Exhibit 10.32

RECITALS:

WHEREAS, the Company desires to retain the services and employment of Executive, upon the terms and conditions hereinafter set forth; and

WHEREAS, Executive desires to enter into such employment with the Company, upon the terms and conditions hereinafter set forth.

NOW, THEREFORE, in consideration of the covenants, representations and warranties contained herein, the parties hereto agree as follows:

1.             Employment.  The Company hereby employs Executive, and Executive hereby accepts such employment and agrees to serve the Company, upon the terms and conditions set forth in this Agreement.

(a)          Base Salary.  The Company or its Hong Kong-based subsidiary, as applicable, will pay Executive an annual base salary (“Base Salary”) of Three Hundred and Twenty Thousand Dollars (US$320,000), payable in substantially equal monthly or more frequent installments in accordance with the Company’s or the Hong Kong-based subsidiary’s, as applicable, normal and customary payroll practices.  The Board or the Compensation Committee of the Board (the “Committee”) may review and further adjust Executive’s Base Salary from time to time in its sole and absolute discretion, provided that, prior to the first anniversary of the Effective Date, the Company may not decrease Executive’s Base Salary below the amount set forth in this section.  Any such increased Base Salary shall be and become the “Base Salary” for purposes of this Agreement.

(b)          Expense Reimbursement.  The Company or its Hong Kong-based subsidiary, as applicable, shall reimburse Executive for all reasonable business expenses properly incurred by Executive in the ordinary course of performing his duties and responsibilities hereunder, subject to the Company’s normal and customary practices and policies as are in effect from time to time with respect to travel, entertainment and other business expenses (including the Company’s reasonable requirements with respect to prior approval, reporting and documentation of such expenses).

 

 

(c)          Benefits.  Executive shall be eligible to participate in such benefits as are generally provided or offered by the Company, or the Company’s mainland China-based subsidiary, as applicable, to its other senior executive employees, including, without limitation, health/major medical insurance, disability insurance and welfare benefits, sick days and other fringe benefits (collectively, “Benefits”), if and to the extent that Executive is eligible to participate in accordance with the terms of the applicable Benefits plan or program generally, applicable law, and subject to any required contributions.

(d)          Bonus.  In addition to the Base Salary, the Executive shall be eligible to earn for each calendar year ending during the Employment Period an annual incentive bonus (the “Bonus”) based on the achievement of one or more performance goals, targets, measurements and other factors (collectively, the “Performance Goals”) established for such year by the Committee or the Board.  The Executive’s target annual bonus and the applicable Performance Goals will be established by the Committee within 90 days of the first day of the year to which such Bonus relates; provided, however, that the minimum annual target bonus shall be 100% of the annual rate of Base Salary in effect at the commencement of his employment with the Company for the first year and, for each subsequent year, at the start of such year (the “Target Bonus”).  Payment of the Executive’s Bonus for any year will be based upon the achievement of the Performance Goals established by the Committee for that year.  The actual Bonus paid may be higher or lower than the Target Bonus for over- or under-achievement of the Performance Goals (including, without limitation, as a result of the exercise by the Committee of negative discretion in accordance with its past practices with respect to the Performance Goals and related payment schedule established by the Committee for such Performance Goals), as determined by the Committee.  Subject to Section 7 hereof, a Bonus, if any, shall be payable in accordance with the Company’s customary bonus payment practices, but in no event later than March 15th of the succeeding calendar year.

(e)          Options. Executive is hereby granted 210,000 options (the “Options”) to purchase shares of the Company’s Common Stock pursuant to the terms and conditions set forth in the Non-Qualified Stock Option Agreement attached hereto as Exhibit A (the “Option Agreement”).  The Options shall vest 1/3 immediately upon award, 1/3 on the first anniversary of the Effective Date, and the final 1/3 on the second anniversary of the Effective Date, subject to Executive’s continued employment with the Company.  The Options shall be granted with an exercise price equal to the Fair Market Value (as defined in the Company’s 2013 Equity Compensation Plan) of a share of Common Stock on the date of grant and shall expire on the tenth anniversary of the date of grant or, if earlier, at the time set forth in the Equity Award Agreement relating to Executive’s termination of employment.

(f)          Withholding.  All salary, bonus and other compensation described in this Agreement shall be subject to withholding for federal, state or local taxes, amounts withheld under applicable benefit policies or programs, and any other amounts that may be required to be withheld by law, judicial order or otherwise.

5.             Executive Work Product and Inventions.  Executive agrees that Inventions (as defined below) shall be deemed “work made for hire” and shall be the property of the Company.  Executive shall promptly disclose to the Company all such Inventions and hereby irrevocably assigns, transfers and conveys to the Company and shall assign, transfer and convey to the Company all such Inventions and all such worldwide right, title and interest therein.  Executive hereby waives and agrees not to assert any moral rights or similar rights under the laws of any jurisdiction with respect to any Inventions.  Executive further agrees to execute or cause to be executed any and all assignment documents or other documents that may be necessary to perfect the ownership rights of the Company in such Inventions or to secure the Company’s statutory protection (including, without limitation, patent, trademark, trade secret or copyright protection) throughout the world for any and all such Inventions.  For purposes hereof, “Invention” means all work product, including, without limitation, any and all creative works, discoveries, ideas, inventions, designs, devices, models, prototypes, processes, works, documentation, files, information, manuals, materials, input materials and output materials, software programs or packages (together with any related documentation, source code or codes, object codes, upgrades, revisions, modifications and any related materials) and other information and materials, and the media upon which they are located (including cards, tapes, discs and other storage facilities), which are conceived, created, developed, reduced to practice, fixed in a tangible medium of expression or otherwise made by Executive solely or jointly with others in connection with or arising from and within the scope of Executive’s employment hereunder (whether or not during regular business hours).
 

 

(a)          Certain Definitions.  For purposes hereof:

“Affiliate” means, with respect to the Company, (i) the Company’s present and former parent companies, subsidiaries, successors, affiliated and related companies, and (ii) a person or entity, directly or indirectly through one or more intermediaries, that is in control of, or controlled by, or under common control with, the Company.

“Competitive Business” means any person or entity engaged in a business similar to or competitive with the Business as it is or was conducted by the Company wherever the Company does business during the Employment Period.

“Current Customer” means any individual or entity which is or was a client of the Company (or its predecessor) or any Affiliate during the twelve (12) months preceding the date of the termination of Executive’s employment and with which Executive or had contact on behalf of the Company or any Affiliate and/or directly managed others with respect to such contact during the Employment Period, and/or about which Executive had access to Confidential Information (as defined herein).

“Prospective Customer” means any individual or entity with which Executive has directly solicited, or had contact on behalf of the Company or any Affiliate and/or directly managed others with respect to such solicitation or contact during the twelve (12) months preceding the date of the termination of Executive’s employment, and/or about which Executive had access to Confidential Information (as defined herein).

“Restricted Period” means the period of Executive’s employment with the Company or any Affiliate and one (1) year thereafter.
 

 

(b)          Non-Interference with Business Relationships.  Executive hereby agrees that during the Restricted Period, Executive will not directly or indirectly, either individually or as a principal, shareholder, member, partner, joint venturer, investor, employer, director, manager, officer, employee, consultant, agent, or in any other manner or capacity whatsoever:

(i)           solicit, induce, advise, request, influence, or take any other action with regard to any sales representative, supplier, customer, lessor, or any other person or entity that has a business relationship with the Company or any Affiliate (or has or had a business relationship with the Company’s or any Affiliate’s predecessors) which is intended to or has the effect of causing such person or entity to discontinue, reduce the extent of, discourage the development of or otherwise adversely affect such relationship with the Company or any of the Affiliates;

(ii)          solicit, promote or sell any products or services that compete with any of the products or services of the Company or any of the Affiliates to any then Current Customer or Prospective Customer of the Company or any of the Affiliates; or

(iii)         recruit, solicit, or otherwise induce or influence any employee, consultant, sales representative, agent, or other personnel of the Company or any of the Affiliates to discontinue or otherwise terminate such relationship with the Company or any of the Affiliates.

(c)          Non-Competition.  Executive hereby agrees that during the Restricted Period, Executive will not directly or indirectly, either individually or as a principal, shareholder, member, partner, joint venturer, investor, employer, director, manager, officer, employee, consultant, agent, or in any other manner or capacity whatsoever, engage in, assist, directly or indirectly, or have any active or economic interest in a Competitive Business located anywhere in the United States; provided, however, that Executive shall not be prohibited from owning less than two percent (2%) of the outstanding securities of a company which is publicly traded on a securities exchange or over-the-counter market.

(d)          No Disclosure of Confidential Information.  Executive hereby agrees that he will not, at any time during or after the Employment Period directly or indirectly, disclose to anyone, or use or otherwise exploit for his own benefit or for the benefit of anyone other than the Company, any Confidential Information (as defined herein) of the Company or any Affiliate.  For purposes hereof, “Confidential Information” means any and all confidential or proprietary information regarding the Company or its Business or any Affiliate or its business, including, without limitation, any and all trade secrets, employer records (including personnel records), customer lists, prospect lists, price lists, customer order or purchasing patterns and activities, product costing information, stocking requirements, purchase orders, invoices, customer records, product information and applications, customer uses and preferences, passwords, access codes, products, patents, trademarks, copyrights, processes, techniques, formulas, designs, scientific information, training information and materials, computer programs, computer network and security information, databases, software, services, research, development, inventions, and information regarding manufacturing, financials, purchasing, accounting, marketing, production, customers, suppliers, lessors, employees, and prospective customers, suppliers, lessors, and employees, and other trade secret, confidential and/or proprietary information, whenever conceived, originated, discovered or developed, concerning any aspect of the Company or its Business or any Affiliate or its business, whether or not in written or tangible form; provided, however, that (i) the term “Confidential Information” shall not include information in Executive’s possession or known to Executive prior to employment with the Company, including but not limited to information that is located on Executive’s rolodex (whether paper or electronic) or information which is or becomes generally available to the public on a non-confidential basis, including from a third party provided that such third party is not in breach of an obligation of confidentiality with respect to such information and Executive is aware of such breach and (ii) Executive shall not be in violation of this subsection in the event that Executive is legally compelled to disclose any of the Confidential Information, provided that in any such event Executive will provide the Company with reasonably prompt written notice prior to any such disclosure so that the Company (or an Affiliate) may obtain a protective order or other confidential treatment for the Confidential Information, and in the event that a protective order or other remedy is not obtained by the Company, Executive will furnish only that portion of the Confidential Information which Executive is advised by opinion of legal counsel is legally required to be furnished.  The foregoing notwithstanding, nothing in this Agreement prohibits Executive from reporting possible violations of federal law or regulation to any governmental agency or entity, including but not limited to the Department of Justice, the Securities and Exchange Commission, Congress, and any agency Inspector General, or making other disclosures that are protected under the whistleblower provisions of federal law or regulation.
 

 

(e)          Remedies.  Executive understands that the Company may not have an adequate remedy at law for the breach or threatened breach by Executive of any one or more of the covenants set forth in this Section 6 and agrees that in the event of any such breach or threatened breach, the Company may be entitled, in addition to any other remedies which may be available to it, to injunctive relief to enjoin Executive from the breach or threatened breach of such covenants.  Further, if Executive violates any of the restrictions contained in this Section 6, the Restricted Period shall be extended by a period equal to the length of time from the commencement of any such violation until such time as such violation shall be cured by Executive to the satisfaction of the Company.  If any of the covenants set forth herein is not enforceable, in whole or in part, the remaining covenants set forth herein shall be enforceable notwithstanding the invalidity of any other covenant.  Any covenant not enforceable in part shall be enforced to the extent valid and enforceable.  If, in any judicial proceeding, a court of competent jurisdiction shall refuse to enforce any of the separate covenants herein or shall find that the term or scope of one or more of the separate covenants is unreasonably broad, then in that event the invalid or unreasonably broad provision shall be deleted or modified by said court to the minimum extent necessary to permit enforcement thereof, and the substitute provision shall be incorporated herein.  The parties acknowledge and agree that the Affiliates shall be third-party beneficiaries of the Company’s rights and Executive’s obligations under this Section 6.

(f)          Notice to Future Employers.  Executive agrees that during the Restricted Period, he will inform each new employer, prior to accepting employment, of the existence of this Agreement and the terms of the restrictive covenants and confidentiality restrictions contained herein.

(a)          Termination by the Company for Cause; Resignation by Executive Without Good Reason.  (i) The Company shall have the right to terminate Executive’s employment hereunder for any reason or for no reason, including without limitation for Cause.  If Executive’s employment with the Company is terminated by the Company for Cause (as defined below) or if Executive resigns without Good Reason (as defined below), he shall be entitled to receive his then current Base Salary and Benefits accrued and unpaid, and any expenses for which Executive is entitled to be reimbursed, up to and including the effective date of such termination (the “Termination Amount”).  Executive shall not be entitled to any other salary, bonus, benefits or other compensation as a result of termination pursuant to this Section 7(a).  For purposes hereof, “Cause” means the occurrence of any one of the following on the part of Executive: (A) conviction of or a plea of nolo contendre to a felony or other criminal offense which materially and adversely affects or reflects on the Company or any Affiliate in a negative manner; (B) act(s) of moral turpitude, which materially and adversely reflects on the Company or any Affiliate in a negative manner; (C) suspension from his position, temporary prohibition from participating in the conduct of the Company or any Affiliate’s affairs or removal from his or any similar position by a governmental agency or regulatory body; (D) actual theft, fraud or embezzlement of money or tangible or intangible assets or property of the Company or any Affiliate or their employees or business relations; (E) gross negligence or willful misconduct in respect of Executive’s performance of his duties and responsibilities to the Company or any Affiliate, which such violation (if susceptible to cure) continues or is repeated following thirty (30) days’ written notice from the Company to Executive thereof; (F) material breach of Executive’s fiduciary duties to the Company or any Affiliate, including without limitation intentional actions that seriously damage or threaten to damage the Company; (G) willful and persistent violation of any express and lawful direction from the Board, relating to Executive’s duties and responsibilities commensurate with his position, which such violation (if susceptible to cure) continues or is repeated following thirty (30) days’ written notice from the Company to Executive thereof; (H) material breach of the material provisions in Section 6; or (I) material breach of any other material term, covenant, representation or warranty contained in this Agreement, which such breach (if susceptible to cure) remains uncured or is repeated following thirty (30) days’ written notice from the Company to Executive thereof.
 

 

(ii) Termination of Executive’s employment for Cause shall be communicated by delivery to Executive of a written notice from the Board stating that Executive will be terminated for Cause, specifying the particulars thereof and the effective date of such termination; provided, however, that upon receipt of such notice, the Executive shall have an opportunity, together with his counsel, to be heard by the Board.  The date of Executive’s termination for Cause shall be the date of termination specified by the resolution of the Board; provided, however, that such termination shall become effective no earlier than the date of the meeting of the Board described in the preceding sentence.  The date of a resignation by Executive shall be the date specified in a written notice of resignation to the Company.  Executive shall provide at least 90 days’ advance written notice of resignation without Good Reason; provided, however, that the Company, in its sole discretion, may waive the notice requirement in whole or in part.

(b)          Termination as a Result of Executive’s Disability or Death.  The Company shall have the right to terminate Executive’s employment hereunder in the event of Executive’s Disability or death, effective immediately.  Upon a termination pursuant to this Section 7(b) as a result of Disability or as a result of Executive’s death, the Executive (or his estate or beneficiary, as applicable) shall be entitled to receive the Termination Amount.  In addition, Executive shall be entitled to receive any earned but unpaid Bonus for the year prior to the year of termination and an amount equal to the pro rata portion of the Bonus for the year in which the termination occurs, calculated by multiplying (x) the Target Bonus for the year of termination by (y) a fraction, the numerator of which is the number of days the Executive was employed during the year of termination and the denominator of which is 365.  If the Executive’s employment is terminated pursuant to this Section 7(b) as a result of his Disability, then subject to Section 7(g), the pro rata Bonus shall be paid in a lump sum on the first business day of the third calendar month following the calendar month in which termination pursuant to this Section 7(b) is effective.  If the Executive’s employment is terminated as of result of his death, the pro rata Bonus shall be paid within 30 days after the date of the Executive’s death.  Except to the extent required by the terms of any applicable compensation or benefit plan or program or otherwise required by applicable law, the Executive shall have no right under this Agreement or otherwise to receive any other compensation or to participate in any other plan, program or arrangement after such termination.

For purposes hereof, “Disability” means the inability of Executive to substantially perform his duties and responsibilities to the Company by reason of a physical or mental disability or infirmity (A) for a continuous period of at least 180 days in any consecutive twelve (12) month period or (B) at such earlier time as Executive submits, or, the Company receives, satisfactory medical evidence that Executive has a physical or mental disability or infirmity which will likely prevent him from returning to the performance of his work duties for ninety (90) days or longer.  In the event of any dispute regarding the determination of Executive’s Disability, such determination shall be made by a physician selected by the Company and Executive, (or if the Company and Executive cannot agree, by two physicians, one selected by the Company and one selected by Executive).
 

 

(c)          Termination by the Company Without Cause.  The Company may terminate Executive’s employment hereunder at will, for any reason (or for no reason) whatsoever, effective immediately upon notice from the Company to Executive thereof.  If Executive’s employment with the Company is terminated by the Company without Cause, he shall be entitled to receive the Termination Amount plus the Severance Payment set forth in Section 7(f) below.

(d)          Termination by Executive for Good Reason.  Executive may terminate his employment hereunder after Executive gives ninety (90) days written notice of Good Reason (as defined below) and the circumstances giving rise to Good Reason (if susceptible to cure) remain uncured during the remaining thirty (30) day period.  If, prior to the expiration of the Employment Period, Executive’s employment with the Company is terminated by Executive with Good Reason he shall be entitled to receive the Termination Amount plus the Severance Payment set forth in Section 7(f) below.

For purposes hereof, “Good Reason” means the occurrence of any one of the following: (i) a material reduction in, or a change in the form of, Executive’s Base Salary or Bonus; (ii) a material reduction in the aggregate amount of the material benefits provided to Executive as of the Effective Date, other than an across-the-board reduction applicable to all senior executive officers of the Company; (iii) a material diminution in Executive’s authority, duties, or responsibilities, or a change to Executive’s reporting structure (provided, however, Good Reason shall not be deemed to occur if the following three conditions are satisfied: (A) the diminution in Executive’s position, duties or reporting responsibilities is solely and directly a result of the Company no longer being a publicly-traded company; (B) the event resulting in the Company no longer being a publicly-traded entity is a leveraged buyout, acquisition by a private equity fund and/or other similar “going private” transaction and is not as a result of the acquisition of the Company or the business of the Company by another operating company or parent or subsidiary thereof; and (C) Executive continues to hold the same position and title with the Company and no other act or omission has then occurred that would constitute an event of Good Reason under this definition); (iv) the relocation, without Executive’s consent, of Executive’s principal place of business to a location that is more than 60 miles from Executive’s primary business location on the Effective Date or, if applicable, from a subsequent primary business location agreed to by Executive; or (v) any other action or inaction that constitutes a material breach of the terms of this Agreement.  Notwithstanding the previous provisions of this Section 7(d), it shall not be an event of Good Reason under this Agreement (1) for the Company (x) to adopt (or subsequently amend) one or more claw-back, mandatory deferral or other risk management policies related to the Company’s incentive compensation plans or arrangements, including without limitation any compensation recoupment policy or (y) to adopt (or subsequently amend) stock ownership guidelines related to the Company’s common stock or (z) to subject the compensation payable to Executive under this Agreement to these policies or guidelines; provided that, except as otherwise required by law, such policies are generally applicable to the Company’s executive officers or (2) unless Executive provides written notice to the Company of the existence of the conditions giving rise to Good Reason within 90 days of the initial existence of such conditions, the Company fails to cure such conditions within 30 days from the date of notice and Executive terminates his employment for Good Reason within 60 days after the end of the Company’s cure period.

(e)          Removal From Positions.  Any termination of Executive’s employment with the Company shall automatically effectuate Executive’s removal from any and all officer and other positions that Executive then holds with the Company or any of its Affiliates as of the effective termination date.
 

 

(f)          Severance Pay.  (i) If Executive’s employment is terminated pursuant to Sections 7(c) or 7(d) above, subject to the terms and conditions in this Agreement and a release and waiver agreement in substantially the form attached as Exhibit B hereto but subject to such modifications as the Company may determine are necessary or prudent to promote the enforceability of such release and waiver agreement (the “Release Agreement”), and further provided that Executive has been and remains in compliance with his obligations as set forth in this Agreement and the Release Agreement, Executive shall be entitled to receive an amount equal to the sum of the following amounts (collectively, the “Severance Payment”):

(A)          any earned but unpaid Bonus for the year prior to the year of termination;

(B)          an amount equal to the pro rata portion of the Bonus for the year in which the termination or resignation occurs, based on the actual achievement of performance goals and payable in accordance with the Company’s customary bonus practices, but in no event later than March 15th of the year following the year in which termination occurs;

(C)          an amount equal to the Base Salary in effect for the year of termination or resignation; and

(D)          continuation of applicable medical, dental and life insurance benefits (based on the coverage in effect for Executive and his dependents at the time of such termination or resignation, but excluding any supplemental medical expense reimbursement insurance provided by the Company), from the date of termination or resignation until the earlier to occur of (1) one year from the date of termination or (2) the date Executive becomes eligible for comparable benefits provided by a third party (in either case, the “Continuation Period”); provided, however, that the continuation of such benefits shall be subject to the respective terms of the applicable plan, as in effect from time to time, if applicable the provisions under the Consolidated Omnibus Budget Reconciliation Act of 1986, as amended (“COBRA”), and the timely payment by Executive of his applicable share of the applicable premiums in effect from time to time during the Continuation Period.  Notwithstanding the previous sentence, if the Company determines in its sole discretion that it cannot provide the foregoing benefit without potentially violating applicable law (including, without limitation, Section 2716 of the Public Health Service Act), the Company shall in lieu thereof provide to Executive a taxable monthly payment in an amount equal to the monthly COBRA premium that Executive would be required to pay to continue his and his covered dependents’ group health coverage in effect on the Date of Termination (which amount shall be based on the premium for the first month of COBRA coverage), less the amount the Executive would have had to pay to receive group health coverage for himself and his covered dependents based on the cost sharing levels in effect on the Date of Termination, which payments shall be made regardless of whether Executive elects COBRA continuation coverage and shall commence in the month following the later of the: (i) month in which the Date of Termination occurs; or (ii) month such determination is made, and shall end on the earlier of (x) the date upon which Executive obtains other employment or (y) the last day of the 12th calendar month following the month in which the Date of Termination occurs.  To the extent that reimbursable medical and dental care expenses constitute deferred compensation for purposes of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), the Company shall reimburse the medical and dental care expenses as soon as practicable consistent with the Company’s practice, but in no event later than the last day of the calendar year next following the calendar year in which such expenses are incurred.
 

 

(ii)          Subject to compliance with the rules set forth in Section 15 below, the Severance Payment shall be paid in a lump sum on the first business day of the third calendar month following the calendar month in which termination by the Company without Cause or resignation by Executive for Good Reason is effective (or, in the event of Executive’s death after the date of Executive’s termination or resignation but prior to the date of payment, to Executive’s estate or beneficiary, as applicable).  In the event of Executive’s death during but prior to the end of the Continuation  Period, the Company will  continue to pay the employer portion of the costs of continued health coverage for Executive’s spouse and dependents in accordance with the terms of Section 7(f)(i)(D)) as if Executive had remained alive for the duration of the Continuation Period, after which time, such participants’ continued participation (if any) in the Company’s health plan shall be at such participants’ sole expense.  Notwithstanding the foregoing, Executive agrees that if the Company adopts a severance plan in which Executive is eligible to participate and under which Executive is eligible for benefits (the “Severance Plan”), Executive will be eligible to receive the greater of either:  (A) the Severance Payment set forth in this Section 7(f) and (B) the benefits for which Executive is eligible under the Severance Plan, but in no event shall Executive be entitled to receive both.

(g)          Return of Property.  Immediately upon the Company’s request or on the termination date of Executive’s employment, whichever occurs first, Executive shall return to the Company all Confidential Information and any other property of the Company, its Affiliates, or any third parties which is in Executive’s possession or control by virtue of his employment with the Company.  Property to be returned to the Company shall include without limitation, all documents and things (whether in tangible or electronic format and whether such documents or things contain any Confidential Information) in Executive’s possession or control, further including without limitation, all computer programs, files and diskettes, and all written or printed files, manuals, contracts, memoranda, forms, notes, records and charts, and any and all copies of, or extracts from, any of the foregoing.

10.           Indemnification; Insurance. During Executive’s employment and thereafter, the Company shall, on the same basis as is provided for the Company’s continuing officers and directors from time to time, indemnify, defend and hold Executive harmless against any costs or expenses (including attorneys’ fees), judgments, fines, losses, claims, damages or liabilities incurred in connection with any claim, action, suit, proceeding or investigation, whether civil, criminal, administrative or investigative, by reason of the fact that Executive is or was a director, officer, employee or agent of the Company or any Subsidiary, whether asserted or claimed prior to, at or after the date of Executive’s termination of employment, to the fullest extent permitted under applicable law. During Executive’s employment and thereafter, Company shall provide to Executive coverage under a policy of directors’ and officers’ liability insurance that provides Executive with coverage on the same basis as is provided for the Company’s continuing officers and directors from time to time.
 

 

11.           Governing Law; Venue.  This Agreement shall be covered by, construed, applied and reinforced in accordance with the internal laws of the State of New York, without regard to conflicts of law provisions.  The parties agree that any action or proceeding to enforce or arising out of this Agreement shall be commenced in the state courts, or in the United States District Court, in New York, New York.  The parties consent to such jurisdiction, agree that venue will be proper in such courts and waive any objections based upon Forum Non Conveniens.  The choice of forum set forth in this section shall not be deemed to preclude the enforcement of any action under this Agreement in any other jurisdiction.

12.           Continuing Obligation.  The covenants, obligations, duties and liabilities of Executive pursuant to Sections 5 and 6 hereof are continuing, absolute and unconditional and shall remain in full force and effect as provided herein.

13.           Waiver.  The waiver by the Company or Executive of any breach of any term or condition of this Agreement shall not be deemed to constitute the waiver of any other breach of the same or any other term or condition hereof.

14.           Notices.  Any notice, request, consent or communication under this Agreement shall be effective only if it is in writing and shall be deemed to have been given when personally delivered or three (3) days after being deposited in the United States mail, certified or registered, postage prepaid, return receipt requested and addressed to the party at its or his last known address.  The address of any party may be changed by notice in writing to the other party duly served in accordance with this Section.

15.           Section 409A.  To the extent applicable, the intent of the parties is that payments and benefits under this Agreement be exempt from, and to the extent not exempt from, comply with Internal Revenue Code Section 409A and the regulations and guidance promulgated thereunder (collectively “Code Section 409A”) and, accordingly, to the maximum extent permitted, this Agreement shall be interpreted in accordance with such intent.  To the extent that any provision hereof is modified in order to comply with Code Section 409A, such modification shall be made in good faith and shall, to the maximum extent reasonably possible, maintain the original intent and economic benefit to Executive and the Company of the applicable provision without violating the provisions of Code Section 409A.  In no event whatsoever shall the Company be liable for any additional tax, interest or penalty that may be imposed on Executive by Code Section 409A or damages for failing to comply with Code Section 409A.  Without limiting the generality of the foregoing, the Company and Executive agree as follows:

(a)          Reimbursements payable to Executive hereunder shall be paid in no event later than the end of the calendar year following the year in which the reimbursable expense is incurred.  In addition, such reimbursements shall be made in a manner that complies with all the requirements of Treasury Regulation Section 1.409A-3(i)(l)(iv).  In no event shall reimbursements and payments provided under this Agreement be subject to liquidation or exchange in a manner which violates Treasury Regulation Section 1.409A-3(i)(l)(iv). The amount of expenses eligible to be reimbursed in a year shall not affect the amount that is eligible for reimbursement in another year except as otherwise permitted by Code Section 409A.

(b)          A termination of employment shall not be deemed to have occurred for purposes of any provision of this Agreement providing for the payment of any amounts or benefits upon or following a termination of employment unless such termination is also a “separation from service” within the meaning of Code Section 409A and, for purposes of any such provision of this Agreement, references to a “termination,” “termination of employment” or like terms shall mean “separation from service.”
 

 

(c)          Notwithstanding any other payment schedule provided herein to the contrary, if Executive is deemed on the date of termination to be a “specified employee” within the meaning of that term under Code Section 409A(a)(2)(B), then each of the following shall apply:

(i)           With regard to any payment that is considered “nonqualified deferred compensation” under Code Section 409A payable on account of a “separation from service,” such payment shall be made on the date which is the earlier of (A) the expiration of the six (6)-month period measured from the date of such “separation from service” of Executive, and (B) the date of Executive’s death (the “Delay Period”) to the extent required under Code Section 409A.  Upon the expiration of the Delay Period, all payments delayed pursuant to this Section (whether they would have otherwise been payable in a single sum or in installments in the absence of such delay) shall be paid to Executive in a lump sum, and all remaining payments due under this Agreement shall be paid or provided in accordance with the normal payment dates specified for them herein; and

(ii)          To the extent that benefits to be provided during the Delay Period are considered “nonqualified deferred compensation” under Code Section 409A provided on account of a “separation from service,” and such benefits are not otherwise exempt from Code Section 409A, Executive shall pay the cost of such benefits during the Delay Period, and the Company shall reimburse Executive, to the extent that such costs would otherwise have been paid by the Company or to the extent that such benefits would otherwise have been provided by the Company at no cost to Executive, the Company’s share of the cost of such benefits upon expiration of the Delay Period, and any remaining benefits shall be reimbursed or provided by the Company in accordance with the procedures specified herein.

(d)          To the extent that severance payments or benefits pursuant to this Agreement are conditioned upon the execution and delivery by Executive of a release of claims, Executive shall forfeit all rights to such payments and benefits unless such release is signed and delivered (and no longer subject to revocation, if applicable) within sixty (60) days following the date of Executive’s termination of employment.  If the foregoing release is timely executed and delivered and no longer subject to revocation as provided in the preceding sentence, then the following shall apply:

(i)          To the extent that any such cash payment or continuing benefit to be provided is not “nonqualified deferred compensation” for purposes of Code Section 409A, then such payment or benefit shall commence upon the first scheduled payment date immediately following the date that the release is executed, delivered and no longer subject to revocation (the “Release Effective Date”).  The first such cash payment shall include payment of all amounts that otherwise would have been due prior to the Release Effective Date under the terms of this Agreement applied as though such payments commenced immediately upon Executive’s termination of employment, and any payments made thereafter shall continue as provided herein.  The delayed benefits shall in any event expire at the time such benefits would have expired had such benefits commenced immediately following Executive’s termination of employment.

(ii)          Subject to Section 15(d)(i), to the extent that any such cash payment or continuing benefit to be provided is “nonqualified deferred compensation” for purposes of Code Section 409A, then such payments or benefits shall be made or commence upon the sixtieth (60th) day following Executive’s termination of employment.  The first such cash payment shall include payment of all amounts that otherwise would have been due prior thereto under the terms of this Agreement had such payments commenced immediately upon Executive’s termination of employment, and any payments made thereafter shall continue as provided herein.  The delayed benefits shall in any event expire at the time such benefits would have expired had such benefits commenced immediately following Executive’s termination of employment.
 

 

(iii)          The Company may provide, in its sole discretion, that Executive may continue to participate in any benefits delayed pursuant to this Section 15(d) during the period of such delay, provided that Executive shall bear the full cost of such benefits during such delay period.  Upon the date such benefits would otherwise commence pursuant to this Section 15(d), the Company may reimburse Executive the Company’s share of the cost of such benefits, to the extent that such costs would otherwise have been paid by the Company or to the extent that such benefits would otherwise have been provided by the Company at no cost to Executive, in each case, had such benefits commenced immediately upon Executive’s termination of employment.  Any remaining benefits shall be reimbursed or provided by the Company in accordance with the schedule and procedures specified herein.

(iv)         For purposes of Code Section 409A, Executive’s right to receive any installment payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct payments.  Whenever a payment under this Agreement specifies a payment period with reference to a number of days, the actual date of payment within the specified period shall be within the sole discretion of the Company.

16.           SECTION 4999 EXCISE TAX LIMITATION.

(a)          In the event that it shall be determined that (i) any amount or benefit paid, distributed or otherwise provided to Executive by the Company, whether pursuant to this Agreement or otherwise (collectively, the “Covered Payments”), would be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), and (ii) the reduction of the amounts payable to Executive under this Agreement or with respect to stock options and equity awards to the maximum amount that could be paid to Executive without giving rise to the Excise Tax (the “Safe Harbor Cap”) would provide Executive with a greater after-tax amount than if such amounts were not reduced, then, subject to the further limitations set forth herein, the Covered Payments shall be reduced (but not below zero) to the Safe Harbor Cap.  The reductions, if applicable, shall be made to the extent necessary in the following order: (A) the acceleration of vesting of stock options and other equity awards with an exercise price that exceeds the then fair market value of the stock subject to the award; (B) the payments under Section 7(f)(i)(A) hereof; (C) the payments under Section 7(f)(i)(B) hereof; (D) the payments under Section 7(f)(i)(C) hereof; (E) the continuation of benefits under Section 7(f)(i)(D) hereof; and (v) the acceleration of vesting of all other stock options and equity awards.  For purposes of reducing the Covered Payments to the Safe Harbor Cap, only amounts payable under this Agreement and with respect to stock options and equity awards (and no other Covered Payments) shall be reduced.  If the reduction would not result in a greater after-tax result to the Executive, no amounts payable under this Agreement or with respect to stock options and equity awards shall be reduced pursuant to this provision.

(b)          A nationally recognized firm of independent accountants, selected by the Company after consultation with Executive, shall perform the foregoing calculations.  The Company shall bear all expenses with respect to the determinations by such accounting firm required to be made hereunder.  Such accounting firm shall apply the provisions of this Section 16 in a reasonable manner and in good faith in accordance with then prevailing practices in the interpretation and application of Section 4999 of the Code.  For purposes of applying the provisions of this Section 16, the Company shall be entitled to rely on the written advice of legal counsel or such accounting firm as to whether one or more Covered Payments constitute “parachute payments” under Section 4999 of the Code.
 

 

The accounting firm engaged to make the determinations hereunder shall provide its calculations, together with detailed supporting documentation, to the Company and Executive within 30 calendar days after the date that such accounting firm has been engaged to make such determinations or such other time as requested by the Company or Executive.  If payments are reduced to the Safe Harbor Cap or the accounting firm determines that no Excise Tax is payable by Executive without a reduction in Covered Payments, it shall furnish the Company and Executive with an opinion to such effect, that Executive is not required to report any Excise Tax on Executive’s federal income tax return, and that the failure to report the Excise Tax, if any, on Executive’s applicable federal income tax return will not result in the imposition of a negligence or similar penalty.  Any good faith determinations of the accounting firm made hereunder shall be final, binding, and conclusive upon the Company and Executive.

17.           Miscellaneous.  This Agreement may be executed in two or more counterparts (including via facsimile), each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.  The section headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.  This Agreement embodies the entire agreement and understanding of the parties hereto in respect of the subject matter contained herein.  There are no restrictions, promises, representations, warranties, covenants or undertakings, other than those expressly set forth or referred to herein.  This Agreement supersedes all prior agreements and understandings (whether oral or written) between the parties (or between the Company and Executive) with respect to such subject matter.

 

 

IN WITNESS WHEREOF, the parties hereto have made and entered into this Agreement on the date first hereinabove set forth.

 

THE COMPANY:			EXECUTIVE:
PROFESSIONAL DIVERSITY NETWORK, INC.
By:	/s/ Chris Wesser		/s/ Maoji Wang
Name:	Chris Wesser		MAOJI WANG
Its:	EVP and Secretary

 

 

Form of Non-Qualified Stock Option Agreement

 

 

Form of Release

Name		Date

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