EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made and entered into this 31st day of July, 2006
by and between Kiwa Bio-tech Products Group Corp., a Delaware corporation having
its principal place of business at 000 Xxxx Xxxxxxxx Xxxx, Xxxxx 000 Xxxxxxxxx,
Xxxxxxxxxx 00000-0000 and Xx Xxx, an individual, whose address is 6 Xxx Xxx,
#1805, Xxx Xxxxx Yuan, Hai Xxxx Xx, Beijing, China ("Executive"), with reference
to the following facts:
R E C I T A L S
WHEREAS, Company is primarily engaged in the business of developing,
manufacturing, distributing and marketing innovative, cost-effective and
environmentally safe bio-technological products for the agricultural,
stockbreeding, natural resources and environmental protection markets, primarily
in China; and
WHEREAS, Company desires to employ Executive and to ensure the continued
availability to Company of Executive's services, and Executive desires to accept
such employment from Company and render such services, all in accordance with
and subject to the terms and conditions herein set forth; NOW, THEREFORE, in
consideration of the promises and of the mutual covenants contained herein, and
for other good and valuable consideration, receipt of which is hereby
acknowledged, Company and Executive do hereby agree as follows:
A G R E E M E N T
1. TERM OF EMPLOYMENT
1.01. SPECIFIED TERM. Company employs Executive, and Executive accepts
employment with Company, for a period of 3 years beginning on January 1, 2006,
and ending on December 31, 2008.
1.02. EARLIER TERMINATION. This Agreement may be terminated earlier as
hereinafter provided.
1.03. CONTINUING EFFECT. Notwithstanding any termination of this
Agreement except for termination under Sections 8.01 and 8.02, at the end of the
Term or otherwise, the provisions of Sections 2.04(b) and 2.07 shall remain in
full force and effect and the provisions of Section 2.07shall be binding upon
the legal representatives, successors and assigns of the Executive.
1.04. "EMPLOYMENT TERM" DEFINED. "Employment term" refers to the entire
period of employment of Executive by Company, whether for the periods provided
above, or whether terminated earlier as hereinafter provided or extended by
mutual Agreement between Company and Executive.
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2. DUTIES AND OBLIGATIONS OF EXECUTIVE.
2.01. GENERAL DUTIES. Executive shall serve as the President and Chief
Executive Officer (CEO) of Kiwa Bio-tech Products Group, Corp. ("Kiwa
Bio-tech"). In his capacity as President and CEO of Kiwa Bio-tech, Executive
shall do and perform all services, acts, or things necessary or advisable to
manage and conduct the business of Company, including the hiring and firing of
all employees and officers of Company, subject at all times to the policies set
by Company's Board of Directors, and to the consent of the Board when required
by the terms of this Agreement.
2.02. MATTERS REQUIRING CONSENT OF BOARD OF DIRECTORS. Executive shall
not, without specific approval of Company's Board of Directors, do or contract
to do any of the following:
(a) Borrow on behalf of Company in each transaction an amount in
excess of $ 500,000;
(b) Permit any customer of Company to become indebted to Company
in an amount in excess of $500,000;
(c) Purchase capital equipment for amounts in excess of the
amounts budgeted for expenditure by the Board of Directors;
(d) Sell any single capital asset of Company having a market
value in excess of $ 300,000 or a total of capital assets during a fiscal year
having a market value in excess of $ 1,00,000; and
(e) Commit Company to the expenditure of more than $200,000 in
the development and sale of new products or services.
2.03. DEVOTION TO COMPANY'S BUSINESS.
(a) Executive shall devote his entire productive time, ability,
and attention to the business of Company during the term of this Agreement. (b)
Executive shall not engage in any other business duties or pursuits whatsoever,
or directly or indirectly render any services of a business, commercial, or
professional nature to any other person or organization, whether for
compensation or otherwise, without the prior written consent of Company's Board
of Directors. However, the expenditure of reasonable amounts of time for
educational, charitable, or professional activities shall not be deemed a breach
of this Agreement if those activities do not materially interfere with the
services required under this Agreement and shall not require the prior written
consent of Company's Board of Directors.
(c) This Agreement shall not prohibit Executive from making
passive personal investments or conducting private business affairs if those
activities do not materially interfere with the services required under this
Agreement. However, Executive shall not directly or indirectly acquire, hold, or
retain any interest in any business competing with or similar in nature to the
business of Company.
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2.04. COMPETITIVE ACTIVITIES.
(a) During the term of this Agreement Executive shall not,
directly or indirectly, either as an Executive, Company, consultant, agent,
principal, partner, stockholder, corporate officer, director, or in any other
individual or representative capacity, engage or participate in any business
that is in competition in any manner whatsoever with the business of Company.
(b) Executive agrees that during the term of this Agreement and
for a period of one year after termination of this Agreement, Executive shall
not directly or indirectly solicit, hire, recruit, or encourage any other
Executive of Company to leave Company.
2.05. UNIQUENESS OF EXECUTIVE'S SERVICES. Executive represents and
agrees that the services to be performed under the terms of this Agreement are
of a special, unique, unusual, extraordinary, and intellectual character that
gives them a peculiar value, the loss of which cannot be reasonably or
adequately compensated in damages in an action at law. Executive therefore
expressly agrees that Company, in addition to any other rights or remedies that
Company may possess, shall be entitled to injunctive and other equitable relief
to prevent or remedy a breach of this Agreement by Executive.
2.06. INDEMNIFICATION FOR NEGLIGENCE OR MISCONDUCT. Executive shall
indemnify and hold Company harmless from all liability for loss, damage, or
injury to persons or property resulting from the negligence or misconduct of
Executive.
2.07. TRADE SECRETS.
(a) The parties acknowledge and agree that during the term of
this Agreement and in the course of the discharge of his duties hereunder,
Executive shall have access to and become acquainted with financial, personnel,
sales, scientific, technical and other information regarding formulas, patterns,
compilations, programs, devices, methods, techniques, operations, plans and
processes that are owned by Company, actually or potentially used in the
operation of Company's business, or obtained from third parties under an
Agreement of confidentiality, and that such information constitutes Company's
"trade secrets."
(b) Executive specifically agrees that he shall not misuse,
misappropriate, or disclose in writing, orally or by electronic means, any trade
secrets, directly or indirectly, to any other person or use them in any way,
either during the term of this Agreement or at any other time thereafter, except
as is required in the course of his employment.
(c) Executive acknowledges and agrees that the sale or
unauthorized use or disclosure in writing, orally or by electronic means, of any
of Company's trade secrets obtained by Executive during the course of his
employment under this Agreement, including information concerning Company's
actual or potential work, services, or products, the facts that any such work,
services, or products are planned, under consideration, or in production, as
well as any descriptions thereof, constitute unfair competition. Executive
promises and agrees not to engage in any unfair competition with Company, either
during the term of this Agreement or at any other time thereafter.
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(d) Executive further agrees that all files, records, documents,
drawings, specifications, equipment, software, and similar items whether
maintained in hard copy or on line relating to Company's business, whether
prepared by Executive or others, are and shall remain exclusively the property
of Company and that they shall be removed from the premises or, if kept on-line,
from the computer systems of Company only with the express prior written consent
of Company's Board of Directors.
2.08. SERVICES AS CONSULTANT. Following the employment term or
Executive's retirement, and if the employment term has not been terminated for
cause, Executive shall make his advice and counsel available to Company for such
a period as the parties may mutually agree to. The parties agree that this
advice and counsel shall not entail full time service and shall be consistent
with Executive's retirement status.
2.09. USE OF EXECUTIVE'S NAME.
(a) Company shall have the right to use the name of Executive as
part of the trade name or trademark of Company if it should be deemed advisable
to do so. Any trade name or trademark, of which the name of Executive is a part,
that is adopted by Company during the employment of Executive may be used
thereafter by Company for as long as Company deems advisable.
(b) Executive shall not, either during the term of this Agreement
or at any time thereafter, use or permit the use of his name in the trade name
or trademark of any other enterprise if that other enterprise is engaged in a
business similar in any respect to that conducted by Company, unless that trade
name or trademark clearly indicates that the other enterprise is a separate
entity entirely distinct from and not to be confused with Company and unless
that trade name or trademark excludes any words or symbols stating or suggesting
prior or current affiliation or connection by that other enterprise or its
Executives with Company.
3. OBLIGATIONS OF COMPANY.
3.01. GENERAL DESCRIPTION. Company shall provide Executive with the
compensation, incentives, benefits, and business expense reimbursement specified
elsewhere in this Agreement.
3.02. OFFICE AND STAFF. Company shall provide Executive with office
space, office equipments, and administrative support suitable to Executive's
position and adequate for the performance of his duties.
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3.03. INDEMNIFICATION OF LOSSES OF EXECUTIVE. Company shall indemnify
Executive for all necessary expenditures or losses incurred by Executive in
direct consequence of the discharge of his duties on Company's behalf.
4. COMPENSATION OF EXECUTIVE.
4.01. ANNUAL SALARY.
(a) As compensation for the services to be performed hereunder,
Executive shall receive a salary at the rate of RMB 768,000 (approximately
$96,000) per annum, of which RMB600,000 shall be paid in equal monthly
installments of RMB50,000 during the period of employment, prorated for any
partial employment period, and RMB168,000 shall be paid as an annual performance
bonus in three months after each employment year.
(b) Executive shall receive such annual increases in salary as
may be determined by Company's Board of Directors in its sole discretion at its
annual meeting.
4.02. SALARY CONTINUATION DURING DISABILITY. If Executive for any
reason whatsoever becomes permanently disabled so that he is unable to perform
the duties prescribed herein, Company agrees to pay Executive his monthly
installments of salary, payable in the same manner as provided for the payment
of salary herein, for a period of up to six (6) months from the date of
disability or until the expiration of the employment term provided for herein,
whichever occurs sooner.
4.03. REPAYMENT OF DISALLOWED SALARY. In the event that any portion of
the compensation paid by Company to Executive is disallowed as an income tax
deduction on an income tax return of Company, Executive agrees to immediately
repay to Company the full amount of that portion.
5. EXECUTIVE INCENTIVES.
5.01. ANNUAL CASH BONUS BASED ON PERFORMANCE.
(a) At the beginning of any fiscal year during the employment
term as herein provided, Company's Board of Directors shall set forth for
Executive goals and objectives to be accomplished by Executive during that year.
For the successful completion of all goals and objectives by the end of that
year, Executive shall receive a performance bonus provided for in Section 4.01
for his services in addition to any other compensation which he is entitled to
receive hereunder. The amount of bonus shall be determined by the Board of
Directors. This bonus shall be paid within one month after the annual meeting of
the Board of Directors.
(b) If the employment term is terminated by Company for cause,
Executive shall not be entitled to any portion of the annual cash bonus for the
fiscal year in which that termination occurs. However, if this Agreement should
expire or be terminated for reasons other than cause, Executive shall be
entitled to a percentage of the annual cash bonus equal to the percentage of the
goals and objectives accomplished.
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(c) As additional compensation, Company agrees to grant Executive
each year certain number of stock options pursuant to Company's Stock Incentive
Plan and the board resolutions on stock option allocation plan each fiscal year.
All terms and conditions of Company's Stock Incentive Plan, including but not
limited to option grant, exercise and any other items are applicable for
Executive as a plan participant.
6. EXECUTIVE BENEFITS.
6.01. ANNUAL VACATION. Executive shall be entitled to two (2) week
vacation time each year with full pay. Executive may be absent from his
employment for vacation only at such times as Company's President shall
determine from time to time. If Executive is unable for any reason to take the
total amount of authorized vacation time during any year, he may accrue that
time and add it to vacation time for any following year or may receive a cash
payment in an amount equal to the amount of annual salary attributable to that
period.
6.02. ILLNESS. On completion of one (1) year in the service of Company,
Executive shall be entitled to five (5) days per year as sick leave with full
pay. Sick leave may not be accumulated or accrued for any following year.
6.03. EMPLOYEE BENEFIT PROGRAMS. Executive is entitled to participate
in any pension, 401(k), insurance or other employee benefit plan that is
maintained by Company for its executive officers, including programs of life and
medical insurance and reimbursement of membership fees in civic, social and
professional organizations
6.04. INSURANCE. Company shall provide to Executive and pay premiums on
Company's group medical insurance policy offered through Company, covering
Executive and Executive's dependents.
6.05. SEVERANCE PACKAGE. If Executive's employment with Company is
terminated pursuant to Section 9.03 or 9.04, Executive shall be entitled to
three (3) month severance package consisting of Executive's compensation and all
benefits as provided for in Sections 4, 5 and 6 and all Executive's remaining
unvested options shall vest immediately. Payments shall be made monthly or in a
lump sum payment at the Board's sole discretion. In the event severance is paid
in a lump sum, the cash amount excluding insurance benefits shall be paid at the
present value for the time remaining in the 3-month severance agreement based on
the current prime interest rate as charged by the Federal Reserve Bank in New
York.
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7. BUSINESS EXPENSES.
7.01. LUMP-SUM ENTERTAINMENT FUND.
(a) It is understood and agreed by the parties that the services
required by Company will require Executive to incur entertainment expenses on
behalf of Company. Company hereby agrees to and shall make available to
Executive for this purpose the sum of $50,000 per annum, payable in such amounts
and at such times as Executive shall request.
(b) Executive shall, however, furnish to Company adequate records
and other documentary evidence required by federal and state statutes and
regulations for the substantiation of each such expenditure as an income tax
deduction.
7.02. REIMBURSEMENT OF OTHER BUSINESS EXPENSES.
(a) Company shall promptly reimburse Executive for all other
reasonable business expenses incurred by Executive in connection with the
business of Company.
(b) Each such expenditure shall be reimbursable only if it is of
a nature qualifying it as a proper deduction on the federal and state income tax
return of Company.
(c) Each such expenditure shall be reimbursable only if Executive
furnishes to Company adequate records and other documentary evidence required by
federal and state statutes and regulations issued by the appropriate taxing
authorities for the substantiation of each such expenditure as an income tax
deduction.
7.03. REPAYMENT OF DISALLOWED EXPENSES. In the event that any expenses
paid for Executive or any reimbursement of expenses paid to Executive shall, on
audit or other examination of Company's income tax returns, be determined not to
be allowable deductions from Company's gross income, and in the further event
that this determination shall be acceded to by the Company or made final by the
appropriate federal or state taxing authority or a final judgment of a court of
competent jurisdiction, and no appeal is taken from the judgment or the
applicable period for filing notice of appeal has expired, Executive shall repay
to Company the full amount of the disallowed expenses.
8. TERMINATION OF EMPLOYMENT.
8.01. TERMINATION FOR CAUSE.
(a) Company reserves the right to terminate this Agreement if
Executive willfully breaches or habitually neglects the duties which he is
required to perform under the terms of this Agreement; or commits such acts of
dishonesty, fraud, misrepresentation or other acts of moral turpitude as would
prevent the effective performance of his duties.
(b) Company may at its option terminate this Agreement for the
reasons stated in this Section by giving written notice of termination to
Executive without prejudice to any other remedy to which Company may be entitled
either at law, in equity, or under this Agreement.
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(c) The notice of termination required by this section shall
specify the ground for the termination and shall be supported by a statement of
all relevant facts.
(d) Termination under this section shall be considered "for
cause" for the purposes of this Agreement.
8.02. FAILURE TO MEET PROFIT STANDARD.
(a) If the net operating profits of Company for any annual
accounting period of Company shall be less than the net operating profits in the
previous fiscal year by 20% percent, Company at its option may terminate this
Agreement by giving written notice of termination to Executive.
(b) The term "net operating profits," as used herein, means the
net operating profits after taxes as determined and certified by the independent
certified public accountants regularly retained by Company in accordance with
sound accounting principles and in accordance with the past accounting practices
of Company.
(c) Termination under this section shall be considered "for
cause" for the purposes of this Agreement.
8.03. TERMINATION WITHOUT CAUSE.
(a) This Agreement shall be terminated upon the death of
Executive.
(b) Company reserves the right to terminate this Agreement not
less than six (6) months after Executive suffers any physical or mental
disability that would prevent the performance of his essential job duties under
this Agreement, unless reasonable accommodation can be made to allow Executive
to continue working. Such a termination shall be effected by giving twenty (20)
days' written notice of termination to Executive. Termination pursuant to this
provision shall not prejudice Executive's rights to continued compensation
pursuant to Section 4.02 of this Agreement.
(c) Termination under this section shall not be considered "for
cause" for the purposes of this Agreement.
8.04. EFFECT OF MERGER, TRANSFER OF ASSETS, OR DISSOLUTION.
(a) This Agreement shall not be terminated by any voluntary or
involuntary dissolution of Company resulting from either a merger or
consolidation in which Company is not the consolidated or surviving corporation,
or a transfer of all or substantially all of the assets of Company.
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(b) In the event of any such merger or consolidation or transfer
of assets, Company's rights, benefits, and obligations hereunder shall be
assigned to the surviving or resulting corporation or the transferee of
Company's assets.
8.05. PAYMENT ON TERMINATION Notwithstanding any provision of this
Agreement, if Company terminates this Agreement, it shall pay Executive an
amount equal to six (6) months salary at the then current rate of compensation.
8.06. TERMINATION BY EXECUTIVE. Executive may terminate his obligations
under this Agreement by giving Company at least three (3) months notice in
advance.
9. GENERAL PROVISIONS.
9.01. NOTICES. Notices and Addresses. All notices, offers, acceptance
and any other acts under this Agreement (except payment) shall be in writing,
and shall be sufficiently given if delivered to the addressees in person, by
Federal Express or similar receipted delivery, by facsimile delivery or, if
mailed, postage prepaid, by certified mail, return receipt requested, as
follows:
To Company: Kiwa Bio-Tech Products Group Corporation
000 Xxxx Xxxxxxxx Xxxx, Xxxxx 000 Xxxxxxxxx,
Xxxxxxxxxx, X.X.X. 00000-0000
Xxxx 000, Xxxxx X, Xxx Xx Xxxx Xxxx Xxxxxxxx,
Xxx 0, Xxxxxxxxxx Xxxxxx, Xxxxxxxx Xxxxxxxx,
Xxxxxxx, P.R.C
To Executive: Xxx Xx
6 Xxx Xxx, #1805, Xxx Xxxxx Yuan, Hai Xxxx Xx,
Beijing, P.R.C
or to such other address as either of them, by notice to the other may designate
from time to time. The transmission confirmation receipt from the sender's
facsimile machine shall be evidence of successful facsimile delivery. Time shall
be counted to, or from, as the case may be, the delivery in person or by mailing
9.02. ATTORNEYS' FEES AND COSTS. If any legal action is necessary to
enforce or interpret the terms of this Agreement, the prevailing party shall be
entitled to reasonable attorneys' fees, costs, and necessary disbursements in
addition to any other relief to which that party may be entitled. This provision
shall be construed as applicable to the entire Agreement.
9.03. MODIFICATIONS. Any modification of this Agreement will be
effective only if it is in writing signed by the party to be charged.
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9.04. EFFECT OF WAIVER. The failure of either party to insist on strict
compliance with any of the terms, covenants, or conditions of this Agreement by
the other party shall not be deemed a waiver of that term, covenant, or
condition, nor shall any waiver or relinquishment of any right or power at any
one time or times be deemed a waiver or relinquishment of that right or power
for all or any other times.
9.05. PARTIAL INVALIDITY. If any provision in this Agreement is held by
a court of competent jurisdiction to be invalid, void, or unenforceable, the
remaining provisions shall nevertheless continue in full force without being
impaired or invalidated in any way.
9.06. LAW GOVERNING AGREEMENT. This Agreement shall be governed by and
construed in accordance with the laws of the State of California.
9.07. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument. The execution of this
Agreement may be by actual or facsimile signature.
9.08. ADDITIONAL DOCUMENTS. The parties hereto shall execute such
additional instruments as may be reasonably required by their counsel in order
to carry out the purpose and intent of this Agreement and to fulfill the
obligations of the parties hereunder.
9.09. SECTION AND PARAGRAPH HEADINGS. The section and paragraph
headings in this Agreement are for reference purposes only and shall not affect
the meaning or interpretation of this Agreement.
9.10. ARBITRATION. Except for a claim for equitable relief, any
controversy, dispute or claim arising out of or relating to this Agreement, or
its interpretation, application, implementation, breach or enforcement which the
parties are unable to resolve by mutual agreement, shall be settled by
submission by either party of the controversy, claim or dispute to binding
arbitration in Los Angeles County, California (unless the parties agree in
writing to a different location), before three arbitrators in accordance with
the rules of the American Arbitration Association then in effect. In any such
arbitration proceeding the parties agree to provide all discovery deemed
necessary by the arbitrators. The decision and award made by the arbitrators
shall be final, binding and conclusive on all parties hereto for all purposes,
and judgment may be entered thereon in any court having jurisdiction thereof.
9.11. ENTIRE AGREEMENT. This Agreement supersedes any and all other
Agreements, either oral or in writing, between the parties hereto with respect
to the employment of Executive by Company, and contains all of the covenants and
Agreements between the parties with respect to that employment in any manner
whatsoever. Each party to this Agreement acknowledges that no representations,
inducements, promises, or Agreements, orally or otherwise, have been made by any
party, or anyone acting on behalf of any party, which are not embodied herein,
and that no other Agreement, statement, or promise not contained in this
Agreement shall be valid or binding.
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IN WITNESS WHEREOF, Company and Executive have executed this Agreement as of the
date and year first above written.
COMPANY: EXECUTIVE:
Kiwa Bio-tech Products Group Corp. Xxx Xx
/s/ Xxx Xx /s/ Xxx Xx
----------------------------- --------------------------------
(Authorized Signature) (Signature)
Xxx Xx, Chairman of Board and CEO July 31, 2006
----------------------------- --------------------------------
(Print Name and Title) (Date)
July 31, 2006
----------------------------
(Date)
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