Attached files
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| 8-K - China Natural Gas, Inc. | v206312_8k.htm |
Exhibit
10.1
Employment
Agreement
This
EMPLOYMENT AGREEMENT (“Agreement”) is dated on December 20, 2010
between Shaocheng Xu
(the “Executive”), a citizen of People’s Republic of
China, ID number 320503197406292510, and China Natural Gas, Inc. (the
“Company”), a Delaware Corporation, with primary business address of No.
35 Tangyan Road, High-Tech Zone, Xi’an 710065, Shaanxi Province, China. The
Executive will be employed as the Chief Financial Officer ("CFO").
WHEREAS,
the Company believes that Executive provides unique management services for the
Company and wishes to retain the Executive as its Chief Financial Officer;
and
WHEREAS,
the Company and Executive have reached the following understanding with respect
to the Executive's employment by the Company for a period of 3 years
commencing December 20, 2010;
and
WHEREAS,
the Company and Executive desire to evidence their agreement in writing and to
retain the Executive by the Company on terms set forth herein.
1.
Employment, Duties and Acceptance.
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1.1.
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Effective
December 20, 2010, the Company hereby agrees to the employment of
Executive as the Chief Financial Officer ("CFO") and both parties hereby
accept such employment on the terms and conditions contained in this
Agreement. During the term of this Agreement, the Executive shall make him
/ her available to the Company to pursue the business of the Company
subject to the supervision and direction of the Board of Directors of the
Company ("Board" or "Board of
Directors").
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1.2.
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The
Company shall retain the Executive to serve as the Company’s full time
CFO. The Executive shall not take any other work, either full-time or
part-time, which is not relevant to these responsibilities. The scope and
responsibilities of the CFO position include the
following:
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(a)
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To
proactively contact and market the company to the investment community;
set up good relationship and communicate effectively with current and
potential investors
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(b)
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To
provide accurate information on the financial resources, obligations and
current activities of the Company to the relevant external parties,
including banks, funds, and
investors;
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(c)
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To
formulate and implement relevant policies, procedures and strategies to
ensure the realization of the Company’s financial
strategy;
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(d)
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To
establish a strong financial system and strict internal control
procedure;
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(e)
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To
supervise all financial activities to ensure their compliance with law and
the Company’s policy;
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(f)
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To
be responsible for quality and timely filing of accurate US GAAP financial
reports;
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1
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(g)
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To
establish and direct a mechanism to timely solve financial
problems;
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(h)
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To
establish and direct a mechanism for reducing costs and increasing
efficiency;
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(i)
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To
be responsible for the Company’s financial
planning;
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(j)
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To
participate in business development and strategic
planning;
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(k)
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To
recommend investment policies, implement investment strategies based on
approved investment guidelines, and to manage investment
transactions;
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(l)
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To
carry out strategic acquisition, capital management, financing etc.
pursuant to the requirements of the Board of
Directors;
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(m)
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To
provide comments to the Executive Management Team and the Board of
Directors on financial issues of the
Company;
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(n)
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To
actively aware of the changing rules and regulations in the US and
China;
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(o)
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Other
responsibilities stipulated by the Board of
Directors.
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Meanwhile,
the CFO is the primary resource of the Chief Executive Officer (“CEO”) and
department directors with respect to strategies and operations, and will be
responsible for the Company’s financial management and planning, including the
following: (1) Company strategy; (2) financial strategy; (3) budget and control;
and (4) financial management.
Company
strategy
The CFO
shall play a major role in coordinating a comprehensive strategy to maximize
Company value:
(1) Ensure
the existing plans are well based on the Company’s current business to maximize
the value to the Company;
1. Continuously assess the plan’s value
creation potential;
2. Ensure the plans are targeted
towards major problems faced by the Company. In doing so, the Executive should
repeatedly research reasons and possibilities related to changes in the
Company’s operations and provide external references for value creation (such as
some business of value to other possible owner);
3. Advise the CEO and department
directors regarding major proposals;
4. Formulate criteria for financial
control and establish mechanism for progress assessment
(2)
Assist in developing the Company’s expansion strategy and creating shareholder
value.
1.
Comment on the current market opportunities closely related to the Company’s
business;
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2.
Evaluate the Company’s capacity and assets to capitalize the market opportunity;
propose proper remedies for capacities lacking;
3.
Provide business and financial evaluations regarding specific
proposals.
Financial
Strategy
The CFO
shall be responsible for the formulation and implementation of comprehensive
financial plans and strategies to provide support for the Company's business and
create greatest value for shareholders.
(1)
Propose capital and dividend policies for value creation;
(2)
Design and manage Company presentation of the Company’s operations and plan to
the financial community;
(3)
Negotiate major financial transactions, including loans, stock offerings and
buybacks.
Budget
and Control
The CFO
shall formulate and implement a program to ensure the management obtain correct
information for goal setting, decision making and operation
supervising:
(1) Coordinates
short-term budget compilation.
(2) Evaluate
main performance standards of each business unit.
(3) Ensure
business units are properly authorized;
(4) Assess
performance of business units with CEO and department directors.
The CFO
shall ensure effective management of the Company’s financial
issues:
(1) Ensure
timely reporting and performance of obligations;
(2) Establish
internal control system to ensure the safety of the company's
assets;
(3) Ensure
effective and efficient management of cash / accounts receivables / accounts
payable;
(4) Perform
all tax reporting and tax obligations;
(5) Seek
opportunities to reduce the tax burden;
(6) Maintaining
close relationship with the Company’s banks;
(7)
Risk management and plan of the Company.
The CFO
shall be responsible for maintaining and management of important external
relations, including:
1.Financial
institutions (banks and investment banks)
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2.External
auditors.
3.Supervising
authorities and tax authorities.
1.3. The
Executive shall perform his duties diligently and competently pursuant to the
requirements for the position.
1.4 The
Board may assign the Executive such general management and supervisory
responsibilities and executive duties for the Company as are appropriate and
commensurate with Executive's position as CFO of the Company
2.
Compensation and Benefits
2.1. The
Company shall pay to Executive a salary of RMB600,000 (six
hundred thousand Chinese Renminbi) after-tax annually and receive 12 pays each
year, equal to a monthly salary of RMB50,000 (fifty thousand
Chinese Renminbi).
In the
probation period, which is the first six months of employment, only 80% of the
abovementioned monthly salary, which is equal to RMB40,000, will be paid to the
Executive each month, while the remaining 20% will be paid in one installment at
the end of the first year of employment. During the employment term if not
informed by written notice, monthly salary is paid on the 20th of next month. If
the payment date coincides with a holiday, the salary will be paid on the first
business day after the holiday.
Upon the
completion of the first year of employment of the Executive, the Company should
grant the Executive stock options for purchasing the Company’s stocks according
to the ratio entitled by the CFO, as provided in the employee stock option plan
of the Company. The Executive may only exercise such stock options according to
the employee stock option plan once he or she has served the Company for one
year on a yearly basis and in cash.
2.2. The
Executive shall pay personal income taxes pursuant to regulations of the
government tax agency, and the Company shall deduct a corresponding amount from
the monthly salary of the Executive and pay that amount on behalf of the
Executive to the relevant tax agency.
2.3. In
addition to what is provided for under the foregoing Article 2.2, the Company
shall have the right to deduct from the Executives’ salaries for other purposes
in accordance with applicable laws and regulations.
3.
Term and Termination
3.1. The
term of this Agreement is for a period of 3 years beginning
on December 20, 2010 and
terminating on December 19,
2013. Each Party may by sixty days prior written notice terminate this
Agreement before expiration of this Agreement. The Executive shall complete
handover duties before he resigns from office.
3.2. The
Company, by notice to the Executive, may terminate this Agreement in writing for
a “cause”. As used herein, "cause" shall include (a) the refusal in bad faith by
Executive to carry out
specific written directions of the Board, (b) intentional fraud or dishonest
action by Executive in his/her relations with the Company ("dishonest" for these
purposes shall mean Executive's knowingly making of a material misstatement to
the Board for the purpose of obtaining direct personal benefit); or (c) the
conviction of Executive of any crime involving an act of significant moral
turpitude after appeal or the period for appeal has elapsed without an appeal
being filed by Executive.
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Notwithstanding
the foregoing, no "cause" for termination shall be deemed to exist with respect
to the Executive's acts described in clause (a) or (b) above, unless the Board
shall have given written notice to Executive (after five (5) days advance
written notice to the Executive and a reasonable opportunity to Executive to
present his/her views with respect to the existence of "cause"), specifying the
"cause" with particularity and , within twenty (20) business days after such
notice, Executive shall not have disputed the Board's determination or in
reasonably good faith taken action to cure or eliminate prospectively the
problem or thing giving rise to such "cause," provided, however, that a repeated
breach after notice and cure, of any provision of clause (a), (b) or (c) above,
involving the same or substantially similar actions or conduct, shall be grounds
for termination for cause upon not less than five (5) days additional notice
from the Company.
3.3. The
Executive, by notice to the Company, may terminate this Agreement in writing if
a "Good Reason" exists . For purposes of this Agreement, "Good Reason" shall
mean the occurrence of any of the following circumstances without the
Executive's prior express written consent:
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(a)
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a
material adverse change in the nature of the Executive's title, duties or
responsibilities with the Company that represents a demotion from his/her
title, duties or responsibilities as in effect immediately prior to such
change;
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(b)
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a
material breach of this Agreement by the
Company;
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(c)
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a
failure by the Company to make any payment to Executive when due, unless
the payment is not material and is being contested by the Company, in good
faith, and approved by the Executive in
advance;
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(d)
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a
liquidation, bankruptcy or receivership of the Company;
or
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(e)
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any
person or entity other than the Company and/or any officers or directors
of the Company as of the date of this Agreement acquires securities of the
Company other than from Executive or his/her affiliates (in one or more
transactions) having 51% or more of the total voting power of all the
Company's securities then
outstanding.
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Notwithstanding
the foregoing, no Good Reason shall be deemed to exist with respect to the
Company's acts described in clauses (a), (b) or (c) above, unless the Executive
shall have given written notice to the Company specifying the Good Reason with
reasonable particularity and, within twenty (20) business days after such
notice, the Company shall not have cured or eliminated the problem or thing
giving rise to such Good Reason; provided, however, that a repeated breach after
notice and cure of any provision of clauses (a), (b) or (c) above involving the
same or substantially similar actions or conduct, shall be grounds for
termination for Good Reason without any additional notice from
Executive.
4.
Protection of Confidential Information; Non-Competition.
4.1. The
Executive acknowledges that:
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(a)
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As
a result of his/her current employment with the Company, the Executive
will obtain secret and confidential information concerning the business of
the Company and its subsidiaries and affiliates, including, without
limitations, financial information, designs and other proprietary rights,
trade secrets and "know-how," customers and sources ("Confidential
Information").
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(b)
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The
Company will suffer substantial damage which will be difficult to compute
if, during the period of his/her employment with the Company or
thereafter, Executive should enter a business competitive with the Company
or divulge Confidential
Information.
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(c)
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The
provisions of this Agreement are reasonable and necessary for the
protection of the business of the
Company.
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4.2. The
Executive agrees that he will not at any time, either during the term of this
Agreement
or thereafter, divulge to any person or entity any Confidential Information
obtained
or learned by him/her as a result of his/her employment with the Company, except
(i) in the course of performing his/her duties hereunder, (ii) to the extent
that any such information is in the public domain other than as a result of
Executive's breach of any of his/her obligations hereunder, (iii) where required
to be disclosed by court order, subpoena or other government process or (iv) if
such disclosure is made without Executive's knowing intent to cause material
harm to the Company. If Executive shall be required to make disclosure pursuant
to the laws and regulations, or pursuant to the provisions of clause (iii) of
the preceding sentence, Executive promptly, but in no event more than 72 hours
after learning of such subpoena, court order, or other government process, shall
notify, by personal delivery or by electronic means, confirmed by mail, the
Company and Executive shall permit the Company to intervene and participate with
counsel of its choice in any proceeding relating to the enforcement
thereof.
4.3. Upon
termination of his/her employment with the Company, Executive will promptly
deliver to the Company all memoranda, notes, records, reports, manuals,
drawings, blue-prints and other documents (and all copies thereof) relating to
the business of the Company and all property associated therewith, which he may
then possess or have under his/her control;
4.4.
During the period of employment: (A) the Executive, without the prior written
permission of the Company, shall not, anywhere in the People’s Republic of
China, (i) enter into the employ of or render any services to any person, firm
or corporation engaged in any business which is directly in competition with the
Company's principal existing business at the time of termination ("Competitive
Business"); (ii) engage in any Competitive Business as an individual, partner,
shareholder, creditor, director, officer, principal, agent, employee, trustee
consultant, advisor or in any other relationship or capacity; (iii) employ, or
have or cause any other person or entity to employ, any person who was employed
by the Company at the time of termination of the Executive's employment by the
Company (other than Executive's personal secretary and assistant); or (iv)
solicit, interfere with, or endeavor to entice away from the Company, for the
benefit of a Competitive Business, any of its customers. Notwithstanding the
foregoing, in the event the Company terminates this Agreement without "cause" or
if Executive terminates this Agreement for Good Reason under Article 3.5 hereof,
the Executive's obligations under this Article 4.4 shall terminate one month
following termination.
4.5. If
the Executive commits a breach of any of the provisions of Articles 4.2 or 4.4,
the Company shall have the right to have the provisions of this Agreement
specifically enforced by any court having equity jurisdiction, it being
acknowledged and agreed by the Executive that the services being rendered
hereunder to the Company are of a special character and that he or
she should bear a corresponding and reasonable responsibility to compensate the
Company for any damage caused by his or her purposeful conduct .
5.
Rewards and Penalties
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5.1 The
Executive should abide by the provisions of the company law includes attendance
management system, various rules and regulations. The mobile phone should remain
open 24 hours, to ensure unblocked communication at any time and maintain
effective communication with overseas investors. Meanwhile, the chief financial
officer reports to the Chairman directly.
5.2.
Without written consent of the Company, the Executive shall not accept money,
gift or any other kinds of benefits from any customer, collaborating company or
other related company, except normal business reception and entertainment with
associated parties.
5.3.
Executive shall serve the Company faithfully and competently during the term of
employment.
5.4. The
Company shall impose penalties on the Executive pursuant to regulations of the
Company, if the Executive violates the Company’s rules or regulations. The
Company’s regulations are attached hereby.
6.
Liability for Breach
6.1 If
either Party to this Agreement is under any of the following circumstances, the
Party shall be liable for breach of the Agreement:
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(a)
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The
Company violates the provisions of this Agreement and unilaterally
rescinds this Agreement, unless otherwise provided by this
Agreement;
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(b)
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The
Executive resigns from the Company in a manner that violates the
provisions of this Agreement.
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6.2.
Either Party in breach of this Agreement shall pay the other Party liquidated
damages. The standard liquidated damages shall be equal to twice of
the salary the Executive has actually received in the month prior to the date of
the breach.
6.3. If
the liquidated damages provided for under the foregoing Article 6.2 is not
enough to cover the losses of the other Party, then the breaching Party shall
compensate the other Party for the actual losses caused by the
breach.
6.4. The
Executive warrants (1) that all the relevant information he provides to the
Company, including without limitations his/her identification, address, academic
credentials, work experiences and professional skills are true; (2) that, by
working for the Company and by entering into this Agreement with the Company,
the Executive does not violate any agreement on confidentiality or
non-competition entered into with his/her previous employer or any other company
or individual. If the Executive breaches this warranty, the Company
has the right to rescind this Agreement and demand that Executive compensate the
Company for any losses due to the breach.
7.
Miscellaneous Provisions.
7.1. All
notices provided for in this Agreement shall be in writing, and shall be deemed
to have been duly given when delivered personally to the party to receive the
same, when transmitted by electronic means, or when mailed first class postage
prepared, by certified mail, return receipt requested, addressed to the party to
receive the same at his/her or its address set forth below, or such other
address as the party to receive the same shall have specified by written notice
given in the manner provided for in this Article 7.1. All notices shall be
deemed to have been given as of the date of personal delivery, transmittal or
mailing thereof.
If to the
Executive: Room 601, No. 34, 999 Lane, Hong Mei Road, Shanghai
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If to the
Company: 19th
Building B Van Metropolis, Tang Yan Road, Hi-tech Zone, Xi'an
7.2. In
the event of any claims, litigation or other proceedings arising under
this
Agreement, the Executive shall be reimbursed by the Company within thirty (30)
days after delivery to the Company of statements for the costs incurred by the
Executive in connection with the analysis, defense and prosecution thereof,
including reasonable attorneys' fees and expenses; provided, however, that
Executive shall reimburse the Company for all such costs if it is determined by
a non-appealable final decision of a court of law that the Executive shall have
acted in bad faith with the intent to cause material damage to the Company in
connection with any such claim, litigation or proceeding.
7.3. The
Company, shall to the fullest extent permitted by law, indemnify the
Executive
for any liability, damages, losses, costs and expenses arising out of alleged or
actual claims (collectively, "Claims") made against the Executive for any
actions or omissions as an officer and/or director of the Company or its
subsidiary. To the extent that the Company obtains director and officers
insurance coverage for any period in which Executive was an officer, director or
consultant to the Company, Executive shall be a name insured and shall be
entitled to coverage thereunder.
7.4. All
questions with respect to the construction of this Agreement, and the rights and
obligations of the parties hereunder, shall be determined in accordance with the
law of China applicable to agreements made and to be performed entirely in
Xi'an, China.
IN
WITNESS WHEREOF, the parties have executed this Agreement as of
the date first above written.
| By: | /s/ Qinan Ji | ||
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CEO of China Natural Gas
Inc.
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| By: | /s/ Shaocheng Xu | ||
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