EMPLOYMENT AGREEMENT
AGREEMENT dated as of the
1st
day of January, 2011, 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 Xxxxxxxx Xxx, residing at Xxxxxxxx 000, 0000 XxXxx Xxxx, XxxXxxx
Xxxxxxxx,Xxxxxxxx, Xxxxx 201100 (“Executive”).
WITNESSETH:
WHEREAS, the Company has
elected Executive to serve asits chief financial officer; and
WHEREAS, the Company and
Executive desire to set forth the terms of Executive’s employment with the
Company;
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, Executive will report to the Company’s
board of directors and his duties will include the duties normally associated
with the position of chief financial officer of a publicly traded company which
is a smaller reporting company, including participation 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
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) This
Agreement shall have an Initial Term commencing on the date of this Agreement
and ending on December 31, 2011 and shall continue on a month-to-month basis
thereafter unless terminated by either party on not less than 30 days’ written
notice prior to the expiration of the Initial Term or any extension, unless
otherwise terminated as provided in this Agreement. The Initial Term
and any extension are referred to as the “Term.”
2. Executive’s
Acceptance. 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. Executive will devote substantially all 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. Executive
shall receive a salary (“Salary”) at the annual rate of RMB500,000, to be paid
in monthly installments at the rate of RMB41,666.67 at the beginning of each
month. Salary for any partial month shall be prorated. Executive’s
Salary shall be subject to annual review by the compensation committee of the
board of directors (the “Compensation Committee”). Any change in the
Executive’s Salary and the amount of any such change are within the sole
discretion of the Compensation Committee.
(b) Equity. The
Company will issue to Executive 7,500 shares (the “Shares”) of its common stock,
par value $.001 per share on the first business day of each January, April, July
and October, during the Term, commencing January 2, 2011, provided that
Executive is employed by the Company on that date. The certificate
for the Shares shall bear the Company’s standard investment legend.
(c) Vacation. Employee
shall be entitled to such annual paid vacation in accordance with the Company’s
policy applicable to senior executive officers from time to time in effect, but
not less than fifteen days per calendar year, in addition to any national
holidays in the People’s Republic of China.
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. If the Company requires Executive to travel, the Company will
pay coach fare.
5. Termination of
Employment.
(a) Termination Upon Death or
Disability. This Agreement shall terminate upon Executive’s
death. 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 his regular duties for a period
of two consecutive months or three months, even though not consecutive, in any
twelve-month period.
(b) Termination by the Company
for Cause. 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 of
directors, or the Company’s chief executive officer, 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 his duties required by said Section 1; provided, however, that Executive
shall have received notice from the board of directors or a committee thereof
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 6 or 7 of this Agreement;
(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 5(a)(v) of this
Agreement.
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(c) Termination by the Executive
for Breach by the Company. 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 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.If Executive shall terminate this Agreement pursuant to
this Section 5(c), Executive shall be entitled to receive one month’s Salary as
a severance payment, and the Company shall have no further obligations to
Executive except pursuant to Section 4 of this Agreement or as otherwise
required by law.
(d) Termination by the Company
Without Cause. The Company may terminate this Agreement
without Cause on thirty days’ prior written notice.
(e) Resignation by
Xxxxxxxxx.Xx the event of Executive’s resignation or termination of his
employment with the Company other than pursuant to Section 5(c) of this
Agreement, the Company shall have no obligation to Executive from the date of
such resignation or other termination of employment other than as provided in
Section 4 of this Agreement or as required by law, and no Shares shall be issued
to Executive from and after the date that Executive gives notice to the Company
of his resignation or intention to resign or terminate his employment with the
Company.
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.
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(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 material 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 6 and 7 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
(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; provided, that this Section 7(a)(ii) shall not apply to
businesses which are not engaged in any business in which the Company was
engaged or planned to be engaged during the Term; or
(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.
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(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. 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 or pursuant to legal process.
(c) 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 or arbitrator 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 or arbitrator 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 or arbitrator 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 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 of the
Parties.
(a) Executive
hereby represents, warrants, covenants and agrees as follows:
(i) Executive
has the 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.
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(ii) Executive
is acquiring the Shares being issued to him pursuant to this Agreement for his
own account and not with a view to or for sale ordistribution
thereof. Executive understands that the Shares are restricted
securities and he understands the meaning of the term “restricted
securities.” Executive further represents that he 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 he understands the
meaning of the term “accredited investor,” and that he was not solicited by
publication of any advertisement in connection with the receipt of the Shares
and that he has consulted tax counsel as needed regarding the Shares.Executive
did not acquire the Shares as a result of, and will not engage in, any “directed
selling efforts” (as defined in Regulation S under the Securities Act of 1933,
as amended) in the United States in respect of the Shares, which would include
any activities undertaken for the purpose of, or that could reasonably be
expected to have the effect of, conditioning the market in the United States for
the resale of the Shares; provided, however, that Executive may sell or
otherwise dispose of the Shares pursuant any applicable securities laws or under
an exemption from the registration requirements of said Securities
Act.
(iii) 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.
(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 his business or property, or any partnership in
which he was a general partner at or within two years before the time of such
filing, or any corporation or business association of which he was an executive
officer at or within two years before the time of such filing;
(ii) Executive
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) Executive
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 himfrom, 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;
(B) Engaging
in any type of business practice; or
(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) Executive
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, his 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;
(v) Executive
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; and
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(vi) Executive
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) 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 People’s Republic of China
applicable to agreements executed and to be performed wholly within the People’s
Republic of China, 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 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.
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(e) The
Executive and the Company agree that any dispute or claim, whether based on
contract, tort, discrimination, retaliation, or otherwise, relating to, arising
from, or connected in any manner with this Agreement or with the Executive’s
employment with Company shall be resolved exclusively through final and binding
arbitration under the auspices of the Hong Kong Chamber of Commerce (“HKCC”) in
accordance with the commercial arbitration rules and supplementary procedures
for international commercial arbitration of the HKCC. The arbitration
shall be held in Hong Kong. There shall be three arbitrators: one
arbitrator shall be chosen by each party to the dispute and those two
arbitrators shall choose the third arbitrator. Each party shall
cooperate with the other in making full disclosure of and providing complete
access to all information and documents requested by the other party in
connection with the arbitration proceedings. Arbitration shall be the
sole, binding, exclusive and final remedy for resolving any dispute between the
parties. The arbitrators shall have jurisdiction to determine any
claim, including the arbitrability of any claim, submitted to
them. The arbitrators may grant any relief authorized by law for any
properly established claim. The Executive acknowledges that the
purpose and effect of this Section 11(e) is solely to elect private arbitration
in lieu of any judicial proceeding he might otherwise have available to him in
the event of an employment-related dispute between him and the
Company. Therefore, the Executive hereby waives his right to have any
such employment-related dispute heard by a court or jury, as the case may be,
and agrees that his exclusive procedure to redress any employment-related claims
will be arbitration.
(f) 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 or consolidation of the Company or a sale by the
Company of all or substantially all of its business and assets.
(g) 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.
(h) 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.
(i) 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.
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By:
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/s/ Xxxxxxx Xx
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Xxxxxxx
Xx, Chief Executive Officer
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EXECUTIVE:
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/s/ Xxxxxxxx Xxx
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Xxxxxxxx
Xxx
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