EMPLOYMENT AGREEMENT
THIS
EMPLOYMENT AGREEMENT
(this
“Agreement”)
is
made and entered into as of the 26th day of February, 2007 and shall be deemed
to have been effective on the 27th day of February, 2007 (the “Effective
Date”)
by and
between Xxxxx
Xx,
an
individual (the “Senior
Financial Officer”, hereafter
call “SFO”
for
short), and Harbin
Electric Inc.,
a
Nevada corporation (the “Company”).
RECITALS
The
Company desires to employ the SFO and the SFO 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 SFO and the SFO hereby accepts employment by the
Company upon the terms and conditions contained in this Agreement.
1.2
Office
and Duties.
The SFO
shall serve the Company as senior financial officer of the Company. Subject
to the direction of the
management (or equivalent body) of the Company, the
SFO, in her capacity as
senior
financial officer, shall
(i)
assist the management of the Company in doing the work related to the Company’s
preparation of financial statements and compliance with its reporting
requirements and any other duties reasonably related to the foregoing, (ii)
assist the Company in work related to investor relations and (iii) perform
such
other duties as may be reasonably assigned to her by the management of the
Company.
1.3
Commitment.
Throughout the term of this Agreement, the SFO shall diligently and faithfully
devote her efforts to the performance of her duties hereunder in a manner that
will further the business and interests of the Company.
1.4
Term.
The
term of this Agreement shall commence on the Effective Date and shall continue
for a period of 12 months until February 26, 2008, and thereafter on a month
to
month basis unless and until terminated upon no less than 30 days prior written
notice by either the Company or the SFO. 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 SFO as compensation a base salary of not less than $2,500
per month during the Term.
(b)
Restricted
Stock Grant and Option Grant.
The SFO
shall be granted options (the “Options”)
to
purchase 25,000 shares of the Company’s common stock (the “Common
Stock”)
during
each three (3) year period that the SFO continues to serve the Company in such
capacity. Upon commencement of employment hereunder, the SFO shall be granted
Options to purchase 25,000 shares of the Common Stock at an exercise price
$12.40, the closing price on February 26, 2007. Provided that the SFO is
employed by the Company on each applicable vesting date, the remaining Options
shall vest quarterly on the last day of each calendar quarter (each a “Vesting
Date”) commencing on March 31, 2007, over a three year period, with 2087 shares
vesting on February 28, 2007 and 2083 shares vesting thereafter on each
applicable Vesting Date.
(c)
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 SFO for all reasonable travel, entertainment and
other out-of-pocket expenses incurred by the SFO in performing her obligations
under this Agreement, consistent with past practices; provided,
that,
the SFO
properly accounts therefore in accordance with the Company’s expenses
reimbursement policies.
ARTICLE
II
RESTRICTIVE COVENANTS
RESTRICTIVE COVENANTS
2.1
Non-Competition.
The SFO
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
2 years thereafter (the “Restrictive
Period”),
unless the SFO is not paid all amounts due to her under this Agreement, she
will
not, directly or indirectly, 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 and, unless the SFO is not paid all amounts due to her under this
Agreement, the Restrictive Period, the SFO shall not in any manner, directly
or
indirectly(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 SFO is not paid all amounts due to her under this
Agreement, the Restriction Period, other than in connection with, for the
benefit of, or in furtherance of the Company’s business, the SFO shall not in
any manner, directly or indirectly 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, of her employment, to terminate such vendor’s, supplier’s or other
third party’s business relationship or contract with the Company.
2.4
Confidentiality.
The SFO
recognizes that, by virtue of the SFO’s employment with the Company, the SFO
will have access to Confidential Information (as defined below) relating to
the
Company’s business. The SFO 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 SFO’s duties in the normal course of business, or unless
specifically authorized in writing by the management of the Company, the SFO
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 SFO 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.
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
SFO 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 SFO; (b) was known by
or
made available on a non-confidential basis to the SFO prior to her employment
with the Company, or (c) becomes available to the SFO on a non-confidential
basis from a Person other than the SFO who is not known by the SFO 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 SFO 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 SFO is
in
breach of any such covenant.
2.6
Condition
Precedent.
So long
as the Company is in compliance with its obligations under Section 1.5, 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
agreement with SFO 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 SFO 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 SFO 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 SFO
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 SFO
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.
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
SFO:
Xxxxx
Xx
Phone: 000-000-000-0000
Email:
xx.xxxxx@xxxxx.xxx
If
to the
Company:
Tian
Fu
Yang
c/o
Harbin Electric, Inc.
Fax:
00-000-00000000
Phone:
00-000-00000000
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.
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 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 SFO, 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 SFO under this
Agreement.
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.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
IN
WITNESS WHEREOF,
the
Company has caused this AGREEMENT
to be
executed by its duly authorized representative, and the SFO has signed this
Agreement, all as of the day and year first above written.
| HARBIN ELECTRIC INC. | ||
| By: _/s/ Tianfu Yang_________________ | ||
| Title: _Chairman and CEO _____________ | ||
| SFO | ||
| /s/ Joann Hu________________________ | ||
| Xxxxx Xx |
