Exhibit 10.1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into as of
the 12th day of October, 2005 and shall be deemed to have been effective on the
26th day of September, 2005 (the "Effective Date") by and between Xxxxx Xxxxxxx,
an individual residing at Philadelphia, Pennsylvania (the "Executive"), and
Harbin Electric Inc., a Nevada corporation (the "Company").
RECITALS
The Company desires to employ the Executive and the Executive agrees to
serve in the employ of the Company, all on the terms and conditions hereinafter
provided.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, and other good and valuable consideration, the receipt and
sufficiency of which the parties hereby acknowledge the parties hereby agree as
follows:
ARTICLE I
EMPLOYMENT
1.1 Employment. The Company hereby employs the Executive and the Executive
hereby accepts employment by the Company upon the terms and conditions contained
in this Agreement.
1.2 Office and Duties. The Executive shall serve the Company as Executive
Vice President of Finance and Corporate Development ("EVP") of the Company.
Subject to the direction of the Board of Directors (or equivalent body) of the
Company (the "Board"), the Executive, in his capacity as EVP, shall oversee
global investor relations outside of mainland PRC, capital formation and market
integration, and other general corporate development activities. He shall
perform all functions necessary to establish a U.S. operation, including setting
up an initial office based in the North America.
1.3 Commitment. Throughout the term of this Agreement, the Executive shall
diligently and faithfully devote his full-time efforts to the performance of his
duties hereunder in a manner that will further the business and interests of the
Company. Except for the Executive's prior contracted duties with Xxxxxx Research
LLC and as otherwise expressly set forth in this Section 1.3, for so long as the
Executive remains employed by the Company hereunder, the Executive may not
engage in any other business for his own account or accept employment from or
serve on the boards of directors of, or hold any other offices or positions in,
other companies or organizations without the prior written approval of the
Board; provided, however, that the Executive may make passive equity investments
in other companies or organizations subject to the terms of Section 2.1 and the
Executive may engage in charitable, civic or community activities that do not
interfere with his duties to the Company.
1.4 Term. The term of this Agreement shall commence on the Effective Date
and shall continue for a period of 36 months until 25th day of September, 2008
(the "Initial Term Date"), unless earlier terminated in accordance with Section
1.6. Thereafter, the term of this Agreement shall automatically extend for
additional 36 month periods (each, a "Subsequent Term") unless (i) terminated in
accordance with Section 1.6, or (ii) the Company notifies the Executive in
writing of non-renewal at least 60 days prior to the end
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of such Term (as defined below). In the event that the Company continues to
employ the Executive after the Initial Term Date, the Executive shall
continue to be employed upon the same terms and conditions as are contained
in this Agreement, except that any such employment shall be terminable by
either party "at will." The period of time between the commencement and
termination of this Agreement is referred to herein as the "Term."
1.5 Compensation.
(a) Salary. The Company shall pay the Executive as compensation a base
salary of not less than $80,000 per year during the Term (the "Base Salary"), or
such greater (but not lesser) amount as shall be approved from time to time by
the Board (the "Salary"). The Executive shall be entitled to annual increases
for cost of living adjustment of no less than 5 % . The Salary for each year
shall be paid by the Company in accordance with the regular payroll practices of
the Company, but not less frequently than monthly.
(b) Restricted Stock Grant and Option Grant. Upon commencement of
employment hereunder, the Executive shall be granted options (the "Options") to
purchase 250,000 shares of the Company's common stock (the "Common Stock") at an
exercise price $3.93, the closing price on September 23, 2005. One-fifth (1/5)
of the Options (50,000 shares) shall vest immediately. The remaining Options
shall vest over a 3-year period, with 13.33 % (33,333 shares) vesting on the
180th day of the Effective Date and the balance vesting thereafter on a
semi-annual basis, proportionately over the course of the following three (3)
years.
(c) Other Benefits and Perquisites. Effective as of the date hereof, and
for the remainder of the Term, the Executive and his dependent family members
shall be entitled to participate in any major medical health plan (including
dental family coverage) (the "Health Plan") that the Company offers at the
Company's expense and the Executive shall be entitled to participate in and
receive such additional benefits, if any, under any plan or arrangement made
available from time to time by the Company to other senior management executives
at an equivalent or higher position to that of the Executive on a basis
consistent with the terms, conditions and overall administration of any such
plan or arrangement. The Company and the Executive have further agreed that,
until the Company has enrolled the Executive and his dependent family members in
the Health Plan, the Company will reimburse the Executive $600.00 per month, in
addition to the amounts payable to the Executive under Sections 1.5(a) and
1.5(b) hereof, to offset the cost of the Executive purchasing his own Health
Plan. During the Term, the Company, in addition to the amounts payable to the
Executive under Sections 1.5(a) and 1.5(b) hereof, shall provide the Executive
with personal disability insurance policy and D&O insurance coverage.
(d) Vacations and Sick Leave. Effective as of the date hereof, and for
the remainder of the Term, the Executive shall be entitled to the maximum number
of paid absence and leave days ("PAL Days") permitted under the Company's PAL
policy in effect from time to time (but not less than four weeks vacation). Such
PAL Days shall be administered pursuant to the regular policies of the Company.
PAL Days that are not used by the Executive in any calendar year will not be
carried forward except as expressly provided by the PAL Day policy of the
Company. The Executive shall not be entitled to any payment or other
compensation for any unused PAL Days as of the end of any calendar year or at
the end of the Term.
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(e) Payment and Reimbursement of Expenses. Effective as of the date
hereof, and for the remainder of the Term, the Company shall pay or reimburse
the Executive for all reasonable travel, entertainment and other out-of-pocket
expenses incurred by the Executive in performing his obligations under this
Agreement, consistent with past practices; provided, that, the Executive
properly accounts therefore in accordance with the Company's expenses
reimbursement policies.
1.6 Termination.
(a) Death. If the Executive dies during the Term of this Agreement, the
Executive's employment hereunder shall terminate upon his death and all
obligations of the Company hereunder shall terminate on such date, except that
the Executive's estate or his designated beneficiary shall be entitled to
payment of any unpaid accrued Base Salary through the date of his death.
(b) Disability. If the Company delivers to the Executive a notice of the
termination of this Agreement due to the disability (as hereinafter defined) of
the Executive, all obligations of the Company hereunder shall terminate, except
that Executive shall be entitled to payment of any unpaid accrued Base Salary
through the date of termination. For purposes of this section, Executive shall
be deemed "disabled" if he shall be unable to perform a significant and
substantial part of his duties and responsibilities in connection with the
conduct of the business and affairs of the Company and such inability lasts for
(i) a period of at least one hundred twenty (120) consecutive days, or (ii)
periods aggregating at least one hundred eighty (180) days during any three
hundred sixty five (365) consecutive days, by reason of his physical or mental
disability, whether by reason of injury, illness or similar cause.
(c) Termination for Cause. The Company may at any time during the Term,
terminate this Agreement and discharge the Executive for Cause, whereupon the
Company's obligation to pay compensation or other amounts payable hereunder to
or for the benefit of the Executive shall terminate on the date of such
discharge. Such termination may be made by the Company without prior notice,
except for terminations made pursuant to clauses (i), (ii) and (v) below, in
which instances the Executive shall be given a reasonable opportunity to cure
the breach. As used herein the term "Cause" shall mean: (i) a willful and
material breach by Executive of the terms of this Agreement, (ii) willful
violation of specific and lawful written direction from the Board of Directors
of the Company; provided such direction is not inconsistent with the Executive's
duties and responsibilities the Executive is holding at the time of the
directive; (iii) fraud, embezzlement or other material dishonesty by the
Executive with respect to the Company or any of its Affiliates; (iv) conviction
of the Executive of a felony by a federal or state court of competent
jurisdiction; and (v) the Executive's willful failure to perform (other than by
reason of disability), or gross negligence in the performance of his duties. The
obligations of the Executive under the restrictive covenants set forth in
Sections 2.1 through 2.5 shall continue notwithstanding termination of the
Executive's employment pursuant to this Section 1.6(c).
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(d) Termination Without Cause. If the Company terminates this Agreement
without Cause by providing written notice to the Executive, the Company shall
pay the Executive, upon termination, the amount required pursuant to Section
1.7. The obligations of the Executive under the restrictive covenants set forth
in Sections 2.1 through 2.5 shall continue notwithstanding termination of the
Executive's employment pursuant to this Section 1.6(d).
1.7 Severance. In the event that Executive's employment hereunder shall be
terminated by the Company without Cause (as defined in Section 1.6(c) hereof) at
any time, the Executive shall be entitled to receive from the Company, in
addition to any Base Salary earned to the date of termination, and a severance
amount equal three (3) times the Executive's current Base Salary in effect on
the date of termination and the immediate vesting of any unvested Options
(together, the "Severance"). The Severance shall be paid in monthly increments
during the year following such termination. In the event of such termination,
the amounts due hereunder shall be payable without offset or defense or any
obligation of the Executive to mitigate damages.
ARTICLE II
RESTRICTIVE COVENANTS
2.1 Non-Competition. The Executive agrees that at all times while he is
employed by the Company and, regardless of the reason for termination of his
employment or this Agreement, for a period of two (2) years thereafter (the
"Restrictive Period"), unless the Executive is not paid all amounts due to him
under this Agreement, he will not, as a principal, agent, employee, employer,
consultant, stockholder, investor, director or co-partner of any person, firm,
corporation or business entity other than the Company, or in any individual or
representative capacity whatsoever, directly or indirectly, without the express
prior written consent of the Company:
(a) engage or participate in any business which competes with the
Company, which business is the manufacturing, marketing, and sale of motor
equipments;
(b) aid or counsel any other person, firm, corporation or business
entity to do any of the above;
(c) become employed by a firm, corporation, partnership or joint venture
which competes with the business of the Company; or
(d) approach, solicit business from, or otherwise do business or deal
with any customer of the Company in connection with any product or service
competitive to any provided by the Company.
2.2 Non-solicitation of Employees. During the Term, the Restriction Period,
the Executive shall not in any manner, directly or indirectly, as an individual
on his own account or as an independent contractor, consultant, partner or joint
venturer, or as an employee, representative or agent of another Person, or as an
officer, director, owner or shareholder of such other Person, or otherwise (a)
solicit, induce or encourage or attempt to solicit, induce or encourage, any
employee of the Company to leave the Company, (b) hire any employee of the
Company or (c) otherwise interfere with the Company's employment relationship
with any employee. The word "employee" in this Section 2.2 means any person who
is or was employed by the Company or any of its affiliates at the time of, or
within 180 days prior to, such solicitation, inducement, encouragement, hiring
or interference.
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2.3 Non-interference with Contract. During the Term and, unless the Company
terminates the Executive without Cause, the Restriction Period, other than in
connection with, for the benefit of, or in furtherance of the Company's
business, the Executive shall not in any manner, directly or indirectly, as an
individual on his own account or as an independent contractor, consultant,
partner or joint venturer, or as an employee, representative or agent of another
Person, or as an officer, director, owner or shareholder of such other Person,
or otherwise, solicit, encourage or induce, or attempt to solicit, encourage or
induce, any vendor, supplier or other third party with whom the Company is doing
business or has a contract as of the Date of Termination, to terminate such
vendor's, supplier's or other third party's business relationship or contract
with the Company.
2.4 Confidentiality. The Executive recognizes that, by virtue of the
Executive's employment with the Company, the Executive will have access to
Confidential Information (as defined below) relating to the Company's business.
The Executive agrees that such Confidential Information is a valuable asset, and
if it were to be known or used by others engaged in a similar business, it would
be harmful and detrimental to the Company's interests. Accordingly, except as
may be required or appropriate for the performance of the Executive's duties in
the normal course of business, or unless specifically authorized in writing by
the Board, the Executive shall not use or disclose, either during or after the
Term, any Confidential Information, except for any Confidential Information
required to be disclosed by law or to comply with a request by a court or
governmental authority (pursuant to a subpoena or otherwise), but only if the
Executive promptly notifies the Company of the required or requested disclosure
so the Company may seek a protective order to prevent disclosure of such
Confidential Information.
For purposes of this Agreement, "Confidential Information" shall mean any
and all information relating to the business, finances, customers, clients and
operations of the Company, whether obtained by or furnished to the Executive
before or after the date hereof, and regardless of the manner in which it is
obtained or furnished. Confidential Information does not include, however,
information which: (a) is or becomes generally available to the public other
than as a result of an impermissible disclosure by the Executive; (b) was known
by or made available on a non-confidential basis to the Executive prior to his
employment with the Company, or (c) becomes available to the Executive on a
non-confidential basis from a Person other than the Executive who is not known
by the Executive to be bound by a confidentiality agreement with or other
obligation of secrecy to the Company.
2.5 Breach of Restrictive Covenants. The period of time during which the
Executive is prohibited from engaging in business practices pursuant to the
restrictive covenants set forth in Sections 2.1 through 2.3 shall be extended by
the length of time during which the Executive is in breach of any such covenant.
2.6 Condition Precedent. So long as the Company is in compliance with its
obligations under Section 1.7, the restrictive covenants set forth in Sections
2.1 through 2.5 are essential elements of this Agreement and enforceable by the
Company, and, but for the Executive's agreement to comply with such covenants,
the Company would not have entered into this Agreement. Such covenants are for
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the benefit of the Company and may be enforced by the Company and by any Person
succeeding to the business of the Company pursuant to a merger or purchase of
all or substantially all the assets or outstanding voting stock of the Company.
Except as otherwise provided in the first sentence of this Section 2.6, such
covenants by the Executive shall be construed as agreements independent of any
other provision contained in this Agreement, and the existence of any claim or
cause of action of the Executive against the Company, whether predicated on this
Agreement or otherwise, shall not constitute a defense to the enforcement by the
Company of such covenants.
2.7 Injunctive Relief. The Executive acknowledges that the services to be
rendered by Employee under this Agreement are extraordinary and unique and are
vital to the success of the Company, and that damages at law shall be an
insufficient remedy in the event that the Executive violates or threatens to
violate any of the terms of Sections 2.1 through 2.5, and the Company shall be
entitled, upon application to a court of competent jurisdiction, to seek
injunctive relief (including temporary restraining orders) to enforce any or all
of the provisions of said sections, without being required to show any actual
damage or to post an injunction bond or other security. The foregoing injunctive
relief shall be in addition to any other rights and remedies available under
applicable laws.
ARTICLE III
MISCELLANEOUS
3.1 Notices. All notices, requests, demands and other communications
required or permitted under this Agreement and the transactions contemplated
herein shall be in writing or electronically and shall be deemed to have been
duly sent, given, made and received when personally delivered, or when sent by
confirmed telecopy or other electronic means or one business day after deposit
with a nationally recognized overnight courier, specifying next day delivery,
with written verification of receipt, addressed as set forth below:
If to the Executive:
Xxxxx Xxxxxxx
000 Xxxxxx Xxxx Xxxx
Xxxxxxxxxxxx, XX 00000
Fax:
Phone: 000.000.0000
Email: xxxxxx.xxxxxxx@xxxxxxx.xxx
If to the Company:
Tian Fu Yang
c/o Harbin Electric, Inc.
Fax: 00.000.00000000
Phone: 00.000.00000000
Email: xxxxxxx@xxxx-xxxx.xxx
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With a copy to:
Xxxxxx X. Xxxxx
Xxxx Xxxxx LLP
Xxx Xxxxxxxxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Fax: (000) 000-0000
Phone: (000) 000-0000
Email: xxxxxx@xxxxxxxxx.xxx
Any party may alter the address to which communications or copies are to be
sent by giving notice of such change of address in conformity with the
provisions of this section for the giving of notice, which shall be effective
only upon receipt.
3.2 Severability. The provisions of this Agreement are independent of and
severable from each other, and no provision shall be affected or rendered
invalid or unenforceable by virtue of the fact that for any reason any other or
others of them may be invalid or unenforceable in whole or in part. If any
provision of this Agreement is held to be unenforceable for any reason, it shall
be adjusted rather than voided, if possible, in order to achieve the intent of
the parties to the extent possible.
3.3 Entire Agreement; Amendment. This Agreement contains the entire
understanding between the parties hereto with respect to the subject matter
hereof and supersedes all prior and contemporaneous agreements and
understandings, inducements or conditions, express or implied, oral or written,
except as herein contained. This Agreement may not be modified or amended other
than by an agreement in writing executed by the parties hereto.
3.4 Waiver. Neither the failure nor any delay on the part of either party
to exercise any right, remedy, power or privilege under this Agreement shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, remedy, power or privilege preclude any other or further exercise of the
same or of any other right, remedy power or privilege, nor shall any waiver of
any right, remedy, power or privilege with respect to any occurrence be
construed as a waiver of such right, remedy, power or privilege with respect to
any other occurrence.
3.5 Interpretation. The parties hereto acknowledge and agree that (i) each
party and each party's counsel have reviewed and negotiated the terms and
provisions of this Agreement and have contributed to its revision, (ii) the rule
of construction to the effect that any ambiguities are resolved against the
drafting party shall not be employed in the interpretation of this Agreement,
and (iii) the terms and provisions of this Agreement shall be construed fairly
as to all parties hereto and not in favor of or against any party regardless of
which party was generally responsible for the preparation of this Agreement.
3.6 Headings. The headings of paragraphs herein are included solely for
convenience of reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement.
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3.7 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without giving effect to its
principles of conflict of laws.
3.8 Survival. The covenants and agreements of the parties set forth in
Sections 1.6 and 1.7 and, Article II are of a continuing nature and shall
survive the expiration, termination or cancellation of this Agreement,
regardless of the reason therefore and in a manner consistent with the
applicable section.
3.9 Binding Effect. This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the parties hereto and their respective heirs,
personal representatives, successors and assigns, including any direct or
indirect successor by purchase, merger, consolidation or otherwise to all or
substantially all of the activities or assets of the Company. The Company shall
require and cause 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, by written agreement in form and substance satisfactory
to the Executive, expressly to assume and agree to perform this Agreement in the
same manner and to the same extent that the Company would be required to perform
if no such succession had taken place; provided, however, that any such
succession or assignment shall not relieve the Company from its continuing
responsibility and liability for the complete payment and performance of all
obligations owed to the Executive under this Agreement.
3.10 Forum Selection. Any litigation based hereon or arising out of, under
or in connection with this Agreement, may be brought and maintained
non-exclusively in the courts of the State of New York or in the United States
District Court for the District of New York.
3.11 Counterparts. This Agreement may be executed in counterparts and
multiple originals, each of which shall be deemed to be an original but all of
which together will constitute one and the same instrument.
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IN WITNESS WHEREOF, the Company has caused this AGREEMENT to be executed by
its duly authorized representative, and the Executive has signed this Agreement,
all as of the day and year first above written.
HARBIN ELECTRIC INC.
By: /s/ Xxxxxx Xxxx
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Title: CEO&Chairman
EXECUTIVE
/s/ Xxxxx X. Xxxxxxx
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Xxxxx X. Xxxxxxx
