November 14, 2009 Zhong Lin
November
14, 2009
Xxxxx
Xxx
000
Xxxxxx Xxxxxx
Boyaxicheng
Second Floor
Zhengzhou
City, Henan Province
People’s
Republic of China 450007
Dear Xx.
Xxxxx:
I am
pleased to inform that you have been selected to receive a retention payment if
you remain continuously employed by ZST Digital Networks, Inc. (the “Company”)
until twenty-four (24) months from the date of your acceptance of this Agreement
(as defined below) (the “Expiration Date”). This letter sets out the
terms and conditions of the retention arrangement (the “Agreement”) between you
and the Company.
1. Right to
Payment of Retention Bonus. Subject to the other provisions of
this Agreement, you will earn and otherwise be entitled to receive a retention
payment equal to $285,000 (the “Retention Amount”) in the event that you remain
continuously employed with the Company through the Expiration
Date. Solely as a gesture of good faith, the Company will advance the
entire Retention Amount to you upon your acceptance of this
Agreement. In the event that you remain employed with the Company
through the Expiration Date, you will retain the entire Retention Amount, and
those amounts are further subject to the provisions of Sections 2 and 3 of this
Agreement. The Retention Amount will be reduced by any applicable
withholdings.
Enclosed
with this Agreement is a check representing the gross pre-tax amount of
$285,000, as an advance of your Retention Amount. The Retention
Amount will be deemed to have been earned ratably over a period of twenty-four
(24) months.
2. Return of
the Retention Amount. In the event of a Disqualifying
Termination that occurs prior to the Expiration Date (the “Disqualifying
Termination Date”), you are required to return the pro-rata amount of the
Retention Amount based on a daily amortization rate of $390.41 times the number
of days remaining from the Disqualifying Termination Date to the Expiration Date
(including the amount of any applicable withholding on the Retention Amount) to
the Company within ten (10) days of the Disqualifying Termination
Date.
3. Effect of
Sale or Certain Terminations of Employment. In the event of a
Sale or a termination of your employment with the Company, other than a
Disqualifying Termination, that occurs prior to the Expiration Date, you will be
entitled to retain the Retention Amount.
4. Binding
Effect. This Agreement is personal to you and, without the
prior written consent of the Company, will not be assignable by
you. This Agreement will inure to the benefit of and be binding upon
the Company and its successors and assigns.
Xxxxx
Xxx
November
14, 2009
Page 2
5. Employment
Status. This Agreement will not be deemed to create in or
confer upon you any right to be retained in the employ of the
Company.
6. Entire
Agreement. This Agreement contains the entire understanding of
the Company and you with respect to the subject matter hereof.
7. Severability. In
the event any provision of this Agreement will be held illegal or invalid for
any reason, the illegality or invalidity will not affect the remaining parts of
the Agreement, and the Agreement will be construed and enforced as if the
illegal or invalid provision had not been included. Further, the
captions of this Agreement are not part of its provisions and will have no force
and effect.
8. Amendment
and Termination. This Agreement may be amended or terminated
at any time by mutual written agreement of the parties hereto.
9. Applicable
Law. To the extent not preempted by the laws of the United
States, the laws of the State of Delaware, other than the conflict of law
provisions thereof, will be the controlling law in all matters relating to this
Agreement.
10. Payment
Not Includable for Employee Benefits Purposes. Subject to all
applicable federal and state laws and regulations, income recognized by you
pursuant to the provisions of this Agreement will not be included in the
determination of benefits under any employee benefit plan (as such term is
defined in Section 3(2) of the Employee Retirement Income Security Act of 1974,
as amended) or group insurance or other benefit plans applicable to you which
are maintained by the Company.
11. Definitions. As
used in this Agreement, the following words and phrases will have the following
respective meanings unless the context clearly indicates otherwise:
(a) Cause. A
determination by the Company that you are engaging or have engaged in one or
more of the following: (i) commission of a felony or any other crime with
respect to which imprisonment is a possible punishment; (ii) willful misconduct
in the performance of your duties which is in the good faith judgment of the
Company materially injurious to the Company, its customers, employees,
suppliers, or shareholders; (iii) acts of disloyalty, gross negligence, willful
misconduct, material dishonesty or refusal to perform your duties in good faith;
or (iv) the willful breach of any written policy, code or procedure of the
Company.
(b) Disqualifying
Termination. A termination, or discontinuance of your active
full-time employment, by the Company for Cause or by you for any reason (other
than death or disability).
Xxxxx
Xxx
November
14, 2009
Page 3
(c) Sale. Consummation
of a sale, merger, exchange or other disposition of more than fifty percent
(50%) of the common stock of the Company or all or substantially all of the
assets of the Company (other than to an affiliate of the Company).
By
depositing, cashing or otherwise negotiating the enclosed check representing the
advance of your Retention Amount, you will be deemed to have accepted and will
be legally bound by the terms and conditions of the Agreement. I have
enclosed two copies of this letter, each signed on behalf of the Company.
Please acknowledge your understanding and acceptance of the terms and conditions
of this Agreement by signing and dating both original copies of the Agreement in
the space provided below and returning one original in the enclosed
self-addressed envelope. Please retain the other signed original for
your files.
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Yours
truly,
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By:
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/s/ Xxxxx Xx
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Xxxxx
Xx
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Chief
Executive Officer
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By:
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/s/ Xxxx Xxxx
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Xxxx
Xxxx
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Chief
Financial Officer
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Accepted
and agreed this
14th day of
November, 2009:
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/s/ Xxxxx Xxx
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Xxxxx
Xxx
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