Exhibit 10.1
EXECUTIVE EMPLOYMENT AGREEMENT
This
Executive Employment Agreement (the " Agreement ") is made
and entered into as of November 12, 2010, by and between Zhan
Youdai, a person residing at the address listed on the signature
page attached hereto (" Executive "), and SMSA Palestine
Acquisition Corp., a Nevada corporation (the " Company "),
with respect to the following facts:
A. The
Company desires to employ Executive under the terms, conditions and
benefits as hereinafter described.
B.
Executive desires to render services to the Company, subject to the
terms and conditions set forth below.
NOW,
THEREFORE, in consideration of the mutual covenants and obligations
contained in this Agreement, and intending to be legally bound, the
parties hereto agree as follows:
ARTICLE I
EMPLOYMENT AND RESPONSIBILITIES
1.1
Employment . The Company hereby employs Executive as its
Chief Executive Officer, subject to the supervision and direction
of the Company's board of directors (the " Board
").
1.2
Assignment of Duties . Executive shall have such duties as
may be assigned to Executive from time to time by the Board,
consistent with the responsibilities of the position of Chief
Executive Officer. All such duties shall be performed outside of
the United States of America.
1.3
Executive's Devotion of Time. Executive shall devote such
portion of Executive’s time, abilities and energy to the
faithful performance of the duties assigned to Executive under this
Agreement and the promotion of the business affairs of the Company
as may be necessary to fulfill his obligations hereunder. Executive
may also be employed by one or more subsidiaries of the Company and
shall devote Executive's full time, abilities and energy to the
faithful performance of duties to the Company and its subsidiaries.
Executive shall not divert any business opportunities from the
Company to Executive or to any other person or business
entity.
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1.4 Conflicting Activities. Executive shall not,
during the term of this Agreement, be engaged in any other business
activity without the prior written consent of the Board; provided,
however, that this restriction shall not be construed as preventing
Executive from investing Executive's personal assets and time in
publicly listed companies that are not in competition with the
Company or its affiliates, provided that Executive shall not own
more than five percent (5%) of the outstanding securities of any
such publicly listed companies.
ARTICLE II
COMPENSATION
During
the Term (as defined below), the Company shall pay Executive the
following compensation:
2.1
Salary. In consideration of the services to be rendered by
Executive to the Company, the Company will pay to Executive a
monthly salary of RMB100,000 (the " Base Salary ") during
the Term, which salary may be increased (but not decreased) from
time to time in the sole discretion of the Board. Such Base Salary
shall be payable in conformity with the Company's customary
practices for executive compensation, as such practices shall be
established or modified from time to time, but the Base Salary
shall be paid to Executive no less frequently than once each
month.
2.2
Bonus . During the Term, Executive will be eligible to earn
bonuses in conformity with the Company's customary practices for
executive compensation as determined by the Board based upon
Executive’s and the Company’s performance. Any bonus
earned shall be paid within ninety (90) days following the end of
the Company's fiscal year end.
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2.3
Compensatory Equity . Executive will be eligible to be
awarded options to acquire common stock or other equity
compensation awards under the Company's or its affiliates' stock
incentive plan (once such plan is adopted and approved by the Board
and Company stockholders). Executive's equity awards level will be
determined by the Board.
2.4
Benefits . During the Term, Executive will be eligible to
participate on the same basis as other Company executive employees
in the Company's employee benefit plans, including, without
limitation, global health insurance, accident & injury
insurance, and D & O liabilities insurance, as such benefits or
plans may be modified or amended from time to time.
2.5
Vacation . During the Term, Executive will be eligible to
accrue twenty days of paid vacation each year. Such vacation shall
be taken at such times and intervals as shall be agreed to by the
Company and Executive in their reasonable discretion. Executive
shall cease to accrue further vacation at any time that Executive
has an unused vacation accrual of twenty days.
2.6
Expenses . The Company shall pay or reimburse Executive for
all reasonable business expenses including, without limitation,
cell phone, personal digital assistant (PDA) device, business
travel expenses, reasonably incurred or paid by Executive in the
performance of his responsibilities hereunder in accordance with
the Company's prevailing policy and practice relating to
reimbursements as modified from time to time. Executive must
provide substantiation and documentation of these expenses to the
Company in accordance with Company policy in order to receive
reimbursement.
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ARTICLE III
TERM
3.1 The Company shall employ
Executive on the terms and conditions set forth herein during the
period commencing on the date of this Agreement and ending on
November 12, 2012 unless terminated earlier in accordance with
ARTICLE IV (the " Term "). Thereafter the Term will continue
on a month to month basis until either party provides the other
party written notice at least thirty (30) days prior to expiration
of the applicable Term. Expiration of the Term shall not be
considered Good Reason or a termination of Executive's employment
by the Company without Cause. Unless the Company requests otherwise
in writing, upon termination of Executive's employment for any
reason, Executive shall be deemed to have immediately resigned from
all positions with the Company (and its affiliates) as of
Executive's last day of employment (the " Termination Date
").
ARTICLE IV
TERMINATION
4.1
Accrued Payments. Executive's employment under this
Agreement may be terminated prior to the end of the Term as follows
in this ARTICLE IV. Except as otherwise provided herein, upon
termination of Executive's employment for any reason, on the
Termination Date Executive shall receive the " Accrued
Payments " which shall consist of: (i) earned but unpaid Base
Salary; (ii) unused vacation days, if any, to the extent accrued
through the Termination Date; and (iii) payment of any outstanding
reimbursable business expenses.
4.2
At Executive's Option. Executive may terminate his
employment upon a month’s prior written notice or by payment
to the Company of an amount equal to the Base Salary in lieu of
such notice under this Agreement at any time for any reason. In the
event of a termination of his employment under this Agreement by
Executive, he shall be entitled to the Accrued Payments.
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4.3
Termination for Cause. The Company may terminate Executive's
employment under this Agreement for Cause at any time upon prior
written notice to Executive. Termination by the Company shall
constitute a termination for " Cause " if such termination
is for one or more of the following reasons:
4.3.1 the failure or refusal of Executive to
fulfill his obligations under this Agreement (other than by reason
of his Disability (as defined below)) or the material breach by
Executive of any of the terms of this Agreement which is not cured
within 15 days written notice to Executive identifying the nature
of the failure;
4.3.2 gross negligence, a material breach by
Executive of his fiduciary duties or the commission by Executive of
an act of fraud or embezzlement or his misappropriation of any
money or other assets or property (whether tangible or intangible)
of the Company or its subsidiaries;
4.3.3 Executive's engagement in conduct
resulting in a material injury to the business, financial condition
or operations of the Company or its subsidiaries and which is not
authorized by the Board;
4.3.4 Declaration by competent authorities of
Executive’s bankruptcy or loss of professional qualification;
or
4.3.5 The conviction of, or plea of guilty or
nolo contendere by, Executive of a felony or any crime or civil
violation involving moral turpitude.
In the
event of a termination of Executive's employment for Cause,
Executive shall be entitled only to the Accrued
Payments.
4.4 At
the Election of the Company without Cause. The Company may terminate Executive's employment
upon a month’s prior written notice under this Agreement
without Cause, in which event, then in addition to the Accrued
Payments, Executive will be eligible to receive a Severance Package
(as defined below) subject to Section 4.6. The severance benefits
payable to Executive (the " Severance Package ") will
consist of twelve (12) months of Executive’s Base Salary then
in effect on the Termination Date, with such cash severance
payments payable to Executive in substantially equal monthly
installments commencing as of the last day of the month of the
Termination Date (provided however that the first installment will
not be paid until the Section 4.6 Release has become effective and
further provided that such first installment will be a larger
amount to account for the passage of time following the Termination
Date in case such first payment occurs more than one month after
its scheduled date of payment).
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4.5
Termination due to Disability. In the event that Executive
is unable to fulfill his obligations due to illness, injury or
other disabilities (" Disabilities "), the Company may, if
and as permissible under applicable laws, stop paying all or
portion of his Base Salary and, if Executive is unable to fulfill
his obligations for more than thirty (30) days during any
twelve-month period due to Disabilities, the Company may terminate
his employment on a month’s prior written notice.
4.6
Resignation for Good
Reason. If Executive
terminates his employment for Good Reason, then in addition to the
Accrued Payments, Executive shall be eligible to receive the
Severance Package subject to Section 4.7. Payments of the Severance
Package shall be made at the same times specified in Section 4.4. "
Good Reason " shall mean (i) a material diminution in
Executive’s authority, duties or responsibilities; (ii) any
reduction in the Base Salary; (iii) declaration by competent
authorities of the Company’s bankruptcy; (iv) the
Company’s material violation of the law; or (v) the Company's
material breach of this Agreement. For purposes of this Agreement,
Executive may resign his employment from the Company for "Good
Reason" within sixty (60) days after the date that any one of the
Good Reason events listed above has first occurred without
Executive's written consent. Executive's resignation for Good
Reason will only be effective if the Company has not cured or
remedied the Good Reason event within 30 days after its receipt of
Executive's written notice (such notice shall describe in detail
the basis and underlying facts supporting Executive's belief that a
Good Reason event has occurred). Such written notice must be
provided by Executive to the Company within 30 days of the initial
existence of the alleged Good Reason event. Failure to timely
provide such written notice to the Company means that Executive
will be deemed to have consented to and waived the Good Reason
event. If the Company does timely cure or remedy the Good Reason
event, then Executive may either resign his employment without Good
Reason or Executive may continue to remain employed subject to the
terms of this Agreement.
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4.7
Release of Claims and Covenant Not to Sue. The Severance
Package will be paid if and only if Executive timely satisfies all
of the following conditions: (i) Executive complies with all
surviving provisions of this Agreement; (ii) Executive executes
(and does not revoke) a release of claims and covenant not to use
(the " Release ") substantially in the form provided in the
attached Exhibit A (and as may be reasonably modified by the
Company) and remains in full compliance with such Release and (iii)
such Release must become effective within 60 days after the
Termination Date.
4.8
Covenants. As a condition of this Agreement and to
Executive's receipt of any post-employment benefits, Executive
agrees that Executive will fully and timely comply with all of the
covenants set forth in this Section (which shall survive the
Termination Date).
4.8.1 Upon the Termination Date, Executive
shall execute the Company's Proprietary Information Agreement
Termination Certification (or its successor agreement);
4.8.2 Upon the Termination Date, Executive
shall return to the Company all Company property including, but not
limited to, computers, cell phones, pagers, keys, laboratory
notebooks, business cards, intellectual property, etc. and
Executive shall not retain any copies, facsimiles or summaries of
any Company proprietary information;
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4.8.3 Executive will fully pay off any
outstanding advances, loans or debts owed to the Company no later
than their applicable due date or the Termination Date (if no other
due date has been previously established);
4.8.4 Executive will submit any outstanding
business expense reports to the Company prior to the Termination
Date;
4.8.5 Executive will not at any time during and
subsequent to Executive's period of employment with the Company
make any disparaging statements (oral or written) about the
Company, or any of its affiliated entities, officers, directors,
employees, stockholders, representatives or agents, or any of the
Company's products or work-in-progress, in any manner that might be
harmful to their businesses, business reputations or personal
reputations;
4.8.6
As of the Termination Date,
Executive will no longer represent that Executive is an officer,
director or employee of the Company and Executive will immediately
discontinue using Executive's Company mailing address, telephone,
facsimile machines, voice mail and e-mail;
4.8.7
Executive acknowledges that (i) upon
a violation of any of the covenants contained in this Section 4.7
of this Agreement or (ii) if the Company is terminating Executive's
employment for Cause, the Company would as a result sustain
irreparable harm, and, therefore, Executive agrees that in addition
to any other remedies which the Company may have, the Company shall
be entitled to obtain equitable relief including specific
performance and injunctions restraining Executive from committing
or continuing any such violation; and
4.8.8 Executive shall, upon the Company's request and
without any payment therefor, reasonably cooperate with the Company
(and be available as necessary) after the Termination Date in
connection with any legal matters involving events that occurred
during Executive's period of employment with the
Company.
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ARTICLE V
TAXES
5.1
Executive Tax Obligations. Anything to the contrary
notwithstanding, all payments made under this Agreement to
Executive or Executive's estate or beneficiaries will be subject to
tax withholding pursuant to any applicable laws or regulations.
Executive will be solely liable and responsible for the payment of
Executive's taxes arising as a result of any payment hereunder
including without limitation any unexpected or adverse tax
consequence.
5.2
Section 409A.
This Agreement is intended to comply
with the requirements of section 409A of the Internal Revenue Code
(the "Code" ) to the extent applicable. In the event this
Agreement or any benefit paid to Executive hereunder is deemed to
be subject to Code Section 409A, Executive consents to the Company
adopting such conforming amendments as the Company deems necessary,
in its reasonable discretion, to comply with Code Section 409A. In
addition, if Executive is a specified employee (within the meaning
of Code Section 409A) at the time of Executive's separation from
service, then to the extent necessary to comply with Code Section
409A and avoid the imposition of taxes under Code Section 409A, the
payment of certain benefits owed to Executive under this Agreement
will be delayed and instead paid (without interest) to Executive
upon the earlier of the first business day of the seventh month
following Executive's separation from service or ten business days
after Executive's death.
5.3
Code Section 280G.
In the event that it is determined
that any payment or distribution of any type to or for Executive's
benefit made by the Company, by any of its affiliates, by any
person who acquires ownership or effective control or ownership of
a substantial portion of the Company's assets (within the meaning
of Section 280G of the Code) or by any affiliate of such person,
whether paid or payable or distributed or distributable pursuant to
the terms of an employment agreement or otherwise, would be subject
to the excise tax imposed by Section 4999 of the Code or any
interest or penalties with respect to such excise tax (such excise
tax, together with any such interest or penalties, are collectively
referred to as the "Excise Tax" ), then such payments or
distributions or benefits shall be payable either: (i) in full; or
(ii) as to such lesser amount which would result in no portion of
such payments or distributions or benefits being subject to the
Excise Tax.
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Executive shall receive the greater, on an
after-tax basis, of (i) or (ii) above, provided however that to the
extent applicable, Executive may elect to subject the payments that
are in excess of the permissible maximum payment amount specified
under Code section 280G(b)(2)(A)(ii) to a stockholder vote as
provided for under Code section 280G(b)(5).
Unless
Executive and the Company agree otherwise in writing, any
determination required under this Section 5.3 shall be made in
writing by an independent accountant selected by the Company (the "
Accountant ") whose determination shall be conclusive and
binding. Executive and the Company shall furnish the Accountant
such documentation and documents as the Accountant may reasonably
request in order to make a determination. The Company shall bear
all costs that the Accountant may reasonably incur in connection
with performing any calculations contemplated by this
Section.
ARTICLE VI
PROPRIETARY INFORMATION AND INVENTIONS.
6.1 Concurrently with the execution
of this Agreement, and in consideration of the salary and benefits
provided to Executive under this Agreement, Executive has entered
into the Company's Proprietary Information and Inventions Agreement
in the form attached hereto as Exhibit B.
ARTICLE VII
DUTY OF LOYALTY
7.1
Non-Competition. During the term of this Agreement, and
within six (6) months after the Termination Date, Executive will
not engage in any employment, business, or activity that is in any
way competitive with the business or proposed business of the
Company, and Executive will not assist any other person or
organization in competing with the Company or in preparing to
engage in competition with the business or proposed business of the
Company.
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7.2
Non-Solicitation. During the term of this Agreement,
Executive will not encourage any customer, employee or consultant
of the Company to discontinue, substantially reduce or materially
alter their business relationship with the Company in a manner that
is detrimental to the Company.
7.3
Injunctive Relief. Executive expressly agrees that the
covenants set forth in Sections 7.1 and 7.2 are reasonable and
necessary to protect the Company and its legitimate business
interests, and to prevent the unauthorized dissemination of
Confidential Information to competitors of the Company. Executive
also agrees that the Company will be irreparably harmed and that
damages alone cannot adequately compensate the Company if there is
a violation of Sections 7.1 or 7.2 by Executive, and that
injunctive relief against Executive is essential for the protection
of the Company. Therefore, in the event of any such breach, it is
agreed that, in addition to any other remedies available, the
Company shall be entitled as a matter of right to injunctive relief
in any court of competent jurisdiction, plus attorneys' fees
actually incurred for the securing of such relief.
ARTICLE VIII
MISCELLANEOUS
8.1
Governing Law and Choice of Forum. This Agreement shall be
interpreted and governed by the laws of the State of Nevada and, as
applicable, the laws of the United States, without giving effect to
the principles of choice of law or conflicts of laws of
Nevada.
8.2
Authority. Each party warrants that it has proper authority
to enter into this Agreement. Execute represents and warrants to
the Company that the execution or performance of this Agreement
does not and will not constitute a breach of any other agreement to
which it is a party or bound.
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8.3
Interpretation. The captions in this Agreement are for
convenience and reference only and the words contained therein
shall in no way be held to explain, modify, amplify or aid in the
interpretation, construction or meaning of the provisions of this
Agreement. Both the Company and Executive have had the opportunity
to consult with an attorney of his choice before executing this
Agreement. Accordingly this Agreement shall be construed in
accordance with its fair meaning and not strictly for or against
either party.
8.4
Waiver. The waiver by either of the parties, express or
implied, of any right under this Agreement or any failure to
perform under this Agreement by the other party, shall not
constitute or be deemed a waiver of any other right under this
Agreement or of any other failure to perform under this Agreement
by the other party, whether of a similar or dissimilar
nature.
8.5
Severability.
Should any part or provision of this
Agreement be held unenforceable or in conflict with the law of any
jurisdiction, the validity of the remaining parts or provisions
shall not be affected by such holding.
8.6
Entire Agreement.
This Agreement and the Exhibits
attached hereto set forth the entire agreement and understanding of
the parties relating to the subject matter contained in this
Agreement and merges all prior and contemporaneous discussions and
agreements between them. Any modific
