EMPLOYMENT AGREEMENT
Exhibit
99.1
AGREEMENT dated as of the
11th
day of December, 2008 (the “Start Date”), by and among China Wind Systems, Inc.,
a Delaware corporation with its principal office at No. 9 Yanyu Middle Road,
Qianzhou Township, Huishan District, Wuxi City, Jiangsu Province, China (the
“Company”), and Xxx Xxxx, an individual residing at
[address]
(“Executive”).
W I T N E S S E T
H:
WHEREAS, the Company desires
to engage Executive to serve at its Chief Financial Officer on and subject to
the terms of this Agreement;
NOW, THEREFORE, in
consideration of the mutual promises set forth in this Agreement, the parties
agree as follows:
1. Employment and
Duties.
(a) Subject
to the terms and conditions hereinafter set forth, the Company hereby employs
Executive as Chief Financial Officer during the Term, as hereinafter
defined. In this capacity he will perform such duties as may be
assigned to him by the Company’s chief executive officer or the board of
directors. Initially his duties will include, in addition to the
duties normally associated with the chief financial officer of a publicly traded
company, services relating to stockholder and investor relations, including
participating in road shows and investor conference calls and, if requested,
attending meetings of the Company’s board of directors as a
guest. Executive shall report to the Company’s chief executive
officer or other officer designated by the chief executive
officer. Executive shall also perform such other duties and
responsibilities as may be determined by the Company’s chief executive officer,
as long as such duties and responsibilities are consistent with those of the
Company’s chief financial officer and the other duties contemplated by this
Section 1(a).
(b) The
“Term” of this Agreement shall be for a period of three (3) years commencing on
the Start Date, unless this Agreement is extended by mutual agreement of the
parties.
2. Executive’s
Performance. Executive hereby accepts the employment
contemplated by this Agreement. During the Term, Executive shall perform his
duties diligently, in good faith and in a manner consistent with the best
interests of the Company. The Company understands that Executive may
devote a portion of his time to matters not related to the Company, which shall
not detract from his obligations under this Agreement and Executive will devote
approximately all of his business time and attention of his business time to the
performance of his duties under this Agreement.
3. Compensation. For
his services during the Term, the Company shall pay Executive the
following:
(a) Salary
(“Salary”) at the annual rate of $100,000, to be paid in monthly
installments of $8,333.33 on the last day of each
month.
(b) Employee
is eligible to participate in any other compensation programs established by the
Company’s board of directors or compensation committee for its executive
officers, if any, which will be determined and paid in accordance with policies
set from time to time by the Board (or compensation committee
thereof). Employee shall also be entitled to a twenty-day paid
vacation for each fiscal year of the Term commencing six months after the Start
Date, in accordance with the Company’s general practices in effect from time to
time.
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(c) In
addition, the Company shall pay Executive a maximum of 166,667 shares (the
“Shares”) which shall vest on a quarterly basis at the rate of 13,889 shares
each calendar quarter, provided that Executive is employed by the Company on
such date. The first installment shall be issuable on March 31,
2009. No shares shall be issued pursuant to this Section 3(b)
subsequent to the termination of this Agreement.
(d) For a
period of nine (9) months following the date of issuance of any Shares (the
"Lockup Period"), Executive irrevocably agrees it will not offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant to purchase or otherwise
transfer or dispose of, directly or indirectly, or announce the offering of, any
Shares obtained by Executive under the terms of this Agreement. In
furtherance thereof, the Company will (a) cause its transfer agent to place a
stop order on all Shares, (b) notify its transfer agent in writing of the stop
order and the restrictions on such Shares owned by Executive under this
Agreement and (c) direct the transfer agent not to process any attempts by
Executive to resell or transfer any Shares owned by Executive in violation of
this Agreement. The Shares shall bear a legend that
refers to this restriction in addition to the Company’s standard investment
legend.
(e) Executive
hereby represents, warrants, covenants and agrees as follows:
(i) Executive
understands that the issuance of the Shares is being made only by means of this
Agreement. Executive understands that the Company has not authorized
the use of, and Executive confirms that he is not relying upon, any other
information, written or oral, other than material contained in this Agreement
and in material that has been publicly filed with the Securities and Exchange
Commission (the “Commission”).
(ii) Executive
represents to the Company that Executive is an accredited investor within the
meaning of Rule 501 of the Commission under the Securities Act and he
understands the meaning of the term “accredited investor.” Executive
further represents that he has such knowledge and experience in financial and
business matters as to enable him to understand the nature and extent of the
risks involved in owning the Shares. Executive is fully aware that
such investments can and sometimes do result in the loss of the entire
investment. Executive has engaged his own counsel and accountants to
the extent that he deems it necessary.
(iii) Executive
is acquiring the Shares pursuant to this Agreement for investment and not with a
view to the sale or distribution thereof, for Executive’s own account and not on
behalf of others; has not granted any other person any interest or participation
in or right or option to purchase all or any portion of the Shares; is aware
that the Securities are restricted securities within the meaning of Rule 144 of
the Commission under the Securities Act, and may not be sold or otherwise
transferred other than pursuant to an effective registration statement or an
exemption from registration; and understands and agrees that the certificates
for the Shares shall bear the Company’s standard investment
legend. Executive understands the meaning of these
restrictions.
(iv) Subject
to the provisions set forth in Section 3(d) above, Executive will not transfer
any Shares except in compliance with all applicable federal and state securities
laws and regulations, and, in such connection, the Company may request an
opinion of counsel reasonably acceptable to the Company as to the availability
of any exemption.
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(v) Executive
represents and warrants that no broker or finder was involved directly or
indirectly in connection with Executive’s receipt of the Shares pursuant to this
Agreement. Executive shall indemnify the Company and hold it harmless
from and against any manner of loss, liability, damage or expense, including
fees and expenses of counsel, resulting from a breach of Executive’s warranty
contained in this Section 3(e)(v).
(vi) Executive
understands that he has no registration rights with respect to the
Shares.
4. Reimbursement of
Expenses. The Company shall reimburse Executive, upon
presentation of proper expense statements, for all authorized, ordinary and
necessary out-of-pocket expenses reasonably incurred by Executive during the
Term in connection with the performance of his services pursuant to this
Agreement in accordance with the Company’s expense reimbursement
policy. Any expense of $100 or more shall require the prior approval
of the Company. Although it is not expected that Executive will be
required to travel to China during the Term, in the event that he is requested
to travel to China, the Company will pay coach fare.
5. Termination of
Employment.
(a) Termination
by the Company: This Agreement and Executive’s employment pursuant to
this Agreement may be terminated by the Company for cause on not less than ten
(10) days’ written notice to Executive. Notwithstanding anything to
the contrary in this Section 5(a), Company may not terminate
Executive's employment under this Agreement for cause unless Executive shall
have first received notice from the Board advising Executive of the specific
acts or omissions alleged to constitute cause, and such acts or omissions
continue after Executive shall have had a reasonable opportunity (at least 10
days from the date Executive receives the notice from the Board) to correct the
acts or omissions so complained of.
(b) Termination
by the Executive: Executive shall have the right to terminate his
employment under this Agreement on not less than ten (10) days' written notice
to Company for any breach of this Agreement by Company, which is not cured by
Company within thirty (30) days of the written notice of such breach by
Executive.
(c) Anything
herein to the contrary notwithstanding, Executive may terminate this Agreement
on not less than ten (10) days’ written notice to Company.
(d) If
Executive shall terminate this Agreement under Section 5(b), Executive shall be
entitled to receive the lesser of: (i) the remaining salary due to Executive
under this Agreement, or (ii) three (3) months salary, at the then applicable
yearly salary rate set forth in section 3(a), (the “Severance Payment”). Other than the Severance
Payment described in this section 5(d), Company shall have no further obligation
to compensate Executive pursuant to Section 3 above. If Executive shall
terminate this Agreement pursuant to Section 5(c), Executive shall not be
entitled to the Severance Payment or any additional compensation as provided in
Section 3.
(e) If the
Company shall terminate Executive's employment under this Agreement other than
for cause, the following shall apply: (i) Executive shall be entitled to receive
the Severance Payment as described in Section 5(d); (ii) Executive shall be
entitled to payment of any previously declared bonus as provided in Section 3(b)
above; and (iii) Any unvested Shares (out of a total of 166,667 shares) as
described in Section 3(c) above shall immediately vest.
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6. Trade Secrets and
Proprietary Information.
(a) Executive
recognizes and acknowledges that the Company, through the expenditure of
considerable time and money, has developed and will continue to develop in the
future confidential information. “Confidential information” shall
mean all information of a proprietary or confidential nature relating to Covered
Persons, including, but not limited to, such Covered Person’s trade secrets or
proprietary information, confidential know-how, and marketing, services,
products, business, research and development activities, inventions and
discoveries, whether or not patentable, and information concerning such Covered
Person’s services, business, customer or client lists, proposed services,
marketing strategy, pricing policies and the requirements of its clients and
relationships with its lenders, suppliers, licensors, licensees and others with
which a Covered Person has a business relationship, financial or other data,
technical data or any other confidential or proprietary information possessed,
owned or used by the Company, the disclosure of which could or does have a
material adverse effect on the Company, its businesses, any business in which it
proposes to engage. Executive agrees that he will not at any time use
or disclose to any person any confidential information relating to Company;
provided, however, that nothing in this Section 6(a) shall be construed to
prohibit Executive from using or disclosing such information if he can
demonstrate that such information (i) became public knowledge other than by or
as a result of disclosure by a person not having a right to make such disclosure
or (ii) was disclosure that was authorized by the Company. The term
“Covered Person” shall include the Company, any subsidiaries and affiliates and
any other person who provides information to the Company pursuant to a secrecy
or non-disclosure agreement.
(b) In the
event that any confidential information is required to be produced by Executive
pursuant to legal process (including judicial process or governmental
administrative subpoena), Executive shall give the Company notice of such legal
process within a reasonable time, but not later than ten business days prior to
the date such disclosure is to be made, unless Executive has received less
notice, in which event Executive shall immediately notify the
Company. The Company shall have the right to object to any such
disclosure, and if the Company objects (at the Company’s cost and expense) in a
timely manner so that Executive is not subject to penalties for failure to make
such disclosure, Executive shall not make any disclosure until there has been a
court determination on the Company’s objections. If disclosure is
required by a court order, final beyond right of review, or if the Company does
not object to the disclosure, Executive shall make disclosure only to the extent
that disclosure is required by the court order, and Executive will exercise
reasonable efforts at the Company’s expense, to obtain reliable assurance that
confidential treatment will be accorded the confidential
information.
(c) Executive
shall, upon expiration or termination of the Term, or earlier at the request of
the Company, turn over to the Company or destroy all documents, papers, computer
disks or other material in Executive’s possession or under Executive’s control
which may contain or be derived from confidential information. To the
extent that any confidential information is on Executive’s hard drive or other
storage media, he shall, upon the request of the Company, cause either such
information to be erased from his computer disks and all other storage media or
otherwise take reasonable steps to maintain the confidential nature of the
material.
(d) Executive
further realizes that any trading in Company’s common stock or other securities
or aiding or assisting others in trading in Company’s common stock or other
securities, including disclosing any non-public information concerning Company
or its affiliates to a person who uses such information in trading in the
Company’s common stock or other securities, may constitute a violation of
federal and state securities laws. Executive will not engage in any
transactions involving the Company’s common stock or other securities while in
the possession of material non-public information in a manner that would
constitute a violation of federal and state securities laws and shall not
disclose any material non-public information except pursuant to a
confidentiality agreement approved by the Company’s chief executive
officer.
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(e) For the
purposes of Sections 6, 7 and 8 of this Agreement, the term “Company” shall
include the Company, and any subsidiaries and affiliates.
7. Covenant Not To Solicit or
Compete.
(a) During
the period from the date of this Agreement until one year following the date on
which Executive’s employment is terminated, Executive will not, directly or
indirectly:
(i) persuade
or attempt to persuade any person which is or was a customer, client or supplier
of the Company to cease doing business with the Company, or to reduce the amount of
business it does with the Company (the terms “customer” and “client” as used in
this Section 7 to include any potential customer or client to whom the
Company submitted bids or proposals, or with whom the Company conducted
negotiations, during the term of Executive’s employment or consulting
relationship hereunder or during the twelve (12) months preceding the
termination of his employment or consulting relationship, as the case may
be);
(ii) solicit
for himself or any other person other than the Company the business of any
person which is a customer or client of the Company, or was a customer or client
of the Company within one (1) year prior to the termination of his employment or
consulting relationship;
(iii) persuade
or attempt to persuade any employee of the Company, or any individual who was an
employee of the Company during the one (1) year period prior to the termination
of this Agreement, to leave the Company’s employ, or to become employed by any
person in any business, which directly competes with the business of the Company
as it is engaged in at the time of the termination of this Agreement; provided,
however, that nothing in this Section 7 shall be construed to prohibit the
Executive from owning an interest of not more than five (5%) percent of any
public company engaged in such activities.
(b) Executive
will not, during or after the Term, make any disparaging statements concerning
the Company, its business, officers, directors and employees that could injure,
impair, damage or otherwise affect the relationship between the Company, on the
one hand, and any of the Company’s employees, suppliers, customers, clients or
any other person with which the Company has or may conduct business or otherwise
have a business relationship of any kind and description; provided, however,
that this sentence shall not be construed to prohibit either from giving factual
information required to be given pursuant to legal process, subject to the
provisions of Section 6(b) of this Agreement. The Company will not
make any disparaging statements concerning Executive. This Section
7(b) shall not be construed to prohibit the either party from giving factual
information concerning the other party in response to inquiries that such party
believes are bona fide.
(c) The
Executive acknowledges that the restrictive covenants (the “Restrictive
Covenants”) contained in Sections 6 and 7 of this Agreement are a condition
of his employment and are reasonable and valid in geographical and temporal
scope and in all other respects. If any court determines that any of the
Restrictive Covenants, or any part of any of the Restrictive Covenants, is
invalid or unenforceable, the remainder of the Restrictive Covenants and parts
thereof shall not thereby be affected and shall remain in full force and effect,
without regard to the invalid portion. If any court determines that any of the
Restrictive Covenants, or any part thereof, is invalid or unenforceable because
of the geographic or temporal scope of such provision, such court shall have the
power to reduce the geographic or temporal scope of such provision, as the case
may be, and, in its reduced form, such provision shall then be
enforceable.
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(d) Nothing
in this Section 7 shall be construed to prohibit Executive from owning a
passive, non-management interest of less than 5% in any public company that is
engaged in activities prohibited by this Section 7.
8. Injunctive Relief.
Executive agrees that his violation or threatened violation of any of the
provisions of Sections 6 or 7 of this Agreement shall cause immediate and
irreparable harm to the Company. In the event of any breach or threatened breach
of any of said provisions, Executive consents to the entry of preliminary and
permanent injunctions by a court of competent jurisdiction prohibiting Executive
from any violation or threatened violation of such provisions and compelling
Executive to comply with such provisions. This Section 8 shall not affect
or limit, and the injunctive relief provided in this Section 8 shall be in
addition to, any other remedies available to the Company at law or in equity or
in arbitration for any such violation by Executive. The provisions of Sections
6, 7 and 8 of this Agreement shall survive any termination of this Agreement and
Executive’s employment relationship pursuant to this Agreement.
9. Indemnification. The
Company shall provide Executive with payment of legal fees and indemnification
to the maximum extent permitted by the Company’s certificate of incorporation,
by-laws and applicable law.
10. Representations by the
Parties.
(a) Executive
represents, warrants, covenants and agrees that he has a right to enter into
this Agreement, that he is not a party to any agreement or understanding, oral
or written, which would prohibit performance of his obligations under this
Agreement, and that he will not use in the performance of his obligations
hereunder any proprietary information of any other party which he is legally
prohibited from using.
(b) The
Company represents, warrants and agrees that it has full power and authority to
execute and deliver this Agreement and perform its obligations
hereunder.
11. Miscellaneous.
(a) Any
notice, consent or communication required under the provisions of this Agreement
shall be given in writing and sent or delivered by hand, overnight courier or
messenger service, against a signed receipt or acknowledgment of receipt, or by
registered or certified mail, return receipt requested, or telecopier or similar
means of communication if receipt is acknowledged or if transmission is
confirmed by mail as provided in this Section 11(a), to the parties at
their respective addresses set forth at the beginning of this Agreement, with
notice to the Company being sent to the attention of the individual who executed
this Agreement on its behalf. Any party may, by like notice, change the person,
address or telecopier number to which notice is to be sent.
(b) This
agreement shall be governed by the laws of the State of New York applicable to
agreements executed and to be performed wholly within such state, without regard
to principles of conflicts of laws.
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(c) If any
term, covenant or condition of this Agreement or the application thereof to any
party or circumstance shall, to any extent, be determined to be invalid or
unenforceable, the remainder of this Agreement, or the application of such term,
covenant or condition to parties or circumstances other than those as to which
it is held invalid or unenforceable, shall not be affected thereby and each
term, covenant or condition of this Agreement shall be valid and be enforced to
the fullest extent permitted by law, and any court having jurisdiction may
reduce the scope of any provision of this Agreement, including the geographic
and temporal restrictions set forth in Section 7 of this Agreement, so that
it complies with applicable law.
(d) This
Agreement constitutes the entire agreement of the Company and Executive as to
the subject matter hereof, superseding all prior or contemporaneous written or
oral understandings or agreements, including any and all previous employment
agreements or understandings, all of which are hereby terminated, with respect
to the subject matter covered in this Agreement. This Agreement may not be
modified or amended, nor may any right be waived, except by a writing which
expressly refers to this Agreement, states that it is intended to be a
modification, amendment or waiver and is signed by both parties in the case of a
modification or amendment or by the party granting the waiver. No course of
conduct or dealing between the parties and no custom or trade usage shall be
relied upon to vary the terms of this Agreement. The failure of a party to
insist upon strict adherence to any term of this Agreement on any occasion shall
not be considered a waiver or deprive that party of the right thereafter to
insist upon strict adherence to that term or any other term of this
Agreement.
(e) No party
shall have the right to assign or transfer any of its or his rights hereunder
except that the Company’s rights and obligations may be assigned in connection
with a merger of consolidation of the Company or a sale by the Company of all or
substantially all of its business and assets.
(f) This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective heirs, successors, executors, administrators and permitted
assigns.
(g) The
headings in this Agreement are for convenience of reference only and shall not
affect in any way the construction or interpretation of this
Agreement.
(h) This
Agreement may be executed in counterparts, each of which when so executed and
delivered will be an original document, but both of which counterparts will
together constitute one and the same instrument.
[Signatures
on following page]
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IN WITNESS WHEREOF, the
parties have executed this Agreement as of the date first above
written.
By:
/s/ Xxxxxxx Xx
Name:
Xxxxxxx Xx
Title: CEO
EXECUTIVE:
/s/
Xxx
Xxxx
Xxx Xxxx
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