EMPLOYMENT AGREEMENT
THIS
EMPLOYMENT AGREEMENT is made and entered into this 2nd day of
February, 2009 by and between Kiwa Bio-tech Products Group Corp., a Delaware
corporation having its principal place of business at 000 X. Xxxxxx Xxxx Xxxx.,
#000 Xxxxxxxxx, Xxxxxxxxxx and Xx Xxx, an individual, whose address is 6 Xxx
Xxx, #1805, Xxx Xxxxx Yuan, Hai Xxxx Xx, Beijing, China (“Executive”), with
reference to the following facts:
RECITALS
WHEREAS,
Company is primarily engaged in the business of developing, manufacturing,
distributing and marketing innovative, cost-effective and environmentally safe
bio-technological products for the agricultural, stockbreeding, natural
resources and environmental protection markets, primarily in China;
and
WHEREAS,
Company desires to employ Executive and to ensure the continued availability to
Company of Executive’s services, and Executive desires to accept such employment
from Company and render such services, all in accordance with and subject to the
terms and conditions herein set forth;
NOW,
THEREFORE, in consideration of the promises and of the mutual covenants
contained herein, and for other good and valuable consideration, receipt of
which is hereby acknowledged, Company and Executive do hereby agree as
follows:
AGREEMENT
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1.
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Term
of Employment.
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1.01. Specified
Term. Company employs Executive, and Executive accepts
employment with Company, for a period of 3 years beginning on January 1, 2009,
and ending on December 31, 2011.
1.02. Earlier
Termination. This Agreement may be terminated earlier as
hereinafter provided.
1.03.
Continuing Effect.
Notwithstanding any termination of this Agreement except for termination
under Sections 8.01 and 8.02, at the end of the Term or otherwise, the
provisions of Sections 2.04(b) and 2.07 shall remain in full force and effect
and the provisions of Section 2.07shall be binding upon the legal
representatives, successors and assigns of the Executive.
1.04. “Employment Term”
Defined. “Employment term” refers to the entire period of
employment of Executive by Company, whether for the periods provided above, or
whether terminated earlier as hereinafter provided or extended by mutual
Agreement between Company and Executive.
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2.
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Duties
and Obligations of Executive.
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2.01. General
Duties. Executive shall serve as the President, Chief
Executive Officer (CEO) and Interim Chief Financial Officer (CFO) of Kiwa
Bio-Tech Products Group, Corp. (“Kiwa Bio-Tech”). In his capacity as
President, CEO and CFO of Kiwa Bio-Tech, Executive shall do and perform all
services, acts, or things necessary or advisable to manage and conduct the
business of Company, including the hiring and firing of all employees and
officers of Company, subject at all times to the policies set by Company’s Board
of Directors, and to the consent of the Board when required by the terms of this
Agreement.
2.02.
Matters Requiring
Consent of Board of Directors. Executive shall not, without
specific approval of Company's Board of Directors, do or contract to do any of
the following:
(a) Borrow
on behalf of Company in each transaction an amount in excess of
$500,000;
(b) Permit
any customer of Company to become indebted to Company in an amount in excess of
$500,000;
(c) Purchase
capital equipment for amounts in excess of the amounts budgeted for expenditure
by the Board of Directors;
(d) Sell
any single capital asset of Company having a market value in excess of $300,000
or a total of capital assets during a fiscal year having a market value in
excess of $1,00,000; and
(e) Commit
Company to the expenditure of more than $200,000 in the development and sale of
new products or services.
2.03.
Devotion to Company’s
Business.
(a) Executive
shall devote his entire productive time, ability, and attention to the business
of Company during the term of this Agreement.
(b) Executive
shall not engage in any other business duties or pursuits whatsoever, or
directly or indirectly render any services of a business, commercial, or
professional nature to any other person or organization, whether for
compensation or otherwise, without the prior written consent of Company's Board
of Directors. However, the expenditure of reasonable amounts of time for
educational, charitable, or professional activities shall not be deemed a breach
of this Agreement if those activities do not materially interfere with the
services required under this Agreement and shall not require the prior written
consent of Company's Board of Directors.
(c) This
Agreement shall not prohibit Executive from making passive personal investments
or conducting private business affairs if those activities do not materially
interfere with the services required under this Agreement. However, Executive
shall not directly or indirectly acquire, hold, or retain any interest in any
business competing with or similar in nature to the business of
Company.
2.04.
Competitive
Activities.
(a) During
the term of this Agreement Executive shall not, directly or indirectly, either
as an Executive, Company, consultant, agent, principal, partner, stockholder,
corporate officer, director, or in any other individual or representative
capacity, engage or participate in any business that is in competition in any
manner whatsoever with the business of Company.
(b) Executive
agrees that during the term of this Agreement and for a period of one year after
termination of this Agreement, Executive shall not directly or indirectly
solicit, hire, recruit, or encourage any other Executive of Company to leave
Company.
2.05. Uniqueness of Executive’s
Services. Executive represents and agrees that the services to
be performed under the terms of this Agreement are of a special, unique,
unusual, extraordinary, and intellectual character that gives them a peculiar
value, the loss of which cannot be reasonably or adequately compensated in
damages in an action at law. Executive therefore expressly agrees that Company,
in addition to any other rights or remedies that Company may possess, shall be
entitled to injunctive and other equitable relief to prevent or remedy a breach
of this Agreement by Executive.
2.06. Indemnification for Negligence or
Misconduct. Executive shall indemnify and hold Company
harmless from all liability for loss, damage, or injury to persons or property
resulting from the negligence or misconduct of Executive.
2.07. Trade Secrets.
(a) The
parties acknowledge and agree that during the term of this Agreement and in the
course of the discharge of his duties hereunder, Executive shall have access to
and become acquainted with financial, personnel, sales, scientific, technical
and other information regarding formulas, patterns, compilations, programs,
devices, methods, techniques, operations, plans and processes that are owned by
Company, actually or potentially used in the operation of Company's business, or
obtained from third parties under an Agreement of confidentiality, and that such
information constitutes Company's ''trade secrets.''
(b) Executive
specifically agrees that he shall not misuse, misappropriate, or disclose in
writing, orally or by electronic means, any trade secrets, directly or
indirectly, to any other person or use them in any way, either during the term
of this Agreement or at any other time thereafter, except as is required in the
course of his employment.
(c) Executive
acknowledges and agrees that the sale or unauthorized use or disclosure in
writing, orally or by electronic means, of any of Company's trade secrets
obtained by Executive during the course of his employment under this Agreement,
including information concerning Company's actual or potential work, services,
or products, the facts that any such work, services, or products are planned,
under consideration, or in production, as well as any descriptions thereof,
constitute unfair competition. Executive promises and agrees not to engage in
any unfair competition with Company, either during the term of this Agreement or
at any other time thereafter.
(d) Executive
further agrees that all files, records, documents, drawings, specifications,
equipment, software, and similar items whether maintained in hard copy or on
line relating to Company's business, whether prepared by Executive or others,
are and shall remain exclusively the property of Company and that they shall be
removed from the premises or, if kept on-line, from the computer systems of
Company only with the express prior written consent of Company's Board of
Directors.
2.08. Services as
Consultant. Following the employment term or Executive's
retirement, and if the employment term has not been terminated for cause,
Executive shall make his advice and counsel available to Company for such a
period as the parties may mutually agree to. The parties agree that
this advice and counsel shall not entail full time service and shall be
consistent with Executive's retirement status.
2.09. Use of Executive’s
Name.
(a) Company
shall have the right to use the name of Executive as part of the trade name or
trademark of Company if it should be deemed advisable to do so. Any
trade name or trademark, of which the name of Executive is a part, that is
adopted by Company during the employment of Executive may be used thereafter by
Company for as long as Company deems advisable.
(b) Executive
shall not, either during the term of this Agreement or at any time thereafter,
use or permit the use of his name in the trade name or trademark of any other
enterprise if that other enterprise is engaged in a business similar in any
respect to that conducted by Company, unless that trade name or trademark
clearly indicates that the other enterprise is a separate entity entirely
distinct from and not to be confused with Company and unless that trade name or
trademark excludes any words or symbols stating or suggesting prior or current
affiliation or connection by that other enterprise or its Executives with
Company.
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3.
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Obligations
of Company.
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3.01. General
Description. Company shall provide Executive with the
compensation, incentives, benefits, and business expense reimbursement specified
elsewhere in this Agreement.
3.02. Office and
Staff. Company shall provide Executive with office space,
office equipments, and administrative support suitable to Executive's position
and adequate for the performance of his duties.
3.03. Indemnification of Losses of
Executive. Company shall indemnify Executive for all necessary
expenditures or losses incurred by Executive in direct consequence of the
discharge of his duties on Company's behalf.
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4.
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Compensation
of Executive.
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4.01. Annual Salary.
(a) As
compensation for the services to be performed hereunder, Executive shall receive
a salary at the rate of $96,000 per annum, of which $72,000 shall be paid in
equal monthly installments of $6,000 during the period of employment, prorated
for any partial employment period, and $24,000 shall be paid as an annual
performance bonus in three months after each employment year.
(b) Executive
shall receive such annual increases in salary as may be determined by Company's
Board of Directors in its sole discretion at its annual meeting.
4.02.
Salary
Continuation During Disability. If Executive for any reason
whatsoever becomes permanently disabled so that he is unable to perform the
duties prescribed herein, Company agrees to pay Executive his monthly
installments of salary, payable in the same manner as provided for the payment
of salary herein, for a period of up to six (6) months from the date of
disability or until the expiration of the employment term provided for herein,
whichever occurs sooner.
4.03.
Repayment of Disallowed
Salary. In the event that any portion of the compensation paid
by Company to Executive is disallowed as an income tax deduction on an income
tax return of Company, Executive agrees to immediately repay to Company the full
amount of that portion.
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5.
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Executive
Incentives.
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5.01. Annual Cash Bonus Based on
Performance.
(a) At
the beginning of any fiscal year during the employment term as herein provided,
Company’s Board of Directors shall set forth for Executive goals and objectives
to be accomplished by Executive during that year. For the successful
completion of all goals and objectives by the end of that year, Executive shall
receive a performance bonus provided for in Section 4.01 for his services in
addition to any other compensation which he is entitled to receive
hereunder. The amount of bonus shall be determined by the Board of
Directors. This bonus shall be paid within one month after the annual
meeting of the Board of Directors.
(b) If
the employment term is terminated by Company for cause, Executive shall not be
entitled to any portion of the annual cash bonus for the fiscal year in which
that termination occurs. However, if this Agreement should expire or be
terminated for reasons other than cause, Executive shall be entitled to a
percentage of the annual cash bonus equal to the percentage of the goals and
objectives accomplished.
(c) As
additional compensation, Company agrees to grant Executive each year certain
number of stock options pursuant to Company’s Stock Incentive Plan and the board
resolutions on stock option allocation plan each fiscal year. All terms and
conditions of Company’s Stock Incentive Plan, including but not limited to
option grant, exercise and any other items are applicable for Executive as a
plan participant.
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6.
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Executive
Benefits.
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6.01. Annual
Vacation. Executive shall be entitled to two (2) week vacation
time each year with full pay. Executive may be absent from his
employment for vacation only at such times as Company's President shall
determine from time to time. If Executive is unable for any reason to
take the total amount of authorized vacation time during any year, he may accrue
that time and add it to vacation time for any following year or may receive a
cash payment in an amount equal to the amount of annual salary attributable to
that period.
6.02. Illness. On completion of one
(1) year in the service of Company, Executive shall be entitled to five (5) days
per year as sick leave with full pay. Sick leave may not be
accumulated or accrued for any following year.
6.03. Employee Benefit Programs. Executive is
entitled to participate in any pension, 401(k), insurance or other employee
benefit plan that is maintained by Company for its executive officers, including
programs of life and medical insurance and reimbursement of membership fees in
civic, social and professional organizations
6.04.
Insurance.
Company shall provide to Executive and pay premiums on Company's group
medical insurance policy offered through Company, covering Executive and
Executive's dependents.
6.05.
Severance Package. If Executive's
employment with Company is terminated pursuant to Section 8.03 or 8.04,
Executive shall be entitled to three (3) month severance package consisting of
Executive's compensation and all benefits as provided for in Sections 4, 5 and 6
and all Executive's remaining unvested options shall vest
immediately. Payments shall be made monthly or in a lump sum payment
at the Board's sole discretion. In the event severance is paid in a
lump sum, the cash amount excluding insurance benefits shall be paid at the
present value for the time remaining in the 3-month severance agreement based on
the current prime interest rate as charged by the Federal Reserve Bank in New
York.
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7.
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Business
Expenses.
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7.01. Lump-Sum Entertainment
Fund.
(a) It
is understood and agreed by the parties that the services required by Company
will require Executive to incur entertainment expenses on behalf of Company.
Company hereby agrees to and shall make available to Executive for this purpose
the sum of $50,000 per annum, payable in such amounts and at such times as
Executive shall request.
(b) Executive
shall, however, furnish to Company adequate records and other documentary
evidence required by federal and state statutes and regulations for the
substantiation of each such expenditure as an income tax deduction.
7.02. Reimbursement of Other Business
Expenses.
(a) Company
shall promptly reimburse Executive for all other reasonable business expenses
incurred by Executive in connection with the business of Company.
(b) Each
such expenditure shall be reimbursable only if it is of a nature qualifying it
as a proper deduction on the federal and state income tax return of
Company.
(c) Each
such expenditure shall be reimbursable only if Executive furnishes to Company
adequate records and other documentary evidence required by federal and state
statutes and regulations issued by the appropriate taxing authorities for the
substantiation of each such expenditure as an income tax deduction.
7.03. Repayment of Disallowed
Expenses. In the event that any expenses paid for Executive or
any reimbursement of expenses paid to Executive shall, on audit or other
examination of Company's income tax returns, be determined not to be allowable
deductions from Company's gross income, and in the further event that this
determination shall be acceded to by the Company or made final by the
appropriate federal or state taxing authority or a final judgment of a court of
competent jurisdiction, and no appeal is taken from the judgment or the
applicable period for filing notice of appeal has expired, Executive shall repay
to Company the full amount of the disallowed expenses.
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8.
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Termination
of Employment.
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8.01. Termination for
Cause.
(a) Company
reserves the right to terminate this Agreement if Executive willfully breaches
or habitually neglects the duties which he is required to perform under the
terms of this Agreement; or commits such acts of dishonesty, fraud,
misrepresentation or other acts of moral turpitude as would prevent the
effective performance of his duties.
(b) Company
may at its option terminate this Agreement for the reasons stated in this
Section by giving written notice of termination to Executive without prejudice
to any other remedy to which Company may be entitled either at law, in equity,
or under this Agreement.
(c) The
notice of termination required by this section shall specify the ground for the
termination and shall be supported by a statement of all relevant
facts.
(d) Termination
under this section shall be considered ''for cause'' for the purposes of this
Agreement.
8.02. Failure to Meet Profit
Standard.
(a) If
the net operating profits of Company for any annual accounting period of Company
shall be less than the net operating profits in the previous fiscal year by 20%
percent, Company at its option may terminate this Agreement by giving written
notice of termination to Executive.
(b) The
term ''net operating profits,'' as used herein, means the net operating profits
after taxes as determined and certified by the independent certified public
accountants regularly retained by Company in accordance with sound accounting
principles and in accordance with the past accounting practices of
Company.
(c) Termination
under this section shall be considered ''for cause'' for the purposes of this
Agreement.
8.03. Termination Without
Cause.
(a) This
Agreement shall be terminated upon the death of Executive.
(b) Company
reserves the right to terminate this Agreement not less than six (6) months
after Executive suffers any physical or mental disability that would prevent the
performance of his essential job duties under this Agreement, unless reasonable
accommodation can be made to allow Executive to continue
working. Such a termination shall be effected by giving twenty (20)
days' written notice of termination to Executive. Termination
pursuant to this provision shall not prejudice Executive's rights to continued
compensation pursuant to Section 4.02 of this Agreement.
(c) Termination
under this section shall not be considered ''for cause'' for the purposes of
this Agreement.
8.04. Effect of Merger, Transfer of Assets,
or Dissolution.
(a) This
Agreement shall not be terminated by any voluntary or involuntary dissolution of
Company resulting from either a merger or consolidation in which Company is not
the consolidated or surviving corporation, or a transfer of all or substantially
all of the assets of Company.
(b) In
the event of any such merger or consolidation or transfer of assets, Company's
rights, benefits, and obligations hereunder shall be assigned to the surviving
or resulting corporation or the transferee of Company's assets.
8.05. Payment On Termination
Notwithstanding any provision of this Agreement, if Company terminates this
Agreement, it shall pay Executive an amount equal to six (6)
months salary at the then current rate of compensation.
8.06. Termination by
Executive. Executive may terminate his obligations under this
Agreement by giving Company at least three (3) months notice in
advance.
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9.
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General
Provisions.
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9.01. Notices. Notices and
Addresses. All notices, offers, acceptance and any other acts under this
Agreement (except payment) shall be in writing, and shall be sufficiently given
if delivered to the addressees in person, by Federal Express or similar
receipted delivery, by facsimile delivery or, if mailed, postage prepaid, by
certified mail, return receipt requested, as follows:
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To
Company:
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Kiwa
Bio-Tech Products Group, Corp.
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000
X. Xxxxxx Xxxx Xxxx., #000
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Xxxxxxxxx,
Xxxxxxxxxx
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To
Executive:
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Xxx
Xx
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____________________
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____________________
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or to
such other address as either of them, by notice to the other may designate from
time to time. The transmission confirmation receipt from the sender's facsimile
machine shall be evidence of successful facsimile delivery. Time shall be
counted to, or from, as the case may be, the delivery in person or by
mailing
9.02. Attorneys' Fees and
Costs. If any legal action is necessary to enforce or
interpret the terms of this Agreement, the prevailing party shall be entitled to
reasonable attorneys' fees, costs, and necessary disbursements in addition to
any other relief to which that party may be entitled. This provision shall be
construed as applicable to the entire Agreement.
9.03. Modifications. Any
modification of this Agreement will be effective only if it is in writing signed
by the party to be charged.
9.04. Effect of
Waiver. The failure of either party to insist on strict
compliance with any of the terms, covenants, or conditions of this Agreement by
the other party shall not be deemed a waiver of that term, covenant, or
condition, nor shall any waiver or relinquishment of any right or power at any
one time or times be deemed a waiver or relinquishment of that right or power
for all or any other times.
Page 9 of
11
Kiwa
Bio-Tech
Employment
Agreement
President,
CEO and CFO
9.05. Partial
Invalidity. If any provision in this Agreement is held by a
court of competent jurisdiction to be invalid, void, or unenforceable, the
remaining provisions shall nevertheless continue in full force without being
impaired or invalidated in any way.
9.06. Law Governing
Agreement. This Agreement shall be governed by and construed
in accordance with the laws of the State of California.
9.07. Counterparts. This
Agreement may be executed in one or more counterparts, each of which shall be
deemed an original but all of which together shall constitute one and the same
instrument. The execution of this Agreement may be by actual or facsimile
signature.
9.08.
Additional
Documents. The parties hereto shall execute such additional
instruments as may be reasonably required by their counsel in order to carry out
the purpose and intent of this Agreement and to fulfill the obligations of the
parties hereunder.
9.09.
Section and Paragraph
Headings. The section and paragraph headings in this Agreement
are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement.
9.10.
Arbitration. Except
for a claim for equitable relief, any controversy, dispute or claim arising out
of or relating to this Agreement, or its interpretation, application,
implementation, breach or enforcement which the parties are unable to resolve by
mutual agreement, shall be settled by submission by either party of the
controversy, claim or dispute to binding arbitration in Los Angeles County,
California (unless the parties agree in writing to a different location), before
three arbitrators in accordance with the rules of the American Arbitration
Association then in effect. In any such arbitration proceeding the
parties agree to provide all discovery deemed necessary by the
arbitrators. The decision and award made by the arbitrators shall be
final, binding and conclusive on all parties hereto for all purposes, and
judgment may be entered thereon in any court having jurisdiction
thereof.
9.11. Entire
Agreement. This Agreement supersedes any and all other
Agreements, either oral or in writing, between the parties hereto with respect
to the employment of Executive by Company, and contains all of the covenants and
Agreements between the parties with respect to that employment in any manner
whatsoever. Each party to this Agreement acknowledges that no representations,
inducements, promises, or Agreements, orally or otherwise, have been made by any
party, or anyone acting on behalf of any party, which are not embodied herein,
and that no other Agreement, statement, or promise not contained in this
Agreement shall be valid or binding.
Page 10
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Kiwa
Bio-Tech
Employment
Agreement
President,
CEO and CFO
IN
WITNESS WHEREOF, Company and Executive have executed this Agreement as of the
date and year first above written.
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COMPANY:
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EXECUTIVE:
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Xxx
Xx
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/s/
Xxx Xx
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/s/
Xxx XX
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(Authorized
Signature)
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(Signature)
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Xxx
Xx, Vice President
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February
2, 2009
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(Print
Name and Title)
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(Date)
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February
2, 2009
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(Date)
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Page 11
of 11
Kiwa
Bio-Tech
Employment
Agreement
President,
CEO and CFO
