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Exhibit 10.6
EXECUTIVE EMPLOYMENT AND
NON-COMPETITION AGREEMENT
AGREEMENT, dated as of the 1st day of May, 1998, by and between Esteem
Industries Ltd., a Hong Kong corporation (the "Company"), and ▇▇▇ ▇▇▇▇ Fai, a
resident of Hong Kong (the "Executive").
WHEREAS, the Company desires to engage the full-time services of the
Executive and the Executive desires to be so employed by the Company;
WHEREAS, the Company desires to be assured that the unique and expert
services of the Executive will be available solely to the Company on such
full-time basis, and that the Executive is willing and able to render such
services on the terms and conditions hereinafter set forth; and
WHEREAS, the Company desires to be assured that the confidential
information and good will of the Company will be preserved for the exclusive
benefit of the Company;
NOW, THEREFORE, in consideration of such employment and the mutual
covenants and promises herein contained, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Company and the Executive agree as follows:
Section 1. Employment. The Company hereby employs the Executive as its
Managing Director, Far East Operations, and the Executive hereby accepts such
employment under and subject to the terms and conditions hereinafter set forth.
Section 2. Term. Unless sooner terminated as provided in Section 7, the
term of employment under this Agreement shall begin on the date hereof and shall
conclude on December 31, 2000 (the "Term"). This Agreement shall be renewed for
additional consecutive one year terms ("Renewal Terms") unless either party
shall give to the other written notice not less than sixty (60) days prior to
the end of the Term or any Renewal Term that it or he does not wish to renew
this Agreement.
Section 3. Duties. The Executive shall perform services in a managerial
capacity subject to the general supervision of the Board of Directors of the
Company (the "Board"). Duties of the Executive shall include, as applicable,
promoting management services to the Company's Parent, Subsidiary and affiliated
companies in the Far East. The Executive hereby agrees to devote his full
business time and best efforts to the faithful performance of such duties and to
the promotion and forwarding of the business and affairs of the Company for the
Term or any Renewal Term.
Section 4. Salary Compensation. In consideration of the services
rendered by the Executive under this Agreement, the Company shall pay the
Executive a base salary (the "Base Salary") at the rate of Two Hundred Thousand
Dollars ($200,000) per calendar year. The Base Salary shall be paid in such
installments and at such times as the Company pays its
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regularly salaried executive employees, and the Board may review the Base Salary
annually in a manner consistent with the Company's policies and may change the
Base Salary from time to time in its sole discretion.
Section 5. Bonus Compensation. The Executive shall be entitled to
receive an annual performance bonus equal to up to 50% of the Base Salary, based
on achievement of certain performance criteria as more fully set forth on
Exhibit A hereto. In the sole discretion of the Board, the Executive may be
granted a performance bonus in excess of 50% of the Base Salary if the targets
set forth on Exhibit A are surpassed. Such bonus shall be payable within ten
(10) days following the Company's receipt of its audited financial statements
for the previous year (it being acknowledged that the bonus will be determined
based on such audited financial statements).
Section 6. Benefits. In addition to the compensation detailed in
Section 4 and 5 of this Agreement and those benefits listed on Exhibit B hereto,
the Executive shall be entitled to the following additional benefits:
Section 6.01. Paid Vacation. The Executive shall be entitled to paid
vacation pursuant to Company policy, such vacation to extend for such periods
and shall be taken at such intervals as shall be appropriate and consistent with
the proper performance of the Executive's duties hereunder.
Section 6.02. Insurance Coverage. During the Term or Renewal Terms, the
Company shall provide the Executive with group health and life insurance
protection to the same extent that it makes such protection available to its
other executive employees.
Section 6.03. Living Allowance. The Company shall pay the Executive an
amount equal to $2,083.33 per month as a living allowance.
Section 6.04. Reimbursement of Expenses. The Company shall reimburse
the Executive for all reasonable expenses actually incurred by the Executive in
connection with the business affairs of the Company and the performance of his
duties hereunder. The Executive shall comply with such reasonable limitations
and reporting requirements with respect to such expenses as the Board may
establish from time to time.
Section 7. Termination. This Agreement shall be terminated at the end
of the Term or any Renewal Term, without prejudice to either party's rights
under this Agreement, or earlier as follows:
Section 7.01. Death. This Agreement shall terminate upon the death of
the Executive, except that the compensation provided in Section 4 shall continue
through the end of the month in which the Executive's death occurs.
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Section 7.02. Permanent Disability. In the event of any physical or
mental disability of the Executive rendering the Executive unable to perform his
duties hereunder for a period of at least one hundred twenty (120) consecutive
days and the further determination that the disability is permanent with regard
to the Executive's ability to return to work in his full capacity, this
Agreement shall terminate automatically. Any determination of disability shall
be made by the Board in consultation with a qualified physician or physicians
selected by the Board and reasonably acceptable to the Executive. The failure of
the Executive to submit to a reasonable examination by such physician or
physicians shall act as an estoppel to any objection by the Executive to the
determination of disability by the Board.
Section 7.03. By The Company For Cause. The employment of the Executive
may be terminated by the Company for Cause (as defined below) at any time
effective upon written notice to the Executive. For purposes hereof, the term
"Cause" shall mean that the Board has determined that any one or more of the
following has occurred:
(a) The Executive shall have been convicted of, or shall have pleaded
guilty or nolo contendere to, any felony;
(b) The Executive shall have willfully failed or refused to perform his
duties hereunder and such failure or refusal shall have continued for a period
of ten (10) days following written notice from the Board, it being understood
that the Company's failure to achieve its business plan or projections shall not
itself be considered a failure or refusal to perform duties;
(c) the Executive shall have breached any provision of Section 9 or 10
hereof;
(d) the Executive shall have committed any fraud, embezzlement,
misappropriation of funds, breach of fiduciary duty or other act of dishonesty
against the Company.
Section 7.04. By the Company without Cause. Subject to Section 8, the
Company may terminate the Executive's employment at any time without Cause
effective upon written notice to the Executive.
Section 7.05. By the Executive Voluntarily. Subject to Section 8, the
Executive may terminate this Agreement at any time effective upon at least sixty
(60) days' prior written notice to the Company.
Section 7.06. By the Executive for Good Reason. The Executive may
terminate this Agreement effective upon written notice to the Company for Good
Reason. Any such
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termination shall be treated as a termination by the Company without Cause. For
this purpose, the term "Good Reason" shall mean: (i) the assignment to the
Executive of any duties that are in violation of laws or regulations or are
inconsistent in any substantial respect with the Executive's position, or
responsibilities as contemplated by Section 1 of this Agreement; (ii) a change
of more than forty (40) miles in the location of the Company's offices where the
Executive is located; or (iii) any material reduction in any of the benefits
described in Sections 4, 5 or 6 of this Agreement.
Section 8. Termination Payments and Benefits.
Section 8.01. Voluntary Termination; Termination for Cause. Upon any
termination of this Agreement: (1) voluntarily by the Executive or (2) by the
Company for Cause as provided in Section 7.03, all payments, salary and other
benefits hereunder shall cease at the effective date of termination.
Section 8.02. Termination without Cause, for Good Reason. In the event
that this Agreement is terminated by the Company without Cause, or by the
Executive for Good Reason, the Executive shall receive from the Company as a
termination settlement an amount equal to twelve (12) month's base salary and
living expenses under Section 6.03 as is in effect at the effective date of
termination (the "Termination Payment"), pursuant to the Company's normal
payroll practices. In addition, the Executive shall receive that portion of the
performance bonus payable pursuant to Section 5 hereof equal to that percentage
of the calendar year during which the Executive was employed by the Company,
payable when such bonus would otherwise normally be paid by the Company. In
addition to the Termination Payment, the Executive shall continue to receive the
insurance benefits described in Section 6.02 for a period of twelve (12) months
following the effective date of termination. The Executive shall have no
obligation to mitigate the amount of the Termination Payment provided for herein
by seeking other employment or otherwise.
Section 8.03. Public Statement of Termination. In the event the
Executive's employment terminates for any reason, the Company and the Executive
shall agree upon a public statement pertaining to the Executive's termination of
employment, and the terms of such statements agreed to by the parties shall not
be subject to subsequent modification by either party unless required by law;
provided, however, that in the event the Company and the Executive are unable in
good faith to agree on such a statement, the Company or the Executive may make
public statements as are necessary to comply with the law.
Section 8.04. No Other Benefits. Except as specifically provided in
this Section 8, the Executive shall not be entitled to any compensation,
severance or other benefits from the Company or any of its subsidiaries or
affiliates upon the termination of this Agreement for any reason whatsoever.
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Section 9. Proprietary Information; Inventions in the Field.
Section 9.01. Proprietary Information. In the course of his service to
the Company, the Executive will have access to confidential specifications,
know-how, strategic or technical data, marketing research data, product research
and development data, manufacturing techniques, confidential customer lists,
sources of supply and trade secrets, all of which are confidential and may be
proprietary and are owned or used by the Company, or any of its subsidiaries or
affiliates. Such information shall hereinafter be called "Proprietary
Information" and shall include any and all items enumerated in the preceding
sentence and coming within the scope of the business of the Company or any of
its subsidiaries or affiliates as to which the Executive may have access,
whether conceived or developed by others or by the Executive alone or with
others during the period of his service to the Company, whether or not conceived
or developed during regular working hours. Proprietary Information shall not
include any records, data or information which are in the public domain during
the period of service by the Executive provided the same are not in the public
domain as a consequence of disclosure directly or indirectly by the Executive in
violation of this Agreement.
Section 9.02. Fiduciary Obligations. The Executive agrees that
Proprietary Information is of critical importance to the Company and a violation
of this Section 9.02 and Section 9.03 would seriously and irreparably impair and
damage the Company's business. The Executive agrees that he shall keep all
Proprietary Information in a fiduciary capacity for the sole benefit of the
Company.
Section 9.03. Non-Use and Non-Disclosure. The Executive shall not
during the Term, any Renewal Term or at any time thereafter (a) disclose,
directly or indirectly, except as may be required by applicable law or
regulations or rules of any regulatory authorities, any Proprietary Information
to any person other than the Company or authorized employees thereof at the time
of such disclosure, or such other persons to whom the Executive has been
specifically instructed to make disclosure by the Board and in all such cases
only to the extent required in the course of the Executive's service to the
Company or (b) use any Proprietary Information, directly or indirectly, for his
own benefit or for the benefit of any other person or entity, other than the
Company, its parent or subsidiaries or pursuant to the express instructions of
the Board. At the termination of his employment, the Executive shall deliver to
the Company all notes, letters, documents and records which may contain
Proprietary Information which are then in his possession or control and shall
destroy any and all copies and summaries thereof.
Section 9.04. Assignment of Inventions. The Executive agrees to assign
and transfer to the Company or its designee, without any separate remuneration
or compensation, his entire right, title and interest in and to all Inventions
in the Field (as
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defined below), together with all United States and foreign rights with respect
thereto, and at the Company's expense to execute and deliver all appropriate
patent and copyright applications for securing United States and foreign patents
and copyrights on Inventions in the Field and to perform all lawful acts,
including giving testimony, and to execute and deliver all such instruments that
may be necessary or proper to vest all such Inventions in the Field and patents
and copyrights with respect thereto in the Company, and to assist the Company in
the prosecution or defense of any interference which may be involving any of
said patent applications, patents, copyright applications or copyrights. For the
purposes of this Agreement, the words "Inventions in the Field" shall include
any discovery, process, design, development, improvement, application,
technique, or invention, whether patentable or copyrightable or not and whether
reduced to practice or not, conceived or made by the Executive, individually or
jointly with others (whether on or off the Company's premises or during or after
normal working hours) while in the employ of the Company, and which was or is
directly or indirectly related to the business of the Company or any of its
subsidiaries or affiliates, or which resulted or results from or was suggested
by any work performed by any employee or agent thereof during the Term or any
Renewal Term or for one year after termination of this Agreement for any reason.
Section 10. Restrictions on Activities of the Executive.
Section 10.01. Acknowledgments. The Executive agrees that he is being
employed hereunder in a key management capacity with the Company and that the
Company is engaged in a highly competitive business and that the success of the
Company's business in the marketplace depends upon its goodwill and reputation
for quality and dependability. The Executive further agrees that reasonable
limits may be placed on his ability to compete against the Company as provided
herein so as to protect and preserve the legitimate business interests and good
will of the Company.
Section 10.02. General Restrictions.
(a) During the Term and any Renewal Term and for the Non-Competition
Period (as defined below), the Executive will not (anywhere in the world where
the Company or any of its subsidiaries or affiliates then conducts business)
engage or participate in, directly or indirectly, as principal, agent, employee,
employer, consultant, investor or partner, or assist in the management of, or
own any stock or any other ownership interest in, any business which is
Competitive with the Company (as defined below). For purposes of this Agreement,
a business shall be considered "Competitive with the Company" only if it
designs, manufactures and markets home comfort and lighting appliances.
Notwithstanding the foregoing, the Executive may own, directly or indirectly,
less than 1% of the capital stock of any public corporation.
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(b) For purposes of this Agreement, the "Non-Competition Period" shall
mean the longer of (i) December 31, 2000 and (ii) a period of twelve (12)
consecutive months after the Executive's employment terminates.
Section 10.03. Employees; Customers and Suppliers.
(a) During the Term, any Renewal Term and the Non-Solicitation Period
(as defined below), the Executive will not solicit, or attempt to solicit, any
officer, director, consultant, executive or employee of the Company or any of
its subsidiaries or affiliates to leave his or her engagement with the Company
or such subsidiary or affiliate nor will he call upon, solicit, divert or
attempt to solicit or divert from the Company or any of its affiliates or
subsidiaries any of their customers or suppliers, or potential customers or
suppliers, of whose names he was aware during the term of his employment with
the Company; provided, however, that nothing in this Section 10.04 shall be
deemed to prohibit the Executive from calling upon or soliciting a customer or
supplier during the Non-Solicitation Period if such action relates solely to a
business which is not Competitive with the Company.
(b) For purposes of this Agreement, the "Non-Solicitation Period" shall
mean the longer of (i) December 31, 2000 and (ii) a period of twenty-four (24)
consecutive months after the Executive's employment terminates.
Section 10.04. THE EXECUTIVE REPRESENTS AND WARRANTS THAT THE
KNOWLEDGE, SKILLS AND ABILITIES HE POSSESSES AT THE TIME OF COMMENCEMENT OF
EMPLOYMENT HEREUNDER ARE SUFFICIENT TO PERMIT HIM, IN THE EVENT OF TERMINATION
OF HIS EMPLOYMENT HEREUNDER, TO EARN A LIVELIHOOD SATISFACTORY TO HIMSELF
WITHOUT VIOLATING ANY PROVISION OF SECTION 9 OR 10 HEREOF, FOR EXAMPLE, BY USING
SUCH KNOWLEDGE, SKILLS AND ABILITIES, OR SOME OF THEM, IN THE SERVICE OF A
NON-COMPETITOR. THE EXECUTIVE FURTHER REPRESENTS AND WARRANTS THAT HIS ABILITY
SO TO EARN A LIVELIHOOD SATISFACTORY TO HIMSELF DOES NOT DEPEND UPON HIS ABILITY
TO OBTAIN COMPENSATION FOR HIS SERVICES AT, OR IN EXCESS OF, THE LEVEL AT WHICH
HE IS COMPENSATED BY THE COMPANY.
Section 11. Remedies. It is specifically understood and agreed that any
breach of the provisions of Section 9 or 10 of this Agreement is likely to
result in irreparable injury to the Company and that the remedy at law alone
will be an inadequate remedy for such breach, and that in addition to any other
remedy it may have, the Company shall be entitled to enforce the specific
performance of this Agreement by the Executive and to seek both temporary and
permanent injunctive relief (to the extent permitted by law) without the
necessity of proving actual damages.
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Section 12. Severable Provisions. The provisions of this Agreement are
severable and the invalidity of any one or more provisions shall not affect the
validity of any other provision. In the event that a court of competent
jurisdiction shall determine that any provision of this Agreement or the
application thereof is unenforceable in whole or in part because of the duration
or scope thereof, the parties hereto agree that said court in making such
determination shall have the power to reduce the duration and scope of such
provision to the extent necessary to make it enforceable, and that the Agreement
in its reduced form shall be valid and enforceable to the full extent permitted
by law.
Section 13. Notices. All notices hereunder, to be effective, shall be
in writing and shall be delivered by hand or mailed by registered mail, postage
and fees prepaid, as follows:
If to the Company: Esteem Industries Ltd.
▇▇▇ ▇▇▇▇▇, ▇▇. ▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ Sha Wan
Kowloon, Hong Kong
If to the Executive:
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or to such other address as a party may notify the other pursuant to a notice
given in accordance with this Section l3.
Section 14. Miscellaneous.
Section 14.01. Modification. This Agreement constitutes the entire
Agreement between the parties hereto with regard to the subject matter hereof,
superseding all prior understandings and agreements, whether written or oral.
This Agreement may not be amended or revised except by a writing signed by the
parties.
Section 14.02. Assignment and Transfer. This Agreement shall not be
terminated by the merger or consolidation of the Company with any corporate or
other entity or by the transfer of all or substantially all of the assets of the
Company to any other person, corporation, firm or entity. The provisions of this
Agreement shall be binding on and shall inure to the benefit of any such
successor in interest to the Company. Neither this Agreement nor any of the
rights, duties or obligations of the Executive shall be assignable by the
Executive, nor shall any of the payments required or permitted to be made to the
Executive by this Agreement be encumbered, transferred or in any way
anticipated.
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Section 14.03. Captions. Captions herein have been inserted solely for
convenience of reference and in no way define, limit or describe the scope or
substance of any provision of this Agreement.
Section 14.04. Governing Law. This Agreement shall be construed under
and enforced in accordance with the laws of Hong Kong.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as a sealed instrument as of the day and year first above written.
ESTEEM INDUSTRIES LTD.
By:/s/ Jordan ▇. ▇▇▇▇
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Name: Jordan ▇. ▇▇▇▇
Title: President
/s/ ▇▇▇ ▇▇▇▇ Fai
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▇▇▇ ▇▇▇▇ Fai
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