CHINA-BIOTICS, INC. EMPLOYMENT AGREEMENT
THIS
EMPLOYMENT AGREEMENT (this “Agreement”) is made
and entered into by and between China-Biotics, Inc., a Delaware corporation (the
“Company”), and
Tao (▇▇▇▇▇▇) CAI (the “Employee”), effective
as of January 16, 2011 (the “Effective
Date”). Based upon the consideration of the mutual covenants
herein contained, and other good and valuable consideration, the sufficiency and
receipt of which are hereby acknowledged, the parties hereto agree as
follows:
1. Employment.
1.1 The
Company hereby employs and the Employee agrees to be employed, as Chief
Financial Officer of the Company. The Employee will report to the
Company’s Chief Executive Officer, Mr. Song Jinan, or his designee(s) and will
perform such services and duties as may be assigned from time to
time. The Employee shall comply with all rules, policies, and
procedures of the Company, as modified from time to time, including, without
limitation, rules, and procedures set forth in the Company’s employee handbook,
as adopted and modified from time to time at the Company’s sole discretion. The
Employee shall perform all of the Employee’s responsibilities in complete
compliance with all applicable laws. The Company may, in its
discretion, modify the Employee’s duties, title, and assignment. If
requested by the stockholders of the Company to do so, the Employee shall serve
on the Board of Directors of the Company (the “Board”) for no
consideration other than that provided for in this Agreement.
1.2 The
Employee agrees to devote all time that is necessary to execute and complete the
Employee’s duties to the Company. During the time necessary to
execute the Employee’s duties, the Employee agrees to devote Employee’s full and
undivided time, energy, knowledge, skill, and ability to the Company’s business,
to the exclusions of all other business and sideline interests. In no
event will the Employee allow other activities to conflict or interfere with the
Employee’s duties to the Company. The Employee agrees to perform all
duties faithfully and diligently and to the best of the Employee’s
ability. The Employee recognizes that the services to be rendered
under this Agreement require certain training, skills, and experience, and that
this Agreement is entered into for the purpose of obtaining such service for the
Company. The Employee agrees to provide the Company with any
information that the Employee possesses and that will be of benefit to the
Company, unless providing such information would violate a third party’s
rightful claim of ownership, or unless such information is subject to an ongoing
obligation of confidentiality to any third party, particularly any prior
employers of the Employee. The Employee agrees to conduct himself in
a way that will be a credit to the reputation and interests of the Company and
its Affiliates, to perform the Employee’s duties in a careful, safe, loyal and
prudent manner, and to otherwise fulfill all fiduciary and other duties the
Employee has to the Company. For the purposes of this Agreement, “Affiliates” means any
entity currently existing or subsequently formed that directly or indirectly
controls, is controlled by, or is under common control with the Company, whether
by contract, through the ownership of voting securities or
otherwise.
1.3 The
Employee’s initial base of operations shall be the Company’s offices in
Shanghai, People’s Republic of China, but the Employee acknowledges and agrees
that the Company may move the base of its operations, or the Employee’s primary
work location, and any such move shall not violate this
Agreement. The Employee shall travel domestically or internationally
as may be requested by the Company to fulfill the responsibilities of the
Employee’s position.
2. At-Will Employment. The Employee
understands and agrees that the Employee’s employment with the Company shall be
at will and for no specific term, and either the Employee or the Company may
terminate the employment relationship at any time, with or without reason, with
or without cause, notice, pre-termination warning or discipline, or other pre-
or post-termination procedures of any kind, subject only to the provisions of
Section 4 regarding payments upon termination. Any representations to the
contrary, whether written, verbal, or implied by any Company communication,
conduct, or practice, are unauthorized and void unless contained in a formal
written employment contract signed by an authorized officer of the Company and
the Employee. Except as otherwise noted in this Agreement, the
Employee shall not be entitled to any further compensation or benefits, other
than compensation earned through the termination date of the Employee’s
employment, accrued, unused vacation and vested benefits, if any exist,
regardless of the reason for termination.
3. Compensation and
Benefits. For the duration of the Employee’s employment
hereunder, the Employee shall be entitled to compensation and benefits pursuant
to the following subparagraphs.
3.1 Salary. The
Employee shall be paid a salary at an annual gross rate of $150,000 U.S. Dollars
per year, with the actual amount paid to be prorated for the actual period of
employment and payable in equal installments in accordance with the Company’s
normal payroll practices, subject to appropriate deductions and withholding. The
Company may, at its discretion, review the Employee’s salary from time to
determine whether a change in salary shall be made; provided, however, that the
decision of whether to adjust salary is at the Company’s sole
discretion.
3.2 Bonus. The Employee
may participate in bonus or incentive plans adopted by the Company that are
applicable to the Employee’s position, as they may be changed from time to time,
but nothing herein shall require the adoption or maintenance of any such
plan. Any bonus or incentive pay shall be subject to the Employee’s
satisfaction of all eligibility criteria, which would be determined by the
Board, or a delegate thereof, in its sole discretion. Any bonus or incentive pay
shall not be deemed earned until paid, and the Employee must be employed with
the Company at the time of payment to be eligible to receive such
payment.
3.3 Other Benefits. For
the duration of the Employee’s employment hereunder, the Employee will be
eligible to participate in employee benefit programs established by the Company
for personnel on a basis commensurate with the Employee’s position, subject to
the eligibility requirements of such plans and in accordance with the Company’s
policies from time to time, but nothing herein shall require the adoption or
maintenance of any such plan. The Company will reimburse the Employee
in accordance with the Company’s policies and procedures for reasonable expenses
necessarily incurred in the performance of duties hereunder against appropriate
receipts and vouchers indicating the specific business purpose for each such
expenditure. The Employee understands that as a corporate officer,
the Employee is not covered by unemployment compensation or workers’
compensation, unless otherwise specifically advised by the Board.
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3.4 Withholding. It is
understood that, in connection with any compensation to be paid to the Employee,
the Company may be required to withhold and pay over certain amounts for federal
income tax withholding, FICA, and such other taxes as may be required by law,
based on the value of the consideration received by the Employee.
3.5 Stock Options. The
Company hereby agrees that the Employee shall be eligible to receive an award of
stock options subject to the terms and conditions hereinafter stated and to the
terms of the applicable stock option agreement executed in connection with the
grant of such award:
(a) Grant. The Employee
shall be entitled to an award of stock options (the “Options”) to purchase
an aggregate of 150,000 shares of the Company’s common stock under the 2010
Equity Incentive Plan (the “2010
Plan”). The Options shall be evidenced by an option agreement
executed by the Employee and the Company subject to the terms and provisions of
the 2010 Plan and this Agreement.
(b) Option Price. The
per share exercise price of an Option granted pursuant to this Section 3.5 shall
be $14.81, which is equal to the
weighted average closing price per share of the Company’s common stock on the
NASDAQ Stock Exchange over the most recent two-week period prior to the Grant
Date.
(c) Vesting and
Exercise. The Options shall vest over four
12-month periods in a series of 48 successive monthly installments on the
last day of each month (beginning with the calendar month including the Grant
Date) as follows: During the first 12-month period, Options will vest in equal
installments such that on the one-year anniversary of the Grant Date, 20% of the
Options shall be fully vested. During the second 12-month period, Options
will vest in equal installments such that on the two-year anniversary of the
Grant Date, an additional 20% of the Options shall be fully vested.
During the third 12-month period, Options will vest in equal installments such
that on the three-year anniversary of the Grant Date, an additional 30% of
the Options shall be fully vested. During the fourth 12-month period,
Options will vest in equal installments such that on the four-year anniversary
of the Grant Date, an additional 30% of the Options shall be fully vested;
provided, however, that the Options shall not become exercisable until the 2010
Plan is approved by the Company’s stockholders at the 2010 Annual Meeting of
Stockholders.
(d) Payment. The full
consideration for any shares purchased pursuant to the Options by the Employee
shall be paid in cash or on such other terms as the Employee and the Company may
agree subject to the terms of the 2010 Plan.
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4. Termination. As
provided in Section 2, the Employee is employed at-will. The Company
shall have the right to terminate immediately the Employee’s services and this
Agreement as specified in Section 2, subject only to the payment obligations
specified below:
4.1 For Cause. The
Company shall have the right to terminate immediately the Employee’s services
and this Agreement for Cause upon notice of termination. “Cause” as used herein
shall mean a good faith finding by the Board that the Employee has:
(i) engaged in conduct that constitutes gross malfeasance of office,
flagrant disloyalty to the Company, dishonesty, fraud, theft, or unprofessional
conduct; (ii) failed to perform assigned job duties or willfully or
repeatedly failed to carry out the reasonable directions of the Board or its
designee; (iii) engaged in conduct in clear violation of material policies of
the Company; (iv) been convicted of or entered a plea of nolo contendere to, or
engaged in conduct constituting a felony or crime involving fraud, embezzlement
or any other act or moral turpitude; (v) breached the terms of this
Agreement or the Confidential Information Agreement (defined below); or
(vi) done any other thing that would constitute cause under the laws of
Washington. Upon termination of the Employee’s employment hereunder for Cause,
or in the event that the Employee terminates the Employee’s employment without
Good Reason (defined below), all compensation described herein shall cease as of
the termination date, and the Employee shall have no rights to any other
compensation or payments, other than salary earned on or prior to the
termination date of the Employee’s employment, accrued, unused vacation, and
vested benefits, if any exist, which vested benefits shall be handled in
accordance with their controlling plans and documents.
4.2 Without
Cause. The Company shall have the right to terminate
immediately the Employee’s services and this Agreement without Cause and without
the Employee’s consent upon notice of termination, subject to the provisions of
this Subsection 4.2. If the Company terminates the Employee’s employment without
the Employee’s consent and without Cause, or the Employee resigns the Employee’s
Employment with Good Reason (defined below), the Company shall continue to pay
the Employee’s base monthly salary (at the annual rate then in effect), subject
to applicable deductions and withholdings, for a period of two (2) months
(“Severance
Payments”). The Severance Payments are expressly conditioned
upon (a) the Employee’s execution and delivery to the Company of a
separation agreement in a form acceptable to the Company, which shall include a
full waiver and release of all claims by the Employee against the Company, its
Affiliates, and their officers, directors, employees and agents; (b) the
Employee not rescinding or revoking the separation agreement; and (c) the
Employee being and remaining in full compliance with the Confidential
Information Agreement (defined below). Except as provided in this
Subsection 4.2, upon termination by the Company without the Employee’s consent
and without Cause, or upon resignation by the Employee for Good Reason, the
Employee shall not be entitled to any further compensation, payments or
severance. The Company may, in its sole discretion, elect to issue
the Severance Payments in a single, lump-sum amount. “Good Reason” shall
mean the substantial reduction of the Employee’s compensation, unless the
Company makes such a reduction ratably with all other employees at similar
levels of responsibility. Notwithstanding the foregoing, the
Employee’s failure to tender resignation within thirty (30) days of an event
constituting Good Reason shall be deemed the Employee’s consent to the same, and
the event will no longer constitute “Good Reason” under this
provision. Any resignation by the Employee that is not for Good
Reason shall be deemed to be without Good Reason. Any termination by
the Company that is not for Cause, death or Total Disability (defined below),
shall be deemed to be without Cause.
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4.3 Death or
Disability. The Employee and the Company acknowledge
that the Employee’s ability to perform the duties specified in Section 1 is of
the essence of this Agreement. This Agreement and the Employee’s
employment hereunder shall terminate automatically upon the death or Total
Disability of the Employee. The term “Total Disability” as
used herein shall mean the Employee’s inability (with or without such
accommodation as may be required by law protecting persons with disabilities and
that places no undue burden on the Company) as determined in good faith by the
Board, to perform the Employee’s duties hereunder for a period or periods
aggregating ninety (90) calendar days in any 12-month period as a result of
physical or mental illness. If the Employee’s employment is
terminated as a result of the Employee’s death or Total Disability, this
Agreement shall terminate without further obligations to the Employee, other
than salary earned on or prior to the termination date of the Employee’s
employment, accrued, unused vacation, and vested benefits, if any exist, which
vested benefits shall be handled in accordance with their controlling plans and
documents.
5. Confidential Information and
Inventions. The Employee and the Company agree that due to the
nature of the Employee’s association with the Company, the Employee has access
to and has acquired, and will have access to, will acquire, and will assist in
developing confidential and proprietary information relating to the business and
operations of the Company and its Affiliates. The Employee acknowledges that
such information is and will continue to be of central importance to the
business of the Company or its Affiliates, and that disclosure of such
confidential information to others or the unauthorized use of such information
by others would cause substantial loss and harm to the Company or its
Affiliates. The Employee shall, as a condition of employment, execute
contemporaneously with this Agreement a Confidential Information and Inventions
Agreement in the form attached hereto as Exhibit A (the “Confidential Information
Agreement”).
6. Fees. Unless
otherwise agreed, the prevailing party shall be entitled to its reasonable costs
and attorneys’ fees incurred in any litigation or other dispute relating to the
interpretation or enforcement of this Agreement.
7. Disclosure. The
Employee agrees fully and completely to reveal the terms of the Confidential
Information Agreement to any future employer or potential employer of the
Employee and authorizes the Company, at its election, to make such
disclosure.
8. Representation of
Employee. The Employee represents and warrants to the Company
that the Employee is free to enter into this Agreement and that the Employee has
no commitment, arrangement or understanding to or with any party that restrains
or is in conflict with the Employee’s performance of the covenants, services and
duties provided for in this Agreement. The Employee agrees to
indemnify the Company and to hold the Company harmless against any and all
liabilities or claims arising out of any unauthorized act or acts by the
Employee that, the foregoing representation and warranty to the contrary
notwithstanding, violate or breach any such commitment, arrangement or
understanding.
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9. Reserved.
10. Reimbursement. If
the Employee ever possesses or controls any Company funds (including without
limitation cash and travel advances, overpayments made to the Employee by the
Company, amounts received by the Employee due to the Company’s error, unpaid
credit or phone charges, excess sick or vacation pay, or any debt owed to the
Company for any reason, including misuse or misappropriation of company assets),
the Employee will remit them immediately to the Company at the address listed in
Section 12 for the entire period of the Employee’s possession or control of such
Company funds unless directed otherwise in writing. At any time upon
request, and at the time of Termination, even without request, the Employee
shall fully and accurately account to the Company for any Company funds and
other property in the Employee’s possession or control. If the
Employee fails to do so, the Employee hereby authorizes the Company (subject to
any limitations under applicable law) to make appropriate deductions from any
payment otherwise due the Employee (including without limitation, the Employee’s
paycheck, salary, bonus, commissions, expense reimbursements and benefits), in
addition to all other remedies available to the Company.
11. Assignability. This
Agreement shall be binding upon the Employee, the Employee’s heirs, personal
representatives and permitted assigns and on the Company, its successors and
assigns. During the Employee’s employment hereunder, this Agreement
may not be assigned by either party without the written consent of the other;
provided, however, that the Company may in its sole discretion assign its rights
and obligations under this Agreement, without the Employee’s consent, to a
successor by sale, merger or liquidation.
12. Notices. Any notice
required or permitted to be given hereunder shall be sufficient if in writing,
by registered or certified mail, addressed to the Employee at: ▇▇. ▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
People’s Republic of China, or such other address as the Employee may provide to
the Company in writing; or addressed to the Company to the attention of its
Chief Executive Officer at: ▇▇. ▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, People’s Republic of China, or such
other address as may be provided in writing by the Company. Notices
to the Employee may, at the discretion of the Company, alternatively be hand
delivered to the Employee.
13. Severability. In
the event that any provision of this Agreement or compliance by any of the
parties with any provision of this Agreement shall constitute a violation of any
law, or be deemed unenforceable or void, then such provision, to the extent only
that it is in violation of law, or is deemed void or unenforceable, shall be
deemed modified to the extent necessary so that it is no longer unenforceable,
void or in violation of law and shall be enforced to the fullest extent
permitted by law. If such modification is not possible, said
provision, to the extent that it is in violation of law, void or unenforceable,
shall be deemed severable from the remaining provisions of this Agreement, which
provisions shall remain binding on the parties.
14. Entire
Agreement. This instrument contains the entire agreement of
the parties, and supersedes any prior or contemporaneous statements or
understandings by or between the parties except for the Confidential Information
Agreement between the parties of even date herewith. This Agreement
may be changed only by an agreement in writing signed by the party against whom
enforcement of any waiver, change, modification, extension or discharge is
sought, and any such modification on behalf of the Company must be approved by
the Board.
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15. Governing Law. This
Agreement shall be governed by and construed in accordance with the laws of the
State of Delaware, excluding choice of law provisions. The parties
hereby irrevocably and unconditionally agree to submit any legal action or
proceeding relating to this Agreement to the non-exclusive general jurisdiction
of the courts of the State of Delaware and, in any such action or proceeding,
consent to jurisdiction in such courts and waive any objection to the venue in
any such court.
16. Third-Party
Beneficiaries. Affiliates of the Company are and shall be
third-party beneficiaries of this Agreement.
17. Survival. Sections
2 and 4 through 19 shall survive the termination of this Agreement or the
Employee’s employment relationship with the Company.
18. Nonwaiver. Failure
of the Company to insist upon strict adherence to any provision of this
Agreement or to enforce any provision, on one or more occasions, shall not be
deemed to be a waiver of its right to enforce any provision in the
future.
19. Employee’s Recognition of
Agreement. The Employee acknowledges that the Employee has
read and understood this Agreement and agrees that its terms are necessary for
the reasonable and proper protection of the Company’ business. The
Employee acknowledges that the Employee has been advised by the Company that the
Employee is entitled to have this Agreement reviewed by an attorney of the
Employee’s selection, at the Employee’s expense, prior to signing, and that the
Employee has either done so or elected to forgo that right.
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SIGNATURE
PAGE
IN
WITNESS WHEREOF, the Company has caused this Employment Agreement to be executed
by its duly authorized representative, and the Employee has executed this
Employment Agreement as of the Effective Date.
|
EMPLOYEE
/s/ ▇▇▇▇▇▇
▇▇▇
|
/s/ Song
Jinan
|
|
|
Tao
(▇▇▇▇▇▇) CAI
Chief
Financial Officer
|
Song
Jinan
Chief
Executive
Officer
|
EXHIBIT
A
CONFIDENTIAL
INFORMATION AND INVENTIONS AGREEMENT
See
attached