Exhibit 10.2
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EMPLOYMENT AGREEMENT
Among
[Hope Ni]
And
COMTECH GROUP
Dated as of August 1st, 2004
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THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into this __ day of
August, 2004 (the "Effective Date") by and between [Hope Ni] (the "Employee")
and COMTECH GROUP (THE COMPANY).
BACKGROUND
WHEREAS the Employee and the Company desire to enter into this Agreement for the
purpose of retaining the services of the Employee, and wishes to provide the
Employee with an inducement to remain with the Company;
WHEREAS the Employee has been employed by the Company NOW, THEREFORE, intending
to be legally bound, and in consideration of the premises and the mutual
promises set forth in this Agreement and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Company and Employee agree as follows:
DEFINITIONS
"Affiliate" means with respect to any Person directly or indirectly Controlling,
Controlled by, or under common Control with such Person.
"Board" means Board of Directors.
"Cause" (i) Employee commits a crime involving dishonesty, breach of trust, or
physical harm to any person; (ii) Employee willfully engages in conduct that is
in bad faith and materially injurious to the Company, including but not limited
to, misappropriation of trade secrets, fraud or embezzlement; (iii) Employee
commits a material breach of this Agreement, which breach is not cured within
twenty (20) days after written notice to Employee from the Company; (iv)
Employee willfully refuses to implement or follow a reasonable and lawful policy
or directive of the Company, which breach is not cured within twenty (20) days
after written notice to Employee from the Company; or (v) Employee engages in
malfeasance demonstrated by a pattern of failure to perform job duties
diligently and professionally.
"Change in Control" shall be defined in Section 4.32.
"Change in Control Audit Date" shall be the date upon which the Board of
Directors of the Company certifies the audited accounts of the company for the
first complete fiscal year, commencing on January 1st and ending on December
31st, after the Change in Control.
"Change in Control Stock Option Exercise Date" shall be the earliest possible
date upon which the value of one share of stock in the Company can be determined
based upon any transaction resulting in a sale of a majority of shares owned by
Common, or as can be otherwise determined, in good faith, by the Board of
Directors of the Company.
"Company" as defined in Preamble.
"Control" (including the terms "Controlled by" and "under common Control with")
means the possession, directly or indirectly or as a trustee or executor, of the
power to direct or cause the direction of the management of a Person, whether
through the ownership of stock, as a trustee or executor, by contract or credit
agreement or otherwise.
"Effective Date" as defined in Preamble.
"Employee" as defined in Preamble.
"Employment Capacity" shall be Financial Officer and Secretary of the Company.
"Employment Change of Control Termination Date" shall be the later of (i) 6
months after the Change in Control Audit Date; (ii) one year from the date of a
Change of Control; or (iii) the date on which either the Company or the Employee
elects not to extend the Agreement further by giving written notice to the other
party.
"Employment Contract Termination Date" shall be the later of December 31, 2007
or the date on which either the Company or the Employee elects not to extend the
Agreement further by giving written notice to the other party.
"Employment Final Termination Date" shall be the date upon which the Employee's
employment with the Company ceases for any reason.
"Employee Stock Option" shall be the right given by the Company to the Employee
on specific vesting dates during the Employment Term to purchase a specific
number of Ordinary Shares of the Company, par value USD0.001, at a specific
strike price, for a length of time equal to the earlier of 10 years from the
Effective Date, 6 months after the Employee Final Termination Date, or the
Change in Control Stock Option Exercise Date, subject to the Change in Control
provisions in Section 4.3.
"Employment Term" shall be as defined in Section 1.1.
"Exchange Act" means the Securities and Exchange Act of 1934, as amended.
"Good Reason" in the context of the employee's resignation is defined as (a) a
change in the employees position which materially reduces the employee's level
of responsibilities, duties or stature; (b) reduction in the employee's
compensation or (c) a relocation of the employee's principal place of employment
by more than 50 miles.
"Monthly Rate of Compensation" shall be the amount in US Dollars of the Salary
divided by 13, and extra month of compensation shall be given during the Chinese
New Year month.
"Option Exercise Date" is the lesser of 10 years from the date first written
above, or 6 months from Employment Termination.
"Person" means an individual, corporation, partnership, limited liability
company, limited partnership, association, trust, unincorporated organization or
other entity or group (as defined in Section 13(d)(3) of the Securities and
Exchange Act of 1934, as amended).
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"Qualified Transaction" shall mean an underwritten offering of Ordinary Shares
of the Company and yields gross proceeds to the Company in excess of
US$30,000,000.
"Salary" shall be US$117,000 per annum or such greater amount as may from time
to time be approved by the Company only and for purposes of definition shall not
include any other compensation including stock option awards.
"Subsidiary" means, with respect to any Person, any entity which securities or
other ownership interests having ordinary voting power to elect a majority of
the Board of Directors or other persons performing similar functions are at the
time directly or indirectly owned by such Person.
"Vesting Schedule" shall mean (i) options for 78,750 shares vesting on February
1, 2005 or vesting in equal monthly installments over the six months from the
Effective date if the Company completes an offering yields gross proceeds at
least US$10,000,000; (ii) the stock options for 236,250 shares vesting in equal
monthly installments over the period of 1.5 years from February 2, 2005 to
August 1, 2006, and (iii) the stock options for 105,000 shares vesting in equal
monthly installments over the period of 1 year from August 2, 2006 to August 1,
2007.
ARTICLE 1 EMPLOYMENT AND TERM
The Company employs Employee and the Employee hereby agrees to such employment
by the Company during the Employment Term to serve as the Chief Financial
Officer of the Company, with the customary duties, authorities and
responsibilities of such position and such other duties, authorities and
responsibilities relative to the Company that may from time to time be delegated
to Employee by the officers of the Company. Employee shall perform such duties
and responsibilities as are normally related to such position in accordance with
the standards of the industry and any additional duties now or hereafter
assigned to Employee by the Company. Employee shall abide by the Company's
rules, regulations, and practices as they may from time-to-time be adopted or
modified.
1.1 EMPLOYMENT TERM. The Employment Term of this Agreement shall commence
on the Effective Date and shall continue until the earlier of the
Employment Contract Termination Date or the Employment Final
Termination Date, except in the event that a Change in Control occurs
prior to the Employment Contract Termination Date.
1.2 If a Change in Control occurs prior to the Employment Contract
Termination Date, then the terms outlined in Section 4.3 shall apply.
ARTICLE 2 COMPENSATION PACKAGE AMOUNT
2.1 COMPENSATION PACKAGE AMOUNT PLUS BENEFITS IN KIND. During the
Employment Term, as compensation for services hereunder, Employee shall
be paid the Compensation Amount; or such greater amount as may from
time to time be approved by the Company (such salary, as increased from
time to time, the "Base Salary"). Base Salary shall be payable in
monthly installments of US$ or Chinese RMB. The Compensation Package a
Amount plus Benefits in Kind shall include all compensation and
Benefits in Kind described in any agreements signed between Employee
and the Company, or its subsidiaries, should be entailed in the
Compensation Package Amount and none of them should be treated as
additional to the Compensation Amount specified in Page 2.
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2.2 INDIVIDUAL INCOME TAX. The Company will pay individual income tax in
respect of the Compensation Package Amount on behalf of the Employee
according to Hong Kong taxation laws and the tax amount will be
deducted from the Employee's monthly base salary.
2.3 BENEFITS. The Employee shall participate in the plans or programs
maintained by the Company for its expatriate employees generally that
provide insurance, medical benefits, retirement benefits, or similar
fringe benefits subject to the terms and eligibility requirements of
such plans.
The Employee shall be entitled to paid vacation each calendar year of
the Employment Term, in accordance with the Company's vacation policy
then in effect;
2.4 EXPENSES. The Company shall pay or reimburse the Employee for
reasonable business expenses actually incurred or paid by the Employee
during the Employment Term, in the performance of her services
hereunder.
2.5 STOCK OPTION AWARDS.
2.5.1 The Employee will be granted the following Employee Stock
Options during the Employment Term:
2.5.1.1 An Employee Stock Option on 420,000 Ordinary Shares
of the Company representing 0.9% of the total shares
outstanding subject to the Vesting Schedule at a
strike prate per option equal to US$1.50.
2.5.2 In the event of a Qualified Transaction, all stock options
currently held by the employee shall be vested.
2.5.3 In the event of a Change in Control, the additional terms
outlines in Section 4.3 shall apply.
ARTICLE 3 TERMINATION
3.1 GENERAL.
3.1.1 COMPANY RIGHT TO TERMINATE. The Company shall have the right
to terminate the employment of the Employee at any time with
or without Cause but the relative rights and obligations of
the parties in the event of any such termination or
resignation shall be determined under this Agreement.
3.1.2 EMPLOYEE RIGHT TO TERMINATE. The Employee shall have the right
to resign for any reason with 30 days notice to the Company,
but the relative rights and obligations of the parties in the
event of any such resignation shall be determined under this
agreement ("Employee Resignation", and the date of notice by
the Employee to the Company of which shall be the "Employee
Resignation Date").
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3.2 TERMINATION UNDER CERTAIN CIRCUMSTANCES.
3.2.1 TERMINATION WITHOUT SEVERANCE BENEFITS. In the event the
Employee's employment with the Company is terminated prior to
the expiration of the Employment Term by reason of (i) the
Employee's resignation for any or no reason, or (ii) the
Employee's discharge by the Company for Cause or gross
negligence, as determined by a majority of the Board of
Directors and defined herein, this Agreement shall terminate
including, without limitation, the Company's obligations to
provide any compensation, benefits or severance to the
Employee under Article 3 of this Agreement or otherwise, other
than the Standard Termination Entitlements defined in section
4.1.
3.2.2 TERMINATION WITHOUT CAUSE OR RESIGNATION FOR GOOD REASON.
Except in the event of a Change in Control, the Company will
be obligated to provide the Standard Termination Entitlements
as defined in Section 4.1 and Severance Benefits as defined in
Section 4.2 if either the Company terminates the employee's
employment without Cause or the Employee resigns for Good
Reason.
3.2.3 TERMINATION UPON A CHANGE IN CONTROL. In the event of a Change
of Control, the terms outlined in Section 4.3 shall apply.
3.3 LIQUIDATED DAMAGES. The Company and Employee hereby stipulate that the
damages which may be incurred by the Employee as a consequence of any
such termination of employment are not capable of accurate measurement
as of the date first above written and that the liquidated damages
payments provided for in this Agreement constitute a reasonable
estimate under the circumstances of, and are in full satisfaction of,
all damages sustained as a consequence of any such termination of
employment.
ARTICLE 4 STANDARD TERMINATION ENTITLEMENTS; SEVERANCE BENEFITS.
4.1 STANDARD TERMINATION ENTITLEMENTS. For all purposes of this Agreement,
the Employees "Standard Termination Entitlements" shall mean and
include, (a) the Employee's earned but unpaid compensation (including,
without limitation, salary, bonus, and all other items which constitute
wages under applicable law) as of the date of her termination of
employment. This payment shall be made at the time and in the manner
prescribed by law applicable to the payment of wages but in no event
later than 30 days after the date of the Employee's termination of
employment; (b) the benefits, if any, due to the Employee (and the
Employee's estate, surviving dependents or her designated
beneficiaries) under the employee benefit plans and programs and
compensation plans and programs (including stock option plans)
maintained for the benefit of the employees of the Company; and (c) all
of the Employee's Employee Stock Options that have been deemed to have
vested prior to the Employment Final Termination Date. The time and
manner of payment or other delivery of these benefits and the
recipients of such benefits shall be determined according to the terms
and conditions of the applicable plans and programs.
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4.2 SEVERANCE BENEFITS. For all purposes of this Agreement, the Employee's
"Severance Benefits" shall mean and include:
4.2.1 the payment of a lump sum amount equal to 3 multiplied by the
Employee's monthly rate of Compensation Package Amount in
effect immediately prior to her termination of employment; and
4.2.2 for a period of six months after the Employee's termination of
employment, direct payment by the Company to the carrier of
the premiums due for any health insurance continuation
coverage elected by the Employee under the Company group
health plans.
4.3 CHANGE IN CONTROL
4.3.1 CHANGE IN CONTROL ADJUSTMENTS AND COMPENSATION. The "Change in
Control Adjustments and Compensation" shall mean the
following:
4.3.1.1 CHANGE IN CONTROL EMPLOYMENT TERM. If a Change in
Control occurs prior to the Employment Contract
Termination Date then the Employment Term shall
continue until the earlier of the Employment Final
Termination Date or the Employment Change of Control
Termination Date.
4.3.1.2 CHANGE IN CONTROL SEVERANCE PAYMENT AMOUNT. If a
Change in Control occurs prior to the Employment
Contract Termination Date and the Company terminates
the employee's employment without Cause or the
Employee resigns for Good Reason prior to the Change
in Control Audit Date, then the Employee will be
entitled to a payment equal to the greater of 6 times
the Monthly Rate of Compensation OR 12 months salary
less any compensation paid to the employee during the
period between the Change in Control and Employment
Final Termination Date and the Company shall be
obligated to provide the Standard Termination
Entitlements as defined Section 4.1. If a Change in
Control occurs prior to the Employment Contract
Termination Date and the Company terminates the
employee's employment without Cause or the Employee
resigns for Good Reason after the Change in Control
Audit Date, then the severance payment in Section
4.2.1 shall apply.
4.3.1.3 CHANGE IN CONTROL HEALTH AND LIFE INSURANCE BENEFITS.
If a Change in Control occurs prior to the Employment
Contract Termination Date then the Employee will be
entitled to Company-paid contributions for health and
life insurance premiums for the greater of six months
or the number of months between the Employment Final
Termination Date and the first anniversary of the
Change in Control.
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4.3.1.4 CHANGE IN CONTROL EMPLOYEE STOCK OPTION ENTITLEMENTS.
If a Change in Control occurs prior to the Employment
Contract Termination Date then the Employee Stock
Options will be modified to include the following
provisions. In the event that the following terms are
in breach of the laws of the People's Republic of
China or any other jurisdiction, or if the Board of
Directors prior a Change of Control decides to
terminate or replace the Employee Stock Options or
any related plans, or on the event of a dispute, the
Company and Employee agree to effect whatever
transaction or agreement necessary to preserve the
intent and economic value represented by the terms
outlined it Section 4.3.1.4.
4.3.1.4.1 VESTING OF EMPLOYEE STOCK OPTION
AWARDS. The number of Employee Stock Options
listed in Section 2.6.1.1. shall be deemed
to have vested in full upon a Change of
Control, the aggregate number of which shall
be the "Total Stock Option Award", subject
to the Strike Adjustment.
4.3.1.4.2 ADJUSTMENT TO THE EXERCISE AND
STRIKE PROVISIONS OF EMPLOYEE STOCK OPTIONS.
If a Change in Control occurs prior to the
Employment Contract Termination Date, the
strike price and exercise date and ability
to exercise Employee Stock Options shall be
as follows:
4.3.1.4.2.1 NO EMPLOYEE RESIGNATION
PRIOR TO CHANGE IN CONTROL AUDIT DATE. If
the Employment Final Termination Date is
after Change in Control Audit Date, and the
Employee's Employment has not been
terminated under the provision outlined in
Section 3.1.2, then the Employee shall have
the right to exercise 100% of the Employee
Stock Options at a Strike Price of US$1.5
per Share Option on the Change in Control
Stock Option Exercise Date.
4.3.1.4.2.2 EMPLOYEE RESIGNATION
PRIOR TO CHANGE IN CONTROL AUDIT DATE. If
the Employee's Employment is terminated
under the provision outlined in Section
3.1.2 prior to Change in Control Audit Date,
then the following shall apply, subject to
the Escrow Provisions outlined in Section
4.2.1.4.3:
4.3.1.4.2.2.1 the Employee
shall have the right to exercise the
following number of Employee Stock Options
at a Strike Price of US$1.5 per on the
Change in Control Stock Option Exercise
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Date. The Change in Control Percentage of
Stock Options of the Total Stock Option
Award, plus an additional number of options
equal to the Change in Control Remaining
Percentage of Stock Options multiplied by
percentage represented by the number of days
between the Change of Control Date and the
Employment Resignation Date divided by the
total number of days between the Change of
Control Date and Change in Control Audit
Date, (the number of Stock Option referred
to herein as the "Number of Stock Options
Entitled to at Original Strike upon Change
of Control and Early Resignation"), and
4.3.1.4.3 ESCROW PROVISIONS. In the event
that an Employee exercises any options after
the date of a Change of Control and prior to
the Change in Control Audit Date, the
proceeds resulting from the exercise of such
options shall be held in an escrow account
at a reputable law firm appointed by the
Board of Directors with the approval of the
CEO of the Company for the benefit of the
Employee until no earlier than Change in
Control Audit Date. All related expenses
derived from the Escrow Provisions shall be
paid for by the Company.
4.3.2 DEFINITION. Change in Control shall mean any one of the
following:
4.3.2.1 the consummation of a reorganization, merger or
consolidation of the Company with one or more other
persons, other than a transaction following which:
4.3.2.2 at least 49% of the equity ownership interests of the
entity resulting from such transaction are
beneficially owned (within the meaning of Rule 13d-3
promulgated under the Securities Exchange Act of
1934, as amended ("Exchange Act")) in substantially
the same relative proportions by persons who,
immediately prior to such transaction, beneficially
owned (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) at least 100% of the
outstanding equity ownership interests in the
Company; and
4.3.2.3 at least 49% of the securities entitled to vote
generally in the election of directors of the entity
resulting from such transaction are beneficially
owned (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) in substantially the same
relative proportions by persons who, immediately
prior to such transaction, beneficially owned (within
the meaning of Rule 13d-3 promulgated under the
Exchange Act) at least 100% of the securities
entitled to vote generally in the election of
directors of the Company.
4.3.2.4 a complete liquidation or dissolution of the Company;
or
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4.3.2.5 the occurrence of any event if, immediately following
such event, at least 49% of the members of the Board
of Directors of the Company do not belong to any of
the following groups: (a) individuals who were
members of the Board of Directors of the Company on
the date hereof; or (b) individuals who first became
members of the Board of Directors of the Company
after the date hereof either: (i) upon election to
serve as a member of the Board of Directors of the
Company by affirmative vote of three-quarters of the
members of such board, or of a nominating committee
thereof, in office at the time of such first
election; or (ii) upon election by the stockholders
of the Company to serve as a member of such board,
but only if nominated for election by affirmative
vote of three-quarters of the members of the Board of
Directors of the Company, or of a nominating
committee thereof, in office at the time of such
first nomination; provided, however, that such
individual's election or nomination did not result
from an actual or threatened contest for the election
of directors or other actual or threatened
solicitation of proxies or consents other than by or
on behalf of the Board of Directors of the Company.
4.3.2.6 In no event, however, shall a Change in Control be
deemed to have occurred as a result of any Qualified
Transaction of the securities of the Company. For
purposes of this section, the term "person" shall
have the meaning assigned to it under sections
13(d)(3) or 14(d)(2) of the Exchange Act.
ARTICLE 5 PROPRIETARY INFORMATION
The Employee shall enter into a Key Employee Invention Assignment and
Confidentiality Agreement attached herein as Exhibit A and a Non-Compete
Agreement attached herein as Exhibit B. The Employee agrees that the provisions
of this Article 5, Exhibit A and Exhibit B are necessary to protect the
interests of the Company or its Subsidiaries or Affiliates and. are reasonable
and valid in geographical and temporal scope and in all other respects. If any
court determines that the provisions of this Article 5 or any part thereof are
unenforceable because of the duration or geographical scope of such provision,
such court will have the power to reduce the duration or scope of such
provision, as the case may be, and, in its reduced form, such provision will be
enforceable.
ARTICLE 6 DISPUTE RESOLUTION
6.1 DISPUTE RESOLUTION. Any dispute, controversy or claim, at any time
arising out of this or relating to this Agreement, or the breach,
termination or invalidity thereof, shall be referred to the Hong Kong
courts for final and binding arbitration. Any arbitral award may be
enforced through a judgment rendered in any court of competent
jurisdiction.
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ARTICLE 7 GENERAL PROVISIONS
7.1 NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and
shall be deemed to have been duly received if so given) by hand
delivery, telegram, telex, or telecopy, or facsimile transmission, or
by mail (registered or certified mail, postage prepaid, return receipt
requested) or by any courier service, providing proof of delivery. All
communications hereunder shall be delivered to the respective parties
at the following addresses or to such other address as the party to
whom notice is given may have previously furnished to the other parties
hereto in writing in the manner set forth above:
If to the Employee: [ ]
If to the Company: [ ]
7.2 ENTIRE AGREEMENT. This Agreement, taken together with Exhibit A and
Exhibit B, shall constitute the entire agreement between the Employee
and the Company with respect to the Company's employment of the
Employee and supersedes any and all prior agreements and
understandings, including but not limited to the Original Employment
Agreements, written or oral, with respect thereto.
7.3 AMENDMENTS AND WAIVERS. Any term of this Agreement may be amended and
the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only by an instrument in writing and signed by the
party against whom such amendment or waiver is sought to be enforced.
7.4 SUCCESSORS AND ASSIGNS. The personal services of the Employee are the
subject of this Agreement and no part of the Employee's or the
Company's rights or obligations hereunder may be assigned, transferred,
pledged or encumbered by the Employee or the Company. This Agreement
shall inure to the benefit of, and be binding upon (a) the parties
hereto, (b) the heirs, administrators, executors and personal
representatives of the Employee and (c) the successors and assigns of
the Company as provided herein.
7.5 GOVERNING LAW AND VENUE. This Agreement, including the validity hereof
and the rights and obligations of the parties hereunder, and all
amendments and supplements hereof and all waivers and consents
hereunder, shall be construed in accordance with and governed by the
laws of the State of New York, USA, without giving effect to any
conflicts of law provisions or rule, that would cause the application
of the laws of any other jurisdiction.
7.6 SEVERABILITY. If any provisions of this Agreement, as applied to any
part or to any circumstance, shall be adjudged by a court to be invalid
or unenforceable, the same shall in no way affect any other provision
of this Agreement, the application of such provision in any other
circumstances or the validity or enforceability of this Agreement.
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7.7 SURVIVAL. The rights and obligations of the Company and Employee
pursuant to Articles 3, 4, 5, 6, and 7 shall survive the termination of
the Employee's employment with the Company and the expiration of the
Employment Term.
7.8 CAPTIONS. The headings and captions used in this Agreement are used for
convenience only and are not to be considered in construing or
interpreting this Agreement.
7.9 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
EMPLOYEE
By: /S/ HOPE NI
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[Hope Ni]
Title: Chief Financial Officer
COMPANY
By: /S/ XXXXXXX XXXX
--------------------------------------
Name: Xxxxxxx Xxxx
Title: Chairman of the Board and Chief
Executive Officer
ATTEST
By:
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Name:
Address:
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