This Executive Employment Agreement involves
Title: EXECUTIVE EMPLOYMENT AGREEMENT
Governing Law: Nevada Date: 11/18/2010
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:
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.
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.
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.
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.
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 ").
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.
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).
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.
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;
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.
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.
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.
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.
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.
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.
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.
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 modification of any of the provisions of this Agreement shall not be valid unless in writing and signed by authorized representatives of the party against whom such modification is sought to be enforced. All notices pursuant to this Agreement must be in writing (which may be by facsimile or electronic transmission) to be effective and shall be deemed to have been given on the day actually delivered or received (upon confirmation thereof). All notices to Executive shall be addressed to the address set forth below his and all the notices to the Company shall be sent to the Company's headquarters.
8.7 Assignment. The Company shall have the right to assign its duties, obligations and/or rights under this Agreement to any entity or person it chooses, at any time and without the consent of Executive. In the case of assignment, the assignee shall be deemed to be the Company for all purposes under this Agreement. Executive shall have no right to assign his duties or responsibilities under this Agreement. With the above qualifications, this Agreement shall inure to the benefit of, and be binding upon, the parties to this Agreement, and their respective executors, administrators, successors and assigns.
8.8 Attorneys' Fees. In the event of any disputes arising out of this Agreement, the prevailing party shall be entitled to reasonable attorneys' fees and other fees and costs related thereto.
8.9 Counterparts. This Agreement may be executed in multiple counterparts and transmitted by facsimile or by electronic mail in portable document format or by any other electronic means intended to preserve the original graphic and pictorial appearance of a party's a signature. Each such counterpart and facsimile or PDF signature shall constitute an original and all of which together shall constitute one and the same original.
[Signature Page to Executive Employment Agreement Follows]
SMSA Palestine Acquisition Corp.
By:/s/ Tsang Yin Chiu Stanley
/s/ Zhan Youdai
Name: Tsang Yin Chiu Stanley
Title: Chief Financial Officer