EXHIBIT 10.1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") dated as of June 14, 2002,
by and among the following three parties:
(1) Flow Traffic Limited, a company incorporated in the Hong Kong Special
Administrative Region of the People's Republic of China ("Hong Kong"),
with its principal offices at Suites 1106-07 Gitic Centre, 00 Xxxxxx
Xxxx Xxxx, Xxxxxxx, Xxxx Xxxx (the "Company");
(2) Mr. Mats Xxxxx Xxxxxx, an individual resident of Hong Kong, with his
residence at 31st floor, Xxxx X, Xxx Xxxxxxxx Xxxxx, Xxx Xxxxxx, Xxxx
Xxxx (the "Executive"); and
(3) Image Sensing Systems, Inc., a company incorporated under the laws of
the State of Minnesota, United States of America, with its principal
offices at 500 Spruce Tree Centre, 0000 Xxxxxxxxxx Xxxxxx Xxxx, Xx.
Xxxx, Xxxxxxxxx (the "Guarantor").
WITNESSETH:
WHEREAS, the Company desires to secure the services of Executive, and
Executive desires to accept employment with the Company, upon the terms and
conditions set forth herein.
WHEREAS, the parties are able to reach this Agreement because the
Guarantor has agreed to guarantee to the Executive the performance of the
Company's obligations in accordance with this Agreement.
WHEREAS, the Executive acknowledges the benefit that the Guarantor is
providing by guaranteeing to the Executive the performance of the Company's
obligations in accordance with this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter set forth, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Executive, the
Company and the Guarantor, intending legally to be bound, hereby agree as
follows, effective as of April 1, 2002 (the "Effective Date").
1. EMPLOYMENT
1.1 As of the Effective Date, the Company agrees to employ the Executive
and the Executive agrees to accept employment as General Manager of the
Company. For statutory purposes, however, the Executive's continuous
employment commenced on February 1, 1999. The Executive's position and
duties on behalf of the Company may be changed from time to time at the
discretion of the Board of Directors of the Guarantor.
2. COMPENSATION AND BENEFITS
2.1 Effective as of the Effective Date, the Company shall pay to the
Executive the base compensation and benefits set forth in Schedule I.
Such base compensation and benefit arrangements shall be subject to
annual review by the Board of Directors of the Guarantor no later than
April 1 in each year, beginning April 1, 2003.
2.2 In addition to the base compensation payable to the Executive pursuant
to Section 2.1, the Executive shall be eligible to receive incentive
compensation in the form of a bonus based on operating results of the
Company for the year ended December 31, 2002, as set forth in Schedule
1. The Executive shall be eligible to receive incentive compensation
relating to subsequent years in accordance with bonus plans which shall
be established by the Board of Directors of the Guarantor no later than
April 1 of each such year.
3. DUTIES OF THE EXECUTIVE
3.1 During the term of Executive's employment under this Agreement, the
Executive agrees to perform such reasonable employment duties as the
Board of Directors of the Guarantor shall assign to him from time to
time.
3.2 The Executive shall, unless prevented by incapacity:
a. under this Agreement devote the whole of his time, attention
and ability to the carrying out of his duties set out in the
Agreement, and in all respects comply with reasonable
directions and regulations given or made by the Board of
Directors of the Guarantor, and shall well and faithfully
serve the Company, the Guarantor and the Group Companies;
b. faithfully and diligently perform those duties and exercise
such powers consistent with them which are from time to time
assigned to or vested in him;
c. obey all lawful and reasonable directions of the Board of
Directors of the Guarantor;
d. use his reasonable endeavors to promote the business interests
of the Company, the Guarantor and the Group Companies;
e. if and for so long as the Board of Directors of the Guarantor
may reasonably require, act as an officer of and carry out
duties for any Group Company or hold any other appointment or
office as nominee or representative of the Company, the
Guarantor or any Group Company;
f. work such hours as are reasonably necessary to properly
undertake the duties assigned to him and, so far as
practicable, to adhere to the normal hours of his place of
employment; and
g. if called upon to do so and without any further remuneration
other than is hereafter mentioned, perform his duties either
at the offices of the Company in
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Hong Kong or elsewhere as the Board of Directors of the
Guarantor may in its reasonable discretion from time to time
require for the performance of such duties.
3.3 Subject to any regulations from time to time issued by the Company
and/or the Guarantor which may apply to him, the Executive shall not
receive or obtain, directly or indirectly, any discount, rebate,
commission or other inducement in respect of any sale or purchase of
any goods or services effected or other business transaction (whether
or not by him) by or on behalf of the Company, the Guarantor or any
Group Company, and if he (or any firm or company in which he is
directly or indirectly engaged, concerned or interested) shall obtain
any such discount, rebate, commission or inducement he shall
immediately account to the Company for the amount received by him or
the amount received by such firm or company.
4. CONFLICT OF INTEREST
4.1 During the continuance of his employment the Executive shall not
(unless otherwise agreed in writing by the Board of Directors of the
Guarantor) undertake any other business or profession, or be or become
an employee or agent of any other company, firm or person or assist in
any other business or profession. However, nothing in this paragraph
shall preclude the Executive from holding or acquiring, by way of bona
fide investment only, shares representing no more than five percent of
the issued equity capital of any company quoted or dealt with on a
recognized stock exchange unless the Board of Directors of the
Guarantor shall require him not to do so in any particular case on the
ground that such other company is or may be carrying on a business
competing or intending to compete with the business of the Company, the
Guarantor or any Group Company. It is agreed by the Company and the
Guarantor that the Executive's interest in Berkeley Development Limited
and the distributor agreement between the Executive and Peek dated May
27, 1998 do not constitute any conflict of interest between the
Executive, on the one hand, and the Company and the Guarantor, on the
other.
5. SHARE DEALINGS
5.1 The Executive shall comply with all U.S. federal and state securities
laws and regulations, including, without limitation, the reporting and
disclosure obligations applicable to him contained in the Securities
Act of 1933, as amended, and the Securities Exchange Act of 1934, as
amended, and the regulations promulgated thereunder, and with any
comparable Hong Kong laws and regulations.
6. CONFIDENTIALITY
6.1 During the term of this Agreement, and all times after the termination
of this Agreement, regardless of the nature of such termination,
Executive covenants and agrees to treat as confidential and not to
disclose, and to use only for the advancement of the interests of the
Company, the Guarantor and the Group Companies, all confidential and
proprietary information and trade secrets of the Company, the Guarantor
or the Group Companies (even if such information or trade secrets
became known to the Executive prior to the
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Effective Date of this Agreement, but while he was otherwise employed
by the Company, the Guarantor and/or any Group Company), including, but
not limited to, customer and prospect lists, customer and prospect
information, plans, information concerning the working of any process
or invention carried on or used by the Company, the Guarantor or any
Group Company, discoveries, marketing techniques, price lists, pricing
policies, information of a third party with respect to which the
Company, the Guarantor or any Group Company is bound by an obligation
of confidence and the Executive is aware of that obligation, and other
confidential or proprietary data of the Company, the Guarantor or any
Group Company. Information shall not be considered confidential or
proprietary if it is generally available in the public domain through
no direct or indirect action of the Executive.
6.2 Upon termination of Executive's employment with the Company, for any
reason, voluntary or involuntary, the Executive shall immediately
return to Employer any property, client lists, written information,
forms, formula, plans, documents or other written or computer material
or data, software or firmware, or copies of the same, belonging to the
Company, the Guarantor or any Group Company, or any of their customers,
within the Executive's possession, and shall not at any time thereafter
copy, reproduce or otherwise facilitate the future disclosure of the
same. Following such termination of employment, the Executive shall not
disclose or use any proprietary, secret or confidential information,
relating to the clients, products, services, equipment, methods of
manufacture, inventions, discoveries or trade secrets, price lists,
computer programs, customer lists, business plans or other confidential
or proprietary information related to the business of the Company, the
Guarantor or any Group Company which the Executive acquires, develops,
designs or produces while employed by the Company and Executive agrees
that all embodiments of such information shall belong to the Company,
the Guarantor and/or the Group Company. The Executive shall not retain
or use for the Executive's account at any time any trade names,
trademarks, service marks, or other proprietary business designation
used or owned in connection with the business of the Company, the
Guarantor or any Group Company. In addition, all notes, memoranda,
books, documents, records and writing made by the Executive relating to
the business of the Company, the Guarantor or any Group Company shall
be and remain the property of the Company, the Guarantor or the Group
Company and shall be returned by the Executive together with any credit
cards, keys or other property of or relating to the business of the
Company, the Guarantor or any Group Company upon request and
immediately upon the termination for any reason.
7. MEDICAL EXAMINATION
7.1 The Company reserves the right at any time during the Executive's
employment (whether or not the Executive is absent from work on account
of sickness) to require, either independently or at the direction of
the Board of Directors of the Guarantor, the Executive to undergo an
examination by a medical practitioner nominated by the Company or the
Board of Directors of the Guarantor, at the expense of the Company, to
determine whether the Executive is fit for further employment, and the
Executive shall authorize such medical practitioner to disclose to and
discuss with an authorized officer
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of the Company or the Guarantor the results of the examination and the
matters which arise from it.
8. INCAPACITY
8.1 If the Executive shall be prevented by illness (including mental
disorder), accident or other incapacity from properly performing his
duties hereunder, he shall report this fact forthwith to the Company
and the Guarantor, and if the Executive is so prevented he shall
provide a medical practitioner's statement on the sixth day and weekly
thereafter. Immediately following his return to work after a period of
absence, the Executive shall complete appropriate documentation
detailing the reason for his absence.
8.2 If the Executive shall be absent from his duties hereunder due to
illness (including mental disorder), accident or other incapacity duly
certified in accordance with the provisions of Section 8.1 hereof he
shall be paid his base salary hereunder for up to 120 days' absence in
any period of 12 months and thereafter such remuneration, if any, as
the Board of Directors of the Guarantor shall in its discretion from
time to time allow; provided that there shall be deducted from or set
off against such remuneration any sickness allowance or other benefit
provided for in the Employment Ordinance (Cap. 57) (or any similar law
then in effect) to which the Executive is entitled whether or not
recovered.
8.3 If the Executive is incapacitated for an aggregate of at least 120
working days in the preceding 12 months, then the Company, at the
direction of the Board of Directors of the Guarantor, may terminate
this Agreement either during or not later than one month after the end
of such period of incapacity in accordance with Section 9.2.
9. TERMINATION OF AGREEMENT
9.1 The Executive may terminate this Agreement for any reason upon six
months' written notice to the Company and the Guarantor; provided,
however, that the effective date of termination may not occur prior to
January 1, 2004.
9.2 The Company may terminate this Agreement for any reason at any time on
or after January 1, 2004, or on an earlier date pursuant to the
provisions of Section 8.3 above, by payment of seven days' wages in
lieu of notice; provided, however, that in the event of any such
termination by the Company, other than a termination pursuant to
Section 9.3 below, the Company shall pay to the Executive severance
equal to one year of Executive's base compensation in effect as of the
date of termination , including salary, holiday passage and housing
allowance but excluding any bonus payments ("Severance Payment");
provided further, however, that there shall be deducted from or set off
against such Severance Payment the payment of seven days' wages in lieu
of notice required by this Section 9.2, and any severance payment, long
service payment or similar payment to which the Executive is entitled
under the Employment Ordinance (Cap. 57) (or any similar law then in
effect).
9.3 The Company may terminate this Agreement at any time without prior
notice, and without the payment of any Severance Payment pursuant to
Section 9.2 hereof, if the Company finds in its discretion that the
Executive: (a) willfully disobeys a lawful and
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reasonable order from the Company or the Guarantor, or from any Group
Company for which the Executive performs services; (b) misconducts
himself, such conduct being inconsistent with the due and faithful
discharge of his duties; (c) engages in fraud or dishonesty; (d) is
convicted of a felony or any crime of fraud or dishonesty; (e) is
habitually neglectful in his duties; or (f) the Company has any other
grounds on which it would be entitled to terminate the Agreement
without notice at common law.
9.4 On the termination of this Agreement for whatever reason, the Executive
shall at the request of the Company or the Guarantor resign from all
other appointments or offices which he holds as nominee or
representative of the Company or any Group Company and if he should
fail to do so within seven days, the Company and/or the Guarantor is
hereby irrevocably authorized to appoint some person in his name and on
his behalf to sign any documents or do any things necessary or
requisite to give effect to these. Such resignation(s) shall be without
prejudice to any claims which the Executive may have against the
Company or the Guarantor arising out of this Agreement or the
termination thereof.
9.5 The Executive shall at all times, either while employed or after
termination of this Agreement, refrain from taking any action or making
any untrue or misleading statements, either written or oral, which are
intended to and do disparage the goodwill or reputation of the Company,
the Guarantor or any Group Company, or their directors, officers,
employees, representatives and agents.
9.6 Notwithstanding any other provision herein to the contrary, the
obligations of the Executive under paragraphs 6, 9.5 and 10 hereof
shall survive the termination (for any reason) of the Executive's
employment under this Agreement.
10. NON-COMPETITION AND NON-SOLICITATION
10.1 The Executive covenants and agrees that in consideration of any
severance or long service payment owed to the Executive upon
termination of this Agreement, for a period beginning on the Effective
Date and continuing until the first anniversary of the termination of
the Executive's employment with the Company for any reason (i.e., 12
months from termination) (the "Non-Competition Period"), the Executive
shall not, directly or indirectly, whether as an employee, independent
contractor, member of limited liability company, partner, shareholder
in a corporation, adviser, consultant, lender, equity investor or
otherwise:
a. be engaged, concerned or interested in any capacity whether as
director, principal, agent, partner, consultant, employee or
otherwise in any other business of whatever kind which is
wholly or partly in competition with the business of the
Company or the Guarantor or the business of any other Group
Company in which the Executive has been involved to a material
extent during the period of 12 months prior to the termination
of his employment for any reason.
b. provide technical, commercial or professional advice to any
business concern which is wholly or partly in competition with
the business of the Company or the
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Guarantor or the business of any other Group Company in which
the Executive has been involved to a material extent during
the 12-month period prior to the termination of his employment
for any reason;
c. provide any service to any Non-Competition Client (as
hereinafter defined) that is of the type of, or otherwise in
any manner directly or indirectly competitive with, any
services provided by the Company, the Guarantor or any Group
Company. As used in this Agreement, "Non-Competition Client"
means any person, company or entity that is or was a client of
the Company, the Guarantor or any Group Company or their
predecessors during the term of the Executive's employment
with the Company, the Guarantor or any Group Company or their
predecessors. (Non-Competition Client shall include all
business units or divisions of the company or entity and shall
not be limited to the business unit or division of the company
or entity that the Company, the Guarantor or any Group Company
or their predecessors had dealings with);
d. solicit or attempt to solicit any Non-Competition Client or
otherwise interfere with the relationship between
Non-Competition Clients for any products or services where
such customers were carrying on trade with the Company, the
Guarantor or any Group Company at any time during the 12
months prior to Executive's termination;
e. interfere or seek to interfere or take steps as may interfere
with the continuance of supplies to the Company, the Guarantor
or any Group Company from any suppliers who have been
supplying components materials or services to the Company, the
Guarantor or any Group Company at any time during the last 12
months of the Executive's employment hereunder.
f. request, induce or attempt to influence any Non-Competition
Client to curtail or cancel any business it transacts with the
Company, the Guarantor or any Group Company;
g. request, induce or attempt to influence any employee or
independent contractor of the Company, the Guarantor or any
Group Company to terminate his or her employment with the
Company, the Guarantor or the Group Company, or attempt to
dissuade any then current employee or independent contractor
of the Company, the Guarantor or any Group Company from
continuing employment with the Company, the Guarantor or the
Group Company.
h. hire (or retain as an independent contractor), on the
Executive's behalf or on behalf of any other party, any person
who is or was an employee or an independent contractor of the
Company, the Guarantor or any Group Company at any time within
one year preceding such person's employment or retention by
Executive or such other party.
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11. ENFORCEMENT; REMEDIES; CONSTRUCTION.
11.1 The Executive acknowledges, covenants and agrees that because the
breach or threatened breach of the covenants, or any of them, contained
in Sections 6, 9.5 and 10 shall result in immediate and irreparable
injury to the Company, the Guarantor and the Group Companies, the
Company and the Guarantor will be entitled to an injunction restraining
the Executive and/or any of the Executive's affiliates, future
employers and entities which the Executive serves as a contractor from
any violation of Sections 6, 9.5 and 10 to the fullest extent allowed
by law.
11.2 The Executive agrees that in the event the Executive breaches the
covenants, or any of them, contained in Sections 6, 9.5 and 10, then
the Non-Competition Period shall be automatically extended by the
length of time any such breach remains continuing.
11.3 The Executive acknowledges and agrees that
a. the covenants in Sections 6, 9.5 and 10 are all reasonable in
all respects and are necessary to protect the legitimate
business and competitive interests of the Company, the
Guarantor and the Group Companies, and
b. each of the covenants set forth in Sections 6, 9.5 and 10 and
the subdivisions thereof is separately and independently
given, and each such covenant is intended to be enforceable
separately and independently of the other such covenants,
including, without limitation, enforcement by injunction;
provided, however, that the invalidity or unenforceability of this
Agreement in any respect shall not affect the validity or
enforceability of this Agreement in any other respect. In the event
that any provision of this Agreement shall be held invalid or
unenforceable by a court of competent jurisdiction by reason of the
scope or duration thereof or for any other reason, such invalidity or
unenforceability shall attach only to the particular aspect of such
provision found invalid or unenforceable as applied and shall not
affect or render invalid or unenforceable any other provision of this
Agreement or the enforcement of such provision in other circumstances,
and, to the fullest extent permitted by law, this Agreement shall be
construed as if the scope or duration of such provision or other basis
on which such provision has been challenged had been more narrowly
drafted so as not to be invalid or unenforceable.
12. GENERAL
12.1 Prior Agreements. This Agreement sets out the entire agreement and
understanding of the parties regarding the Executive's employment by
the Company and supersedes any previous contracts of employment or any
agreements for the provision of services by the Executive to the
Company (which shall be deemed to have been terminated by mutual
consent). The parties hereto acknowledge that (a) the Guarantor, the
Executive and Berkeley Development Limited are entering into an
Amendment to Share Sales and Purchase Agreement dated the date hereof,
(b) the Guarantor and the Executive are entering into a Non-Incentive
Stock Option Agreement dated the date hereof, and (c)
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such agreements shall remain in full force and effect following the
execution of this Agreement.
12.2 Accrued Rights. The expiration or termination of this Agreement however
arising shall not operate to affect such of the provisions of this
Agreement as are express to operate or have effect after then and shall
be without prejudice to any accrued rights or remedies of the parties.
12.3 Definitions. In this Agreement, the expressions "subsidiary" and
"holding company" shall have the respective meanings as defined in
Section 2 of the Companies Ordinance (or any statutory re-enactment
thereof). The Company, any holding company for the time-being of the
Company, any subsidiaries for the time-being of the Company and any
such holding company are collectively called the "Group." Any reference
to a "Group Company" in this Agreement shall mean any company in the
Group.
12.4 Proper Law; Jurisdiction. The validity, construction and performance of
this Agreement shall be governed by the Laws of Hong Kong. The parties
hereby submit to the Hong Kong courts or Labour Tribunal in respect of
any dispute or matter arising out of or in connection with this
Agreement and the Executive's employment hereunder.
12.5 Notices. Any notice or other communication to any party in connection
with this Agreement shall be sent to all other parties to this
Agreement, shall be in writing and shall be sent by personal delivery,
facsimile transmission or express courier requiring signature for
delivery, addressed to such parties at the addresses set forth in the
first paragraph of this Agreement or at such other address as such
parties shall have specified to the other parties hereto in writing.
Any such notice shall be effective on the date of delivery thereof if
manually delivered, the date of sending thereof if sent by facsimile
transmission (with receipt electronically acknowledged), or the second
business day after delivery to an express courier if sent by express
courier; provided that any notice or communication changing the address
of any party shall be effective and deemed given only upon its receipt.
12.6 Personal Data. The Executive unconditionally and irrevocably consents
to the Company's disclosure and/or transfer of any personal data
collected from the Executive and related to his employment under this
Agreement (including without limitation his name, residential address,
nationality, position, remuneration, bank account details and the
contents of this Agreement as may be amended and/or supplemented from
time to time), whether now or in the future, to affiliates of the
Company for purposes that are directly and/or indirectly related to
and/or expedient for the Company's and its affiliates' business
activities and operations.
13. GUARANTEE
13.1 The Guarantor guarantees to the Executive the performance of the
Company's obligations in accordance with this Agreement.
13.2 The Guarantor guarantees to pay, on demand, any sum which the Company
fails to pay to the Executive in accordance with this Agreement.
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13.3 This is a continuing guarantee which will remain in force until all the
Company's obligations under this Agreement have been fulfilled.
13.4 The Guarantor's liability under this paragraph 13 will not be
discharged or affected by any act, omission or circumstance which, but
for this provision, would discharge the Guarantor to any extent,
including any legal limitation, disability or incapacity or any
amendment, waiver or release affecting any of the parties, any other
person, this Agreement or any other document or any change in the
constitution of the Guarantor.
13.5 The Guarantor shall not exercise any rights of subrogation,
contribution, indemnity or set-off or counterclaim against the Company
so long as any obligation of the Company under this Agreement remains
unfulfilled.
13.6 Payments by the Guarantor shall be made without set-off, counterclaim,
withholding or condition of any kind.
13.7 Any guaranteed moneys which are not recoverable from the Company for
any reason will, nevertheless, be recoverable from the Guarantor as
principal debtor, by way of indemnity, on the Executive's demand.
13.8 If the Guarantor fails to pay any sum under this Agreement, including a
sum payable under this paragraph 13.8, on its due date for payment the
Guarantor shall pay default interest on such sum from the due date to
the date of payment (both before and after any judgment) at the rate of
3% per annum above the prime rate of The Hong Kong & Shanghai Banking
Corporation Limited, for Hong Kong Dollars in Hong Kong from time to
time. Such interest shall accrue and be calculated daily (on a 365-day
year basis), be payable on demand and be compounded monthly on the
first day of each calendar month and shall itself bear interest
accordingly.
13.9 The Guarantor hereby represents and warrants to the Executive that the
execution, delivery and performance of this Agreement has been duly
authorized by all necessary action on the part of the Guarantor's board
of directors and the Agreement constitutes a valid and legally binding
obligation of the Guarantor.
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IN WITNESS WHEREOF, this Agreement has been executed by or on behalf of the
parties hereto the day and year first before written.
/s/ Mats Xxxxx Xxxxxx
-----------------
Mats Xxxxx Xxxxxx
In the presence of:
------------------------------------
Name:
FLOW TRAFFIC LIMITED
By: /s/ Xxxxxxx Xxxxxxxx
--------------------
Name: Xxxxxxx Xxxxxxxx
Title: Chairman of the Board
In the presence of:
------------------------------------
Name:
IMAGE SENSING SYSTEMS, INC.
By: /s/ Xxxxx Xxxxxxxx
------------------
Name: Xxxxx Xxxxxxxx
Title: Chief Executive Officer
By: /s/ Xxxxx Xxxxxxxxxxxxx
-----------------------
Name: Xxxxx Xxxxxxxxxxxxx
Title: Director
In the presence of:
------------------------------------
Name:
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Schedule I
(To the Agreement dated June 14, 2002 among
Flow Traffic Limited, Mats Xxxxx Xxxxxx and Image Sensing Systems, Inc.)
Remuneration and Benefits, effective from April 1, 2002:
Base HK$122,000 per month, payable on a 13-month basis
Compensation: (such 13th month payment to be paid in December of
each year), for total annual base compensation of
HK$1,586,000, consisting of salary, holiday passage and
housing allowance (if any) in such proportions as the
Executive may determine from time to time. Executive
agrees to provide notice to the Company of any such
determinations on a timely basis.
Housing That portion of the Executive's base compensation
Allowance: determined by the Executive in accordance with the
provisions set forth above under "Base Compensation."
Incentive The Executive shall be eligible to receive incentive
Compensation: compensation in the form of a cash bonus as follows:
For the year ended December 31, 2002, the Executive shall
be paid, on or before March 31, 2003, a cash incentive
bonus equal to the aggregate of the amounts to which the
Executive may be entitled under each of the following two
paragraphs. Executive's eligibility for a cash incentive
bonus under each such paragraph is based on the
achievement by either the Company of certain net income
targets. In each case, net income shall be determined
after taking into consideration any and all bonuses
required to be paid to Executive and all other employees
by the Company pursuant to this Schedule I and any other
agreements or arrangements with the Company's employees.
- If for the year ending December 31,
2002, the Company, on a
non-consolidated basis, achieves
pre-tax net income of at least
US$181,818, the Executive shall receive
a bonus equal to 10% of such pre-tax
net income; provided, however, that the
maximum bonus payable under this
provision shall be US$25,000.
- If for the year ending December 31,
2002, the Company, on a
non-consolidated basis, achieves
pre-tax net income in excess of
US$250,000, then the Company shall
provide the Executive with a cash bonus
pool equal to 20% of such excess, which
shall be allocated among the Executive
and all other employees of the Company
in the Executive's discretion;
provided, however, that the Executive
may not receive more than 25% of such
bonus pool.
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All bonuses shall be payable, at the Executive's option,
in Hong Kong Dollars at the exchange rate then in effect.
The Executive shall be eligible to receive incentive
compensation relating to subsequent years in accordance
with bonus plans which shall be established by the Board
of Directors of the Guarantor no later than April 1 of
each such year.
Provident The Company shall match the Executive's aggregate
Fund: contributions under the Mandatory Provident Fund Scheme
Ordinance (Cap. 485 of the laws of Hong Kong) and the
Royal Skandia Managed Pension Account (or such other
pension plans as the Executive may nominate), in such
proportions as the Executive may from time to time
direct, up to a maximum of 5% of the Executive's base
compensation.
Option to The Guarantor shall grant to the Executive an option to
Purchase purchase 100,000 shares of the Guarantor's common stock,
Common which option shall be issued pursuant to Guarantor's 1995
Stock of Long-Term Incentive and Stock Option Plan, as amended
Guarantor: from time to time (the "Plan"), and shall be subject
to the terms and conditions of the Plan and a
Non-Incentive Stock Option Agreement between the
Guarantor and the Executive substantially in the form
attached as Exhibit A hereto.
Expenses: Out-of-pocket expenses incurred by the Executive in the
course of business will be reimbursed against periodic
claims.
Medical The Executive shall be eligible to participate in any
Insurance: health care benefit plan established by the
Company for the benefit of employees to the extent that
the Executive meets the requirements for such plan. In
the event no such plan is established or the Executive
does not meet such requirements, the Company will pay
insurance premiums to a medical insurance company
approved by the Board of Directors of the Guarantor to
provide coverage for the Executive and his immediate
family.
Annual Leave: In addition to the statutory holidays, the Executive
shall be entitled to 20 working days' paid annual leave
during each calendar year to be taken at such time or
times as may be agreed by the Company. For the calendar
year during which the Executive's employment under this
Agreement commences or terminates, he shall be entitled
to such proportion of his annual leave entitlement as
the period of his employment in each such year bears to
one calendar year. Upon termination of his employment
for whatever reason he shall, if appropriate, either be
entitled to a payment in lieu of any outstanding annual
leave entitlement or be required to pay to the Company
any salary receive in respect of annual leave taken in
excess of his proportionate annual leave entitlement.
13
