Document:

exv4w10

Exhibit 4.10

EMPLOYMENT AGREEMENT

I. PARTIES

     This Employment Agreement is between Metal Storm Inc., a corporation incorporated under the
laws of the state of Delaware in the United States of America with its registered office located at
9 East Lockerman, Dover, in the State of Delaware (hereinafter referred to as “MS”), and Arthur D.
Schatz, an individual residing at 9218 Town Gate Lane, Bethesda, Maryland (hereinafter referred to
as “Schatz”).

II. AGREEMENT PURPOSE

     The purpose of this agreement is to state the terms and conditions of employment for Schatz by
MS and the responsibilities and obligations of Schatz to MS.

III. EMPLOYMENT

A. Position

     MS hereby employs Schatz, and Schatz hereby accepts such employment, as Senior Vice President,
North America, for MS on the terms and conditions set forth herein.

B. At-Will Employment

     Schatz’s employment as Senior Vice President, North America, is wholly at the will of MS and
subject to termination, with or without cause, at any time and for any reason.

C. Duties and Authority

     As Senior Vice President, North America, Schatz will report to Mr. J.M. O’Dwyer, Chief
Executive Officer of MS, and will perform such duties and responsibilities regarding the overall
development and day-to-day direction and administration of MS’s business in North America as
defined by MS. Schatz will be given full authority necessary to accomplish assigned duties. Such
duties and responsibilities shall include but not be limited to: overall responsibility for the
development, promotion and advancement of the company and its unique technology to military and
commercial interests in the United States of America and to discharge all duties instructed
generally by, and act under the general instructions of, the Managing Director of the company’s
holding company, Metal Storm Limited, who is, at the Commencement Date, Mr. James Michael O’Dwyer
(hereinafter referred to as “the Managing Director”). In fulfilling his responsibilities as Senior
Vice President, North America, Schatz will devote all of his time, attention, skill and best
efforts to the business and affairs of MS. In addition, Schatz will use his best efforts at all
times to promote and protect the good name of MS as well as that of its respective officers,
directors, employees, agents, products and services. Schatz will comply with all MS policies and
procedures. Without limiting the foregoing, both during his employment and following the
termination of such employment, Schatz will not defame or disparage the business, products,
services, officers, employees or other representatives of MS or otherwise do anything to detract
from or reflect adversely upon their reputation. Finally, Schatz warrants that he will not enter
into any contract for the sale of goods and/or services on behalf of MS without first obtaining
written approval from MS.

D. Laws and Regulations

     Schatz is solely responsible for compliance with all applicable laws, regulations, rules,
court orders, ordinances, and other requirements of the United States. Schatz warrants that he is
or will become familiar with and will fully comply with all such requirements including, but not
limited to, Government security regulations, the Arms Export Control Act, the ITAR, the

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Foreign
Corrupt Practices Act of 1977, and all federal, state, and local laws and regulations applicable to
Government contractors, including but not limited to such laws and regulations as may relate to
communications and dealings with Government employees and to the solicitation, disclosure and
handling of information relating to the procurement of goods and services by the Government. Since
Schatz is not a lawyer, MS agrees to provide to him competent counsel to aid him in the discharge
of the responsibility described herein.

     Schatz specifically warrants that during his employment by MS, he will maintain eligibility
for all necessary security clearances with the Unites States Government. In particular, Schatz
warrants that he will maintain eligibility to participate in all aspects of contracting with
federal, state and local governments.

E. Location

     Schatz shall operate out of an office located at his home in Bethesda, Maryland until the time
that MS’s offices in the Washington, D.C. metropolitan area are established. At that time, Schatz
shall operate from MS’s offices.

F. Commencement Date

     Schatz’s employment with MS shall commence effective a date to be agreed with the Managing
Director

IV. COMPENSATION AND RELATED MATTERS

A. Base Salary

     In consideration for Schatz’s performance of the duties and responsibilities set forth in this
Agreement, MS shall pay Schatz a base salary of One Hundred Thirty Thousand U.S. Dollars
($130,000.00) per year, payable in equal monthly installments or in such other manner as the
parties may mutually agree. The performance by Schatz of his duties and responsibilities hereunder
shall be subject to periodic review by MS, and his salary as specified in this Section may be
increased or decreased, as necessary, as a result thereof. At any time, Schatz shall be entitled to
treat an aggregate decrease in salary of fifteen percent (15%) or more as a termination by MS
triggering the provisions of Article V of this agreement.

B. Shares and Share Options

     In further consideration for Schatz’s performance of the duties and responsibilities set forth
in this Agreement, MS shall issue Schatz 50,000 fully paid shares at the end of each year of
employment for the first two years of employment, subject to an annual review of Schatz’s
performance which in the absolute view of the Managing Director is satisfactory in all respect. In
addition, pursuant to the Metal Storm Limited Employee Option Plan, MS shall grant Schatz 250,000
share options, exercisable at a price of not more than A$1.17 (On Dollar and seventeen cents
Australian currency). These options shall vest one year after due date of employment provided
Schatz does not leave the employ of MS of his own volition except for illness, and must be
exercised by Schatz within four years from the commencement date of employment. In the event that
Schatz’s employment is terminated pursuant to Section V of this Agreement, Schatz shall have 120
days from the date of termination in which to exercise any options, provided they are exercised
within four years from date of employment.

C. Expenses

     MS shall reimburse Schatz for such reasonable and necessary expenses, including travel and
entertainment expenses, actually incurred by him as are directly related to the rendering of
services in connection with this Agreement. Schatz shall provide appropriate documentation of all
reimbursable expenses in accordance with MS’s procedures. MS shall reimburse approved expenses
within thirty (30) days after submission of the appropriate documentation.

D. Medical and Dental Expenses

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     MS shall contribute an amount not to exceed Three Thousand Six Hundred U.S. Dollars
($3,600.00) per year, payable in equal monthly installments, toward Schatz’s medical and dental
insurance premiums during the period of his employment and, thereafter, only as may be required by
law.

E. Vacations

     In addition to all statutory United States holidays, Schatz shall be entitled to fifteen (15)
working days vacation in each calendar year to be taken at such time or times as the business of MS
permits.

V. TERMINATION

	 	1.	 	A. Termination by MS This Agreement may be terminated at the will of MS, with or
without cause, at any time and for any reason.
	 
	 		 	B. Termination by Schatz

     This Agreement may be terminated by Schatz upon sixty (60) days’ prior written notice by him.
Upon termination of this Agreement by Schatz, MS shall pay him his then current annual Base Salary
through the effective date of such termination.

C. Termination Package

     1. In the event that MS shall terminate Schatz for any reason, other than on account of an act
of moral turpitude by him or on account of a serious, intentional breach of this agreement subject
to Schatz’s execution of a Release of all claims against MS surrounding his employment and
termination, MS shall pay Schatz his then current annual Base Salary through the effective date of
such termination, plus a payment in an amount equivalent to his, then current, annual Base Salary
but in no event less than his initial annual Base Salary. This amount will be payable in twelve
(12) equal monthly installments (“Termination Package”).

     2. In the event MS is acquired by or merged into another corporation or entity and
Schatz is terminated within one (1) year of such acquisition or merger, Schatz is entitled to
receive a sum equal to twice his then annual Base Salary in a lump sum. If Schatz’s employment is
terminated after one (1) year of, but before the expiration of the second year from such
acquisition or merger, Schatz is entitled to receive a sum equal to his then annual Base Salary in
a lump sum. There shall be no entitlement under this sub-clause if Schatz’s employment is
terminated after the expiration of two (2) years from the acquisition or merger date.

VI. PROHIBITION ON COMPETITION

     Both during the term of this Agreement and for a period of twelve consecutive months after
Schatz leaves MS’s employment for any reason, with the exception of the “other employment”
authorized by MS pursuant to Section VII of this Agreement, Schatz shall not:

     1. either directly or indirectly become employed by or in any way aid or associate
himself in any capacity with any business competitor of MS, or competitor of any subsidiary
corporations and affiliated organizations owned or managed by MS, which provides the same services
or substantially similar services as provided by MS or any subsidiary corporations and affiliated
organizations owned by, controlled by or managed by MS; or

     2. solicit for employment or seek to employ or employ any individual who was an
employee of MS, or any subsidiary corporations and affiliated organizations owned by, managed by or
controlled by MS, at any time during the twelve (12) consecutive month period immediately preceding
Schatz’s cessation of employment with MS, provided however, this prohibition shall not apply if
Schatz recruits a MS employee to a business not in competition with MS.

     3. The geographic scope of this non-competition agreement shall include all states

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and/or countries in which MS has a facility or offices, or conducts business, during Schatz’s
employment by MS.

     4. Schatz acknowledges that a breach of the competition prohibition contained
herein may result in irreparable and continuing damage to MS’s business for which there is no
adequate remedy at law. Schatz further agrees that in the event of any such breach of such
restrictions, Schatz shall forfeit any right to a Termination Package, and MS and its successors
and assigns shall be entitled to injunctive relief and to such other appropriate relief as may be
necessary.

     5. If any provision of this Article is adjudged by a court to be invalid or unenforceable,
such a finding will in no way affect the validity or enforceability of any other provision of this
Article. The parties expressly agree that if a court holds any provision of this Article to be
invalid or unenforceable the court shall have the power to reduce the duration and/or geographic
scope of this Article, and/or delete specific words or phrases so that it is enforceable.

VII. OTHER EMPLOYMENT

     A. Schatz agrees not to enter into an employment relationship with any employer other than MS
during the term of his employment with MS unless he first receives express written approval from
MS.

VIII. PROHIBITION ON DISCLOSURE OF CONFIDENTIAL INFORMATION

          A. Government Confidential Information

          1. Schatz shall not, directly or indirectly, improperly disclose to, solicit or
obtain, either from Government officials, other Government contractors or any other individual,
information prohibited by law from disclosure including, but not limited to, proprietary or source
selection information as defined by law and regulation. Schatz shall notify MS immediately if he
comes into possession of proprietary or source selection information of the U.S. Government or
another Company or becomes aware of any possible violation of the federal laws and regulations
prohibiting the disclosure or solicitation of such information.

          2. Schatz agrees to comply with all applicable Laws, Executive Orders and other
requirements governing the use and handling of information subject to the Arms Export Control Act
and/or information classified for national security purposes.

          B. MS Confidential Information

          1. Schatz acknowledges that, in connection with his employment, Schatz may be furnished with,
or may otherwise receive or have access to, information which relates to the MS’s past, present or
future materials, products, software, research, development, improvements, inventions, processes,
techniques, pricing, designs or other technical data, customer and prospect lists or other
compilations for marketing or development, or regarding administrative, management, financial,
marketing or manufacturing activities of the MS or of a third party which provided such items or
proprietary information to the MS on a confidential basis. All such items and information,
including any materials or documents containing such information, shall be considered by MS and
Schatz as proprietary and confidential (collectively, the “Proprietary Information”).

          2. Both during and after the terms of this Agreement, Schatz agrees to preserve
and protect the confidentiality of the Proprietary Information and all physical forms thereof,
whether disclosed to Schatz before this Agreement is executed or afterward. In addition, Schatz
shall not (i) disclose or disseminate the Proprietary Information to any third party, without a
legitimate need to know, which need to know relates to such third party’s responsibilities in
connection with the business of MS; (ii) copy the Proprietary Information or remove the Proprietary
Information for MS’s premises without a valid purpose directly related to Schatz’s responsibilities
in connection with the business of MS; or (iii) use the Proprietary Information for Schatz’s own
benefit or for the benefit of any third party.

          3. Schatz acknowledges and agrees that all Proprietary Information used or

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generated during the course of working for MS is the property of MS. Schatz agrees to deliver to MS
all originals and copies of documents and other tangibles (including diskettes and other storage
media) containing Proprietary Information immediately upon termination of his employment.

          4. Schatz agrees and acknowledges that during his employment, MS shall own all
rights, including all trade secrets and copyrights, in and to all works created by the Schatz,
whether created on or off MS’s premises, including, but not limited to: (i) works that relate to or
arise out of MS’s actual or anticipated business; and (ii) works that results from or in any manner
arise out of any task assigned to Schatz or any other employee by MS or work performed by Schatz or
any other employee for MS (collectively “Works”). MS shall own such Works whether or not created
outside normal business hours and regardless of whether MS’s equipment, Schatz’s equipment or the
equipment of a third party or entity is used to create the Works. Such Works shall include program
codes and source documentation. To the extent that any such Works do not qualify as works made for
hire under U.S. copyright law, this Agreement will constitute an irrevocable assignment by Schatz
to MS of the ownership of, and all rights of copyright in, such Works, and Schatz shall, at MS’s
expense, execute any writings to evidence such ownership. MS shall have the right to hold in its
own name all proprietary rights in the Works, including but not limited to, all rights of
copyright, trade secret, patent and trademark. Schatz agrees to give MS or its designees all
assistance required to perfect such rights.

          5. Schatz shall, and hereby does, assign to MS his entire right, title and
interest in any invention, technique, software, computer program, process, device, discovery,
improvement or know-how, patentable or not, hereafter made or conceived solely or jointly by Schatz
at any time during his employment which (i) are created using MS facilities, supplies, information
trade secrets or time; (ii) relate to MS’s business or actual or anticipated research and
development; or (iii) directly or indirectly result from any work performed by Schatz. Schatz shall
disclose any such invention, technique, process, device, discovery, improvement or know-how
promptly to an officer of MS and Schatz shall, upon request, promptly execute s specific assignment
of title to MS, and do anything else reasonably necessary to enable MS to secure patent, trade
secret or any other proprietary rights protected in the United States or foreign countries.

          IX. Schatz acknowledges that a breach of this restriction of confidential information may
result in irreparable and continuing damage to MS’s business for which there is no adequate remedy
at law. Schatz further agrees that in the event of any breach of this restriction of disclosure of
confidential information, Schatz will forfeit any right to a Termination Package, and MS and its
successors shall be entitled to injunctive relief and to such other further relief as may be
proper. MISCELLANEOUS

     A. Return of MS’s Property

          Upon termination of Schatz’s employment with the MS, for any reason, Schatz shall return to
MS, in good condition, all property of MS, in whatever format, including without limitation, the
originals and all copies of any materials which contain, reflect, summarize, describe, analyze or
refer or relate to any items of information listed in Section VII this Agreement. In the event that
such items are not so returned, MS will have the right to charge Schatz for all reasonable damages,
costs, attorneys’ fees and other expenses incurred in searching for, taking, removing and/or
recovering such property.

     B. Remedy

     1. In the event of any breach of the provisions of this Agreement by Schatz, the parties
acknowledge that MS may suffer irreparable injury and that the injury to MS cannot be reasonably or
adequately compensated in damages in any action at law. Accordingly, Schatz acknowledges and agrees
that in such case, MS shall be entitled to injunctive relief, specific performance or other
equitable relief and Schatz hereby expressly agrees and consents to the entry of such order or
relief restraining him from such actions as would constitute a breach of

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any of the provisions of this Agreement. Such relief shall be in addition to any other
remedy to which MS may be entitled at law or in equity.

     2. Amendment

     Any amendment to this Agreement shall be made in writing and signed by the parties.

     C. Governing Law

     This Agreement shall be governed by the law of the State of Maryland, without regard to
conflict of laws principles.

     D. Notices

     All notices under this Agreement shall be in writing and personally delivered or mailed, by
registered or certified mail, to the addresses of the parties first above written, or to such other
address as a party may designate by notice delivered in accordance with this Section. Any notice
shall be deemed to have been delivered when served, if personally served, and ten (10) business
days after mailing, if mailed.

     E. Waivers

     No claim or right arising out of a breach or default under this Agreement can be discharged in
whole or in part by a waiver of that claim or right unless the waiver is supported by consideration
and is in writing and executed by the aggrieved party hereto.

     F. Assignment

     The rights and obligations of MS under this Agreement shall be binding upon, and inure to the
benefit of, MS, its successors, affiliates, subsidiaries and assigns. This Agreement and the
obligations created hereunder may not be assigned by Schatz.

     G. Partial Invalidity

     If any provision of this Agreement is held to be invalid, void or unenforceable, in whole or
in part, then such provision shall be deemed to be modified or restricted to the extent and in the
manner necessary to render the same valid and enforceable, or shall be deemed excised from this
Agreement, as the case may require, and this Agreement shall be construed and enforced to the
maximum extent permitted by law as if such provision had been originally incorporated herein as so
modified or restricted or as if such provision had not been originally incorporated herein, as the
case may be In the event that any provision of this Agreement is held to be invalid, void or
unenforceable, the remaining provisions shall continue in full force and effect, without being
impaired or invalidated in any way.

     H. Entire Agreement

     This Agreement supersedes any other oral or written agreements between the parties and contain
the entire agreement between the parties with respect to Schatz’s performance of services for MS.

For

METAL STORM INC.

	 	 	 	 	 

	/S/ Wayne A. Downing

	 	/S/ Arthur D. Schatz	 	 
	 

	 	 

	 	 
	Director

	 	Arthur D. Schatz	 	 
	Dated: 22 May 2001

	 	Dated: 22 May 2001	 	 

6Exhibit 4.62

Exhibit 4.62

Dated

XINHUA SPORTS & ENTERTAINMENT LIMITED

and

 

EXECUTIVE SERVICE AGREEMENT

 

 

 

 

DATE:

PARTIES:

	(1)	 	XINHUA SPORTS & ENTERTAINMENT LIMITED a company registered in the Cayman Islands whose office
is at 21/F On Hong Commercial Bldg, 145 Hennessy Road, Wanchai, Hong Kong (the “Company”);

and

	(2)	 	an individual (the “Executive”).

RECITALS:

The Company has agreed to employ the Executive and the Executive has agreed to serve the Company as
                     on the following terms and conditions.

TERMS AGREED:

	1.	 	Definitions and Interpretation

	1.1	 	In this Agreement where the context so admits the following words and expressions shall have
the following meanings:

	 	 	 	 	 
	 

	 	“Associated Company”
	 	means in relation to the Company, any subsidiary or
holding company of the Company, any subsidiary of
such holding company, and any company in which the
Company or any such holding company holds or controls
directly or indirectly not less than 20% of the
issued share capital;

	 
	 	 	 	 
	 

	 	“CEO”
	 	means the CEO of directors of the Company from time
to time;

	 
	 	 	 	 
	 

	 	“HK$”
	 	means Hong Kong dollars;

	 
	 	 	 	 
	 

	 	“Hong Kong”
	 	means the Hong Kong Special Administrative Region of
the People’s Republic of China.

	1.2	 	Terms defined in Section 2 of the Companies Ordinance shall in this Agreement have the
meanings ascribed to them in that section.

	1.3	 	All references in this Agreement and the Schedule attached hereto to the Company or any
Associated Companies shall include their successors in title or assigns.

 

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	1.4	 	References herein to Clauses and the Schedules are references to the clauses and the
schedules of this Agreement which shall be deemed to form part of this Agreement. The
headings in this Agreement are inserted for convenience of reference only and do not affect
the interpretation hereof.

	2.	 	Employment

	 
	 	 	The Company shall employ the Executive and the Executive shall serve the Company as [                    ] on and subject to the terms and conditions specified herein.

	3.	 	Commencement

	3.1	 	The Executive agrees that he will remain in the employ of the Company or an Associated
Company for the period commencing the date of this Agreement and ending on the date that is
three years after the date of this Agreement, with a three year renewal at the option of the
Executive. The renewal will be at identical terms as this contract; PROVIDED, HOWEVER, that
nothing in this Clause 3 shall affect the termination provisions pursuant to clause 12.

	4.	 	Duties

	4.1	 	Subject to Clause 6.1 below, the Executive shall be employed in the position of
                                         in which capacity he shall devote such time, attention and skill
as is necessary in order to fulfill his duties hereunder, and shall at all times during such
employment act in the interests of the Company and its Associated Companies, and shall
faithfully and diligently perform such duties and exercise such powers consistent therewith as
may from time to time be assigned to or vested in him by the CEO or the Company.

	4.2	 	The Executive shall fulfill the reasonable and lawful orders of the CEO, given by or with the
authority of the CEO provided such orders comply with recognizable pertinent ethical standards
in effect at such time, and shall comply with all the Company’s rules, regulations, policies
and procedures from time to time in force.

	4.3	 	The Executive may be required in pursuance of his duties hereunder to perform services not
only for the Company but also for any Associated Company and, without further remuneration
(except as otherwise agreed), to accept any such office or position in any Associated Company
which is consistent with his position with the Company, as the CEO or the Company may from
time to time reasonably require, provided that such office and/or position does not inhibit
the Executive from performing his duties hereunder or entail services which are well beyond
his duties hereunder (in which event the parties shall mutually agree to acceptable additional
remuneration in connection with such position and/or office).

	4.4	 	The Executive will keep the CEO promptly and fully informed (in writing if so requested) of
his conduct of the business or affairs of the Company and any
Associated Company and provide such explanations as the CEO may require in connection
therewith.

 

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	5.	 	Place of Work

The Executive’s place of work shall be                                         , or any location outside
                                         as the Company and the Executive shall mutually agree. In the performance
of his duties hereunder, the Executive may be required to travel both throughout and outside
Asia.

	6.	 	Exclusivity of Service/Conflicts

	6.1	 	During the period of the Executive’s employment hereunder the Executive shall devote such of
his time and attention to his duties hereunder as is required to fulfill those duties and he
shall not (without the prior written consent of the CEO) directly or indirectly either on his
own account or on behalf of any other person, company, business entity or other organisation:

	 	6.1.1	 	(i) engage in, or (ii) be concerned with, or (iii) provide services to,
(whether as an employee, officer, director, agent, partner, consultant or otherwise)
any other business in direct competition with the Company or any Associated Company; or

	 	6.1.2 accept any public office;

PROVIDED THAT the Executive may not hold shares in a private company which is in direct
competition with the Company; and

	 
	 	FURTHER PROVIDED THAT the Executive is entitled to devote his time and attention to other
business interests provided that such interests do not conflict or interfere with the duties
of the Executive as set out in this Agreement.

	7.	 	Remuneration

The remuneration of the Executive shall be:

	 	(a)	 	a monthly salary of US$                     payable in arrears such salary to include any
sum receivable as other remuneration from any Associated Company, except as set forth
herein.

	 	(b)	 	a discretionary bonus in cash or shares in such amounts (if any), at such times
and subject to such conditions as the Compensation Committee of the Company may in its
absolute discretion decide;

 

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	8.	 	Other Benefits

	8.1	 	In addition to the foregoing remuneration and benefits, the Executive shall also be entitled
to the following:

	 	(a)	 	the provision of medical, dental, travel and optical insurance under such
insurance scheme as the CEO may decide from time to time at the expense of the Company
for the benefit of the Executive, his spouse and dependent children under the age of
21;

	 	(b)	 	participation in any share option scheme which may be adopted by the Company,
subject to the terms and conditions of such scheme from time to time in place; and

	8.2	 	Details of the scheme(s) referred to in Clauses 8.1(a), (b) and (c) above can be obtained
from the HR Department. The Company reserves the right to substitute other scheme(s) for such
scheme(s) or amend the scale of benefits of such scheme(s) provided the level of benefits to
the Executive is not diminished.

	8.3	 	The Company represents that it has taken all corporate action necessary in order to enter
into this Agreement and comply with the terms contained herein, including the payment of bonus
and issuance of shares in accordance with terms of this Agreement and the Compensation Share
Agreement.

	8.4	 	The Company agrees that it shall obtain Officers and Directors liability insurance covering
the Executive from a reputable internationally recognized insurance carrier, at such levels as
is customary in the business conducted by the Company.

	9.	 	Expenses

The Company shall reimburse the Executive (against receipts or other satisfactory evidence)
for all reasonable expenses properly incurred in the course of his employment hereunder or
in promoting or otherwise in connection with the business of the Company and as set forth in
this Agreement.

	10.	 	Deductions

The Company shall, to the extent permitted by s.32 of the Employment Ordinance of the Laws
of Hong Kong, be entitled to deduct from the Executive’s remuneration hereunder any monies
due from his to the Company or any Associated Company including, but not limited to, any
outstanding loans, advances, the cost of repairing any damage to or loss of the Company’s
property caused by his (and of recovering the same, only as adjudged by a court of competent
jurisdiction) and any other monies owed by his to the Company or any Associated Company.

 

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	11.	 	Leave

	11.1	 	The Executive shall be entitled to _____ working days’ per calendar year leave (in addition to
public holidays) with full pay, which leave shall be taken at such time or times which do not
interfere with the Executive carrying out his duties hereunder.

	11.2	 	Unused annual leave may not be carried forward without the approval of CEO. Failure to take
holiday entitlement in the appropriate holiday year will lead to forfeiture of any accrued
holiday not taken without any right to payment in lieu thereof.

	12.	 	Termination

	12.1	 	Notwithstanding the provisions of Sections 2 and 3, the Executive’s employment with the
Company may be earlier terminated as follows:

	 	12.1.1	 	By action taken by the CEO or the Board, the Executive may be discharged for cause
(as hereinafter defined), effective as of such time as the CEO or the Board shall determine.
Upon discharge of the Executive pursuant to this Section 12.1.1, the Company shall have no
further obligation or duties to the Executive, except for payment of salary, issuance of all
Shares earned, benefits, expenses and any earned but unpaid bonus, through the effective
date of termination, and the Executive shall have no further obligations or duties to the
Company. “Cause” means (i) the Executive’s indictment or conviction of a felony or crime
involving moral turpitude or the Executive’s intentional commission of any other act or
omission involving dishonesty, fraud or malfeasance; (ii) the Executive’s gross failure to
perform duties of the office held by the Executive as reasonably directed by the CEO or
Board of Directors, if such failure is not cured within ninety (90) days after the Executive
receives written notice thereof; (iii) gross negligence or willful misconduct in the
performance of the Executive’s duties which materially injures the Company or its
reputation; or (iv) the Executive’s willful breach of any of the covenants of this
Agreement.

	 	12.1.2	 	In the event of (i) the death of the Executive or (ii) by action of the CEO or the
Board and the inability of the Executive, by reason of physical or mental disability, to
continue substantially to perform his duties hereunder for a period of 180 consecutive days,
during which 180 day period salary and any other benefits hereunder shall not be suspended
or diminished. Upon any termination of the Executive’s employment under this Section
12.1.2, the Company be responsible for paying to the Executive (or the Executive’s estate if
applicable) a lump sum equal to the annual salary of the Executive in effect at the time of
termination plus shares or bonus as provided in Section 7 above, plus the benefits in
Section 8.1(a) for a period of one year following such termination. Provided that by way of
example, if either of the aforementioned events occur, the Executive shall be entitled to
such bonus enumerated in Clause 7 if at the end of such calendar year the Executive has
achieved the predetermined milestones for which a bonus is to be paid.

 

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	 	12.1.3	 	In the event (i) that Executive’s employment with the Company is terminated by action
taken by the CEO or the Board of Directors without cause or (ii) there is a Change in
Control (as hereinafter defined), or (iii) the Company fails to pay such bonus due to
Executive in accordance with Section 7 in a timely fashion (in such
event the Executive shall have the right to terminate this Agreement upon written notice to
the Company, in which case the Company shall be responsible for the payments set forth
below), then the Company shall be responsible for payment to the Executive of the salary
amounts and such earned but unpaid bonus as provided in Section 7 above plus expenses
incurred by the Executive as per Section 9 above and the benefits in Section 8.1(a) all of
which shall be for a period through the life of this contract plus option extension
following such termination, and Executive shall have no further obligations or duties to the
Company . In the event such aforementioned termination and/or event occurs, the Company
shall pay to the Executive within five business days after such termination/event a lump sum
due the Executive whether due to Executive in cash or shares per section 7 above.
Additionally, all options or other types of shares granted but not vested shall become
immediately vested. Additionally, the Company or it successors shall be required at the
Executive’s option to purchase all of the Executives shares at $2.24 USD per share or market
price whichever is higher.

	 	 	 	All amounts payable to the Executive pursuant to this Section 12.1.3 shall be paid to the
Executive in one lump-sum payment within five business days after such termination. Provided
that by way of example, if either of the aforementioned events occur, the Executive shall be
entitled to such compensation enumerated in Clause 7 if at the end of such calendar year the
Executive has achieved the predetermined milestones.

	12.2	 	For purposes of this Agreement a “Change in Control” shall be deemed to occur, unless
previously consented to in writing by the Executive, in case the Company shall, consolidate or
merge with or into another corporation (whether or not the Company is the surviving
corporation or where there is a change in or distribution with respect to the stock of the
Company), or sell, transfer or otherwise dispose of a substantial portion, all or
substantially all of its shares, property, assets or business to another corporation or
investor and, pursuant to the terms of such reorganization, reclassification, merger,
consolidation or disposition of assets, shares of common stock of the successor or acquiring
corporation, or any cash, shares of stock or other securities or property of any nature
whatsoever (including warrants or other subscription or purchase rights) in addition to or in
lieu of common stock of the successor or acquiring corporation. In case of any such
reorganization, reclassification, merger, consolidation or disposition of assets, the
successor or acquiring corporation (if other than the Company) shall expressly assume the due
and punctual observance and performance of each and every covenant and condition of this
Agreement to be performed and observed by the Company and all the obligations hereunder.

	12.3	 	Forthwith upon the termination of the employment of the Executive hereunder, provided the
parties are not involved in a dispute over such materials, if the Company shall so request,
the Executive shall deliver to the Company all documents (including correspondence, lists of
customers, notes, memoranda, plans, drawings and other documents of whatsoever nature), models
or samples made or compiled by or delivered to the Executive during his employment hereunder,
in connection with his duties hereunder, and concerning the business, finances or affairs of
the Company or any Associated Company. For the avoidance of doubt it is hereby declared that
the property in all such documents as aforesaid shall at tall times be vested in the relevant
Associated Company.

 

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	12.4	 	The Executive acknowledges that the Company may, during all or any part of any period of
notice whether given by the Company or the Executive to terminate the Executive’s employment
under this Agreement, require the Executive not to attend work and/or not to undertake all or
any of his duties and/or exclude his from any premises of the Company, provided that for the
avoidance of doubt during such period the Executive shall continue to receive salary and other
contractual benefits provided by this Agreement.

	12.5	 	The Executive agrees that he will not at any time after the termination of the Employment
represent himself as still having any connection with the Company or any Associated Company,
save as a former employee for the purpose of communicating with prospective employers or
complying with any applicable statutory requirements.

	13.	 	[Intentionally Omitted]

	14.	 	Reasonableness of Restrictions

The Executive recognises that, whilst performing his duties for the Company, he will have
access to and come into contact with trade secrets and confidential information belonging to
the Company or to Associated Companies and will obtain personal knowledge of and influence
over its or their customers and/or employees. The Executive therefore agrees that the
restrictions contained or referred to in Clauses 15 and 16 and Schedule 1 are reasonable and
necessary to protect the legitimate business interests of the Company and the Associated
Companies both during and after the termination of his employment.

	15.	 	Confidentiality

	15.1	 	The Executive shall neither during the Employment (except in the proper performance of his
duties) nor one year after the termination thereof by the Company for cause (as defined above)
or termination by the Executive, directly or indirectly

	 	15.1.1	 	use for his own purposes or those of any other person, company, business entity or
other organisation whatsoever; or

	 	15.1.2	 	disclose to any person, company, business entity or other organisation whatsoever.

	 
	 	any trade secrets or confidential information belonging to the Company or any Associated
Company including but not limited to any such information relating to customers, customer
lists or requirements, price lists or pricing structures, sales and marketing information,
business plans or dealings, employees or officers, source codes and computer systems,
software, financial information and plans, designs,
formulae, prototypes, product lines, services, research activities, which are expressly
proprietary to the Company or any Associated Company and not in the knowledge of the
Executive prior to the date of this Agreement, any document marked ‘Confidential’ (or with a
similar expression), or any information which the Executive has been told is confidential or
which he might reasonably expect the Company would regard as confidential, or any
information which has been given to the Company or any Associated Company in confidence by
customers, suppliers or other persons.

 

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	15.2	 	The obligations contained in Clause 15.1 shall cease to apply to any information or knowledge
which may subsequently come into the public domain other than by way of unauthorised
disclosure, or any such information which is the subject of a lawful court order then in
effect.

	16.	 	Copyright, Inventions and Patents

	16.1	 	The Executive will promptly disclose to the Company and to no one else all copyright works or
designs originated, conceived, written or made by him alone or with others in the course of
his employment (except only those works originated, conceived, written or made by him wholly
outside his normal working hours and which are wholly unconnected with his employment).

	16.2	 	All records, documents, papers (including copies and summaries thereof) and other copyright
protected works made or acquired by him in the course of his employment shall, together with
all the worldwide copyright and design rights in all such works, be and at all times remain
the absolute property of the Company.

	16.3	 	The Executive hereby irrevocably and unconditionally waives in favour of the Company all
rights granted by the Copyright Ordinance 1997 in connection with his authorship of any
copyright works in the course of his employment with the Company, including without limitation
any moral rights and any right to claim an additional payment with respect to use or
exploitation of those works.

	16.4	 	The Executives agree that his compensation in this Agreement are full compensation for his
services and all present and future uses of copyright works made by him in the course of his
employment.

	16.5	 	If, at any time during the Executive’s employment under this Agreement, he (whether alone or
with any other person or persons) shall make any invention which relates directly to the
business of the Company or any Associated Company or was made or acquired in course of his
employment, he will promptly disclose to the Company and no-one else full details, including
drawings and models, of such invention.

	16.6	 	If the Executive makes any inventions that do not belong to the Company under the Patents
Ordinance 1997, he agrees that he will forthwith agree that the Company shall have the first
right to exclusively license such inventions. The Company will pay to the Executive such
compensation for the license as the Executive and the Company agree, with such compensation
being in lines with the standard in such industry. If the parties do not agree then the
Executive shall be entitled to license such invention to other parties.

 

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	16.7	 	The Executive will, at the request and expense of the Company both during and after the
termination of his employment under this Agreement, do all things necessary or desirable to
perfect the rights of the Company under this Clause 16, provided no bona fide dispute exists.

	17.	 	Post-Termination Obligations

	17.1	 	The Executive agrees that he will observe the post-termination obligations set out in
Schedule 1 for a period of one year.

	18.	 	[Intentionally Omitted]

	19.	 	Warranty

The Executive represents and warrants that he is not prevented by any agreement,
arrangement, contract, understanding, court order or otherwise, which in any way directly or
indirectly restricts or prohibits him from fully performing the duties of his employment
hereunder, or any of them, in accordance with the terms and conditions of this Agreement.

	20.	 	Indemnification

The Company shall indemnify and hold harmless the Executive against any and all expenses
reasonably incurred by him in connection with or arising out of (a) the defense of any
action, suit or proceeding in which he is a party, or (b) any claim asserted or threatened
against him, in either case by reason of or relating to his being or having been an
employee, officer or director of the Company, provided the Executive has acted in the best
interests of the Company and has not acted in bad faith, whether or not he continues to be
such an employee, officer or director at the time of incurring such expenses, except insofar
as such indemnification is prohibited by law. Such expenses shall include, without
limitation, the fees and disbursements of attorneys, amounts of judgments and amounts of any
settlements. Such amounts do not need to be agreed to in advance by the Company. The
foregoing indemnification obligation is independent of any similar obligation provided in
the Company’s organization documents or Articles of Association, and to matters attributable
to his employment hereunder, without regard to when asserted. No indemnification shall be
available to the Executive in the event of actions by Executive which are in violation of
this Agreement, however, in the event of actions by Executives which are in violation of
this Agreement, however, in the event of the Company terminates the Executives, the Company
shall pay for Executive’s legal representation in any settlement discussions. Additionally,
in the event of any disputes, the Company shall pay all costs of Executives separate
counsel, whether or not the Company deems those expenses reasonable.

 

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	21.	 	Notices

	21.1	 	Each notice, demand or other communication given or made under this Agreement shall be in
writing and delivered or sent to the relevant party at its address or fax number set out below
(or such other address or fax number as the addressee has by five business days’ prior written
notice specified to the other party):

	 	 	 	 	 	 	 
	 	 	To the Company:	 	Xinhua Sports & Entertainment Limited
	 

	 	 	 	Fax number:
	 	(86-10) 8567 6074
	 

	 	 	 	Attention:
	 	CEO
	 
	 	 	 	 	 	 
	 

	 	To the Executive:	 	 	 	 

	21.2	 	Any notice, demand or other communication so addressed to the relevant party shall be deemed
to have been delivered (a) if given or made by letter, when actually delivered to the relevant
address; and (b) if given or made by fax, when dispatched subject to receipt of
machine-printed confirmation of error-free dispatch.

	21.3	 	Any notice to be given hereunder may be delivered (a) in the case of the Company by first
class post addressed to its Registered Office or via facsimile, and (b) in the case of the
Executive, either to him personally or by first class postage to his last known address.

	22.	 	Miscellaneous

	22.1	 	The various provisions and sub-provisions of this Agreement and the Schedules are severable
and if any provision or sub-provision is held to be unenforceable by any court of competent
jurisdiction then such unenforceability shall not affect the enforceability of the remaining
provisions or sub-provisions in this Agreement or the Schedules.

	22.2	 	The benefit of each agreement and obligation of the Executive under Clause 15 and Schedule 1
may be assigned to and enforced by all successors and assigns for the time being of the
Company and each Associated Company and such agreements and obligations shall operate and
remain binding notwithstanding the termination of this Agreement.

	22.3	 	This Agreement cancels and is in substitution for all previous letters of engagement,
agreements and arrangements (whether oral or in writing) relating to the subject-matter hereof
between the Company and the Executive all of which shall be deemed to have been terminated by
mutual consent. This Agreement constitutes the entire terms and conditions of the Executive’s
employment and no waiver or modification thereof shall be valid unless in writing, signed by
the parties and only to the extent therein set forth.

 

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	22.4	 	No failure or delay by the Company in exercising any right, power or remedy under this
Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of the
same preclude any further exercise thereof or the exercise of any other right, power or
remedy. Without limiting the foregoing, no waiver by the Company of any breach by the
Executive of any provision in this Agreement shall be deemed to be a waiver of any subsequent
breach of that or any other provision in this Agreement.

	22.5	 	This Agreement shall be governed by and construed in accordance with the laws of Hong Kong
and the parties hereby irrevocably submit to the non-exclusive jurisdiction of the Hong Kong
courts.

SIGNED by the parties on the date first above written.

                                                                                                                        

For and on behalf of

XINHUA SPORTS & ENTERTAINMENT LIMITED

in the presence of:

                                                                                                                        

SIGNED SEALED AND DELIVERED

AS A DEED by

                                                                                                                        

                    

in the presence of:

                                                                                                                        

 

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Schedule 1

Post-Termination Restrictions

	1.	 	Non-Competition

The Executive hereby agrees that he shall not (without the written consent of the CEO) for
the Relevant Period within the Prohibited Area and whether on his own behalf or in
conjunction with or on behalf of any other person, firm, company or other organisation, (and
whether as an employee, director, principal, agent, consultant or in any other capacity
whatsoever,) in competition with the Company directly or indirectly (i) be employed or
engaged in, or (ii) perform services in respect of, or (iii) be otherwise concerned with:

	1.1	 	the research into, development, manufacture, supply or marketing of any product which is of
the same or similar type to any product researched, or developed, or manufactured, or
supplied, or marketed by the Company during the 12 months immediately preceding the
Termination Date;

	1.2	 	the development or provision of any services (including but not limited to technical and
product support, or consultancy or customer services) which are of the same or similar type to
any services provided by, or known by the Executive to be in development by, the Company
during the 12 months immediately preceding the Termination Date;

	2.	 	Non-Solicitation of Customers

The Executive hereby agrees that he shall not for the Relevant Period whether on his own
behalf or in conjunction with or on behalf of any person, company, business entity or other
organisation (and whether as an employee, director, principal, agent, consultant or in any
other capacity whatsoever), directly or indirectly (i) solicit or, (ii) assist in
soliciting, or (iii) accept, or (iv) facilitate the acceptance of, or (v) deal with, in
competition with the Company, the custom or business of any Customer or Prospective
Customer.

	3.	 	Non-Solicitation of Employees

The Executive hereby agrees that he will not for the Relevant Period either on his own
behalf or in conjunction with or on behalf of any other person, company, business entity, or
other organization (and whether as an employee, principal, agent, consultant or in any other
capacity whatsoever), directly or indirectly:-

	3.1	 	(i) induce, or (ii) solicit, or (iii) entice or (iv) procure, any person who is a Company
Employee to leave the Company’s or any Associated Company’s employment (as applicable) where
that person is a Company Employee on the Termination Date or during the Relevant Period;

 

- 12 -

 

	3.2	 	be personally involved to a material extent in (i) accepting into employment or (ii)
otherwise engaging or using the services of, any person who is a Company Employee on the
Termination Date.

	4.	 	Interference with Suppliers/Joint Venture Partners/Company Employees

The Executive hereby agrees that he shall not (i) for the Relevant Period, and (ii) in
relation to any contract or arrangement which the Company has with any joint venture
partner, Company Employee, or Supplier for the exclusive supply of goods or services to the
Company and/or to its Associated Companies, for the duration of such contract or
arrangement, whether on his own behalf or in conjunction with or on behalf of any person,
company, business entity or other organization, (and whether as an employee, director,
agent, principal, consultant or in any other capacity whatsoever), directly or indirectly:

	4.1	 	interfere with the supply of goods or services to the Company from any Supplier, Company
Employee, or joint venture partner;

	4.2	 	induce any Company Employee, joint venture partner, or Supplier of goods or services to the
Company to cease or decline to supply such goods or services in the future.

	5.	 	Associated Companies

	5.1	 	Paragraphs 1, 2, 3, 4, and 6 in this Schedule 1 shall apply as though references to the
“Associated Company” were substituted for references to the “Company”. The obligations
undertaken by the Executive pursuant to this Schedule shall, with respect to each Associated
Company, constitute a separate and distinct covenant and the invalidity or unenforceability of
any such covenant shall not affect the validity or enforceability of the covenants in favour
of the Company or any other Associated Company.

	5.2	 	In relation to each Associated Company referred to in paragraphs 5.1 above, the Company
contracts as trustee and agent for the benefit of each such Associated Company. The Executive
agrees that, if required to do so by the Company, he will enter into covenants in the same
terms as those set out in paragraphs 1, 2, 3, 4, and 6 hereof directly with all or any of
such Associated Companies, mutatis mutandis. If the Executive fails, within seven
business days of receiving such a request from the Company, to sign the necessary documents to
give effect to the foregoing, the Company shall be entitled, and is hereby irrevocably and
unconditionally authorised by the Executive, to execute all such documents as are required to
give effect to the foregoing, on his behalf.

 

- 13 -

 

	6.	 	Definitions

For the purposes of this Schedule, the following words and expressions shall have the
meanings set out below:

	6.1	 	“Associated Company”, “CEO”, and “Company” shall have the meanings set out in the Agreement
attached hereto, and shall include their successors in title and assigns (as applicable).

	6.2	 	“Company Employee” means any person who was employed by (i) the Company or (ii) any
Associated Company, for at least one month during Executive’s employment with the Company or
during the Relevant Period.

	6.3	 	“Customer” shall mean any person, firm, company or other organisation whatsoever to whom the
Company has supplied goods or services.

	 
	6.4	 	“Prohibited Area” means:

	 	6.4.1	 	Hong Kong;

	 
	 	6.4.2	 	any other country in the world where, on the Termination Date, the Company
develops, sells, supplies, manufactures or researches its products or services or where
the Company is intending within 3 months following the Termination Date to develop,
sell, supply or manufacture its products or services and in respect of which
the Executive has been responsible (whether alone or jointly with others), concerned or
active on behalf of the Company during any part of the 12 months immediately preceding
the Termination Date.

	6.5	 	“Prospective Customer” shall mean any person, firm, company or other organisation with whom
the Company has had any material negotiations or material discussions regarding the possible
supply of goods or services by the Company.

	6.6	 	The “Relevant Period” shall mean, solely in the event of termination by the Company of the
Executive with cause (as defined in the Agreement) the 12 months immediately following the
Termination Date. PROVIDED that the Relevant Period shall be the Termination Date in the
event of termination of the Executive Services Agreement for any other reason whatsoever.

 

- 14 -

 

	6.7	 	“Supplier” means any person, company, business entity or other organisation whatsoever who:

	 	6.7.1	 	has supplied goods or services to the Company during any part of the 12 months
immediately preceding the Termination Date; or

	 	6.7.2	 	has agreed prior to the Termination Date to supply goods or services to the
Company to commence at any time in the 12 months following the Termination Date; or

	 
	 	6.7.3	 	as at the Termination Date, supplies goods or services to the Company under a
contract or arrangement between that Supplier and the Company.

	6.8	 	“Termination Date” shall mean the date upon which the Executive’s employment with the Company
terminates.

SIGNED by the parties on the date first above written.

 

- 15 -

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