EMPLOYMENT AGREEMENT
AGREEMENT dated as of the
12th
day of January, 2010, 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 Ying (Xxxxxx) Zhang, residing
at (“Executive”).
WITNESSETH:
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 its Chief Financial Officer during the Term, as hereinafter
defined. In this capacity she will perform such duties as may be
assigned to her by the Company’s chief executive officer or the board of
directors. Initially her 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 and audit committee as a
guest. Executive shall report to the Company’s 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.
(b) The
“Term” of this Agreement shall be for an Initial Term commencing on the date of
this Agreement and ending on January 31, 2011, and shall be automatically
renewed for an additional one year period unless terminated by either party on
not less than 30 days’ written notice prior to the expiration of the Initial
Term, subject to early termination as provided in this
Agreement. During the one-year extension, either party may terminate
this Agreement on 30 days’ written notice. The Initial Term and any extension
are referred to as the “Term.”
2. Executive’s
Performance. Executive hereby accepts the employment
contemplated by this Agreement. During the Term, Executive shall perform her
duties diligently, in good faith and in a manner consistent with the best
interests of the Company. Executive will devote substantially
approximately all of her business time and attention of her business time to the
performance of her duties under this Agreement.
3. Compensation. For
her services during the Term, the Company shall pay Executive the
following:
(a)
Salary (“Salary”) at the annual rate of RMB480,000, to be paid in monthly
installments at the monthly rate of RMB40,000 on the last day of each month,
with the first payment being due on January 31, 2010 for the period commencing
on the date of this Agreement. At Executive’s request,
payment may be made in United States dollars at the monthly rate of
US$5,857. If the Term is extended beyond the Initial Term,
Executive’s Salary shall be increased to RMB 41,200 or US$6,033 per month, with
the first payment being due on January 31, 2011.
(b) In
addition to Salary, the Company shall issue to Executive 1,500 shares of Common
Stock pursuant to the Company’s long-term incentive plan, which is subject to
stockholder approval, on each of January 31, 2010 and July 31, 2011, provided
that Executive is employed by the Company on such dates. No shares
shall be issued pursuant to this Section 3(b) subsequent to the termination of
this Agreement.
(c) For
a period of nine (9) months following the date of issuance of any Shares (the
"Lockup Period"), Executive irrevocably agrees that she 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 pursuant to 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 the
Shares. The Shares shall bear a legend that refers to
this restriction in addition to the Company’s standard investment
legend.
(d) Employee
shall be entitled to a fifteen (15)-day paid vacation for each fiscal year of
the Term commencing two months after the Start Date and all
nationally-designated holidays in the People’s Republic of
China.
4. Representations of
Executive. Executive hereby represents, warrants, covenants and
agrees as follows:
(a) Executive
is accepting the Shares being issued to her pursuant to this Agreement for her
own account and not with a view to or for sale of distribution
thereof. Executive understands that the Shares are restricted
securities and she understands the meaning of the term “restricted
securities.” Executive further represents that she is an accredited
investor within the meaning of Rule 501 of the Securities and Exchange
Commission under the Securities Act of 1933, as amended, that she understands
the meaning of the term “accredited investor,” and that she was not solicited by
publication of any advertisement in connection with the receipt of the Shares
and that she has consulted tax counsel as needed regarding the
Shares.
(b) Executive
further represents that, during the past five years:
(i) No
petition has been filed under the federal bankruptcy laws or any state
insolvency law by or against, or a receiver, fiscal agent or similar officer has
been appointed by a court for her business or property, or any partnership in
which she was a general partner at or within two years before the time of such
filing, or any corporation or business association of which she was an executive
officer at or within two years before the time of such filing;
(ii) She
has not been convicted in a criminal proceeding and is not the subject of a
pending criminal proceeding (excluding traffic violations and other minor
offenses);
(iii) She
has not been the subject of any order, judgment, or decree, not subsequently
reversed, suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining you from, or otherwise limiting, the
following activities:
(A) Acting
as a futures commission merchant, introducing broker, commodity trading advisor,
commodity pool operator, floor broker, leverage transaction merchant, any other
person regulated by the Commodity Futures Trading Commission, or an associated
person of any of the foregoing, or as an investment adviser, underwriter, broker
or dealer in securities, or as an affiliated person, director or employee of any
investment company, bank, savings and loan association or insurance company, or
engaging in or continuing any conduct or practice in connection with such
activity;
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(C) Engaging
in any activity in connection with the purchase or sale of any security or
commodity or in connection with any violation of federal or state securities
laws or federal commodities laws;
(iv) She
has not been the subject of any order, judgment or decree, not subsequently
reversed, suspended or vacated, of any federal or state authority barring,
suspending or otherwise limiting, for more than 60 days, her right to engage in
any activity described in Section 4(b)(iii)(A) of this Agreement, or to be
associated with persons engaged in any such activity; or
(v) She
has not been found by a court of competent jurisdiction in a civil action or by
the SEC to have violated any federal or state securities law, and the judgment
in such civil action or finding by the SEC has not been subsequently reversed,
suspended, or vacated.
(vi) She
has not been found by a court of competent jurisdiction in a civil action or by
the Commodity Futures Trading Commission to have violated any Federal
commodities law, and the judgment in such civil action or finding by the
Commodity Futures Trading Commission has not been subsequently reversed,
suspended or vacated.
(c) Subject
to the provisions set forth in Section 3(c) of this Agreement, 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.
5. 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 her 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. If the Company requires Executive to travel, the
Company will pay coach fare.
6. Termination of
Employment.
(a) Termination
by the Company: This Agreement and Executive’s employment pursuant to
this Agreement may be immediately terminated by the Company for
Cause. The term “Cause” shall mean:
(i) repeated
failure of Executive to perform material instructions from the Board, or, if
Executive does not report to the Board, from the officer to whom Executive
reports, provided that such instructions are reasonable and consistent with
Executive’s duties as set forth in Section 1 of this Agreement, or any other
failure or refusal by Executive to perform her duties required by said Section;
provided, however, that Executive shall have received notice from the Board
specifying the nature of such failure in reasonable detail and Executive shall
have failed to cure the failure within five business days after receipt of such
notice.
(ii) a
breach of Sections 7 or 8 of this Agreement;
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(iii) a
breach of trust whereby Executive obtains personal gain or benefit at the
expense of or to the detriment of the Company or any of its
affiliates;
(iv) any
fraudulent or dishonest conduct by Executive or any other conduct by Executive
which damages the Company or any of its affiliates or their property, business
or reputation.
(v) a
conviction of, or guilty plea or plea of nolo contendere by, of Executive of (x)
any felony or (y) any other crime involving fraud, theft, embezzlement or use or
possession of illegal substances; or
(vi) the
admission by Executive of any matters set forth in Section 6(c)(v) of this
Agreement.
(b) Termination
by the Executive or the Company: This Agreement and Executive’s employment
pursuant to this Agreement, may be terminated by the Executive or the Company on
not less than 30 days’ written notice in the event of Executive’s Disability.
The term “Disability” shall mean any illness, disability or incapacity of the
Executive which prevents him from substantially performing her regular duties
for a period of two consecutive months or three months, even though not
consecutive, in any twelve month period.
(c) Termination
by the Executive: Executive shall have the right to terminate her
employment under this Agreement on not less than ten (10) days’ written notice
to Company for any material 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.
(d) Anything
herein to the contrary notwithstanding and except as provided in Section 1(b),
Executive may terminate this Agreement on not less than ten (10) days’ written
notice to Company.
(e) If
Executive shall terminate this Agreement under Section 6(c) or if the Company
shall terminate Executive’s employment other than for Cause, Executive shall be
entitled to receive two (2) months’ Salary at the then applicable yearly salary
rate (the “Severance Payment”). Other than the Severance
Payment, the Company shall have no further obligations to Executive except as
required by law.
(f) If
Executive shall terminate her employment pursuant to Section 6(d) of this
Agreement, Executive shall not be entitled to the Severance Payment or any
additional compensation.
7. 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 she will not at any time
use or disclose to any person any confidential information relating to Company;
provided, however, that nothing in this Section 7(a) shall be construed to
prohibit Executive from using or disclosing such information if she 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.
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(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, she shall, upon the request of the Company, cause either such
information to be erased from her 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.
(e) For
the purposes of Sections 7 and 8 of this Agreement, the term “Company”
shall include the Company, and any subsidiaries and affiliates.
8. 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 8 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 her employment or consulting relationship, as the case may
be);
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(ii) solicit
for herself 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 her 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 8 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 7(b) of this Agreement. The Company will not
make any disparaging statements concerning Executive. This Section
8(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 7 and 8 of this Agreement are a condition
of her 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.
(d) Nothing
in this Section 8 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 8.
9. Injunctive Relief.
Executive agrees that her violation or threatened violation of any of the
provisions of Sections 7 or 8 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 9 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
7, 8 and 9 of this Agreement shall survive any termination of this Agreement and
Executive’s employment relationship pursuant to this Agreement.
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10. 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.
11. Additional Representations
by the Parties.
(a) Executive
represents, warrants, covenants and agrees that she has a right to enter into
this Agreement, that she is not a party to any agreement or understanding, oral
or written, which would prohibit performance of her obligations under this
Agreement, and that she will not use in the performance of her obligations
hereunder any proprietary information of any other party which she 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.
12. 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 12(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.
(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 8 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.
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(e) No
party shall have the right to assign or transfer any of its or her 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.
| CHINA WIND SYSTEMS, INC. | |||
|
|
By:
|
/s/ Xxxxxxx Xx | |
| Name: | Xxxxxxx Xx | ||
| Title: | CEO | ||
| EXECUTIVE: | |||
| /s/ Xxxx Xxxxx | |||
| Xxxx Xxxxx | |||
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