CHINA PRECISION STEEL, INC. EXECUTIVE EMPLOYMENT AGREEMENT
This EXECUTIVE EMPLOYMENT AGREEMENT
(this “Agreement”) is
entered into as of January 1, 2007 (the “Effective Date”), by
and between CHINA PRECISION STEEL, INC., a Delaware corporation (along with its
successors and assigns, the “Company”), and HAI
XXXXX XXXX (“Executive”).
During the Employment Period, upon and
subject to proper election and appointment by the shareholders of the Company,
Executive will serve as a member of the Company’s Board until such time as
Executive resigns or is properly removed as a member of the Board in accordance
with the Company’s Articles of Incorporation and/or
By-laws. Compensation, if any, fees and/or benefits paid to Executive
for service as a member of the Board and any committee thereof shall be
established by the Compensation Committee of the Board (the “Compensation
Committee”) from time to time.
(a)
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Executive’s
death;
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(b)
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Termination
by the Company in the event of Executive’s Disability (as defined
below);
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(c)
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Termination
by the Company for Cause (as defined
below);
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(d)
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Termination
by the Company without Cause; or
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(e)
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Termination
by Executive, with or without Good Reason (as defined
below).
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For
purposes of this Agreement, the following terms shall have the following
meanings:
“Cause” means: (i)
Executive’s conviction of, or plea of nolo contendere to, a felony,
or a crime involving dishonesty, disloyalty or moral turpitude; (ii) Executive’s willful
disloyalty or deliberate dishonesty; (iii) the commission by Executive of an act
of fraud or embezzlement against the Company; (iv) Executive’s failure to use
his good faith efforts to perform in all material respects such duties as are
contemplated by this Agreement, or to follow any lawful direction of the Board
or any committee thereof; (v) Executive’s gross negligence in the performance of
his duties hereunder; or (vi) a material breach by Executive of any provision of
this Agreement or of any Company policy, which breach is not cured within thirty
(30) days after delivery to Executive by the Company of written notice of such
breach. Any determination of “Cause” shall be made in good faith by a
majority vote of the Board in its sole discretion.
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“Disability” means
Executive’s mental, physical or other disability, the condition of which renders
him incapable of performing his obligations under this Agreement for a period of
ninety (90) consecutive days or an aggregate of one hundred and twenty (120)
days (whether or not consecutive) in any 12-month period. Any
determination of “Disability” shall be made in good faith by a majority vote of
the Board in its sole discretion.
“Good Reason” means,
without Executive’s consent: (i) a material diminution in Executive’s Base
Salary; (ii) a material diminution in Executive’s responsibilities, duties or
authority as the Chief Executive Officer and President of the Company, which
causes Executive’s position with the Company to have less responsibility or
authority than Executive’s position immediately prior to such change, provided
that any such change is not in connection with the termination of Executive’s
employment with the Company; or (iii) a material breach by the Company of the
terms or conditions of this Agreement; provided however, if any of the
conditions described in subsections (i)-(iii) above occur, Executive is required
to provide written notice of such condition to the Board within sixty (60) days
of the initial occurrence of the condition, and, following such written
notice, the Company shall then have thirty (30) days to remedy such
condition, before the existence of any such condition (which is not otherwise
remedied by the Company) shall constitute “Good
Reason.”
(i) At
any time that Executive’s employment is terminated, the Company will pay the
Accrued Obligations (as defined below) to Executive (or to his estate or legal
representative, if applicable) on or promptly following the Date of Termination,
in accordance with applicable law. For purposes of this Agreement,
“Accrued
Obligations” means (A) the portion of Executive’s Base Salary as has
accrued up through the Date of Termination which Executive has not yet been
paid, (B) an amount equal to the value of Executive’s accrued unused vacation
days, and (C) the amount of expenses incurred by Executive on behalf of the
Company prior to the Date of Termination and not yet reimbursed as of such
date.
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(ii) In
addition to the Accrued Obligations, if Executive’s employment is terminated by
the Company without Cause or by Executive for Good Reason (and other than due to
Executive’s death or Disability), then in exchange for Executive’s timely
execution and delivery to the Company of the Release required by Section 4(d) below,
the Company will pay to Executive a severance payment equal to six (6) months of
his then current Base Salary, payable in six equal installments over the
six-month period immediately following the Date of Termination in accordance
with the Company’s regular payroll schedule.
(iii) If
within twelve (12) months following a Change of Control (as defined below),
Executive's employment is terminated by the Company without Cause, or by
Executive for Good Reason (and other than due to Executive’s death or
Disability) (each, a “Covered
Termination”), the vesting and exercisability of fifty percent (50%) of
Executive's stock options that are unvested at the time of the Covered
Termination shall accelerate and immediately become vested and exercisable as of
such date, and such options shall be exercisable for a period of twelve (12)
months following such date, but in no case beyond the relevant expiration dates
of such options. For purposes of this Agreement, a “Change of Control”
shall be deemed to have occurred if (A) a tender offer shall be made and
consummated for the ownership of more than 50% of the outstanding voting
securities of the Company, (B) the Company shall be merged or consolidated with
another corporation or entity and as a result of such merger or consolidation
less than 50% of the outstanding voting securities of the surviving or resulting
corporation or entity shall be owned in the aggregate by former shareholders of
the Company, as the same shall have existing immediately prior to such merger or
consolidation, (C) the Company shall sell, lease, or otherwise dispose of, all
or substantially all of its assets to another corporation or entity which is not
a wholly-owned subsidiary, or (D) a person, within the meaning of Section
3(a)(9) or Section 13(d)(3) (as in effect on the date hereof) of the Securities
Exchange Act of 1934 shall acquire more than 50% of the outstanding voting
securities of the Company (whether directly, indirectly, beneficially, or of
record).
Notwithstanding any other provision
with respect to the timing of payments under this Section 4(c), if, at
the time of Executive’s termination, Executive is deemed to be a “specified
employee” (within the meaning of Section 409A of the Internal Revenue Code
of 1986, as amended, and any successor statute, regulations and guidance thereto
(“Section
409A”) of the Company, then only to the extent necessary to comply with
the requirements of Section 409A, any payments to which Executive may
become entitled under this Section 4(c) which
are subject to Section 409A (and not otherwise exempt from its application) will
be withheld until the first business day of the seventh month following the Date
of Termination, at which time Executive shall be paid an aggregate
amount of any withheld payments otherwise due under this Section 4(c), as
applicable.
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(a) General. The Company
agrees that if Executive is made a party or is threatened to be made a party to
any action, suit or proceeding, whether civil, criminal, administrative or
investigative (a “Proceeding”), other
than a Proceeding initiated by the Company or Executive to enforce their rights
under this Agreement, by reason of the fact that Executive is or was a trustee,
director or officer of the Company, or any predecessor to the Company or any of
their affiliates or is or was serving at the request of the Company, any
predecessor to the Company, or any of their affiliates as a trustee, director,
officer, member, employee or agent of another corporation or a partnership,
joint venture, limited liability company, trust or other enterprise, including,
without limitation, service with respect to employee benefit plans, whether or
not the basis of such Proceeding is alleged action in an official capacity as a
trustee, director, officer, member, employee or agent while serving as a
trustee, director, officer, member, employee or agent, Executive shall be
indemnified and held harmless by the Company to the fullest extent authorized by
Delaware law, as the same exists or may hereafter be amended, against all
Expenses incurred or suffered by Executive in connection therewith, and such
indemnification shall continue as to Executive even if Executive has ceased to
be an officer, director, trustee or agent, or is no longer employed by the
Company and shall inure to the benefit of his heirs, executors and
administrators. Notwithstanding the foregoing, Executive shall not be entitled
to indemnification by the Company in respect of, and to the extent that, any
Expenses arising as a result of the bad faith, willful misconduct or gross
negligence of Executive, or as a result of Executive’s conviction for a felony.
As used in this Agreement, and except as otherwise specifically excluded or made
inapplicable herein, the term “Expenses” shall
include, without limitation, damages, losses, judgments, liabilities, fines,
penalties, excise taxes, settlements, and costs, attorneys’ fees, accountants’
fees, and disbursements and costs of attachment or similar bonds,
investigations, and any expenses of establishing a right to indemnification
under this Agreement.
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(b) Enforcement. If a
claim or request under this Section 6 is not paid
by the Company or on its behalf, within thirty (30) days after a written claim
or request has been received by the Company, Executive may at any time
thereafter bring suit against the Company to recover the unpaid amount of the
claim or request and if successful in whole or in part, Executive shall be
entitled to be paid also the expenses of prosecuting such suit. All obligations
for indemnification hereunder shall be subject to, and paid in accordance with,
applicable Delaware law.
(i) the
Company will be entitled to participate therein at its own expense;
(ii) except
as otherwise provided below, to the extent that it may wish, the Company will be
entitled to assume the defense thereof, with counsel reasonably satisfactory to
Executive, which in the Company’s sole discretion may be regular counsel to the
Company and may be counsel to other officers and directors of the Company or any
subsidiary.
(iii) The
Company shall not be liable to indemnify Executive under this Agreement for any
amounts paid in settlement of any action or claim effected without its written
consent. The Company shall not settle any action or claim in any manner which
would impose any penalty that would not be paid directly or indirectly by the
Company or limitation on Executive without Executive’s written consent. Neither
the Company nor Executive will unreasonably withhold or delay their consent to
any proposed settlement.
(iv) The
right to indemnification and the payment of Expenses incurred in defending a
Proceeding in advance of its final disposition conferred in this Section 6 shall not
be exclusive of any other right which Executive may have or hereafter may
acquire under any statute or certificate of incorporation or by-laws of the
Company or any subsidiary, agreement, vote of shareholders or disinterested
directors or trustees or otherwise.
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If
to the Company:
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18th
Floor, Teda Building
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00
Xxxx Xxx Xxxxxx
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Xxxxxx
Xxx, Xxxx Xxxx
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People’s
Republic of China
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Attention: Company
Secretary
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If
to Executive:
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At
Executive’s home address, as listed in the
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Company’s
personnel records from time to
time.
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(f) Governing
Law. This Agreement and the rights and obligations of the
parties hereunder will be construed in accordance with and governed by the law
of the State of Delaware, without giving effect to the conflict of law
principles thereof.
[Remainder of
page left intentionally blank. Signature page to
follow.]
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By:
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/s/
Che Xxx Xxx
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Che
Xxx Xxx
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Director
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EXECUTIVE
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/s/
Hai Xxxxx Xxxx
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Hai
Xxxxx
Xxxx
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