EMPLOYMENT AGREEMENT
Exhibit
10.1
THIS
EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into as of the
27th
day of November, 2007 and shall be deemed to be effective on the 15th day of
December, 2007 (the "Effective Date") by and between Xxxxxxx Xxxxx Xxxx, an
individual residing at 00 Xxxxxxxxxx Xxxx, Xxxxxxxx, Xxx Xxxx 00000 (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 Investor Relations ("EVP") of the Company. Subject
to
the direction of the Board of Directors (or equivalent body) of the Company
(the
"Board"), the Executive, in her capacity as EVP, shall oversee global investor
relations outside of mainland PRC, capital formation and market integration,
and
other general corporate development activities. She shall perform all functions
necessary to conduct investor relations and other activities necessary in the
U.S.
1.3
Commitment. Throughout the term of this Agreement, the Executive shall
diligently and faithfully devote her full-time efforts to the performance of
her
duties hereunder in a manner that will further the business and interests of
the
Company. For so long as the Executive remains employed by the Company hereunder,
the Executive may not engage in any other business for her 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 her duties to the
Company.
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1.4
Term.
The term of this Agreement shall commence on the Effective Date and shall
continue for a period of 48 months until 15th day of December, 2011 (the
"Initial Term Date"), unless earlier terminated in accordance with Section
1.6.
Thereafter, the term of this Agreement shall automatically extend for additional
48 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 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 $100,000 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 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
260,000 shares of the Company's common stock (the "Common Stock") at an exercise
price $15.60, the closing price on November 26, 2007, the date that this
agreement is signed. One-fifth (1/5) of the Options (52,000 shares) shall vest
immediately. The remaining Options shall vest over a 3-year period, with 13.33%
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 her 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 her dependent family members in the Health Plan,
the
Company will reimburse the Executive $800.00 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 her 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.
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(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.
(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 her 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 her death and all obligations of
the
Company hereunder shall terminate on such date, except that the Executive's
estate or her designated beneficiary shall be entitled to payment of any unpaid
accrued Base Salary through the date of her 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 she shall be unable to perform a significant and substantial
part
of her 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 her 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 her 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 she is employed
by
the Company and, regardless of the reason for termination of her 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 her under this
Agreement, she 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;
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(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
her 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.
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 her 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.
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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
her
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
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.
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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:
Xxxxxxx
X. Xxxx
00
Xxxxxxxxxx Xxxx
Xxxxxxxx,
XX 00000
Fax: 000-000-0000
Phone:
000-000-0000
Email:
xxxxxxxxxxx@xxxxx.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
With
a
copy to:
Xxxxxxxx
X. Xxxxxxxx
XXXX
& XXXX LLP
000
Xxxx
Xxxxxx
Xxx
Xxxx,
XX 00000
Fax: 000.000.0000
Phone:
000.000.0000
Email:
xxxxxxxxx@xxxx.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.
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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.
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.
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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.
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HARBIN
ELECTRIC INC.
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By:
/s/ Xxxxxx Xxxx
|
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Title:
CEO & Chairman
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EXECUTIVE
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/s/
Xxxxxxx X. Xxxx
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Xxxxxxx
X. Xxxx
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