AMENDMENT NO. 1 TO THE ASSET PURCHASE AGREEMENT
AMENDMENT
NO. 1 TO THE
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
▇▇▇▇▇▇▇ ▇▇▇▇▇, 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]
2
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.
| BUYER: | ||
| FUQI INTERNATIONAL HOLDINGS CO., LTD. | ||
|
By:
|
/s/
Yu ▇▇▇▇ ▇▇▇▇▇
|
|
|
Name:
|
Yu
▇▇▇▇ ▇▇▇▇▇
|
|
|
Title:
|
Chairman
& Chief Executive Officer
|
|
| SELLERS: | ||
| BEIJING YINZHONG TIANMEI JEWELRY CO., LTD. | ||
|
By:
|
/s/
▇▇▇▇▇▇▇ ▇▇▇▇▇
|
|
|
Name:
|
▇▇▇▇▇▇▇
▇▇▇▇▇
|
|
|
Title:
|
Legal
Representative
|
|
| SHANGHAI TIANMEI JEWELRY CO., LTD. | ||
|
By:
|
/s/
▇▇▇▇▇▇▇ ▇▇▇▇▇
|
|
|
Name:
|
▇▇▇▇▇▇▇
▇▇▇▇▇
|
|
|
Title:
|
Legal
Representative
|
|
| SELLER PRINCIPAL: | ||
|
/s/
▇▇▇▇▇▇▇ ▇▇▇▇▇
|
||
|
▇▇▇▇▇▇▇
▇▇▇▇▇
|
||
3
EXHIBIT
A-1
EMPLOYMENT
AGREEMENT
THIS
AGREEMENT
is made
on August 7, 2008 and shall be effective immediately.
Between:
|
(1)
|
FUQI
INTERNATIONAL, INC.,
incorporated under the laws of the State of Delaware, U.S.A., whose
registered office is at ▇▇▇▇ ▇▇▇▇, ▇▇/▇, ▇▇▇▇ Seng ▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇, Tsim Sha Tsui, Kowloon, HKSAR (the Company);
and
|
|
(2)
|
▇▇▇▇▇▇▇
▇▇▇▇▇,
an individual residing in the PRC with holder of PRC identity card
no.
440105196302250950 (the Employee).
|
Whereas:
|
(A)
|
On
the date hereof, the Company has acquired the Temix
business.
|
|
(B)
|
As
part of the acquisition of Temix, the Company and Employee agreed
to enter
into an employment agreement as a condition of the acquisition.
|
|
(C)
|
The
parties desire to enter into this Agreement to establish the terms
and
conditions of the Employee’s
employment.
|
IT
IS AGREED
as
follows:
1.1 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, 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;
Exhibit
A-1
4
Termination
Date
means
the date on which the Employment is terminated howsoever caused.
1.2 Term
and
Appointment
|
2.1
|
According
to the terms of this Agreement, the Employee shall be appointed as
the
[_____________________] of the
Company.
|
|
2.2
|
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.
|
|
2.3
|
The
Executive will be responsible for his own income tax payable to relevant
federal and state authorities in the United
States
|
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.
1.3 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;
|
|
(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
|
Exhibit
A-1
5
|
(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.
|
1.4 Salary
|
4.1
|
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.
|
|
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
|
[RESERVED]
|
|
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.
|
1.5 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.
|
Exhibit
A-1
6
1.6 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.
|
1.7 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.
|
1.8 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.
|
1.9 Termination
Exhibit
A-1
7
|
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);
|
|
(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.
|
Exhibit
A-1
8
|
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.
|
1.10 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:
|
|
(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.
|
1.11 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;
|
Exhibit
A-1
9
|
(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.
|
l.12 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;
|
Exhibit
A-1
10
|
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,
|
|
(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.
|
1.13 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.
|
Exhibit
A-1
11
|
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.
|
|
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]
Exhibit
A-1
12
IN
WITNESS WHEREOF
this
AGREEMENT
has
been
signed on the date the day and year first above written.
| SIGNED by ▇▇▇▇▇▇▇ ▇▇▇▇▇ | ) | ||
| in the presence of: | ) | ||
| SIGNED for and on behalf of | ) | |
| FUQI INTERNATIONAL, INC. in the presence of: | ) | |
Exhibit
A-1
13
DATED
THE
[___] DAY OF AUGUST, 2008
and
▇▇▇▇▇▇▇
▇▇▇▇▇
EMPLOYMENT
AGREEMENT
Exhibit
A-1
14
EXHIBIT
A-2
BNY
MELLON, NATIONAL ASSOCIATION
ESCROW
AGREEMENT
This
Escrow Agreement, dated as of August 7, 2008, is by and among Fuqi
International, Inc., a Delaware corporation having its principal place of
business at ▇/▇., ▇▇▇▇▇ ▇, ▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇ Road North,
Shenzhen, 518019, People’s Republic of China (“Fuqi”), ▇▇▇▇▇▇▇ ▇▇▇▇▇, an
individual residing in the PRC with holder of PRC identity card no.
440105196302250950, (collectively, the “Escrow Parties”), and BNY Mellon,
National Association, a national banking association with its principal place
of
business at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (the "Escrow
Agent").
WHEREAS,
▇▇. ▇▇▇▇▇, Beijing YinZhong TianMei Jewelry Co., Ltd. (“TianMei Beijing”),
Shanghai TianMei Jewelry Co., Ltd. (the “TianMei Shanghai” and together with
TianMei Beijing, collectively the “Sellers” and each a “Seller”), entered into
an Asset Purchase Agreement dated April 18, 2008 with Fuqi International
Holdings Co., LTD., a British Virgin Islands company (“Fuqi BVI”) and
wholly-owned subsidiary of Fuqi;
WHEREAS,
pursuant to the Asset Purchase Agreement, ▇▇. ▇▇▇▇▇ entered into that certain
Intellectual Property Transfer Agreement dated April 18, 2008 (the “IP
Agreement”) with Fuqi pursuant to which ▇▇. ▇▇▇▇▇ agreed to transfer the
Intellectual Property, as defined in the IP Agreement to Fuqi and/or its
subsidiaries;
WHEREAS,
in accordance with the IP Agreement, Fuqi agreed to issue Five Hundred Forty
Thousand Three Hundred Thirty-Three (540,333) shares of common stock of Fuqi
(the “Shares”) and deposit the Shares into an escrow account for a period of
twenty-four (24) months from the closing date of the Asset Purchase Agreement
and IP Agreement (the “Closing Date”) where the Shares will be subject to
set-off from failure of the Business to meet EBITDA targets and from
indemnification obligations of ▇▇. ▇▇▇▇▇ or the Sellers under the Asset Purchase
Agreement or the IP Agreement; and
WHEREAS,
the parties desire to set forth their understandings with regard to the escrow
account established by this Agreement.
NOW,
THEREFORE, in consideration of the premises and agreements of the parties
contained in this Agreement, and for other good and valuable consideration,
the
receipt and sufficiency of which are acknowledged, the parties agree as
follows:
1.
Appointment
of Agent.
The
Escrow Parties appoint the Escrow Agent as their agent to hold in escrow, and
to
administer the disposition of, the Escrow Fund (as defined below) in accordance
with the terms of this Agreement, and the Escrow Agent accepts such
appointment.
2.
Establishment
of Escrow.
(a)
Escrow Shares. Within
ten (10) calendar days of this Agreement, Fuqi shall deliver to the Escrow
Agent
stock certificate(s) representing the Shares registered in the name ▇▇. ▇▇▇▇▇
and ▇▇. ▇▇▇▇▇ shall provide a sign, blank, and fully endorsed stock power are
it
relates to the stock certificate(s) representing the Shares. Upon receipt
thereof, the Escrow Agent shall acknowledge such receipt to all parties in
writing. Such shares, together with any securities distributed in respect
thereof or in exchange therefor, and the stock power are referred to herein
as
“Escrow
Shares.” The
Escrow Shares will be held and disbursed by the Escrow Agent in accordance
with
the terms hereof. The Escrow Shares together with any cash or other property
distributed in respect thereof and less any amounts paid or distributed from
time to time in accordance with the terms of this Agreement, are referred to
herein as the “Escrow
Fund.”
(b)
Distributions, Etc. Any
securities distributed in respect of or in exchange for any of the Escrow
Shares, whether by way of distribution, other reorganizations, or otherwise,
shall be issued in the name of ▇▇. ▇▇▇▇▇, and shall be delivered to the Escrow
Agent, who shall hold such securities in escrow. Such securities shall be
considered Escrow Shares for purposes hereof. Any cash dividends or property
(other than securities) distributed in respect of the Escrow Shares that are
received by the Escrow Agent shall be held by the Escrow Agent as part of the
Escrow Fund. Subject to the foregoing, the Escrow Agent shall, upon written
instruction from Fuqi (a copy of which shall also be delivered to ▇▇. ▇▇▇▇▇),
deliver any certificate representing the Escrow Shares to any payment agent
or
exchange agent if required in connection with a sale, merger, combination or
similar reorganization involving the Company.
(c)
Cash Deposits. The
Escrow Agent shall deposit any cash received in connection with the Escrow
Fund
in one or more deposit accounts at Mellon Bank, N.A. in accordance with such
written instructions and directions as may from time to time be provided to
the
Escrow Agent by Fuqi. In the event that the Escrow Agent does not receive
written instructions, the Escrow Agent shall deposit the Escrow Fund in deposit
accounts at Mellon Bank, N.A. Deposits shall in all instances be subject to
the
Escrow Agent’s standard funds availability policy. The Escrow Agent shall not be
responsible for any loss due to interest rate fluctuation or early withdrawal
penalty. The Escrow Parties understand that deposits of the Escrow Fund are
not
necessarily insured by the United States Government or any agency or
instrumentality thereof, or of any state or municipality, and that such deposits
do not necessarily earn a fixed rate of return. In no instance shall the Escrow
Agent have any obligation to provide investment advice of any kind. The Escrow
Agent shall not be liable or responsible for any loss resulting from any
deposits made other than as a result of the gross negligence or willful
misconduct of the Escrow Agent.
(d)
Voting
of Interests. ▇▇.
▇▇▇▇▇
shall have the right, in his sole discretion, to Exercise
any and all voting rights with respect to the Escrow Shares. The Escrow Agent
shall not vote the Escrow Shares or take any other action with respect thereto
unless Fuqi has given the Escrow Agent written instructions in that
regard.
(e)
Transferability of Escrow Shares. For
the
period during which the Escrow Shares are held by the Escrow Agent in accordance
with this Agreement, ▇▇. ▇▇▇▇▇’▇ interest in such Escrow Shares shall not be
assignable or transferable.
3. Customer
Identification and TIN Certification. To
help
the government fight the funding of terrorism and money laundering activities,
Federal laws requires all financial institutions to obtain, verify and record
information that identifies each individual or entity that opens an account.
Therefore, the Escrow Agent must obtain the name, address, taxpayer or other
government identification number, and other information, such as date of birth
for individuals, for each individual and business entity that is a party to
this
Agreement. For individuals signing this Agreement on their own behalf or on
behalf of another, the Escrow Agent requires a copy of a driver’s license,
passport or other form of photo identification. For business and other entities
that are parties to this Agreement, the Escrow Agent will require such documents
as it deems necessary to confirm the legal existence of the entity.
At
the
time of or prior to execution of this Agreement, any Escrow Party providing
a
tax identification number for tax reporting purposes shall provide to the Escrow
Agent a completed IRS Form W-9 or W-8, applicable, and every individual
executing this Agreement on behalf of an Escrow Party shall provide to the
Escrow Agent a copy of a driver’s license, passport or other form of photo
identification acceptable to the Escrow Agent. The Escrow Parties agree to
provide to the Escrow Agent such organizational documents and documents
establishing the authority of any individual acting in a representative capacity
as the Escrow Agent may require in order to comply with its established
practices, procedures and policies.
Exhibit
A-2
2
The
Escrow Agent is authorized and directed to report all interest and other income
earned on the Escrow Fund in accordance with the Form W-9 or W-8, applicable,
information provided to the Escrow Agent by ▇▇. ▇▇▇▇▇. The Escrow Parties
understand that, in the event one or more tax identification number is not
certified to the Escrow Agent, the Internal Revenue Code, as amended from time
to time, may require withholding of a portion of any interest or other income
earned on the Initial Deposit.
4.
RESERVED.
5.
Release
of the Escrow Fund.
(a) Subject
to the conditions set forth below, the parties agree that Fuqi shall calculate
the number of Escrow Shares to be released to ▇▇. ▇▇▇▇▇ pursuant to the formulas
below and Fuqi shall issue and execute an instruction certificate to the Escrow
Agent indicating the number of Escrow Shares to be released to ▇▇. ▇▇▇▇▇ and
the
date of such release, if any. For purposes of determining the number of Escrow
Shares deliverable to ▇▇. ▇▇▇▇▇ under this Agreement, each Escrow Share shall
be
deemed to have a value equal to $7.27 per common share (the “Fuqi Share Price”).
For purposes of this Agreement, “EBITDA” shall mean, for any period, the net
income or loss of the Business for such period before any interest, income
tax,
depreciation and amortization determined on a consolidated basis in accordance
with USGAAP as shall be determined by the Fuqi and approved by the Fuqi’s
independent auditors.
| 1.14 |
(1)The
“First Release”, if any, shall be released to ▇▇. ▇▇▇▇▇ no later than the
thirtieth (30th) day following the completion of the Fuqi’s preparation of
its financial statements for the period (the “2008 Period”) commencing on
September 1, 2008 and terminating on August 31, 2009. If EBITDA for
the
2008 Period is equal to or greater than US$2.6 million (“2008 EBITDA
Target”), then one-half of the Escrow Shares shall be released to
▇▇.
▇▇▇▇▇.
If EBITDA for the 2008 Period is less than the 2008 EBITDA Target,
the
number of Escrow Shares to be released to ▇▇. ▇▇▇▇▇, if any, shall
be
calculated as follows:
|
|
1.15 One-half
of Escrow Shares - ( ( 2008 EBITDA Target - EBITDA for 2008 Period
) /
Fuqi Share Price)
|
| 1.16 Any Escrow Shares not released to the ▇▇. ▇▇▇▇▇ in the First Release shall be returned to the Fuqi. |
| 1.17 |
(2)The
“Second Release”, if any, shall be due and payable no later than the
thirtieth (30th) day following the completion of the Fuqi’s preparation of
its financial statements for the period (the “2009 Period”) commencing on
the September 1, 2009 and terminating on August 31, 2010. If EBITDA
for
the 2009 Period is equal to or greater than US$3.7 million (“2009 EBITDA
Target”), then one-half of the Escrow Shares shall be released to ▇▇.
▇▇▇▇▇. If EBITDA for the 2009 Period is less than the 2009 EBITA
Target,
the number of Escrow Shares to be released to ▇▇. ▇▇▇▇▇, if any,
shall be
calculated as follows:
|
3
| 1.18 One-half of Escrow Shares - ( ( 2009 EBITDA Target - EBITDA for 2009 Period ) / Fuqi Share Price) |
| 1.19 Any Escrow Shares not released to the ▇▇. ▇▇▇▇▇ in the Second Release shall be returned to the Fuqi. |
Any
dispute as to the release of Escrow Shares under this Section 5(a) shall be
resolved in accordance with the arbitration provisions contained in Section
5(b), below.
(b) In
addition to release of the Escrow Shares in accordance with Section 5(a), above,
the Escrow Fund is intended to provide a source of funds for the payment of
any
amounts which may become due or payable to Fuqi, Fuqi BVI or any of their
affiliates by ▇▇. ▇▇▇▇▇ or any of the Sellers pursuant to (i) “Article 7
Survival of Representations and Warranties; Indemnification” of the Asset
Purchase Agreement or (ii) Section 8.1 of the IP Agreement. In connection
therewith, the Escrow Fund shall be distributed and released in accordance
with
the following:
(1) If
Fuqi,
Fuqi BVI or any of their affiliates make a claim for indemnification pursuant
to
“Article 7 Survival of Representations and Warranties; Indemnification” of the
Asset Purchase Agreement or Section 8.1 of the IP Agreement (the “Claim”), Fuqi
shall deliver to the Escrow Agent and ▇▇. ▇▇▇▇▇ a written notice (a “Claim
Notice”) specifying the facts alleged to constitute the basis for such claim,
the representations, warranties, covenants and obligations alleged to have
been
breached and the amount sought hereunder from the indemnifying persons.
(2) Within
ten (10) business days or the receipt of a Claim Notice, ▇▇. ▇▇▇▇▇ shall deliver
to the Escrow Agent and Fuqi a notice (“Objection Notice”) stating they intend
to contest the claim (a “Contest”) or to accept liability thereunder.
(i) If
▇▇.
▇▇▇▇▇ does not give an Objection Notice within the ten (10) business day period,
▇▇. ▇▇▇▇▇ will be deemed to accept liability as it relates to such claim. To
the
extent ▇▇. ▇▇▇▇▇ is deemed liable for any Claims hereunder, such liability
shall
be satisfied pursuant to this Section 5.
(ii) If
▇▇.
▇▇▇▇▇ gives a timely Objection Notice, the Escrow Agent shall not take any
further action with respect to the claim being contested except as further
provided herein. Within thirty (30) business days of the receipt thereof, ▇▇.
▇▇▇▇▇ and Fuqi shall select an independent arbitrator (the “Independent
Arbitrator”). The Independent Arbitrator shall be selected by the mutual
agreement of ▇▇. ▇▇▇▇▇ and Fuqi. If the parties cannot agree on the identity
of
an Independent Arbitrator within ten (10) business days of the date of an
Objection Notice, then the Independent Arbitrator will be determined by an
arbitrator selected by ▇▇. ▇▇▇▇▇ and an arbitrator selected by Fuqi. The
decision of the Independent Arbitrator shall be borne as directed by him. ▇▇.
▇▇▇▇▇ and Fuqi shall be entitled to make such representation and provide such
information and reports to the Independent Arbitrator within twenty (20)
business days of the date of agreement or, if later, determination of the
identity of the Independent Arbitrator. ▇▇. ▇▇▇▇▇ and Fuqi shall use their
respective commercially reasonable efforts to procure that the Independent
Arbitrator issues his/her ruling within thirty (30) business days after the
matter is submitted to him/her for consideration.
Exhibit
A-2
4
(3) Whenever
▇▇. ▇▇▇▇▇ is deemed liable for any Claims, ▇▇. ▇▇▇▇▇ shall have ten (10)
business days from such time such liability is deemed accepted to pay or satisfy
such liability pursuant to one of the following methods:
(i)▇▇.
▇▇▇▇▇
may elect to pay by wire transfer of immediately available funds to Fuqi, in
which case, ▇▇. ▇▇▇▇▇ shall provide notice of such election to the Escrow Agent
in accordance with the terms of this Agreement;
(ii) ▇▇.
▇▇▇▇▇
may deliver a notice (“Claim Payment Notice”) to Escrow Agent instructing such
agent to deliver to Fuqi a stock certificate representing such amount of Common
Stock from the Escrow Funds required to satisfy the claim set forth in the
Claim
Payment Notice where such shares are valued at the Fuqi Share Price;
or
(iii) ▇▇.
▇▇▇▇▇
may deliver a Claim Payment Notice instructing Escrow Agent to sell such amount
of Common Stock equal to an amount equal to 110% of the claim set forth in
the
Claim Payment Notice divided by the closing price of the Common Stock as listed
on the Nasdaq Global Select Market, or other exchange on which the Fuqi’s
securities are traded, one (1) day immediately preceding the date of the Claim
Payment Notice; provided,
that
Escrow Agent shall not sell such Common Stock until it shall have received
an
opinion from counsel to Fuqi indicating that the proposed sale of such shares
of
Common Stock are not required to be registered under the Securities Act of
1933,
as amended, by reason of an exemption thereunder; provided,
further,
that to
the extent the proceeds from such sale exceed the amount required to satisfy
the
claim set forth in the Claim Payment Notice, such excess proceeds shall be
delivered to ▇▇. ▇▇▇▇▇; provided,
further,
that to
the extent the proceeds from such sale are not sufficient to satisfy the claim
set forth in the Claim Payment Notice, ▇▇. ▇▇▇▇▇ shall be required to satisfy
the remainder of such claim by wire transfer of immediately available funds
to
Fuqi. In addition, ▇▇. ▇▇▇▇▇ shall furnish in the Claim Payment Notice, the
closing stock price and the number of Escrow Shares to be sold to satisfy the
amount of the Claim, and any fees associated with such a sale would be deducted
from the Claim Payment amount, at the cost of ▇▇. ▇▇▇▇▇.
To
the
extent that ▇▇. ▇▇▇▇▇ fails to timely designate one of the methods set forth
above, Fuqi shall have sole discretion to designate one of the above methods
for
satisfaction of ▇▇. ▇▇▇▇▇’ liability hereunder.
(c)
In no
event shall the Escrow Agent be responsible for any fee or expense of any party
to any arbitration proceeding. Upon completion of the arbitration, the parties
shall provide joint written instructions to the Escrow Agent as to the
resolution of the dispute, attaching a copy of any relevant arbitration
decision, and instructing the Escrow Agent as to Escrow Shares to be disbursed.
The Escrow Agent shall use its best efforts to make such payment out of the
Escrow Fund within three (3) business days following the Escrow Agent’s receipt
of written notice of said determination or as soon thereafter as possible.
Exhibit
A-2
5
(d)
Notwithstanding anything to the contrary in this Agreement, if the Escrow Agent
receives written instructions from all of the Escrow Parties, or their
respective successors or assigns, substantially in the form of Exhibit A, as
to
the disbursement of the Escrow Fund (“Joint Written Instructions”), the Escrow
Agent shall disburse the Escrow Fund pursuant to such Joint Written Instruction.
The Escrow Agent shall have no obligation to follow any directions set forth
in
any Joint Written Instructions unless and until the Escrow Agent is satisfied,
in its sole discretion, that the persons executing said Joint Written
Instructions are authorized to do so.
(e)
Notwithstanding anything to the contrary in this Agreement, if any amount to
be
released at any time or under any circumstances exceeds the balance in the
Escrow Fund, the Escrow Agent shall release the balance in the Escrow Fund
and
shall have no liability or responsibility to the Escrow Parties for any
deficiency.
(f)
On
the date of the Second Release, the Escrow Fund shall terminate with respect
to
all remaining Escrow Shares, if any, and all such remaining Escrow Shares,
if
any, shall be delivered to Fuqi as directed by ▇▇. ▇▇▇▇▇ and Fuqi pursuant
to
Joint Written Instructions.
6.
Methods
of Payment. All
payments required to be made by the Escrow Agent under this Agreement shall
be
made by wire transfer or by cashier’s check, as elected by the party receiving
the funds. Any wire transfers shall be made subject to, and in accordance with,
the Escrow Agent’s normal funds transfer procedures in effect from time to time.
The Escrow Agent shall be entitled to rely upon all bank and account information
provided to the Escrow Agent by any of the Escrow Parties. The Escrow Agent
shall have no duty to verify or otherwise confirm any written wire transfer
instructions but it may do so in its discretion on any occasion without
incurring any liability to any of the Escrow Parties for failing to do so on
any
other occasion. The Escrow Agent shall process all wire transfers based on
bank
identification and account numbers rather than the names of the intended
recipient of the funds, even if such numbers pertain to a recipient other than
the recipient identified in the payment instructions. The Escrow Agent shall
have no duty to detect any such inconsistencies and shall resolve any such
inconsistencies by using the account number.
7.
Responsibilities
and Liability of Escrow Agent.
(a) Duties
Limited.
The
Escrow Agent undertakes to perform only such duties as are expressly set forth
in this Agreement. The Escrow Agent's duties shall be determined only with
reference to this Agreement and applicable laws and it shall have no implied
duties. The Escrow Agent shall not be bound by, deemed to have knowledge of,
or
have any obligation to make inquiry into or consider, any term or provision
of
any agreement between any of the Escrow Parties and/or any other third party
or
as to which the escrow relationship created by this Agreement relates, including
without limitation any documents referenced in this Agreement.
(b)
Limitations
on Liability
of Escrow Agent.
Except
in cases of the Escrow Agent's bad faith, willful misconduct or gross
negligence, the Escrow Agent shall be fully protected (i) in acting in reliance
upon any certificate, statement, request, notice, advice, instruction,
direction, other agreement or instrument or signature reasonably and in good
faith believed by the Escrow Agent to be genuine, (ii) in assuming that any
person purporting to give the Escrow Agent any of the foregoing in connection
with either this Agreement or the Escrow Agent's duties, has been duly
authorized to do so, and (iii) in acting or failing to act in good faith on
the
advice of any counsel retained by the Escrow Agent. The Escrow Agent shall
not
be liable for any mistake of fact or law or any error of judgment, or for any
act or omission, except as a result of its bad faith, willful misconduct or
gross negligence. The Escrow Agent shall not be responsible for any loss
incurred upon any action taken under circumstances not constituting bad faith,
willful misconduct or gross negligence.
Exhibit
A-2
6
In
connection with any payments that the Escrow Agent is instructed to make by
wire
transfer, the Escrow Agent shall not be liable for the acts or omissions of
(a)
any Escrow Party or other person providing such instructions, including without
limitation errors as to the amount, bank information or bank account number;
or
(b) any other person or entity, including without limitation any Federal Reserve
Bank, any transmission or communications facility, any funds transfer system,
any receiver or receiving depository financial institution, and no such person
or entity shall be deemed to be an agent of the Escrow Agent.
Without
limiting the generality of the foregoing, it is agreed that in no event will
the
Escrow Agent be liable for any lost profits or other indirect, special,
incidental or consequential damages which the parties may incur or experience
by
reason of having entered into or relied on this Agreement or arising out of
or
in connection with the Escrow Agent's services, even if the Escrow Agent was
advised or otherwise made aware of the possibility of such damages; nor shall
the Escrow Agent be liable for acts of God, acts of war, breakdowns or
malfunctions of machines or computers, interruptions or malfunctions of
communications or power supplies, labor difficulties, actions of public
authorities, or any other similar cause or catastrophe beyond the Escrow Agent's
reasonable control.
In
the
event that the Escrow Agent shall be uncertain as to its duties or rights under
this Agreement, or shall receive any certificate, statement, request, notice,
advice, instruction, direction or other agreement or instrument from any other
party with respect to the Escrow Funds which, in the Escrow Agent's reasonable
and good faith opinion, is in conflict with any of the provisions of this
Agreement, or shall be advised that a dispute has arisen with respect to the
Escrow Fund or any part thereof, the Escrow Agent shall be entitled, without
liability to any person, to refrain from taking any action other than to keep
safely the Escrow Fund until the Escrow Agent shall be directed otherwise in
accordance with Joint Written Instructions or an order of a court with
jurisdiction over the Escrow Agent. The Escrow Agent shall be under no duty
to
institute or defend any legal proceedings, although the Escrow Agent may, in
its
discretion and at the expense of the Escrow Parties as provided in subsections
(c) or (d) immediately below, institute or defend such proceedings.
(c)
Indemnification
of Escrow Agent.
The
Escrow Parties jointly and severally agree to indemnify the Escrow Agent for,
and to hold it harmless against, any and all claims, suits, actions,
proceedings, investigations, judgments, deficiencies, damages, settlements,
liabilities and expenses (including reasonable legal fees and expenses of
attorneys chosen by the Escrow Agent) as and when incurred, arising out of
or
based upon any act, omission, alleged act or alleged omission by the Escrow
Agent or any other cause, in any case in connection with the acceptance of,
or
performance or non-performance by the Escrow Agent of, any of the Escrow Agent's
duties under this Agreement, except as a result of the Escrow Agent's bad faith,
willful misconduct or gross negligence.
(d)
Authority
to Interplead.
The
Escrow Parties authorize the Escrow Agent, if the Escrow Agent is threatened
with litigation or is sued, to interplead all interested parties in any court
of
competent jurisdiction and to deposit the Escrow Fund with the clerk of that
court. In the event of any dispute, the Escrow Agent shall be entitled to
petition a court of competent jurisdiction and shall perform any acts ordered
by
such court.
8.
Termination.
This
Agreement and all the obligations of the Escrow Agent shall terminate upon
the
earliest to occur of the release of the entire Escrow Fund by the Escrow Agent
in accordance with this Agreement or the deposit of the Escrow Fund by the
Escrow Agent in accordance with Section 7(d) hereof.
Exhibit
A-2
7
9.
Removal
of Escrow Agent.
The
Escrow Parties acting together shall have the right to terminate the appointment
of the Escrow Agent, specifying the date upon which such termination shall
take
effect. Thereafter, the Escrow Agent shall have no further obligation to the
Escrow Parties except to hold the Escrow Fund as depository and not otherwise.
The Escrow Parties agree that they will jointly appoint a banking corporation,
trust company or attorney as successor escrow agent. Escrow Agent shall refrain
from taking any action until it shall receive joint written instructions from
the Escrow Parties designating the successor escrow agent. Escrow Agent shall
deliver all of the Escrow Fund to such successor escrow agent in accordance
with
such instructions and upon receipt of the Escrow Fund, the successor escrow
agent shall be bound by all of the provisions of this Agreement.
10.
Resignation
of Escrow Agent.
The
Escrow Agent may resign and be discharged from its duties and obligations
hereunder at any time by giving no less than ten (10) days' prior written notice
of such resignation to the Escrow Parties, specifying the date when such
resignation will take effect. Thereafter, the Escrow Agent shall have no further
obligation to the Escrow Parties except to hold the Escrow Fund as depository
and not otherwise. In the event of such resignation, the Escrow Parties agree
that they will jointly appoint a banking corporation, trust company, or attorney
as successor escrow agent within ten (10) days of notice of such resignation.
Escrow Agent shall refrain from taking any action until it shall receive joint
written instructions from the Escrow Parties designating the successor escrow
agent. Escrow Agent shall deliver all of the Escrow Fund to such successor
escrow agent in accordance with such instructions and upon receipt of the Escrow
Fund, the successor escrow agent shall be bound by all of the provisions of
this
Agreement.
11.
Accounting.
On a
monthly basis, the Escrow Agent shall render a written statement setting forth
the balance of the Escrow Fund, all interest earned and all distributions made,
which statements shall be delivered to the following address(es):
Address
1:
Address
2:
12.
Survival.
Notwithstanding anything in this Agreement to the contrary, the provisions
of
Section 7 shall survive any resignation or removal of the Escrow Agent, and
any
termination of this Agreement.
13.
Escrow
Agent Fees, Costs, and Expenses.
The
Escrow Agent shall charge an administrative fee of $_______, and shall be
entitled to be reimbursed for its customary fees and charges for any wire
transfers or other depository services rendered in connection with the Escrow
Fund and any delivery charges or other out of pocket expenses incurred in
connection the Escrow Fund. The Escrow Parties each acknowledge their joint
and
several obligation to pay any fees, expenses and other amounts owed to the
Escrow Agent pursuant to this Agreement. The Escrow Parties agree that Escrow
Agent shall be entitled to pay itself for any fees, expenses or other amounts
owed to the Escrow Agent out of the amounts held in the Escrow Fund and grant
to
the Escrow Agent a first priority security interest in the Escrow Fund to secure
all obligations owed by them to the Escrow Agent under this Agreement. The
Escrow Parties further agree that the Escrow Agent shall be entitled to withhold
any distribution otherwise required to be made from the Escrow Fund if any
fees,
expenses or other amounts owed to the Escrow Agent remain unpaid on the date
such distribution would otherwise be made.
Exhibit
A-2
8
14.
Notices.
All
notices under this Agreement shall be transmitted to the respective parties,
shall be in writing and shall be considered to have been duly given or served
when personally delivered to any individual party, or on the first (1st)
business day after the date of deposit with an overnight courier for next day
delivery, postage paid, or on the third (3rd) business day after deposit in
the
United States mail, certified or registered, return receipt requested, postage
prepaid, or on the date of telecopy, fax or similar transmission during normal
business hours, as evidenced by mechanical confirmation of such telecopy, fax
or
similar transmission, addressed in all cases to the party at his or its address
set forth below, or to such other address as such party may designate, provided
that notices will be deemed to have given to the Escrow Agent on the actual
date
received:
If
to ▇▇.
▇▇▇▇▇:
[ADDRESS]
If
to
Fuqi International, Inc.:
▇▇▇▇
▇▇▇▇, ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇
▇▇▇▇
Sum Avenue
Sheung
Shui, New Territories
HKSAR
Attention:
Yu ▇▇▇▇ ▇▇▇▇▇
Copy
to:
K&L
Gates LLP
▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇
▇▇▇▇▇
▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Tel:
▇▇▇.▇▇▇.▇▇▇▇
Fax:
▇▇▇.▇▇▇.▇▇▇▇
Attn:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
If
to the
Escrow Agent:
Mellon
Bank, N.A.
One
Mellon Center, Room 151-37__
▇▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Facsimile:
Attention:
▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, Vice President
or
Mellon
Bank, N.A.
Exhibit
▇-▇
▇
▇▇▇▇▇▇▇▇▇▇▇▇,
▇▇
Facsimile:
Attention:
▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, Vice President
Any
notice, except notice by the Escrow Agent, may be given on behalf of any party
by its counsel or other authorized representative. In all cases the Escrow
Agent
shall be entitled to rely on a copy or a fax transmission of any document with
the same legal effect as if it were the original of such document.
15.
Modifications;
Waiver.
This
Agreement may not be altered or modified without the express prior written
consent of all of the parties to this Agreement. No course of conduct shall
constitute a waiver of any terms or conditions of this Agreement, unless such
waiver is specified in writing, and then only to the extent so specified. A
waiver of any of the terms and conditions of this Agreement on one occasion
shall not constitute a waiver of the other terms of this Agreement, or of such
terms and conditions on any other occasion.
16.
Further
Assurances.
If at
any time the Escrow Agent shall determine or be advised that any further
agreements, assurances or other documents are reasonably necessary or desirable
to carry out the provisions of this Agreement and the transactions contemplated
by this Agreement, the Escrow Parties shall execute and deliver any and all
such
agreements or other documents, and do all things reasonably necessary or
appropriate to carry out fully the provisions of this Agreement.
17.
Assignment.
This
Agreement shall inure to the benefit of and be binding upon the successors,
heirs, personal representatives, and permitted assigns of the parties. This
Agreement is freely assignable by the Escrow Parties; provided, however, that
no
assignment by such party, or it successors or assigns, shall be effective unless
prior written notice of such assignment is given to the other parties,
including, without limitation, the Escrow Agent. This Agreement may not be
assigned by the Escrow Agent, except that upon prior written notice to the
Escrow Parties, the Escrow Agent may assign this Agreement to an affiliated
or
successor bank or other qualified bank entity.
18.
Section
Headings.
The
section headings contained in this Agreement are inserted for purposes of
convenience of reference only and shall not affect the meaning or interpretation
of this Agreement.
19.
Governing
Law.
This
Escrow Agreement shall be governed by and construed in accordance with the
laws
of the Commonwealth of Pennsylvania, without regard to principles of conflicts
of law.
20.
Counterparts
and Facsimile Execution.
This
Agreement may be executed in two or more counterparts, each of which shall
be
deemed an original and all of which together shall constitute one and the same
instrument. The exchange of copies of this Escrow Agreement and of signature
pages by facsimile transmission shall constitute effective execution and
delivery of this Escrow Agreement as to the parties and may be used in lieu
of
the original Escrow Agreement for all purposes (and such signatures of the
parties transmitted by facsimile shall be deemed to be their original signatures
for all purposes).
[end
of text]
Exhibit
A-2
10
IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date first
written above.
BY:
________________________
NAME:
Yu
▇▇▇▇ ▇▇▇▇▇
TITLE:
Chairman and CEO
▇▇▇▇▇▇▇
▇▇▇▇▇
________________________
MELLON
BANK, N.A.
BY:
________________________
NAME:
_____________________
TITLE:
_____________________
Exhibit
A-2
11
EXHIBIT
A
JOINT
WRITTEN INSTRUCTIONS
FOR
RELEASE OF ESCROW FUNDS
Pursuant
to Section ___ of the Escrow Agreement dated as of August __, 2008, by and
among
Fuqi International, Inc., ▇▇▇▇▇▇▇ ▇▇▇▇▇, and ▇▇▇▇▇▇ Bank, N.A., (the “Escrow
Agent”), Fuqi International, Inc. and ▇▇▇▇▇▇▇ ▇▇▇▇▇ hereby instruct the Escrow
Agent to release [____] Shares from the Escrow Fund in accordance with the
following instructions:
|
Delivery
Address:
|
|||
|
Wire
Instructions:
|
|||
|
Account
Name:
|
|||
|
Account
Number:
|
|||
|
Bank
Name:
|
|||
|
Bank
ABA Number:
|
|||
|
Bank
Address:
|
|||
|
For
credit to:
|
|||
|
Special
Instructions:
|
|||
|
Bank
Check:
|
|||
|
Payee
Name:
|
|||
|
Mailing
Address:
|
|||
| [PARTY A] | [PARTY B] | |
| By:_______________________________ | By: ______________________________ | |
| Name: | Name: | |
| Title: | Title: |
Exhibit
A-2
12