This Consulting Services Agreement involves
Title: AMENDED AND RESTATED EXECUTIVE SERVICES AGREEMENT
Industry: Computer Services Sector: Technology
CHINA.COM CORPORATION LIMITED
DR. RAYMOND KUO-FUNG CH'IEN
AMENDED AND RESTATED
EXECUTIVE SERVICES AGREEMENT
THIS AMENDED AND RESTATED EXECUTIVE SERVICES AGREEMENT (EXECUTIVE
CHAIRMAN) dated as of March 2, 2005 between china.com Corporation Limited
located at 34/F Citicorp Centre, 18 Whitfield Road, Causeway Bay, Hong Kong (the
"Company") and Dr. Raymond Kuo-Fung Ch'ien located at c/o china.com Corporation
Limited, 34/F Citicorp Centre, 18 Whitfield Road, Causeway Bay, Hong Kong (the
"Executive"). The Company and the Executive are collectively referred to as the
"Parties" and each, a "Party".
WHEREAS, effective as of April 27, 2004, the Company and the Executive had
entered into an Executive Services Agreement pursuant to which the Executive had
agreed to provide certain services to the Company on the terms set forth therein
(the "Original Executive Services Agreement").
WHEREAS, effective as of April 27, 2004, the Company and the Executive had
entered into Amendment No. 1 to the Original Executive Services Agreement
pursuant to which, among other things, the Executive agreed to serve as Acting
Chief Executive Officer of the Company until March 31, 2005 on the terms set
forth in such Amendment.
WHEREAS, the Company and the Executive desire for the Executive to
continue to provide certain services to the Company as both Executive Chairman
and Chief Executive Officer of the Company.
WHEREAS, concurrently with entry into this Amended and Restated Executive
Services Agreement (Executive Chairman), the Company and the Executive have
agreed to enter into an Executive Services Agreement (Chief Executive Officer)
(the "CEO Services Agreement") which sets forth the terms pursuant to which the
Executive has agreed to provide services as Chief Executive Officer of the
WHEREAS, the Company and the Executive desire to amend and restate in its
entirety the terms pursuant to the Executive has agreed to provide certain
services to the Company as Executive Chairman.
WHEREAS, the terms of this Agreement have been approved by the Board (as
defined below) and the Agreement has been so ratified by the Board.
NOW, THEREFORE, in consideration of the foregoing mutual covenants and
agreements contained herein, the Parties hereby agree, pursuant to the terms of
the Original Executive Services Agreement (as amended) and in accordance with
Clause 14.6 thereof, to amend and restate in its entirety the Original Executive
Services Agreement, as amended by Amendment No. 1 to such Agreement, effective
as of the Effective Date as follows:
1. DEFINITIONS AND INTERPRETATION
1.1 In this Agreement, the following words and expressions shall bear the
following meanings, unless the context otherwise requires:
"Appointment Date" means April 27, 2004.
"Associated Company" means any corporation or other business entity or
entities that directly or indirectly controls, is controlled by, or is under
common control with the Company after the Appointment Date or all other entities
in the group of companies of such Associated Companies, and "Associated Company"
shall have a corresponding meaning.
"Average Trading Price" means the average of the per share closing price
of the Shares on the Nasdaq during the five consecutive trading days ending on
(and including) the trading day that is one trading day prior to such date.
"Board" means the board of directors of the Company from time to time.
"CEO Services Agreement" has the meaning set forth in the recitals above.
"Compensation Committee" means the compensation committee of the Board.
"Company" has the meaning set forth in the introductory paragraph above.
"Confidential Information" has the meaning set forth in Clause 7.2.
"Effective Date" means April 27, 2004.
"Exchange Act" means the U.S. Securities Exchange Act of 1934, as amended.
"Executive" has the meaning set forth in the introductory paragraph above.
"Executive Committee" means the executive committee established by the
Board in accordance with the Company's Articles of Association.
"Hong Kong" means the Hong Kong Special Administration Region of the
People's Republic of China.
"Initial Term" has the meaning set forth in Clause 2.1.
"Option Term" has the meaning set forth in Clause 5.4.
"Options" has the meaning set forth in Clause 5.1.
"Original Executive Services Agreement" has the meaning set forth in the
"Parties" or "Party" has the meaning set forth in the introductory
"PRC" means the People's Republic of China.
"Prior Services Agreement" means the Executive Services Agreement dated as
of April 27, 2001 between the Parties and any and all amendments thereof.
"Released Party" has the meaning set forth in Clause 3.1.
"Services" means the services rendered by the Executive to the Company as
described in Schedule 1 hereto.
"Shares" has the meaning set forth in Clause 5.1.
"Two Year Period" has the meaning set forth in Clause 13.1.3.
"1999 Stock Option Plan" means the Company's stock option plan, which was
initially registered pursuant to a registration statement on Form S-8 with the
U.S. Securities and Exchange Commission in December 1999, as amended from time
1.2 Any reference in this Agreement to any ordinance or other enactment shall be
deemed also to refer to any statutory modification, amendment, codification or
re-enactment thereof or substitution therefore or regulations or guidelines
issued under any of the foregoing.
1.3 Any reference to a numbered clause or a numbered schedule shall be a
reference to the relevant clause, or as the case may be, the relevant schedule
of this Agreement.
1.4 The headings to the clauses of this Agreement shall not affect its
2. TERM OF APPOINTMENT AND TERMINATION OF PRIOR SERVICES AGREEMENT
2.1 The Company hereby engages the Executive, and the Executive accepts such
engagement, to render Services, including the services of the Executive as the
Executive Chairman of the Company effective the Appointment Date for a period of
thirty-six (36) months until April 27, 2007 (the "Initial Term").
2.2 This Agreement shall be automatically renewed for successive periods of one
(1) year after the expiry of the Initial Term unless either the Company or the
Executive informs the other Party in writing not less than three (3) months
prior to the expiration of the then-current term of its or his desire for this
Agreement to not be automatically renewed for the successive term.
2.3 The Company and the Executive agree that this Agreement shall supersede and
replace the Prior Services Agreement, and that the Prior Services Agreement is
hereby and forever terminated. The Company and the Executive agree that this
Agreement amends and restates in its entirety the Original Executive Services
Agreement effective as of April 27, 2004, as amended by Amendment No. 1 to such
Original Executive Services Agreement. The Executive hereby releases the Company
from all obligations or claims related to the Prior Services Agreement and the
Original Executive Services Agreement.
3. RIGHT TO NOMINATION AS DIRECTOR
3.1 For so long as the Executive serves as Executive Chairman of the Company
pursuant to this Agreement, the Executive shall have the right to be nominated
to serve as a Director to the Company's Board, subject to the approval of the
shareholders of the Company. For the avoidance of doubt, in the event the
shareholders of the Company do not approve the Executive to serve as a Director
to the Company's Board, the Executive, irrevocably and unconditionally releases
and waives all claims, causes of action or similar rights of any type arising
under this Clause 3 that the Executive, has or may have against the Company, all
current and former parents, subsidiaries, related companies, partnerships, or
joint ventures, and, with respect to each of them, their predecessors and
successors; and, with respect to each such entity, all of its past, present and
future employees, officers, directors, shareholders, owners, representatives,
assigns and any other persons acting by, through, under or in concert with any
of the persons or entities listed in this clause, and their successors (each, a
4.1 Effective the Appointment Date, the Company shall pay, provide or grant to
the Executive; (a) no basic salary; (b) additional options to purchase the
shares of the Company as described in Clause 5; and (c) the other benefits as
set forth in Clause 6 hereof. The Executive's remuneration shall be payable in
accordance with the usual practice of the Company as at the date hereof which
may be amended from time to time by the Company during the term of this
Company will not be obliged to increase the Executive's remuneration at any time
during the Initial Term or any renewed term.
4.2 To the extent reasonably practicable the Company shall cooperate with the
Executive to ensure that the remuneration arrangements set forth in this
Agreement are structured in a tax efficient manner for all concerned parties.
The Executive agrees and warrants to the Company that he shall indemnify the
Company and any Associated Company, and hold the Company and any Associated
Company harmless against the Executive's non-payment of any income tax,
professional indemnity, and other national, provincial or local taxes or
assessments in connection with his remuneration arrangements and benefits from
the Company and any Associated Company. In addition, the Executive specifically
represents, warrants and covenants to the Company that to the extent that he is
subject to any withholding or deduction under income tax laws of any
jurisdiction with respect to the remuneration arrangements and benefits from the
Company and any Associated Company, that he will hold the Company and each
Associated Company harmless against any non-withholding or non-deduction in
connection with the remuneration arrangements and benefits from the Company and
any Associated Company.
4.3 The Executive shall not be entitled to any fee as a director of the Company
or any Associated Company.
5. SHARE OPTIONS
5.1 Subject to the provisions of this Clause 5, the Executive shall be granted a
total of 800,000 share options under the 1999 Stock Option Plan ("Options") as
set forth in the option award agreement to purchase an equivalent number of the
Company's Class A Common Shares, par value US$0.00025 (the "Shares"). Such
Options shall be granted in three tranches. The first tranche of 300,000 Options
were granted to the Executive at such time as the Board ratified the Original
Executive Services Agreement with an exercise price of US$7.77 per Option, the
fair market value of the Shares on the date of such ratification. The second
tranche of an additional 250,000 Options will be granted to the Executive on the
first anniversary of the Appointment Date at an exercise price equal to the
higher of (i) Average Trading Price and (ii) the fair market value of the Shares
on such date. The third tranche of the remaining 250,000 Options will be granted
to the Executive on the second anniversary of the Appointment Date at an
exercise price equal to the higher of (i) the Average Trading Price and (ii) the
fair market value of the Shares on such date
5.2 The Options granted under Clause 5.1 shall vest over the course of the
Initial Term according to a vesting schedule as set forth in Schedule 2;
provided (a) the Executive remains at the Company to provide the Services on the
day the vesting of the relevant portion of those Options takes place and (b)
this Agreement has not otherwise been terminated. Except as otherwise provided
in this Clause 5, the Options granted shall be subject to the terms and
conditions of the 1999 Stock Option Plan.
5.3 If the Executive is terminated other than pursuant to Clause 12.1, 12.3,
12.4 or 12.5 of this Agreement, provided that the Executive executes a written
release in favor of the Company and its affiliates, the Company shall cause the
Executive's Options to accelerate and fully vest. In the event of such
termination other than pursuant to Clause 12.1 of this Agreement, the Executive
shall have a reasonable period of time following such termination to exercise
the Executive's Options, such period to be not less than ninety (90) days
following the date the Board determines the Executive is no longer in possession
of material non-public information such that the Executive may freely exercise
the Options in compliance with the Company's insider trading policy and
applicable law. Notwithstanding the above, if under Clauses 12.3, 12.4 or 12.5
the Executive is terminated or initiates the termination as a result of a death
or disability that is tangibly related to the performance of the duties by the
Executive for the Company hereunder, the Company shall cause the Executive's
Options to accelerate and fully vest and the Executive or his successors or
assigns, as the case may be, shall have up to one year following such
termination to exercise the Executive's Options. For avoidance of doubt if under
Clauses 12.3, 12.4 or 12.5 the Executive is terminated or initiates the
termination as a result of a death or disability that is NOT tangibly related to
the performance of the duties by the Executive for the Company hereunder, the
Executive's Options shall not accelerate but the Executive or his successors or
assigns, as the case may be, shall have up to one year following such
termination to exercise the Executive's Options that had vested as of the date
5.4 The Executive agrees that, without the prior written consent of the Company,
the Executive will not sell, offer to sell, contract to sell, grant any option
to purchase or otherwise dispose of any Options (whether vested or unvested), or
any securities convertible into, exercisable or exchangeable for such Options
(whether vested or unvested), including the Shares, or in any other manner
transfer all or a portion of the economic consequences associated with the
ownership of any Option (whether vested or unvested) until the expiration of the
"Option Term" which shall be the earlier of (A) the end of the Initial Term (and
any subsequent renewals thereof) or (B) termination of this Agreement; provided,
however, that the provisions of this Clause 5.4 shall not apply to the sale of
Shares received upon exercise of such Options in order to satisfy any tax
liability associated with a disposal permitted by this Clause 5.4. For the
avoidance of doubt, (A) any disposal made pursuant to this Clause 5.4 must also
comply with the provisions of the 1999 Stock Option Plan and any option award
agreement; the Executive may exercise his Options during the Option Term so long
as he complies with this Clause 5.4; and if the Executive's Options are
accelerated and fully vested as a result of Clause 5.3, this Clause 5.4 will no
5.5 The award of Options under this Agreement shall not affect the accrued
rights of the Executive in relation to other options on the shares of the
Company or any Associated Company held by the Executive.
6. OTHER BENEFITS
6.1 Upon presentation of proper vouchers, receipts or other proof, the Company
shall reimburse the Executive with respect to reasonable expenses of the
Executive related to travel, entertaining and subscriptions, in accordance with
the policies of the Company, in each case reasonably incurred in the performance
of his Services. All reimbursable expenses in the amount of $20,000 or less,
shall be approved in writing by the then current chairman of the Company, or in
his absence or if the Executive is such chairman, by two members of the
executive management team comprised of the Chief Financial Officer, General
Counsel and Human Resources Director. All reimbursable expenses in excess of
$20,000, shall be approved in writing by a member of the Audit Committee. The
Executive understands and agrees that at no time will the Executive approve his
own reimbursable expenses. For the avoidance of doubt, the Company or any of its
Associated Companies shall not be required to reimburse any cost associated with
any motor vehicle, chauffeur or executive assistant used or hired by the
Executive during the term of this Agreement except with respect to the
administrative assistant currently employed by an Associated Company on behalf
of the Executive.
6.2 So long as the Executive is also an executive of the Company, the Executive
shall not be entitled to receive director compensation from the Company.
6.3 The Parties acknowledge that in addition to this Agreement, the Parties have
entered into the CEO Services Agreement. For the avoidance of the doubt, the
Parties acknowledge that the "Other Benefits" provided for in Section 6 of the
CEO Services Agreement to the extent duplicative of the benefits provided to the
Executive hereunder (including, but not limited to benefits with respect to
reimbursement of expenses, participation in insurance, employee benefit plans
and medical insurance plans, and annual leave entitlement) shall not be
cumulated or aggregated, and that the Executive is
entitled to receive benefits under only the one agreement which provides more
favorable terms to such Executive with respect to such benefit.
7. CONFIDENTIAL INFORMATION
7.1 The Executive covenants and agrees not to use, other than for the benefit of
the Company and to keep confidential, during the term of this Agreement, all
information about the Company and all Associated Companies which the Company or
any of the Associated Company treats as confidential, including, but not limited
to, information about customers, marketing plans, marketing techniques,
technical information, and possible new products or services, except that the
Executive shall not be required to keep particular items of information
confidential after those items of information become generally available to the
public without a breach by the Executive of the obligations under this Clause.
7.2 The Executive covenants and agrees that, except during the performance of
the Services, he shall not, at any time, directly or indirectly, without the
prior written consent of the Company, use or disclose to any person any
confidential or proprietary information ("Confidenti