EMPLOYMENT AGREEMENT
THIS AGREEMENT is
made on August 30, 2007 and shall be effective as of and contingent
upon the consummation of the IPO, as defined below.
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(1)
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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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(2)
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Lie Xi Zhuang (holder
of PRC identity card no. 440524196810082915)
o f
Suite 20C, Xing Long Building, No. 3015, Nan Hu Road, Luo Hu
District, Shenzhen, PRC (the
Employee ).
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(A)
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The
Company intends to conduct an initial public offering of securities
in the United States (“IPO”).
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(B)
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Prior
to the execution of this agreement, the Employee was employed by
the Company, and the Company and the Employee have agreed to reduce
the terms of the employment in writing as recorded by the
provisions of this Agreement.
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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, which shall be
contingent on and effective as of the consummation of the
Company’s IPO.
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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;
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 Chief Operating Officer of the Company.
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2.2
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Subject
to clause 10, the Employment shall commence upon the closing of the
Company’s currently proposed IPO and shall continue for a
period of three (3) years from such date unless or until terminated
by either party according to clause 9. This Agreement is contingent
upon the consummation of the Company’s currently proposed
IPO, and in the event that the currently proposed IPO does not
close, for whatever reason, within the sixty (60) day period
following the date of this Agreement, this Agreement shall be
terminated and have no effect.
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2.3
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Employee
shall bear his individual income tax by himself according to
applicable law and shall be responsible to properly report his
personal income tax to his country or place of residency.
Notwithstanding the Employee’s reporting and payment
obligations with respect to income taxes, Employee agrees that the
Company or Group Company is entitled to withhold the tax according
to applicable law.
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3.1
During
the Employment, the Employee will:
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(a)
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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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(b)
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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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(c)
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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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(d)
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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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(e)
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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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(f)
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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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(g)
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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 Shenzhen, China. However,
the Employee may be assigned to work in either of the
Company’s offices in Hong Kong 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 One Hundred Twenty Thousand
US Dollars (US$120,000) 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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4.3
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The
Employee shall receive, on an annual basis, stock options with a
ten-year term to acquire shares of the Company’s common stock
having a market value of 1% of our annual profit before tax, not
exceeding $120,000 in value, as set forth in our annual report on
Form 10-K for the relevant period as filed with the Securities and
Exchange Commission. The per share exercise price of these options
shall be 100% of the fair market value of the Company’s
common stock on the date of grant.
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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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S
ICKNESS
AND
O
THER
I
NCAPACITY
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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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8.1
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The
Employee shall forthwith disclose full details of any inventions,
designs, know-how or discoveries, whether registera
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