Management Agreement of Chi Shing NG, Chief Executive Office and Founder of China Digital Media Corporation EMPLOYMENT AGREEMENT
EXHIBIT
10.1
Management
Agreement of
Chi
Xxxxx XX, Chief Executive Office and Founder of China Digital Media
Corporation
This
Employment Agreement (this “Agreement”) dated as of this 15tht
day of
December, 2005,, and to be effective as of January 1, 2006 (the "Effective
Date"), by and between China Digital Media Corporation., a Nevada corporation
(the “Company”), and Chi Xxxxx XX, a resident of Hong Kong SAR (the
“Executive”).
W
I T N E S S E T H:
WHEREAS,
the Company is engaged in and seeks to expand its business in the media,
broadcasting, television commercials and related industry segments, and the
Executive has substantial experience in managing and operating businesses and
as
a senior management executive that would be very beneficial to the Company’s
operations and future prospects;
WHEREAS,
the Company believes its progress and its prospects for future development
and
growth would be significantly enhanced if the Executive were to serve as the
Company’s Chief Executive Office (“CEO”);
WHEREAS,
the Board of Directors of the Company (the “Board”) has authorized this
Agreement with the Executive and has approved its terms and conditions, all
of
which the Board has found to be reasonable, proper, and in the best interest
of
the Company;
WHEREAS,
the Company and the Executive desire to set forth the terms and conditions
pursuant to which the Executive will be employed by the Company;
and
WHEREAS,
the Executive is willing to be employed by the Company pursuant to the terms
and
conditions set forth herein;
NOW
THEREFORE, in consideration of the foregoing premises and of the mutual
covenants and undertakings contained herein, the parties to this agreement
hereby agree as follows:
ARTICLE
I
EMPLOYMENT
DUTIES AND COMPENSATION
1.01
(a) Initial
Terms of Employment and Duties. The
Company and the Executive hereby agree that for a thirty-six (36) month period
beginning on the Effective Date, the Company shall employ the Executive as
the
CEO and the Executive shall perform services for the Company at the Company’s
headquarters location. The last day of such thirty-six (36) month period shall
be the "Termination Date" for purposes of this Agreement.
(b) Renewal
of Term. Unless
the Company shall have given the Executive written notice at least 180 days
prior to the Termination Date, this Agreement shall renew and continue in effect
for additional one-year periods (and all provisions of this Agreement shall
continue in full force and effect), and each successive anniversary from such
original Termination Date shall thereafter be designated as the “Termination
Date” for all purposes under this Agreement, provided, however, that the Company
may, at its election at any time after the expiration of the initial term of
this Agreement, give the Executive notice of termination, in which event the
Executive shall continue to receive, as severance pay, his base salary, if
any,
and benefits set forth in Paragraphs (d) and (f) below for 12 full months
following such notice of termination. During such 12-month severance period,
the
Board may modify the Executive’s duties as described in Paragraph (c) below
without triggering the provisions of Section 2.03 below. The Company agrees
that
it will not unreasonably withhold any annual renewals of this
Agreement.
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(c)
Duties:
As
the
CEO of the Company, the Executive shall carry out the strategic plans and
policies as established by the Board of Directors of the Company and shall
report to the Board of Directors. The Executive’s duties shall include but not
be limited to the following:
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(i)
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Supporting
the operations and administration of the Board of Directors by advising
and informing Board members with regard to the operations of the
Company
and interfacing between the Board and the staff of the Company;
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(ii)
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Overseeing
the design, marketing, promotion, delivery, and quality of company
programs, products, and services;
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(iii)
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Working
with the CFO, recommending a yearly budget for Board approval and
prudently managing the Company’s resources within those budgetary
guidelines according to current laws and regulations;
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(iv)
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Effectively
managing the human resources of the organization according to authorized
personnel policies and procedures that fully conform to current laws
and
regulations;
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(v)
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Recruit
and train executive staff for Company and promote its mission programs,
products, and services are consistently presented in strong, positive
image to relevant stakeholders.
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As
the
Executive shall be entitled to exercise all rights and power and shall have
all
the privileges and authorities commensurate with his offices, including without
limitation:
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(i)
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The
full authority for the operations and conduct of the business of
the
Company;
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(ii)
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General
decision-making authority with respect to the day-to-day operations
of the
business of the Company;
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(iii)
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The
engagement, retention, and termination of employees and independent
contractors of the Company, the setting of the compensation and other
material terms of employment or engagement of employees and independent
contractors and the establishment of work rules for employees; and
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(iv)
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The
initiation, development, and implementation of new business, subject
to
the approval of and supervision of the Board. The Executive shall
render
his services thereunder in the headquarters city (or other headquarters
location approved by the Board) subject to such reasonable travel
as may
be required to perform his duties hereunder. During the term of
employment, the Executive shall devote such time as is required to
perform
his services hereunder.
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(d) Compensation:
During
the initial term of this Agreement and for each renewal term thereafter, the
Executive’s annual gross base salary pursuant to this agreement shall be as set
forth below:
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(i)
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For
the three-year period immediately following the beginning date above,
$12.00 per year payable at a rate of $1.00 per month for the first
year
hereunder; $14.40 per year payable at a rate of $1.20 per month for
the
second year, $17.28 per year payable at a rate of $1.44 per month
for the
third year.
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(ii)
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For
the second year under this Agreement, if the revenue growth in 2006
comparing to 2005 is over 50%, the Executive’s gross base salary and
compensation package shall adjust to the “Market Rate”. The Market Rate
shall be comparable to rate of pay of a CEO who is employed by a
company
in the similar industry with similar capacity, and such Market Rate
shall
be determined and approved by the
Board.
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Nothing
herein shall be deemed to restrict the right of the Board to increase the
Executive’s annual gross base salary, bonuses, and fringe benefits or grant
stock options at any time in its discretion.
(e) Bonuses.
The
Executive shall be entitled to such bonuses as are described in Exhibit A
attached hereto.
(f) Fringe
Benefits. The
Company shall provide to Executive, during the term of his employment
hereunder:
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(i)
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All
so-called “fringe benefits” including, but not limited to, participation
in pension plans, profit-sharing plans, hospitalization insurance,
medical
insurance, dental insurance, disability insurance, life insurance,
and the
like that are granted to or provided for eligible employees of the
Company, or that may be granted to or provided for during the term
of the
Executive’s employment under this Agreement; and upon termination of
Executive’s services with the Company, the Executive may, at his option
and at his expense, continue the Executive’s hospitalization/medical/
dental/disability and life insurance policy without interruption
until his
death, if permitted by the terms of such group
policies.
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(ii)
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Four
weeks’ paid vacation per year.
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(iii)
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A
monthly housing and auto allowance of $0.00 which will be paid monthly
to
Executive at the first of each month during the period of this contract
or
any renewals hereunder.
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(g) Travel
and Reimbursement of Expenses.
The
Company agrees to pay to on behalf of Executive the cost of travel and other
expenses incurred by Executive on the Company’s behalf. It is understood that
the Company will reimburse Executive for reasonable travel expenses between
the
Company headquarters and other office locations, and Executive’s primary
residences, provided that reasonable efforts are made to manage the costs
associated with travel.
ARTICLE
II
RIGHTS
ON TERMINATION OF EMPLOYMENT
2.01 Right
to Terminate Employment. At
any
time the Executive may, at his option, terminate his employment under this
Agreement upon not less than 30 days’ written notice to the Board of Directors
of the Company given at any time. In the event of the termination of this
Agreement by the Executive, the Executive shall be entitled to:
(i)
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a
portion of his monthly salary and any accrued bonus earned by the
Executive prior to the date of termination, computed pro rata up
to and
including the date of termination.
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2.02 Disability.
If,
because of mental or physical disability, the Executive shall be incapable
for a
period of six consecutive months (the “Disability Period”) of performing his
obligations and agreements hereunder (hereinafter referred to as a “Disability”)
during which period the provision of this Agreement will continue to apply
in
full force and effect, then, at the election of the Company expressed to the
Executive in writing, this Agreement shall terminate at the end of such
Disability Period, except that the Executive shall receive 75% of his base
salary then in effect for one year from the date of termination, together with
the bonuses described on Exhibit A hereto. The Company may at its option
alternatively purchase an insurance policy that will provide the same disability
benefit to the Executive. Additionally, any stock options previously granted
but
not vested shall become vested upon termination for Disability by the Company.
The determination of whether the Executive has suffered a Disability shall
be
made by three licensed medical doctors: one chosen by the Company, one chosen
by
the Executive, and one chosen by the two doctors so chosen.
2.03 Rights
Upon Termination of Employment Without Cause Prior to the
Termination:
The
Company may terminate the Executive’s services without Cause by delivering
written notice of such termination to the Executive. In addition,
any:
(i)
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Material
change of the Executive’s title, responsibilities, or authority by the
Board without the Executive’s concurrence which is not cured within 30
days after notice by the Executive,
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(ii)
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Material
breach by the Company of this Agreement which continues for 30 days
after
notice by the Executive, or
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(iii)
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a
change in control of the Company that is required to be reported
by the
Company on Form 8-K,
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shall
be
deemed termination by the Company without Cause. In the event of termination
pursuant to clauses (i), (ii), or (iii) of the preceding sentence, the Executive
shall be entitled to give notice of termination, which notice shall have the
same effect as a notice delivered by the Company, or
If,
prior to
the Termination Date, the Company terminates the Executive’s employment for any
reason other than Cause or Disability, then the Company shall:
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(i)
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Continue
to pay the Executive (in the same manner as prior to such termination)
after the date of such termination the compensation provided under
Section
1.01 above through the Termination Date as if the Executive had been
employed hereunder during such
period;
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(ii)
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Pay
all bonuses quarterly as if the mutually agreed upon targets were
met;
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(iii)
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Provide
the Executive with continued coverage through the Termination Date
under
any employee benefit plan (as such term is defined in Section 3(3)
of the
Employee Retirement Income Security Act of 1974, as amended) then
maintained by the Company and in which the Executive then participates
or
any successor plan thereof. Notwithstanding 2.03(iii) above, the
Company
hereby agrees to maintain the Executive’s
hospitalization/medical/dental/disability and life insurance policy
in
effect at the time of termination through the full period of this
Agreement, to continue to pay any premium to maintain the policy
through
the full period of this Agreement, and the Executive may, at his
option
and his expense at the end of this Agreement or termination, continue
the
policy without interruption until his death if permitted by the terms
of
such policy.
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2.04 Right
Upon Termination of Employment for Cause
The
Company shall have the right at any time, by giving written notice to Executive
to terminate Executive’s employment for Cause. Cause shall be deemed to have
occurred if the Executive is convicted of a felony or a crime involving fraud,
gross negligence, or significant mismanagement of the business. Upon such
termination for Cause, Executive shall be paid his current monthly salary and
any bonuses earned up to that point, and Executive may exercise any unexercised
options or warrants that are vested. Executive shall forfeit all unexercised
options not then vested.
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2.05 Beneficiaries
of Payments
If
the
Executive shall die before receiving all payments to be made by the Company
to
him pursuant to any of the provisions of this Agreement, all such payments
or
any remaining payments, as the case may be, shall be made by the Company to
such
beneficiary or beneficiaries as the Executive may designate from time to time
by
notice in writing filed with the Company, or if the Executive shall fail or
fail
effectively to designate a beneficiary, or if no beneficiary shall survive
the
date when the last payment is to be made, any remaining payments shall be made
to the Executive’s estate.
ARTICLE
III
PROTECTIONS/CONFIDENTIALITY
3.01
Covenants
Regarding Protections:
The
Executive hereby agrees and covenants to the following:
(a) Solicitation
of Customers and Registered Primary Vendors:
During
the term of this Agreement and for a period of three months following the
termination of this Agreement by either party (other than a termination of
this
Agreement by the Company’s failure to renew it pursuant to Section 1.01(b)
above), the Executive hereby agrees not to solicit or contact in any manner
that
could be reasonably construed as a solicitation, any past or current customer
or
registered primary vendor of the Company for purposes of encouraging such
customer to refrain from purchasing products or services from the Company or
for
purposes of encouraging such vendor to refrain from providing services or
selling products to the Company. Notwithstanding the above, if the Executive
should leave the Company and join a competitive company, it is recognized by
the
parties that the industry utilizes a variety of marketing and sales techniques
such as direct mail, telemarketing, advertising, etc., and the customer might
be
contacted by the Company that the Executive joins as a matter of course, and
in
this event this practice would not be considered a violation of this
Agreement.
(b) Solicitation
of Executives:
During
the term of this Agreement and for a period of three months following the
termination of this Agreement by either party (other than a termination of
this
Agreement by the Company’s failure to renew it pursuant to Section 1.01(b)
above), the Executive hereby agrees not to employ, either directly or indirectly
through any entity in which the Executive is an executive officer, and agrees
not to solicit, or contact in any manner that could reasonably be construed
as a
solicitation, any executive officer or director of the Company for purposes
of
encouraging such person to leave or terminate his employment with the
Company.
3.02 Confidentiality;
Competitive or Personal Disparagement:
The
Executive and the Company hereby agree that neither will, during the term of
the
Executive’s employment or at any time following the termination hereof for any
reason, do or cause to have done any of the following:
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(i)
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Without
the prior written consent of the other party, use for its own purposes
or
disclosure to any person or other entity any confidential and/or
proprietary information of the Company or the Executive;
and
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(ii)
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Each
party agrees that it will not disparage the other
party.
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3.03 Enforcement:
The
Executive and the Company recognize that the provisions of this Agreement are
vitally important to the continuing welfare of the Company and the Executive
and
that money damages constitute an inadequate remedy for any violation thereof.
Accordingly, in the event of any such violation by the Executive or the Company,
the Company or the Executive, in addition to any other remedies it may have,
shall have the right to institute and maintain a proceeding to compel specific
performance thereof or to issue an injunction restraining any action by the
Executive or the Company in violation of the Agreement.
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ARTICLE
IV
4.01 Indemnifications:
The
parties agree that the Executive shall be indemnified by the Company against
any
liability asserted against the Executive (and expenses, including without
limitation, reasonable attorney’s fees, court costs, and other legal expenses
incurred in connection therewith) by reason of his position with the Company
or
any subsidiary to the full extent a Nevada corporation may indemnify an officer
or director under the Nevada General Corporate Law.
4.02 No
Obligation to Mitigate Damages:
In
the
event of a termination of employment upon a change in control, the Executive
shall not be required to mitigate damages by seeking other
employment.
4.03 Arbitration
and Remedies:
(a)
All
disputes, differences, or questions between the parties concerning the
construction, interpretation, and effect of the Agreement, or the rights,
obligations, and liabilities of the parties, and which have as their sole remedy
monetary damages, will be settled by arbitration in Nevada, or such other place
as the parties may mutually agree. In the case of a dispute, difference, or
question, one party shall appoint its arbitrator and shall notify the other
party in writing (the “Arbitration Notice”) of the appointment and the matter to
be determined. If the party receiving the arbitration notice fails to appoint
an
arbitrator and notify the first party of such appointment for 15 days after
receipt of such notice, the decision of the arbitrator appointed by the first
of
the parties shall be final and binding on both of the parties hereto. If two
arbitrators are appointed, they shall meet within 30 days after appointment
of
the second arbitrator. If they do not agree as to their decision, they shall
choose a third arbitrator, failing which third arbitrator shall be selected
in
accordance with the rules of the American Arbitration Association. The
arbitration shall be held as promptly as possible at such time and place in
the
designated city as the arbitrators may determine. The decision of the
arbitrators so appointed, or a majority of them, will be final and binding
upon
the parties hereto. Judgment upon the award may be entered in any court having
jurisdiction, or application may be made to such court for judicial acceptance
of the award and an order to enforce, as the case may be. If the arbitrator
appointed refuses to act, is incapable of acting, or dies, a substitute for
him
shall be appointed in the manner provided above.
(b)
Each
of
the parties to the Agreement will be entitled to enforce its rights under the
Agreement specifically, to recover damages by reason of any breach of any
provision of this Agreement and to exercise all other rights existing in its
favor. The parties hereto agree and acknowledge that money damages may not
be an
adequate remedy for any breach of the provisions of the Agreement and that
any
party may, in its sole discretion, apply for specific performance and/or
injunctive relief in either a federal or state court to enforce or prevent
any
violations of the provisions of this Agreement.
4.04 Legal
Cost and Indemnification:
The
Company shall pay the Executive all legal fees and expenses incurred by him
as a
result of his termination without Cause or Disability, including but not limited
to, all such fees and expenses, if any, incurred in contesting or disputing
any
such termination or in seeking to obtain or enforce any right or benefit
provided in this Agreement through legal process or arbitration, if the
Executive shall be wholly successful on the merits, such amounts not to exceed
any court-directed maximum.
4.05 Notices:
(a)
Any
notice to be given concerning this Agreement shall be given in writing and
either (i) sent by certified or registered mail, return receipt requested,
postage prepaid; or (ii) hand-delivered to the recipient personally. In the
case
of notice sent by mail, the date of the giving of the notice shall be deemed
to
be (i) the date of the postmark of the executed return receipt or (ii) the
date
of actual receipt if not postmarked by the United States Postal Service. In
the
case of notice being hand-delivered, a written dated receipt shall be given
therefor. Hand-delivery of any notice to the Company shall be delivered to
the
Company’s chief financial officer personally.
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(b)
Notice
shall be sent as follows:
If
to the
Executive: Chi
Xxxxx
XX
If
to the
Company: China
Digital Media Corporation
2505-06,
Stelux House, 698 Xxxxxx Xxxxxx Road East,
Kowloon,
Hong Kong
(c)
By
giving
notice to all other parties, any party may, from time to time, designate a
different address to which notice by mail to such party shall be
sent.
4.06 Successors
and Assigns; Survival in Case of Merger:
(a)
This
Agreement is intended to bind and inure to the benefit of, and be enforceable
by, the Executive and the Company and their respective successors and
assigns.
(b) Without
limiting the effect of the foregoing, this Agreement and all of its terms shall
survive, and be enforceable by the Executive, notwithstanding any merger,
consolidation, combination, or reorganization of the Company with or into any
other entity or person (“Surviving Entity”), including but not limited to any
other corporation, partnership, or other similar organization, whether or not
the Company is the Surviving Entity of such merger, consolidation, combinatiuon,
or reorganization. The Surviving Entity shall be bound by this Agreement to
the
same extent as if such Surviving Entity had entered into the Agreement with
the
Executive on the Effective Date.
(c) As
a
condition of any merger, consolidation, combination, or reorganization of the
Company as discussed in Section 4.06(b) above, the Company agrees to include,
as
a condition of consummation of such merger, consolidation, combination, or
reorganization, an undertaking by the Surviving Entity, pursuant to which the
Surviving Entity shall agree in writing to be bound by this
Agreement.
4.07 Amendment;
Waiver:
No
amendment or other modification of this Agreement nor any waiver of any term
of
this Agreement shall be valid unless it is in writing and signed by the party
against whom enforcement of the amendment, modification, or waiver is sought.
No
waiver by any party of the breach of any term contained in this Agreement,
whether by conduct or otherwise, in any one or more instances, shall be deemed
to be or construed as a further or continuing waiver of any such breach of
any
other term of this Agreement.
4.08 Further
Assurances:
Each
party hereto agrees to perform any further acts and to execute and deliver
any
further documents mutually agreed to in writing that may be reasonably necessary
to carry out the provisions of this Agreement.
4.09
Severability:
In
the
event that any of the provisions, or portions thereof, of this Agreement are
held to be unenforceable or invalid by any court of competent jurisdiction,
the
validity and enforceability of the remaining provisions, or portions thereof,
shall not be affected thereby.
4.10 Construction:
Whenever
used herein, the singular number shall include the plural, and the plural number
shall include the singular.
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4.11 Gender:
Any
references hereto to the masculine gender, or to the masculine form of any
noun,
adjective, or possessive, shall be construed to include the feminine or neuter
gender and form, and vice versa.
4.12 Headings
The
headings contained in this Agreement are for purposes of reference only and
shall not limit or otherwise affect the meaning of any of the provisions
contained hereof.
4.13 Multiple
Counterparts:
This
agreement may be executed in multiple counterparts, each of which shall be
deemed to be an original but all of which together shall constitute one and
the
same instrument.
4.14 Governing
Law:
THIS
AGREEMENT HAS BEEN EXECUTED IN AND SHALL BE COVERED BY THE LAWS OF THE STATE
OF
NEVADA AND THE OBLIGATIONS OF THE PARTIES HERETO SHALL BE PERFORMABLE IN
NEVADA.
4.15 Inurement:
Subject
to the restrictions against transfer or assignment as herein contained, the
provisions of the Agreement shall inure to the benefit of, and shall be binding
on, the assigns, successors in interest, personal representatives, estates,
heirs, and legatees of each of the parties thereto.
4.16 Waiver:
No
waiver
of any provision or condition of this Agreement shall be valid unless executed
in writing and signed by the party to be bound thereby and then only to the
extent specified in such waiver. No waiver of any provision or condition of
this
Agreement shall be construed as a waiver of any other provision or condition
of
this Agreement and no present waivers of any provision or condition of this
Agreement shall be construed as a future waiver of such provision or
condition.
4.17 Entire
Agreement:
This
Agreement contains the entire understanding between the parties hereto
concerning the subject matter contained herein.
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IN
WITNESS WHEREOF, the parties to the Agreement have set their respective hands
hereto as of the date first written above.
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THE
EXECUTIVE
Chi
Xxxxx XX
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By:
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/s/ Chi
Xxxxx XX
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By:
Chi Xxxxx XX
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THE
COMPANY
China
Digital Media Corporation
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By:
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/s/
Xxxxxx Xxx
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Name: Xxxxxx Xxx |
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Title: Chief
Financial Officer
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EXHIBIT
A
BONUSES
·
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Period
of Contract and Renewals:
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Executive
will be eligible for a bonus of up to 0% of his base first year annual salary;
payable quarterly based upon the completion of Company objectives and
performance criteria to be mutually agreed upon by Executive and the Board
of
Directors at the beginning of each year. The bonuses to the Executive shall
be
reviewed annually after the first year.
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