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.
BETWEEN:
|
(1)
|
FUQI
INTERNATIONAL, INC.,
incorporated under the laws of the State of Delaware, U.S.A., whose
registered office is at Xxxx 0000, 00/X, Xxxx Seng XXX Xxxxxxxx,
00
Xxxxxxxxx Xxxx, Tsim Sha Tsui, Kowloon, HKSAR (the Company);
and
|
|
(2)
|
Heung
Xxxx Xxxx (holder
of Hong Kong identity card no. X000000(0))
of
00000 Xxxxx Xxxx, Xxxxxxxx, XX 00000, XXX (the Employee).
|
WHEREAS:
|
(A)
|
The
Company intends to conduct an initial public offering of securities
in the
United States (“IPO”).
|
|
(B)
|
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.
|
|
(C)
|
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.
|
IT
IS AGREED
as
follows:
DEFINITIONS
|
1.
|
In
this Agreement the following expressions shall have the following
meanings:
|
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;
Page
1
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.
TERM
AND APPOINTMENT
|
2.1
|
According
to the terms of this Agreement, the Employee shall be appointed as
the
Executive Vice President, Corporate Development of the
Company.
|
|
2.2
|
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.
|
|
2.3
|
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.
|
DUTIES
3.1 During
the Employment, the Employee will:
|
(a)
|
devote
his best efforts, energies, skills and attention to the business
and
affairs of the Company and Group
Company;
|
|
(b)
|
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;
|
|
(c)
|
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;
|
|
(d)
|
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;
|
Page
2
|
(e)
|
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.
|
|
(f)
|
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
|
|
(g)
|
fully
cooperate and participate in any investigation conducted by the Company
relating to its interests or as may be required by applicable
law.
|
|
3.2
|
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.
|
|
3.3
|
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.
|
SALARY
|
4.1
|
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.
|
|
4.2
|
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.
|
|
4.3
|
Upon
the closing of the IPO, the Employee shall receive stock options
with a
term of three (3) years to purchase Six Hundred Thousand (600,000)
shares
of the Company’s common stock. One-third of the stock options shall vest
upon the effective date of the IPO, an additional one-third of the
stock
options shall vest after completion of twelve (12) months of service
rendered from the effective date of the IPO, and the remaining one-third
of stock options shall vest after completion of twenty-four (24)
months of
service rendered from the effective date of this IPO. The per share
exercise price of such options shall be equal to 100% of the fair
market
value of the Company’s common stock on the date of the grant. The details
of the option grant shall be as set forth in the stock option agreement
as
executed by the Company and the Employee upon the date of
grant.
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Page
3
|
4.4
|
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.
|
BONUS
|
5.1
|
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.
|
|
5.2
|
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.
|
VACATION
|
6.1
|
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.
|
|
6.2
|
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.
|
SICKNESS
AND OTHER INCAPACITY
|
7.1
|
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.
|
|
7.2
|
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.
|
Page
4
INTELLECTUAL
PROPERTY
|
8.1
|
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.
|
|
8.2
|
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.
|
|
8.3
|
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.
|
|
8.4
|
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.
|
TERMINATION
|
9.1
|
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.
|
|
9.2
|
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:
|
|
(a)
|
commits
any serious or repeated breach of any of his obligations under this
Agreement or his Employment;
|
|
(b)
|
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;
|
|
(c)
|
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;
|
|
(d)
|
is
charged with a criminal offense (other than a road traffic offense
not
subject to a custodial sentence);
|
Page
5
|
(e)
|
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
|
|
(f)
|
is
declared bankrupt or makes any arrangement with or for the benefit
of his
creditors.
|
Any
delay
or forbearance by the Company in exercising any right of termination shall
not
constitute a waiver of it.
|
9.3
|
On
termination of the Employment for whatever reason (and whether in
breach
of contract or otherwise) the Employee
will:
|
|
(a)
|
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;
|
|
(b)
|
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
|
|
(c)
|
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.
|
|
9.4
|
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.
|
|
9.5
|
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.
|
SUSPENSION
|
10.1
|
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:
|
Page
6
|
(a)
|
not
to attend any premises of the Company or any other Group Company;
and/or
|
|
(b)
|
to
resign with immediate effect from any offices he holds with the Company
or
any other Group Company (and any related trusteeships);
and/or
|
|
(c)
|
to
refrain from business contact with any customers, clients or employees
of
the Company or any Group Company;
and/or
|
|
(d)
|
to
take any vacation which has accrued under clause 6.1 during any
period of suspension under this
clause 10.1.
|
|
10.2
|
The
provisions of clauses 11 and 12 shall remain in full force and effect
during any period of suspension under
clause 10.1.
|
|
10.3
|
Any
suspension under this clause 10.1 shall be on full salary and
benefits during any period of
suspension.
|
CONFIDENTIAL
INFORMATION
|
11.1
|
The
Employee acknowledges:
|
|
(a)
|
that
the Confidential Information is valuable to the Company and other
Group
Companies;
|
|
(b)
|
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;
|
|
(c)
|
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;
|
|
(d)
|
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;
|
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.
|
11.2
|
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.
|
Page
7
RESTRICTIVE
COVENANTS
|
12.1
|
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):
|
|
(a)
|
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;
|
|
(b)
|
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;
|
|
(c)
|
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;
|
|
12.2
|
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:
|
|
(a)
|
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,
|
|
(b)
|
for
a period of six (6) months from the Termination Date; or if this
period is
held to be unreasonable,
|
Page
8
|
(c)
|
for
such other period as any court of competent jurisdiction decides
is
reasonable.
|
|
12.3
|
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.
|
MISCELLANEOUS
|
13.1
|
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.
|
|
13.2
|
The
Employee represents and warrants to the Company that he will not
by reason
of entering into the Employment, or by performing any duties under
this
Agreement, be in breach of any terms of employment with a third party
whether express or implied or of any other obligation binding on
him.
|
|
13.3
|
Any
notice to be given under this Agreement to the Employee may be served
by
being handed to him personally or by being sent by registered post
to him
at his usual or last known address; and any notice to be given to
the
Company may be served by being left at or by being sent by registered
post
to its registered office for the time being. Any notice served by
registered post shall be deemed to have been served two days (excluding
Sundays and statutory holidays) after the date of the registered
post
receipt.
|
|
13.4
|
The
provisions of clauses 11, 12 and 13 shall remain in full force and
effect after the Termination Date.
|
|
13.5
|
This
Agreement and the relationship between the parties shall be governed
by,
and interpreted in accordance with, the laws of the State of Delaware,
U.S.A. Each of the parties agrees that the courts of the State of
Delaware
are to have non-exclusive jurisdiction to settle any disputes (including
claims for set-off and counterclaims) which may arise in connection
with
the creation, validity, effect, interpretation or performance of,
or the
legal relationships established by, this Agreement or otherwise arising
in
connection with this Agreement, and for such purposes irrevocably
submit
to the non-exclusive jurisdiction of the courts of the State of
Delaware.
|
|
13.6
|
The
Agreement is written in both Chinese and English languages. If any
inconsistency arises between the two versions, the English version
shall
prevail.
|
|
13.7
|
If
any one or more of the provisions contained in this Agreement shall
for
any reason be held to be invalid, illegal, or unenforceable in any
respect, such invalidity, illegality, or unenforceability shall not
affect
any other provision hereof, and this Agreement shall be construed
as if
such invalid, illegal, or unenforceable provision had never been
contained
herein. In addition, if any court of competent jurisdiction determines
that any of the provisions set forth herein are unenforceable because
of
the duration or geographic scope of such provision, such court shall
have
the power to reduce the duration or scope of such provision as the
case
may be, to the extent necessary to render such provision
enforceable.
|
Page
9
|
13.8
|
The
waiver by any party to a breach of any provision of this Agreement
must be
in writing and signed by such party to be effective, and shall not
operate
or be construed as a waiver of any subsequent breach of this
Agreement.
|
|
13.9
|
This
Agreement is personal in nature, and neither this Agreement nor any
part
of any obligation herein shall be assignable by Employee. The Company
shall be entitled to assign this Agreement to any affiliate or successor
of the Company that assumes the ownership or control of the business
of
the Company, and the Agreement shall inure to the benefit of any
such
successor or assign.
|
|
13.10
|
This
Agreement may be executed in one or more facsimile counterparts,
and by
the parties hereto in separate facsimile counterparts, each of which
when
executed shall be deemed to be an original while all of which taken
together shall constitute one and the same
instrument.
|
[SIGNATURE
PAGE TO FOLLOW]
Page
10
IN
WITNESS WHEREOF
this
AGREEMENT
has
been
signed on the date the day and year first above written.
|
SIGNED by
HEUNG
XXXX XXXX
|
) | /s/ HEUNG XXXX XXXX |
|
in
the presence of:
|
) |
| SIGNED for and on behalf of | ) | /s/ YU XXXX XXXXX |
| FUQI INTERNATIONAL, INC. in the presence of: | ) |
Page
11
DATED
THE
30 DAY OF AUGUST, 2007
and
HEUNG
XXXX XXXX
