This Executive Employment Agreement involves
Title: EXECUTIVE EMPLOYMENT AGREEMENT
Governing Law: Delaware Date: 11/17/2010
Industry: Chemical Manufacturing Sector: Basic Materials
EXECUTIVE EMPLOYMENT AGREEMENT
THIS EXECUTIVE EMPLOYMENT AGREEMENT (this “ Agreement ”) is made as of November 15, 2010, between China Sun Group High-Tech Co., a Delaware corporation (together with its successors and assigns, the “ Company ”), and Guosheng Fu (“ Executive ”).
A. The Company and Executive desire to enter into an agreement pursuant to which the Company will continue to employ Executive as its Chief Executive Officer subject to the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and promises contained herein, the parties agree as follows:
1. Employment . The Company hereby engages Executive to serve as the Chief Executive Officer of the Company, and Executive agrees to serve the Company, during the Service Term (as defined in Section 4 below) in the capacities, and subject to the terms and conditions, set forth in this Agreement.
2. Duties . During the Service Term, Executive, as Chief Executive Officer of the Company, shall have all the duties and responsibilities customarily rendered by Chief Executive Officers of companies of similar size and nature and such other duties and responsibilities as may be delegated from time to time by the Board in its sole discretion. Executive will report to the Board. Executive will devote his best efforts and substantially all of his business time and attention (except for vacation periods and periods of illness or other incapacity) to the business of the Company and its Subsidiaries. With the consent of the Board, Executive will be permitted to serve on the boards of other companies so long as such service does not unreasonably interfere with his duties to the Company.
3. Salary, Bonus and Benefits. The Board shall make all decisions related to Executive's base salary and the payment of bonuses, if any. Executive's Annual Base Salary and other compensation will be reviewed by the Board at least annually.
(a) Base Salary. During the Service Term, the Company will pay Executive a base salary (the “ Annual Base Salary ”) as the Board may designate from time to time. The initial Annual Base Salary shall be at the rate of $30,000 per annum in accordance with the Company's customary payroll practices (minus all applicable withholdings). Executive's Annual Base Salary for any partial year will be prorated based upon the number of days elapsed in such year. The Annual Base Salary may be modified from time to time during the Service Term by the Board based upon the Company's and Executive's performance.
(b) Bonus Plan; Equity Awards . Executive shall be entitled to participate in any bonus plan as may be established by the Board from time to time (the “ Bonus ”) . The Bonus, if any, will be determined by the Board based upon the Company's annual achievement of financial performance goals and other annual objectives as determined by the Board in good faith for each fiscal year of the Company. Subject to the terms of this Agreement, the Company hereby agrees to grant to Executive One Hundred Fifty Thousand (150,000) shares of the common stock of the Company on each of December 31, 2010, 2011 and 2012 (each, an “Award Date”) for an aggregate amount of Four Hundred Fifty Thousand (450,000) shares of common stock (collectively, the “Shares”). The parties agree that Executive shall receive each such grant of Shares subject to Executive’s Continuous Service on each Award Date, respectively. “Continuous Service” means that the provision of services by the Executive to the Company or a related entity in any capacity of employee, director or consultant, is not interrupted or terminated. Continuous Service shall not be considered interrupted in the case of (i) any approved leave of absence, (ii) transfers among the Company, any related entity, or any successor, in any capacity of employee, director or consultant, or (iii) any change in status as long as the individual remains in the service of the Company or a related entity in any capacity of employee, director or consultant. An approved leave of absence shall include sick leave, military leave, or any other authorized personal leave.
(i) Executive and, to the extent eligible, his dependents, shall be entitled to participate in and receive all benefits under any welfare or pension benefit plans and programs made available to the Company's senior level executives or to its employees generally (including, without limitation, medical, disability and life insurance programs, accidental death and dismemberment protection, leave and participation in retirement plans and deferred compensation plans), subject, however, to the generally applicable eligibility and other provisions of the various plans and programs and laws and regulations in effect from time to time.
(ii) The Company shall promptly reimburse Executive for all reasonable, ordinary and necessary business, travel or entertainment expenses incurred during the Service Term in the performance of his services hereunder in accordance with the policies of the Company as they are from time to time in effect. Executive, as a condition precedent to obtaining such payment or reimbursement, shall provide to the Company any and all statements, bills or receipts evidencing the travel or out-of-pocket expenses for which Executive seeks payment or reimbursement, and any other information or materials, which the Company may from time to time reasonably require.
(iii) Executive shall be entitled to paid vacation of up to 15 days per annum which shall accrue pro rata during the applicable year and shall be entitled to medical, disability, family and other leave in accordance with Company policies as in effect from time to time for senior executives.
(iv) Notwithstanding anything to the contrary contained above, the Company shall be entitled to terminate or reduce any employee benefit enjoyed by Executive pursuant to the provisions of this Section 3(c) , but only if such reduction is part of an across-the-board reduction applicable to all executives of the Company who are entitled to such benefit.
4. Employment Term. Unless Executive's employment under this Agreement is sooner terminated as a result of Executive's resignation or termination in accordance with the provisions of Section 5 below, Executive's term of employment (“ Service Term ”) under this Agreement shall commence on the date hereof and shall continue for a period of one year, and at the end of each day it shall renew and extend automatically for an additional day so that the remaining Service Term is always one year; provided , however , that either party may terminate this Agreement pursuant to Section 5 below for any reason, with or without Cause or with or without Good Reason, as the case may be, at any time upon thirty (30) days prior written notice to the other party of its decision to terminate (except in the event of termination for Cause, whereupon Executive's termination shall be effective immediately upon written notice thereof except for any required grace periods for “Cause” as otherwise set forth below)
5. Termination. Executive's employment with the Company shall cease upon the first of the following events to occur:
(a) Executive's death.
(b) Executive's voluntary retirement at age 65 or older.
(c) Executive's disability, which means his incapacity due to physical or mental illness such that he is unable to perform the essential functions of his previously assigned duties where (1) such incapacity has been determined to exist by either (x) the Company's disability insurance carrier or (y) by the concurring opinions of two licensed physicians (one selected by the Company and one by Executive), and (2) the Board has determined, based on competent medical advice, that such incapacity will likely last for a continuous period of at six (6) months.
(d) Termination by the Company by the delivery to Executive of a written notice from the Board that Executive has been terminated (“ Notice of Termination ”) with or without Cause. “ Cause ” shall mean termination for any of the following:
(i) Executive's (A) commission of a felony or a crime involving moral turpitude or the commission of any other act or omission involving dishonesty in the performance of his duties to the Company or fraud; (B) substantial and repeated failure to perform duties of the office held by Executive as reasonably directed by the Board; (C) gross negligence or willful misconduct with respect to the Company or any of its Subsidiaries; (D) material breach of this Agreement not cured within ten (10) days after receipt of written notice thereof from the Company; (E) failure, within ten (10) days after receipt by Executive of written notice thereof from the Company, to correct, cease or otherwise alter any failure to comply with instructions or other action or omission which the Board reasonably believes does or may materially or adversely affect its business or operations; (F) misconduct which is of such a serious or substantial nature that a reasonable likelihood exists that such misconduct will materially injure the reputation of the Company or its Subsidiaries if Executive were to remain employed by the Company; (G) harassing or discriminating against the Company's employees, customers or vendors in violation of the Company's policies with respect to such matters; and/or (H) misappropriation of funds or assets of the Company for personal use or willful violation of Company policies or standards of business conduct as determined in good faith by the Board.
(ii) Executive's voluntary resignation by the delivery to the Board of a written notice from Executive that Executive has resigned with or without Good Reason. “ Good Reason ” shall mean Executive's resignation from employment with the Company within thirty (30) days after (i) a material diminution in Executive's annual salary, duties, authority or responsibilities from the annual salary, duties, authority or responsibilities as in effect at the commencement of the Service Term, (ii) the Company's failure to perform any material obligation undertaken by the Company to Executive hereunder after Executive has provided the Company with written notice of such failure and such failure has not thereafter been cured within ten (10) days of the delivery of such written notice or (iii) notice by the Company to Executive that his primary place of employment is to be relocated to a geographic area more than 50 miles from the principal executive offices of the Company without Executive's consent.
6. Rights on Termination.
(a) If during the Service Term Executive's employment is terminated under Section 5 above (x) by the Company without Cause or (y) by Executive with Good Reason, then:
(i) The Company shall pay to Executive, at the times specified in Section 6(a)(iv) below, the following amounts (collectively, the “ Severance Benefit ”):
1. the Accrued Obligation;
2. Executive’s Bonus earned up until the effective date of termination (the “ Termination Date ”); and
3. All Shares due to Executive as of December 31 of the year during which Executive’s Continuous Service was terminated.
(ii) Payments and benefits provided to Executive under this Section 6 (other than Accrued Obligations) are contingent upon Executive's execution of a release substantially in the form of Exhibit A hereto.
(iii) Executive shall not be permitted to specify the taxable year in which a payment described in this Section 6 shall be made to him.
(iv) The Company shall pay Executive the amounts specified in Section 6(a)(i)(1) within thirty (30) days after the Termination Date. The Company will pay, when due and payable, the pro rata portion, if any, of Executive's Bonus earned up until the Termination Date.
(b) If the Company terminates Executive's employment for Cause, if Executive dies or is disabled (as defined in Section 5(c) above), or if Executive resigns without Good Reason, the Company's obligations to pay any compensation or benefits under this Agreement will cease effective as of the Termination Date and the Company shall pay to Executive the Accrued Obligation within thirty (30) days following the Termination Date. Following such payments, the Company shall have no further obligations to Executive other than as may be required by law or the terms of an employee benefit plan of the Company.
(c) Notwithstanding the foregoing, the Company's obligation to Executive for payments under either Sections 6(a) or (b) above shall cease if Executive is in violation of the provisions of Sections 8 or 9 below, to the extent permissible under applicable law.
7. Representations of Executive. Executive hereby represents and warrants to the Company that the statements contained in this Section 7 are true and accurate as of the date of this Agreement.
(a) Legal Proceedings . Executive has not been (i) the subject of any criminal proceeding (other than a traffic violation or other minor offense) which has resulted in a conviction against Executive, nor is Executive the subject of any pending criminal proceeding (other than a traffic violation or other minor offense), (ii) indicted for, or charged in a court of competent jurisdiction with, any felony or crime of moral turpitude, (iii) the defendant in any civil complaint alleging damages in excess of $50,000, or (iv) the defendant in any civil complaint alleging sexual harassment, unfair labor practices or discrimination in the work place.
(b) Securities Law . Executive has not been found in a civil action by the Securities and Exchange Commission, Commodity Futures Trading Commission, a state securities authority or any other regulatory agency to have violated any federal, state or other securities or commodities law.
(c) Work History; Immigration Status . Executive's resume, previously provided by Executive to the Company, is complete and correct in all material respects, and accurately reflects Executive's prior work history. Executive has the full legal right to be employed on a full-time basis by the Company in the jurisdiction in which he is employed, and has provided the Company with evidence of legal immigration status and will do so at any time upon request.
(d) Employment Restrictions . Executive is not currently a party to any non competition, non-solicitation, confidentiality or other work-related agreement that limits or restricts Executive's ability to work in any particular field or in any particular geographic region, whether or not such agreement would be violated by this Agreement.
8. Confidential Information; Proprietary Information, etc.
(a) Obligation to Maintain Confidentiality . Executive acknowledges that any Proprietary Information disclosed or made available to Executive or obtained, observed or known by Executive as a direct or indirect consequence of his employment with or performance of services for the Company or any of its Subsidiaries during the course of his performance of services for, or employment with, any of the foregoing Persons (whether or not compensated for such services) and during the period in which Executive is receiving payments pursuant to this Agreement, are the property of the Company and its Subsidiaries. Therefore, Executive agrees that, other than in the course of performance of his duties as an employee of the Company, he will not at any time (whether during or after Executive's term of employment) disclose or permit to be disclosed to any Person or, directly or indirectly, utilize for his own account or permit to be utilized by any Person any Proprietary Information or records pertaining to the Company, its Subsidiaries and their respective business for any reason whatsoever without the consent of the Board, unless and to the extent that (except as otherwise provided in the definition of Proprietary Information) the aforementioned matters become generally known to and available for use by the public other than as a direct or indirect result of Executive's acts or omissions to act. Executive agrees to deliver to the Company at the termination of his employment, as a condition to receipt of the next or final payment of compensation, or at any other time the Company may request in writing (whether during or after Executive's term of employment), all records pertaining to the Company, its Subsidiaries and their respective business which he may then possess or have under his control. Executive further agrees that any property situated on the Company's or its Subsidiaries' premises and owned by the Company or its Subsidiaries, including disks and other storage media, filing cabinets or other work areas, is subject to inspection by Company or its Subsidiaries and their personnel at any time with or without notice. Nothing in this Section 8(a) shall be construed to prevent Executive from using his general knowledge and experience in future employment so long as Executive complies with this Section 8(a) and the other restrictions contained in this Agreement.
(b) Ownership of Property . Executive acknowledges that all inventions, innovations, improvements, developments, methods, processes, programs, designs, analyses, drawings, reports and all similar or related information (whether or not patentable) that relate to the Company's or any of its Subsidiaries' actual or anticipated business, research and development, or existing or future products or services and that are conceived, developed, contributed to, made, or reduced to practice by Executive (either solely or jointly with others) while employed by the Company or any of its Subsidiaries (including any of the foregoing that constitutes any Proprietary Information or records) (“ Work Product ”) belong to the Company or such Subsidiary and Executive hereby assigns, and agrees to assign, all of the above Work Product to the Company or such Subsidiary. Any copyrightable work prepared in whole or in part by Executive in the course of his work for any of the foregoing entities shall be deemed a “work made for hire” under the copyright laws, and the Company or such Subsidiary shall own all rights therein. To the extent that any such copyrightable work is not a “work made for hire,” Executive hereby assigns and agrees to assign to Company or such Subsidiary all right, title and interest, including without limitation, copyright in and to such copyrightable work. Executive shall promptly disclose such Work Product and copyrightable work to the Board and perform all actions reasonably requested by the Board (whether during or after Executive's term of employment) to establish and confirm the Company's or its Subsidiary's ownership (including, without limitation, execution of assignments, consents, powers of attorney and other instruments). Notwithstanding anything contained in this Section 8(b) to the contrary, the Company's ownership of Work Product does not apply to any invention that Executive develops entirely on his own time without using the equipment, supplies or facilities of the Company or Subsidiaries or any Proprietary Information (including trade secrets), except that the Company's ownership of Work Product does include those inventions that: (i) relate to the business of the Company or its Subsidiaries or to the actual or demonstrably anticipated research or development relating to the Company's business; or (ii) result from any work that Executive performs for the Company or its Subsidiaries.
(c) Third Party Information . Executive understands that the Company and its Subsidiaries will receive from third parties confidential or proprietary information (“ Third Party Information ”) subject to a duty on the Company's and its Subsidiaries' part to maintain the confidentiality of such information and to use it only for certain limited purposes. During the term of Executive's employment and thereafter, and without in any way limiting the provisions of Sections 8(a) and 8 (b) above, Executive shall hold Third Party Information in the strictest confidence and shall not disclose to anyone (other than personnel of the Company or its Subsidiaries who need to know such information in connection with their work for the Company or its Subsidiaries) or use, except in connection with his work for the Company or its Subsidiaries, Third Party Information unless expressly authorized by the Board in writing.
(d) Use of Information of Prior Employers, etc . Executive will abide by any enforceable obligations contained in any agreements that Executive has entered into with his prior employers or other parties to whom Executive has an obligation of confidentiality.
(e) Compelled Disclosure . If Executive is required by law or governmental regulation or by subpoena or other valid legal process to disclose any Proprietary Information or Third Party Information to any Person, Executive will immediately provide the Company with written notice of the applicable law, regulation or process so that the Company may seek a protective order or other appropriate remedy. Executive will cooperate fully with the Company and the Company's representatives in any attempt by the Company to obtain any such protective order or other remedy. If the Company elects not to seek, or is unsuccessful in obtaining, any such protective order or other remedy in connection with any requirement that Executive disclose Proprietary Information or Third Party Information then Executive may disclose such Proprietary Information or Third Party Information to the extent legally required; provided, however, that Executive will use his reasonable best efforts to ensure that such Proprietary Information is treated confidentially by each Person to whom it is disclosed.
9. Noncompetition and Nonsolicitation.
(a) Noncompetition . As long as Executive is an employee of the Company or any Subsidiary thereof, and for a period ending twelve (12) months following the Termination Date of Executive's employment (the “ Restrictive Covenant Period ”), Executive shall not, directly or indirectly own, manage, control, participate in, consult with, render services for, or in any manner engage in any business competing with the businesses then carried on or anticipated to be carried on by the Company or its Subsidiaries (the “ Business ”) in any geographic area in which: (i) Executive acted as an employee of the Company or its Subsidiaries and had contact with the customers of the Company or its Subsidiaries during the 12-month period immediately preceding the Termination Date, and (ii) the Company or its Subsidiaries is conducting business or has conducted business during the Restrictive Covenant Period.
(b) Nonsolicitation . As long as Executive is an employee of the Company or any Subsidiary thereof, and during the Restrictive Covenant Period thereafter, Executive shall not directly or indirectly through another entity: (i) induce or attempt to induce any employee of the Company or any Subsidiary to leave the employ of the Company or such Subsidiary, or in any way interfere with the relationship between the Company or any Subsidiary and any employee thereof; (ii) hire or employ any person who was an employee of the Company or any Subsidiary at any time during the 12-month period immediately preceding the Termination Date; (iii) induce or attempt to induce any customer, supplier, licensee or other business relation of the Company or any Subsidiary to cease doing business with the Company or such Subsidiary, or in any way interfere with the relationship between any such customer, supplier, licensee or business relation and the Company or any Subsidiary; (iv) solicit or provide services related to the Business to any Person who was a customer or client of the Company or any Subsidiary at any time during the 12-month period immediately preceding the Termination Date; or (v) solicit or provide services related to the Business to any Prospective Customer. For purposes hereof, a “ Prospective Customer ” means any Person whom the Company or any of its Subsidiaries has entertained discussions with to become a client or customer at any time during the 12-month period immediately preceding the Termination Date and who has not explicitly rejected a business relationship with the Company.
(c) Acknowledgment . Executive acknowledges that in the course of his employment with the Company and its Subsidiaries, he has and will become familiar with the trade secrets and other Proprietary Information of the Company and its Subsidiaries. Executive further acknowledges that as the Chief Executive Officer of the Company, Executive has and will have direct or indirect responsibility, oversight or duties with respect to the businesses of the Company and its Subsidiaries and its and their current and prospective employees, vendors, customers, clients and other business relations, and that, accordingly, the geographical restriction contained in this Section 9 is reasonable in all respects and necessary to protect the goodwill and Proprietary Information of the Company and that without such protection the Company's customer and client relations and competitive advantage would be materially adversely affected. It is specifically recognized by Executive that his services to the Company and its Subsidiaries are special, unique and of extraordinary value, that the Company has a protectable interest in prohibiting Executive as provided in this Section 9 , that Executive is responsible for the growth and development of the Company and the creation and preservation of the Company's goodwill, that money damages are insufficient to protect such interests, that there is adequate consideration being provided to Executive hereunder, that such prohibitions are necessary and appropriate without regard to payments being made to Executive hereunder and that the Company would not enter this Agreement with Executive without the restriction of this Section 9 . Executive further acknowledges that the restrictions contained in this Section 9 do not impose an undue hardship on him and, since he has general business skills that may be used in industries other than that in which the Company and its Subsidiaries conduct their business, do not deprive Executive of his livelihood. Executive further acknowledges that the provisions of this Section 9 are separate and independent of the other sections of this Agreement.
(d) Enforcement, etc . If, at the time of enforcement of Section 8 or 9 of this Agreement, a court holds that the restrictions stated herein are unreasonable under circumstances then existing, the parties hereto agree that the maximum duration, scope