal
delivery or by electronic means, confirmed by mail, the Company and, at the
Company’s expense, Executive shall: (a) take reasonably necessary and lawful
steps required by the Company to defend against the enforcement of such
subpoena, court order or other government process, and (b) permit the Company
to
intervene and participate with counsel of its choice in any proceeding relating
to the enforcement thereof.
4.3 Upon
termination of her employment with the Company, Executive will promptly deliver
to the Company all memoranda, notes, records, reports, manuals, drawings,
blueprints and other documents (and all copies thereof) relating to the business
of the Company and all property associated therewith, which she may then possess
or have under her control; provided, however, that Executive shall be entitled
to retain one copy of such documents for her personal use and
records.
4.4 During
the period commencing upon the closing of the Gifted Time Transaction and
terminating three years after termination of employment, Executive, without
the
prior written permission of the Company, shall not, anywhere in the People’s
Republic of China, (i) enter into the employ of or render any services to any
person, firm or corporation engaged in any business which is directly in
competition with the Company’s principal existing business at the time of
termination {“Competitive Business”); (ii) engage in any Competitive Business as
an individual, partner, shareholder, creditor, director, officer, principal,
agent, employee, trustee consultant, advisor or in any other relationship or
capacity; (iii) employ, or have or cause any other person or entity to employ,
any person who was employed by the Company at the time of termination of
Executive’s employment by the Company (other than Executive’s personal secretary
and assistant); or (iv) solicit, interfere with, or endeavor to entice away
from
the Company, for the benefit of a Competitive Business, any of its customers.
Notwithstanding the foregoing, Executive shall not be precluded from investing
and managing the investment of, her or her family’s assets in the securities of
any corporation or other business entity which is engaged in a Competitive
Business if such securities are traded on a national stock exchange or in the
over-the-counter market and if such investment does not result in her
beneficially owning, at any time, more than 5% of any class of the
publicly-traded equity securities of such Competitive Business; provided,
however, that for a period commencing upon the closing of the
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Gifted
Time Transaction and terminating three years after termination of Executive’s
employment (except for investments in a class of securities trading on public
markets), Executive shall refer to the Company for consideration (before any
other party) any and all opportunities to acquire or purchase, or otherwise
make
equity or debt investments in, companies primarily involved in a Competitive
Business if such opportunities becomes known to Executive while she is the
Chairman of the Board of the Company. If the Company determines not to exploit
any opportunity referred to in the foregoing sentence, the Company shall
determine what, if anything, should be done with such opportunity. Executive
shall not be entitled to any compensation, as a finder or otherwise, if either
the Company or Executive introduces such opportunity to other persons, it being
understood that all such compensation shall be paid to the Company.
Notwithstanding the foregoing, in the event the Company terminates this
Agreement without cause or if Executive terminates this Agreement for Good
Reason under Section 3.5 hereof, Executive’s obligations under this Section 4.4
shall terminate one month following termination.
4.5 If
Executive commits a breach of any of the provisions of Sections 4.2 or 4.4,
the
Company shall have the right:
(a) to
have
the provisions of this Agreement specifically enforced by any court having
equity jurisdiction, it being acknowledged and agreed by Executive that the
services being rendered hereunder to the Company are of a special, unique and
extraordinary character and that any breach or threatened breach will cause
irreparable injury to the Company and that money damages will not provide an
adequate remedy to the Company; and
(b) to
require Executive to account for and pay over to the Company all monetary
damages determined by a non-appealable decision by a court of law to have been
suffered by the Company as the result of any actions constituting a breach
of
any of the provisions of Section 4.2 or 4.4, and Executive hereby agrees to
account for and pay over such damages to the Company (up to the maximum of
all
payments made under the Agreement).
4.6 If
Executive shall violate any covenant contained in Section 4.4, the duration
of
such covenant so violated shall be automatically extended for a period of time
equal to the period of such violation.
4.7 If
any
provision of Sections 4.2 or 4.4 is held to be unenforceable because of the
scope, duration or area of its applicability, the tribunal making such
determination shall not have the power to modify such scope, duration, or area,
or all of them and such provision or provisions shall be void ab
initio.
5. Miscellaneous
Provisions.
5.1 All
notices provided for in this Agreement shall be in writing, and shall be deemed
to have been duly given when delivered personally to the party to receive the
same, when transmitted by electronic means, or when mailed first class postage
prepared, by certified mail, return receipt requested, addressed to the party
to
receive the same at her or its address set forth below, or such other address
as
the party to receive the same shall have specified by written
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notice
given in the manner provided for in this Section 5.1. All notices shall be
deemed to have been given as of the date of personal delivery, transmittal
or
mailing thereof.
-8-
If
to
Executive:
Xxxx
Xx
Xx. 00
Xxxxxxxxxxxx Xxxxxx Xxxx
Xxxxxxx,
Xxxxxxx Xxxxxxxx, Xxxxxxx 000000
Fax:
(0000)00000000
If
to the
Company:
HLS
Systems International, Ltd.
000
Xxxxxxxx, Xxxxx 0000
Xxx
Xxxxx, XX 00000
Fax:
000-000-0000
5.2 In
the
event of any claims, litigation or other proceedings arising under this
Agreement (including, among others, arbitration under Section 3.4), Executive
shall be reimbursed by the Company within thirty (30) days after delivery to
the
Company of statements for the costs incurred by Executive in connection with
the
analysis, defense and prosecution thereof, including reasonable attorneys’ fees
and expenses; provided, however, that Executive shall reimburse the Company
for
all such costs if it is determined by a non-appealable final decision of a
court
of law that Executive shall have acted in bad faith with the intent to cause
material damage to the Company in connection with any such claim, litigation
or
proceeding.
5.3 The
Company, shall to the fullest extent permitted by law, indemnify Executive
for
any liability, damages, losses, costs and expenses arising out of alleged or
actual claims (collectively, “Claims”) made against Executive for any actions or
omissions as an officer and/or director of the Company or its subsidiary. To
the
extent that the Company obtains director and officers insurance coverage for
any
period in which Executive was an officer, director or consultant to the Company,
Executive shall be a named insured and shall be entitled to coverage
thereunder.
5.4 The
provision of Article 4, Sections 5.2 and 5.3 and any provisions relating to
payments owed to Executive after termination of employment shall survive
termination of this Agreement for any reason.
5.5 This
Agreement sets forth the entire agreement of the parties relating to the
employment of Executive and are intended to supersede all prior negotiations,
understandings and agreements. No provisions of this Agreement may be waived
or
changed except by a writing by the party against whom such waiver or change
is
sought to be enforced. The failure of any party to require performance of any
provision hereof or thereof shall in no manner affect the right at a later
time
to enforce such provision.
5.6 All
questions with respect to the construction of this Agreement, and the rights
and
obligations of the parties hereunder, shall be determined in accordance with
the
law of the British Virgin Islands applicable to agreements made and to be
performed entirely in the British Virgin Islands.
5.7 This
Agreement shall inure to the benefit of and be binding upon the successors
and
assigns of the Company. This Agreement shall not be assignable by Executive,
but
shall inure to the benefit of and be binding upon Executive’s heirs and legal
representatives.
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5.8 Should
any provision of this Agreement become legally unenforceable, no other provision
of this Agreement shall be affected, and this Agreement shall continue as if
the
Agreement had been executed absent the unenforceable provision.
IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date first
above written.
|
“COMPANY”
HLS
SYSTEMS INTERNATIONAL, LTD.
By:_________________________________________
Title:________________________________________
|
“EXECUTIVE”
XXXX
XX
By:
/s/ Xxxx Xx
|
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IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date first
above written.
|
“COMPANY”
HLS
SYSTEMS INTERNATIONAL, LTD.
By:________________________________________
Title:______________________________________
|
“EXECUTIVE”
XXXX
XX
By:
/s/ Xxxx Xx
|
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IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date first
above written.
|
“COMPANY”
HLS
SYSTEMS INTERNATIONAL, LTD.
By:_______________________________________
Title:______________________________________
|
“EXECUTIVE”
XXXX
XX
By:
/s/ Xxxx Xx
|
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