EMPLOYMENT AGREEMENT
This
employment agreement (this "Agreement"), dated as of November 15, 2006 (the
"Effective Date"), is made by and between Applied Spectrum Technologies, Inc.,
a
Delaware corporation (the "Company"), and Xxx Xx (the "Executive") (each, a
"Party" and together, the "Parties").
WHEREAS,
the Executive is currently employed as a Vice President of Operations of the
Company; and
WHEREAS,
pursuant to an Exchange Agreement (the "Exchange Agreement"), dated as of
September 7, 2006, by and among the Company, Ever Leader KI Equity Partners
III,
LLC and each of the stockholders of Ever Leader, Ever Leader will become a
wholly-owned subsidiary of the Company (the "Acquisition") as of the Effective
Date.
Simultaneously with the consummation of the Acquisition on the Effective Date,
the Company shall change its name from Applied Spectrum Technologies, Inc.
to
Xxxxx Pharmaceuticals, Inc. All references herein to the Company after
consummation of the Acquisition shall be deemed to be references to Xxxxx
Pharmaceutical, Inc.; and
WHEREAS,
the Parties wish to establish the terms of the Executive's continued employment
by the Company;
NOW,
THEREFORE, in consideration of the foregoing, of the mutual promises contained
herein and of other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Parties, intending to be legally bound,
hereby agree as follows:
1. POSITION/DUTIES.
(a) During
the Employment Term (as defined in Section 2 below), the Executive shall serve
as a Vice President of Operations of the Company. In this capacity the Executive
shall have such duties, authorities and responsibilities commensurate with
the
duties, authorities and responsibilities of persons in similar capacities in
similarly sized companies and such other reasonable duties and responsibilities
as the Board of Directors of the Company (the "Board") shall designate. The
Executive shall report directly to the Chief Executive Officer. The Executive
shall obey the lawful directions of the Board, the Company's Chief Executive
Officer and any other senior executive of the Company to whom the Executive
reports and shall use his diligent efforts to promote the interests of the
Company and to maintain and promote the reputation thereof.
(b) During
the Employment Term, the Executive shall use his best efforts to perform his
duties under this Agreement and shall devote all of his business time, energy
and skill in the performance of his duties with the Company. The Executive
shall
not during the Employment Term (except as a representative of the Company or
with consent in writing of the Board) be directly or indirectly engaged or
concerned in any other business activity. Notwithstanding the foregoing
provisions, the Executive is not prohibited from (1) participating in
charitable, civic, educational, professional or community affairs or serving
on
the board of directors or advisory committees of non-profit entities, and (2)
managing his and his family's personal investments, in each case, provided that
such
activities in the aggregate do not materially interfere with his duties
hereunder.
2. EMPLOYMENT
TERM.
Except
for earlier termination as provided in Section 6, the Executive's employment
under this Agreement shall be for a three-year term commencing on the Effective
Date and ending on November 15, 2009 (the "Initial Term"). Subject to Section
6,
the Initial Term shall be automatically extended for additional terms of
successive one-year periods (the "Additional Term") unless the Company or the
Executive gives written notice to the other of the termination of the
Executive's employment hereunder at least 90 days prior to the expiration of
the
Initial Term or Additional Term. The Initial Term and any Additional Term shall
be referred to herein as the "Employment Term."
3. BASE
SALARY.
The
Company agrees to pay to the Executive a base salary at an annual rate of not
less than US$120,000, payable in accordance with the regular payroll practices
of the Company. The Executive's Base Salary shall be subject to annual review
by
the Board (or a committee thereof). The base salary as determined herein from
time to time shall constitute "Base Salary" for purposes of this
Agreement.
4. BONUS.
With
respect to each full fiscal year during the Employment Term, the Executive
shall
be eligible to earn an annual bonus (the "Annual Bonus") in such amount, if
any,
as determined in the sole discretion of the Board of up to 100% of the
Executive's Base Salary. In addition, the Executive shall be eligible to
participate in the Company's bonus and other incentive compensation plans and
programs (if any) for the Company's senior executives at a level commensurate
with his position and may be entitled to bonus payments in addition to the
amount set forth hereinabove.1
5. EMPLOYEE
BENEFITS.
(a) Benefit
Plans.
The
Executive shall be eligible to participate in any employee benefit plan of
the
Company, including, but not limited to, equity, pension, thrift, profit sharing,
medical coverage, education, or other retirement or welfare benefits that the
Company has adopted or may adopt, maintain or contribute to for the benefit
of
its senior executives, at a level commensurate with his positions, subject
to
satisfying the applicable eligibility requirements. The Company may at any
time
or from time to time amend, modify, suspend or terminate any employee benefit
plan, program or arrangement for any reason in its sole discretion.
2
(b) Vacation.
The
Executive shall be entitled to an annual paid vacation in accordance with the
Company's policy applicable to senior executives from time to time in effect,
but in no event less than two weeks per calendar year (as prorated for partial
years), which vacation may be taken at such times as the Executive elects with
due regard to the needs of the Company. The carry-over of vacation days shall
be
in accordance with the Company's policy applicable to senior executives from
time to time in effect.
(c) Business
and Entertainment Expenses.
Upon
presentation of appropriate documentation, the Executive shall be reimbursed
for
all reasonable and necessary business and entertainment expenses incurred in
connection with the performance of his duties hereunder, all in accordance
with
the Company's expense reimbursement policy applicable to senior executives
from
time to time in effect.
6. TERMINATION.
The
Executive's employment and the Employment Term shall terminate on the first
of
the following to occur:
(a) Disability.
The
thirtieth (30th)
day
following written notice by the Company to the Executive of termination due
to
Disability. For purposes of this Agreement, "Disability" shall mean a
determination by the Company in accordance with applicable law that due to
a
physical or mental injury, infirmity or incapacity, the Executive is unable
to
perform the essential functions of his job with or without accommodation for
180
days (whether or not consecutive) during any 12-month period.
(b) Death.
Automatically on the date of death of the Executive.
(c) Cause.
Immediately upon written notice by the Company to the Executive of a termination
for Cause. "Cause" shall mean, as determined by the Board (or its designee)
(1)
conduct by the Executive in connection with his employment duties or
responsibilities that is fraudulent, unlawful or grossly negligent; (2) the
willful misconduct of the Executive; (3) the willful and continued failure
of
the Executive to perform the Executive's duties with the Company (other than
any
such failure resulting from incapacity due to physical or mental illness);
(4)
the commission by the Executive of any felony (or the equivalent under the
law
of the People's Republic of China) (other than traffic-related offenses) or
any
crime involving moral turpitude; (5) violation of any material policy of the
Company or any material provision of the Company's code of conduct, employee
handbook or similar documents; or (6) any material breach by the Executive
of
any provision of this Agreement or any other written agreement entered into
by
the Executive with the Company.
(d) Without
Cause.
On the
thirtieth (30th) day following written notice by the Company to the Executive
of
an involuntary termination without Cause, other than for death or
Disability.
(e) Good
Reason.
On the
sixtieth (60th)
day
following written notice by the Executive to the Company of a termination for
Good Reason. "Good Reason" shall mean, without the express written consent
of
the Executive, the occurrence of any the following events unless such events
are
cured (if curable) by the Company within fifteen days following receipt of
written notification by the Executive to the Company that he intends to
terminate his employment hereunder for one of the reasons set forth below:
any
material reduction or diminution (except temporarily during any period of
incapacity due to physical or mental illness) in the Executive's title,
authorities, duties or responsibilities or reporting requirements with the
Company.
3
7. CONSEQUENCES
OF TERMINATION.
(a) Disability.
Upon
termination of the Employment Term because of the Executive's Disability, the
Company shall pay or provide to the Executive (1) any unpaid Base Salary and
any
accrued vacation through the date of termination; (2) any unpaid Annual Bonus
accrued with respect to the fiscal year ending on or preceding the date of
termination; (3) reimbursement for any unreimbursed expenses properly incurred
through the date of termination; and (4) all other payments or benefits to
which
the Executive may be entitled under the terms of any applicable employee benefit
plan, program or arrangement (collectively, "Accrued Benefits").
(b) Death.
Upon the
termination of the Employment Term because of the Executive's death, the
Executive's estate shall be entitled to any Accrued Benefits.
(c) Termination
for Cause.
Upon the
termination of the Employment Term by the Company for Cause or by either party
in connection with a failure to renew this Agreement, the Company shall pay
to
the Executive any Accrued Benefits.
(d) Termination
without Cause or for Good Reason.
Upon the
termination of the Employment Term by the Company without Cause or by the
Executive with Good Reason, the Company shall pay or provide to the Executive
(1) the Accrued Benefits, and (2) subject to the Executive's execution (and
non-revocation) of a general release of claims against the Company and its
affiliates in a form reasonably requested by the Company, (A) continued payment
of his Base Salary for two (2) months after termination, payable in accordance
with the regular payroll practices of the Company, but off the payroll; and
(B)
payment of the Executive's cost of continued medical coverage for two (2) months
after termination (subject to the Executive's co-payment of the costs in the
same proportion as such costs were shared immediately prior to the date of
termination).2
Payments
provided under this Section 7(d) shall be in lieu of any termination or
severance payments or benefits for which the Executive may be eligible under
any
of the plans, policies or programs of the Company.
8. NO
ASSIGNMENT.
This
Agreement is personal to each of the Parties. Except as provided below, no
Party
may assign or delegate any rights or obligations hereunder without first
obtaining the written consent of the other Party hereto; provided,
however,
that
the Company may assign this Agreement to any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business or assets of the Company.
2
NOTE:
typically the period for severance payments corresponds to the length of
the
noncompete and nonsolicitation period.
4
9. NOTICES.
For the
purpose of this Agreement, notices and all other communications provided for
in
this Agreement shall be in writing and shall be deemed to have been duly given
(1) on the date of delivery if delivered by hand, (2) on the date of
transmission, if delivered by confirmed facsimile, (3) on the first business
day
following the date of deposit if delivered by guaranteed overnight delivery
service, or (4) on the fourth business day following the date delivered or
mailed by United States registered or certified mail, return receipt requested,
postage prepaid, addressed as follows:
If
to the
Executive:
At
the
address (or to the facsimile number) shown on the records of the
Company
If
to the
Company:
00/X,
Xxxxxxxxxx Xxxxx, 0 Xxxxxxxx Xx
Xxxxx
000000, P.R. China
Telephone: x0
(00
00) 0000-0000
Facsimile: x0
(00
00) 0000-0000
Attention:
Principal
Executive Officer/Principal Financial Officer
With
a
copy to:
Xxxxxx
& Jaclin, LLP
000
Xxxxx
0 Xxxxx, Xxxxx 000
Xxxxxxxxx,
Xxx Xxxxxx, 00000
Attention:
Xxxxxxx Xxxxxx
Facsimile:
(000) 000-0000
or
to
such other address as either Party may have furnished to the other in writing
in
accordance herewith, except that notices of change of address shall be effective
only upon receipt.
10. PROTECTION
OF THE COMPANY'S BUSINESS.
(a) Confidentiality.
The
Executive acknowledges that during the course of his employment by the Company
(prior to and during the Employment Term) he has and will occupy a position
of
trust and confidence. The Executive shall hold in a fiduciary capacity for
the
benefit of the Company and shall not disclose to others or use, whether directly
or indirectly, any Confidential Information regarding the Company, except (i)
as
in good faith deemed necessary by the Executive to perform his duties hereunder,
(ii) to enforce any rights or defend any claims hereunder or under any other
agreement to which the Executive is a party, provided that
such
disclosure is relevant to the enforcement of such rights or defense of such
claims and is only disclosed in the formal proceedings related thereto, (iii)
when required to do so by a court of law, by any governmental agency having
supervisory authority over the business of the Company or by any administrative
or legislative body (including a committee thereof) with jurisdiction to order
him to divulge, disclose or make accessible such information, provided that
the
Executive shall give prompt written notice to the Company of such requirement,
disclose no more information than is so required, and cooperate with any
attempts by the Company to obtain a protective order or similar treatment,
(iv)
as to such Confidential Information that shall have become public or known
in
the Company's industry other than by the Executive's unauthorized disclosure,
or
(v) to the Executive's spouse, attorney and/or his personal tax and financial
advisors as reasonably necessary or appropriate to advance the Executive's
tax,
financial and other personal planning (each an "Exempt Person"), provided,
however,
that
any
disclosure or use of Confidential Information by an Exempt Person shall be
deemed to be a breach of this Section 10(a) by the Executive. The Executive
shall take all reasonable steps to safeguard the Confidential Information and
to
protect it against disclosure, misuse, espionage, loss and theft. The Executive
understands and agrees that the Executive shall acquire no rights to any such
Confidential Information. "Confidential Information" shall mean information
about the Company, its subsidiaries and affiliates, and their respective clients
and customers that is not disclosed by the Company and that was learned by
the
Executive in the course of his employment by the Company, including, but not
limited to, any proprietary knowledge, trade secrets, data and databases,
formulae, sales, financial, marketing, training and technical information,
client, customer, supplier and vendor lists, competitive strategies, computer
programs and all papers, resumes, and records (including computer records)
of
the documents containing such Confidential Information.
5
(b) Non-Competition.
During
the Employment Term and for the one-year period following the termination of
the
Executive's employment for any reason (the "Restricted Period"), the Executive
shall not, directly or indirectly, without the prior written consent of the
Company, provide employment (including self-employment), directorship,
consultative or other services to any business, individual, partner, firm,
corporation, or other entity that competes with any business conducted by the
Company or any of its subsidiaries or affiliates on the date of the Executive's
termination of employment or within one year of the Executive's termination
of
employment in the geographic locations where the Company and its subsidiaries
or
affiliates engage or propose to engage in such business (the "Business").
Nothing herein shall prevent the Executive from having a passive ownership
interest of not more than 2% of the outstanding securities of any entity engaged
in the Business whose securities are traded on a national securities
exchange.
(c) Non-Solicitation
of Employees.
The
Executive recognizes that he possesses and will possess confidential information
about other employees of the Company and its subsidiaries and affiliates
relating to their education, experience, skills, abilities, compensation and
benefits, and inter-personal relationships with customers of the Company and
its
subsidiaries and affiliates. The Executive recognizes that the information
he
possesses and will possess about these other employees is not generally known,
is of substantial value to the Company and its subsidiaries and affiliates
in
developing their business and in securing and retaining customers, and has
been
and will be acquired by him because of his business position with the Company.
The Executive agrees that, during the Restricted Period, he will not, directly
or indirectly, (i) solicit or recruit any employee of the Company or any of
its subsidiaries or affiliates (a "Current Employee") or any person who was
an
employee of the Company or any of its subsidiaries or affiliates during the
twelve (12) month period immediately prior to the date the Executive's
employment terminates (a "Former Employee") for the purpose of being employed
by
him or any other entity, or (ii) hire any Current Employee or Former
Employee.
6
(d) Non-Solicitation
of Customers.
The
Executive agrees that, during the Restricted Period, he will not, directly
or
indirectly, solicit
or attempt to solicit (i)
any
party who is a customer or client of the Company or its subsidiaries, who was
a
customer or client of the Company or its subsidiaries at any time during the
twelve (12) month period immediately prior to the date the Executive's
employment terminates or who is a prospective customer or client that has been
identified and targeted by the Company or its subsidiaries for the purpose
of
marketing, selling or providing to any such party any services or products
offered by or available from the Company or its subsidiaries, or (ii) any
supplier or vendor to the Company or any subsidiary to terminate, reduce or
alter negatively its relationship with the Company or any subsidiary or in
any
manner interfere with any agreement or contract between the Company or any
subsidiary and such supplier or vendor.
(e) Property.
The
Executive acknowledges that all originals and copies of materials, records
and
documents generated by him or coming into his possession during his employment
by the Company or its subsidiaries are the sole property of the Company and
its
subsidiaries ("Company Property"). During the Employment Term, and at all times
thereafter, the Executive shall not remove, or cause to be removed, from the
premises of the Company or its subsidiaries, copies of any record, file,
memorandum, document, computer related information or equipment, or any other
item relating to the business of the Company or its subsidiaries, except in
furtherance of his duties under this Agreement. When the Executive's employment
with the Company terminates, or upon request of the Company at any time, the
Executive shall promptly deliver to the Company all copies of Company Property
in his possession or control.
(f) Non-Disparagement.
Executive shall not, and shall not induce others to, Disparage the Company
or
its subsidiaries or affiliates or their past and present officers, directors,
employees or products. "Disparage" shall mean making comments or statements
to
the press, the Company's or its subsidiaries' or affiliates' employees or any
individual or entity with whom the Company or its subsidiaries or affiliates
has
a business relationship which would adversely affect in any manner (1) the
business of the Company or its subsidiaries or affiliates (including any
products or business plans or prospects), or (2) the business reputation of
the
Company or its subsidiaries or affiliates, or any of their products, or their
past or present officers, directors or employees.
(g) Cooperation.
Subject
to the Executive's other reasonable business commitments, following the
Employment Term, the Executive shall be available to cooperate with the Company
and its outside counsel and provide information with regard to any past,
present, or future legal matters which relate to or arise out of the business
the Executive conducted on behalf of the Company and its subsidiaries and
affiliates, and, upon presentation of appropriate documentation, the Company
shall compensate the Executive for any out-of-pocket expenses reasonably
incurred by the Executive in connection therewith.
7
(h) Equitable
Relief and Other Remedies.
The
Executive acknowledges and agrees that the Company's remedies at law for a
breach or threatened breach of any of the provisions of this Section 10 would
be
inadequate and, in recognition of this fact, the Executive agrees that, in
the
event of such a breach or threatened or attempted breach, in addition to any
remedies at law, the Company, without posting any bond, shall be entitled to
obtain equitable relief in the form of specific performance, a temporary
restraining order, a temporary or permanent injunction or any other equitable
remedy which may then be available. In addition, without limiting the Company's
remedies for any breach of any restriction on the Executive set forth in this
Section 10, except as required by law, the Executive shall not be entitled
to
any payments set forth in Section 7(d) hereof if the Executive has breached
the
covenants applicable to the Executive contained in this Section 10, the
Executive will immediately return to the Company any such payments previously
received under Section 7(d) upon such a breach, and, in the event of such
breach, the Company will have no obligation to pay any of the amounts that
remain payable by the Company under Section 7(d).
(i) Reformation.
If it is
determined by a court of competent jurisdiction in any state that any
restriction in this Section 10 is excessive in duration or scope or is
unreasonable or unenforceable under the laws of that state, it is the intention
of the parties that such restriction may be modified or amended by the court
to
render it enforceable to the maximum extent permitted by the law of that state.
The
Executive acknowledges that the restrictive covenants contained in this Section
10 are a condition of this Agreement and are reasonable and valid in temporal
scope and in all other respects.
(j) Survival
of Provisions.
The
obligations contained in this Section 10 shall survive in accordance with their
terms the termination or expiration of the Executive's employment with the
Company and shall be fully enforceable thereafter.
11. INDEMNIFICATION.
The
Executive shall be indemnified to the extent permitted by the Company's
organizational documents and to the extent required by law.
12. SECTION
HEADINGS AND INTERPRETATION.
The
section headings used in this Agreement are included solely for convenience
and
shall not affect, or be used in connection with, the interpretation of this
Agreement. Expressions of inclusion used in this agreement are to be understood
as being without limitation.
13. SEVERABILITY.
The
provisions of this Agreement shall be deemed severable and the invalidity of
unenforceability of any provision shall not affect the validity or
enforceability of the other provisions hereof.
14. COUNTERPARTS.
This
Agreement may be executed in several counterparts, each of which shall be deemed
to be an original but all of which together will constitute one and the same
Agreement.
8
15. GOVERNING
LAW AND VENUE.
The
validity, interpretation, construction and performance of this Agreement shall
be governed by the laws of the State of New York without regard to its conflicts
of law principles. The
Parties agree irrevocably to submit to the exclusive jurisdiction
of the federal courts or, if no federal jurisdiction exists, the state courts,
located in the City of New York, Borough of Manhattan, for the purposes of
any
suit, action or other proceeding brought by any Party arising out of any breach
of any of the provisions of this Agreement and hereby waive, and agree not
to
assert by way of motion, as a defense or otherwise, in any such suit, action,
or
proceeding, any claim that it is not personally subject to the jurisdiction
of
the above-named courts, that the suit, action or proceeding is brought in an
inconvenient forum, that the venue of the suit, action or proceeding is
improper, or that the provisions of this Agreement may not be enforced in or
by
such courts. IN
ADDITION, THE PARTIES AGREE TO WAIVE A TRIAL BY JURY.
16. ENTIRE
AGREEMENT.
This
Agreement contains the entire agreement between the Parties with respect to
the
subject matter hereof and supersedes all prior agreements, written or oral,
with
respect thereto. No agreements or representations, oral or otherwise, express
or
implied, with respect to the subject matter hereof have been made by either
party which are not expressly set forth in this Agreement.
17. WAIVER
AND AMENDMENT.
No
provision of this Agreement may be modified, amended, waived or discharged
unless such waiver, modification, amendment or discharge is agreed to in writing
and signed by the Executive and such officer or director as may be designated
by
the Board. No waiver by either Party at any time of any breach by the other
Party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other Party shall be deemed a waiver or
similar or dissimilar provisions or conditions at the same or at any prior
or
subsequent time.
18. WITHHOLDING.
The
Company may withhold from any and all amounts payable under this Agreement
such
federal, state, local and foreign taxes as may be required to be withheld
pursuant to any applicable law or regulation.
19. AUTHORITY
AND NON-CONTRAVENTION.
The
Executive represents and warrants to the Company that he has the legal right
to
enter into this Agreement and to perform all of the obligations on his part
to
be performed hereunder in accordance with its terms and that he is not a party
to any agreement or understanding, written or oral, which could prevent him
form
entering into this Agreement or performing all of his obligations
hereunder.
20. COUNTERPARTS.
This
Agreement may be executed in counterparts, each of which shall be deemed an
original but all of which shall constitute one and the same
instrument.
9
21. TERMINATION
OF EXCHANGE AGREEMENT.
In the
event that the consummation of the Acquisition does not occur and the Exchange
Agreement terminates pursuant to its term, the terms of employment contained
herein shall be null and void, or if the Executive's employment with the Company
terminates prior to the consummation of the Acquisition, the terms contained
herein shall be null and void unless the Company agrees otherwise, in its sole
discretion.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
10
IN
WITNESS WHEREOF,
the
Parties have executed this Agreement as of the date first written
above.
APPLIED
SPECTRUM TECHNOLOGIES, INC.
/s/
Xxxxxx
Xxx
By:
Xxxxxx
Xxx
Title:
Chief Exxecutive Officer
EXECUTIVE
/s/
Xxx
Xx
Xxx
Xx
11
