AMENDMENT NO. 1 TO
THE
ASSET PURCHASE
AGREEMENT
This AMENDMENT NO. 1 TO THE ASSET PURCHASE
AGREEMENT, dated and effective as of August 7, 2008 (this
"Amendment"), is entered into by and among Fuqi International
Holdings Co., LTD., a British Virgin Islands company, Beijing
YinZhong TianMei Jewelry Co., Ltd., a company established under the
laws of the PRC (“ TianMei Beijing ”),
Shanghai TianMei Jewelry Co., Ltd., a company established under the
laws of the PRC (the “ TianMei Shanghai
” and together with TianMei Beijing, collectively the “
Sellers ” and each a “
Seller ”), and Chujian Huang, an individual
residing in the PRC with holder of PRC identity card no.
440105196302250950 (the “ Seller Principal
”). Terms not defined in this Amendment shall have such
meanings as set forth in the Agreement (as defined
below).
WITNESSETH:
WHEREAS, the Parties entered into that certain
Asset Purchase Agreement dated as of April 18, 2008 (the
“Agreement”);
WHEREAS, in lieu of depositing the Escrow
Deposit with the Escrow Agent, the Parties desire for Buyer to make
a payment (“Subsequent Purchase Payment”) to the
Sellers in an amount equal to the Escrow Deposit on the date that
is six (6) from the Closing Date, subject to set-off from
undiscovered inventory defects or descriptions in accordance with
the Agreement and this Amendment;
WHEREAS, Section 8.6 of the Agreement permits
the parties to amend the Agreement only by a written instrument
executed by the Parties; and
WHEREAS, the Parties wish to amend the Agreement
as set forth below by entering into this Amendment.
NOW, THEREFORE, for good and valuable
consideration and in consideration of the respective
representations, warranties, covenants and agreements set forth in
the Agreement, the parties hereby agree to amend the Agreement as
follows:
AGREEMENT:
1.
Section 1.4(c) of the Agreement is
hereby amended and restated in its entirety as follows:
(c)
Subsequent
Payment . On the
date that is six (6) months from the Closing Date, Buyer shall
effect a payment to the Sellers in an amount equal to Sixteen
Million Yuan Renminbi (16,000,000 Yuan RMB) (the “
Subsequent Payment ”), which is equal to
twenty percent (20%) of the Purchase Price; provided that
, however, the Subsequent Payment shall be subject to set-off from
undiscovered inventory defects or descriptions in accordance with
this Section 1.4(c). During the six (6) month period after the
Closing Date, Buyer shall verify whether the Inventory list, as
previously provided to Buyer by Sellers, is accurate and whether
any items on the Inventory list is defective. For purposes of this
Section 1.4(c), defective inventory shall means any item of
Inventory agreed upon and identified by Buyer and Sellers as
damaged or defective or otherwise not salable in the ordinary
course because it is dented, worn, scratched, broken, broken sets,
faded, mismatched, or merchandise affected by other similar defects
rendering it not first quality.
2.
Section 2.6, “Deliveries at
the Closing by Sellers,” and Section 2.7, “Deliveries
at the Closing by Buyer,” shall be amended in accordance with
the following:
(a) Seller Principal and Fuqi International, Inc.,
Buyer’s parent corporation, shall execute an Employment
Agreement at or within ten (10) calendar days after the Closing
Date in substantially the form attached hereto as Exhibit
A-1 .
(b) Seller Principal and Fuqi International, Inc.,
further to the Intellectual Property Transfer Agreement, shall
execute an Escrow Agreement at or within ten (10) calendar days
after the Closing Date in substantially the form attached hereto as
Exhibit A-2 .
3.
Except as amended herein, the
Agreement shall remain in full force and effect.
4.
This Amendment may be executed in
any number of facsimile counterparts, each of which shall be an
original, but which together constitute one and the same
instrument. This Amendment may be executed and delivered by
facsimile.
[SIGNATURE PAGE
FOLLOWS]
IN WITNESS
WHEREOF, Buyer, Sellers, and Seller Principal have each caused this
Agreement to be duly executed by their duly authorized officers as
of the day and year first above written.
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BUYER:
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FUQI
INTERNATIONAL HOLDINGS CO., LTD.
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By:
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/s/ Yu Kwai
Chong
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Name:
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Yu Kwai
Chong
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Title:
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Chairman &
Chief Executive Officer
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SELLERS:
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BEIJING
YINZHONG TIANMEI JEWELRY CO., LTD.
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By:
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/s/ Chujian
Huang
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Name:
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Chujian
Huang
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Title:
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Legal
Representative
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SHANGHAI TIANMEI JEWELRY CO.,
LTD.
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By:
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/s/ Chujian
Huang
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Name:
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Chujian
Huang
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Title:
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Legal
Representative
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SELLER
PRINCIPAL:
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/s/ Chujian
Huang
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Chujian
Huang
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EXHIBIT
A-1
EMPLOYMENT
AGREEMENT
THIS AGREEMENT is made on August 7, 2008 and shall be effective
immediately.
Between:
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FUQI
INTERNATIONAL, INC. , incorporated under the laws of the State of
Delaware, U.S.A., whose registered office is at Room 1307, 13/F,
Hang Seng TST Building, 18 Carnarvon Road, Tsim Sha Tsui, Kowloon,
HKSAR (the Company ); and
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Chujian
Huang , an
individual residing in the PRC with holder of PRC identity card no.
440105196302250950 (the Employee ).
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Whereas :
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(A)
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On the date
hereof, the Company has acquired the Temix business.
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(B)
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As part of the
acquisition of Temix, the Company and Employee agreed to enter into
an employment agreement as a condition of the
acquisition.
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(C)
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The parties
desire to enter into this Agreement to establish the terms and
conditions of the Employee’s employment.
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IT IS AGREED as follows:
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1.
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In this
Agreement the following expressions shall have the following
meanings:
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Business means all and any business, trade or other
commercial activities of the Company or any Group Company,
including the operations of the Temix business;
Board means the Board of Directors of the Company or a
duly authorized committee of the Board of Directors;
Confidential Information
means all and any information,
knowledge or data (whether or not recorded in documentary form or
on computer disk or tape) not generally known or available to the
public which Employee may have learned, discovered, developed,
conceived, originated or prepared during or as a result of the
Employment relating to the operations, business methods, corporate
plans, management systems, finances, new business opportunities,
products, services, technology, customers, clients, policies,
procedures, accounts, personnel, techniques, concepts, or research
and development projects of the Company or any Group Company and
any and all trade secrets, secret formulae, process, inventions,
designs, know-how, discoveries, technical specifications and other
technical information relating to the creation, production or
supply of any past, present or future product or service of the
Company or any Group Company;
Employment means the Employee’s employment in
accordance with the terms and conditions of this
Agreement;
Group Company means the Company and any company which is a
direct or indirect subsidiary of the Company from time to
time;
Termination Date means the date on which the Employment is
terminated howsoever caused.
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2.1
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According to
the terms of this Agreement, the Employee shall be appointed as the
[_____________________] of the Company.
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2.2
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Subject to
clause 10, the Employment shall commence as of the date hereof and
shall continue for a period of [three] ([3]) years from such date
unless or until terminated by either party according to clause
9.
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2.3
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The Executive
will be responsible for his own income tax payable to relevant
federal and state authorities in the United States
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Employee shall be responsible for and bear his
own income tax by himself according to applicable law, authorities
and jurisdictions and Employee shall be responsible to properly
report his personal income tax to his country, place of residency,
and any other authority as required by applicable law.
Notwithstanding the Employee’s reporting and payment
obligations with respect to income taxes, Employee agrees that the
Company or Group Company is entitled, at its election, to withhold
the tax according to applicable law. Employee agrees that it shall
indemnify the Company for any income taxes and related cost and
expenses that Company is forced to pay on the behalf of Employee
where such amounts exceed what was withheld by the Company from
Employee’s income.
3.1 During the Employment, the Employee
will:
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devote his best
efforts, energies, skills and attention to the business and affairs
of the Company and Group Company;
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faithfully and
diligently perform all such duties and exercise all such powers
that are commensurate with Employee’s position and as are
lawfully and properly assigned to him from time to time by the
Chief Executive Officer or the Board, whether such duties or powers
relate to the Company or any other Group Company;
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comply with all
directions lawfully and properly given to him by the Chief
Executive Officer and the Board as they may from time to time deem
in the best interests of the Company;
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devote the
whole of his time, attention and abilities to the business of the
Company or any other Group Company for which he is required to
perform duties and shall not, without the Company’s prior
written consent, be directly or indirectly engaged, concerned or
interested in any other business activity, trade or
occupation;
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promptly
provide the Company with all such information as it may require in
connection with the business or affairs of the Company and of any
other Group Company for which he is required to perform
duties.
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comply with any
and all governmental laws, regulations, and policies in connection
with his actions as an employee of the Company and conduct himself
in accordance with the highest business standards as are reasonably
and customarily expected of such position; and
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fully cooperate
and participate in any investigation conducted by the Company
relating to its interests or as may be required by applicable
law.
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3.2
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The Employee
shall be required to work during the Company’s normal
business hours together with such additional hours as are required
in the proper performance of his duties. The Employee acknowledges
that he has no entitlement to additional remuneration for any hours
worked in excess of the Company’s normal business
hours.
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3.3
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The
Employee’s normal place of work is in the United States.
However, the Employee may be assigned to work in either of the
Company’s offices in Hong Kong or Shenzhen and may be
required to make overseas business trips as may be required for the
proper performance of his duties under the Employment.
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4.1
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The
Employee’s base salary shall be [_______________] US Dollars
(US$[__________]) per annum payable in regular instalments in
accordance with the customary payroll practices of the Company and
subject to all legally required deductions and withholdings.
Employee’s base salary will be reviewed by the
Company’s Compensation Committee annually in a manner that is
consistent with Company’s compensation policy. The base
salary may be increased from time to time by the Compensation
Committee in its absolute discretion, the determination of which
shall be based upon such standards, guidelines and factual
circumstances as the Compensation Committee deems
relevant.
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4.2
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Other than as
explicitly set forth in this Agreement, the Employee’s salary
is inclusive of all fees and other remuneration to which he may be
or become entitled as an officer of the Company or of any other
Group Company.
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4.4
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During
Employment, Employee is entitled to reimbursement for reasonable
and necessary business expenses incurred by Employee in connection
with the performance of Employee’s duties. Payments to
Employee will be made in accordance with the Company’s policy
and procedures upon presentation of itemized statements of such
business expenses in such detail as the Company may reasonably
require and pursuant to applicable Company policy.
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5.1
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The Employee
shall be eligible to receive a management bonus in respect of each
fiscal year of the Company completed in an amount to be determined
by the Compensation Committee in its absolute discretion. Payment
of such bonus, if any, shall be at the absolute discretion of the
Company’s Compensation Committee, the determination of which
shall be based upon such standards, guidelines and factual
circumstances as the Compensation Committee deems
relevant.
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5.2
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After the
Termination Date the Employee will not be eligible to receive the
bonus referenced in clause 5.1 and the payment of any bonus to
which the Employee may be eligible for after the Termination Date
will be at the sole discretion of the Board and Compensation
Committee.
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6.1
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The Employee is
entitled to accrue up to twenty (20) working days’ paid
vacation per calendar year during his Employment (plus public
holidays in Hong Kong), to be taken at a time or times convenient
to the Company. The right to paid vacation will accrue pro rata
during each calendar year of the Employment. Any vacation time not
taken within 12 months of accruing will be forfeited, and no more
than twenty (20) working days’ of vacation may be accrued at
any time. Vacation time may not be carried over from one year to
the next and payment will not be made in lieu of vacations not
taken.
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6.2
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On termination
of the Employment, the Employee shall be entitled to payment in
lieu of accrued but untaken vacation (other than vacations
forfeited in accordance with clause 6.1) on a pro rata
basis.
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1.7 Sickness and Other Incapacity
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7.1
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Subject to the
Employee’s compliance with the Company’s policy on
notification and certification of periods of absence from work, the
Employee will continue to be paid his full salary during any period
of absence from work due to sickness, injury or other incapacity,
up to a maximum of two (2) days for each completed month of service
in the first year of service and four (4) days for each completed
month of service thereafter.
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7.2
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The Employee
will not be paid during any period of absence from work (other than
due to vacation, holiday, sickness, injury or other incapacity)
without the prior written permission of the Company.
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1.8 Intellectual Property
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8.1
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The Employee
shall forthwith disclose full details of any inventions, designs,
know-how or discoveries, whether registerable or not, or whether
patentable or a copyright work ( Inventions ) in
confidence to the Company and shall regard himself in relation
thereto as a trustee for the Company.
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8.2
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All
intellectual property rights in such Inventions shall vest
absolutely in the Company which shall be entitled, so far as the
law permits, to the exclusive use thereof.
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8.3
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Notwithstanding
clause 8.2 above, the Employee shall assign to the Company the
copyright (by way of assignment of copyright) and other
intellectual property rights, if any, in respect of all works
written, originated, conceived or made by the Employee (except only
those works written, originated, conceived or made by the Employee
wholly outside his normal working hours hereunder and wholly
unconnected with the Employment) during the continuance of the
Employment.
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8.4
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The Employee
agrees and undertakes that at any time during or after the
termination of his Employment he will execute such deeds or
documents and do all such acts and things as the Company may deem
necessary or desirable to substantiate the Company’s rights
in respect of the Inventions and other intellectual property rights
referred to in this clause 8, including for the purpose of
obtaining letters patent or other privileges in all such countries
as the Company may require.
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9.1
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Either party
may terminate the Employment by providing the other party with
sixty (60) days’ written notice. The Company may, in its sole
discretion, also terminate the Employment immediately without prior
written notice by making a payment of the base salary to Employee
in lieu of prior written notice.
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9.2
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At any time
during the Employment the Company may also terminate the Employment
immediately and with no liability to make any further payment to
the Employee (other than in respect of amounts accrued) for serious
misconduct, including, without limitation, if the
Employee:
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commits any
serious or repeated breach of any of his obligations under this
Agreement or his Employment;
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is guilty of
serious misconduct which, in the Board’s reasonable opinion,
has damaged or may damage the business or affairs of the Company or
any other Group Company;
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is guilty of
conduct which, in the Board’s reasonable opinion, brings or
is likely to bring himself, the Company or any other Group Company
into disrepute;
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is charged with
a criminal offense (other than a road traffic offense not subject
to a custodial sentence);
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is or becomes
incapacitated or ill to the extent that he is unable to perform the
inherent duties and obligations of the Employment and the Employee
has exhausted all of his entitlement to paid sickness leave set out
in clause 7, or
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is declared
bankrupt or makes any arrangement with or for the benefit of his
creditors.
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Any delay or
forbearance by the Company in exercising any right of termination
shall not constitute a waiver of it.
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9.3
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On termination
of the Employment for whatever reason (and whether in breach of
contract or otherwise) the Employee will:
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immediately
deliver to the Company all books, documents, papers, computer
records, computer data, and any other property relating to the
business of or belonging to the Company or any other Group Company
which is in his possession or under his control. The Employee is
not entitled to retain copies or reproductions of any documents,
papers or computer records relating to the business of or belonging
to the Company or any other Group Company;
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immediately
resign from any office he holds with the Company or any other Group
Company (and from any related trusteeships) without any
compensation for loss of office. Should the Employee fail to do so
he hereby irrevocably authorizes the Company to appoint some person
in his name and on his behalf to sign any documents and do any
thing to give effect to his resignation from office; and
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immediately pay
to the Company or, as the case may be, any other Group Company all
outstanding amounts due or owed to the Company or any other Group
Company. The Employee confirms that, should he fail to do so, the
Company is to be treated as authorised to deduct from any amounts
due or owed to the Employee by the Company (or any other Group
Company) a sum equal to such amounts.
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9.4
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The Employee
will not at any time after termination of the Employment represent
himself as being in any way concerned with or interested in the
business of, or employed by, the Company or any other Group
Company.
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9.5
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The Employee
agrees that any payments pursuant to this clause 9 will be in full
and final settlement of any and all claims the Employee may have
against the Company or any other Group Company arising out of or in
connection with his Employment or its termination, and Employee and
the Company agree to execute a general mutual release in favor of
the other and their successors, affiliates and estates to the
fullest extent permitted by law, drafted by and in a form
reasonably satisfactory to the Company and Employee.
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10.1
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Where notice of
termination has been served by either party whether in accordance
with clause 9.1 or otherwise, the Company shall be under no
obligation to provide work for or assign any duties to the Employee
for the whole or any part of the relevant notice period and may
require him:
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not to attend
any premises of the Company or any other Group Company;
and/or
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to resign with
immediate effect from any offices he holds with the Company or any
other Group Company (and any related trusteeships);
and/or
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to refrain from
business contact with any customers, clients or employees of the
Company or any Group Company; and/or
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to take any
vacation which has accrued under clause 6.1 during any period
of suspension under this clause 10.1.
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10.2
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The provisions
of clauses 11 and 12 shall remain in full force and effect
during any period of suspension under clause 10.1.
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10.3
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Any suspension
under this clause 10.1 shall be on full salary and benefits
during any period of suspension.
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1.11 Confidential Information
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11.1
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The Employee
acknowledges:
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that the
Confidential Information is valuable to the Company and other Group
Companies;
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that the
Company will provide the Employee with access to Confidential
Information so that the Employee is properly able to carry out the
duties pursuant to this Agreement;
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that the
Employee owes, without limitation, a duty of trust and confidence
to the Company and a duty to act at all times in the best interests
of the Company;
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that the
disclosure of any Confidential Information to any customer or
actual or potential competitor of the Company or any Group Company
would place the Company at a serious competitive disadvantage and
would cause immeasurable damage to the Business and therefore the
restrictions contained in clauses 11 and 12 are reasonable to
protect the Company;
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and the Employee undertakes that he will not at
any time (whether during the Employment or for a period of 12
months from the Termination Date) use for his own or
another’s advantage, or reveal to any third-party person,
firm, company or organization and shall use his best efforts to
prevent the publication or disclosure of any Confidential
Information to any third party.
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11.2
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The limitations
imposed on Employee pursuant to clause 11.1 shall not apply to
Employee’s (i) compliance with legal process or subpoena, or
(ii) statements in response to inquiry from a court or regulatory
body, provided that Employee gives the Company reasonable prior
written notice of such process, subpoena or request. In addition,
the restrictions in this clause shall not apply so as to prevent
the Employee from using his own personal skill in any business in
which he may be lawfully engaged after the Employment is
ended.
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l.12 Restrictive Covenants
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12.1
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The Employee
covenants with the Company (for itself and as trustee and agent for
each other Group Company) that, for the period during the
Employment and the twelve (12) months following the Termination
Date, he shall not, whether directly or indirectly, on his own
behalf or on behalf of or in conjunction with any other person,
firm, company or other entity (except on behalf of the
Company):
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solicit or
entice away or attempt to solicit or entice away from the Company
or any Group Company any person, firm, company or other entity who
is, or was, a client of the Company or any Group Company with whom
the Employee had business dealings during the course of his
Employment or in the twelve (12) month period prior to the
Termination Date;
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solicit or
entice away or attempt to solicit or entice away any individual
person who is employed or engaged by the Company or any Group
Company either as a director or in a managerial or technical
capacity; or who is in possession of Confidential Information and
with whom the Employee had business dealings during the course of
his Employment or the twelve (12) month period immediately prior to
the Termination Date;
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carry on, set
up, be employed, engaged or interested in a business in Hong Kong,
the People’s Republic of China, and any other geographic
locations where the Company’s Business is conducted, that is
in competition with, whether directly or indirectly, the Business
as at the Termination Date. It is agreed that if any such company
ceases to be in competition with the Company and/or any Group
Company this clause 12.1(c) shall, with effect from that date,
cease to apply in respect of such company. The provisions of this
clause 12.1(c) shall not, at any time following the
Termination Date, prevent the Employee from (i) owning an equity
interest in the Company, and (ii) owning up to one percent (1%) of
the securities in a corporation engaged in a business that competes
with the Company, provided that such securities are listed on a
national securities exchange. Nothing in this clause 12.1(c) shall
prohibit Employee from seeking or doing of business not in direct
or indirect competition with the Business;
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12.2
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While the
parties agree that the restrictions contained in Clause 11 and 12
are reasonable in all the circumstances, it is agreed that if any
court of competent jurisdiction holds that the length of the
post-termination covenants contained in clauses 11 and 12 are not
reasonable, the parties agree that:
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the covenants
are to apply for a period of nine (9) months from the Termination
Date; or, if this period is held to be unreasonable,
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for a period of
six (6) months from the Termination Date; or if this period is held
to be unreasonable,
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for such other
period as any court of competent jurisdiction decides is
reasonable.
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12.3
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The period
during which the restrictions referred to in clauses 12.1(a)
to (c) inclusive which apply following the Termination Date shall
be reduced by the amount of time during which, if at all, the
Company suspends the Employee under the provisions of
clause 10.1.
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13.1
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This Agreement,
together with any other documents referred to in this Agreement,
supersedes all other agreements both oral and in writing between
the Company and the Employee. The Employee acknowledges that he has
not entered into this Agreement in reliance upon any
representation, warranty or undertaking which is not set out in
this Agreement or expressly referred to in it as forming part of
the Employee’s contract of employment.
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13.2
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The Employee
represents and warrants to the Company that he will not by
reas
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