Exhibit 10.1
 

CHINA VALVES TECHNOLOGY, INC.
ENGLISH TRANSLATION OF INDEPENDENT DIRECTOR AGREEMENT WITH PETER LI

Due to business requirement, China Valves Technology, Inc. (hereinafter referred
to as “Party A” or “Company”), intends to employ Yichen Li (a.k.a. Peter Li)
(hereinafter referred to as “Party B”) to be a director of Party A in accordance
with the State’s relevant laws, regulations and rules on labor issues.  Based on
the principles of equality, volunteer, and consultation, both Parties enter into
this Agreement to establish relations and specify both Parties’ rights and
obligations for mutual abidance.

1.  Term

This Agreement becomes effective on November 22, 2008.  Unless one party
terminates the Agreement pursuant to the terms of this section, the term of the
Agreement is two years. If no party gives a thirty-day notice prior to the
termination of the Agreement, the Agreement will be automatically extended for
one more year. The Agreement is at will and either party may terminate the
Agreement with or without cause. In the event that either Party intends to
terminate this Agreement, it shall notify the other Party in writing or by email
thirty (30) days in advance.

Given that Party A’s investor, The Pinnacle Fund, has veto power to the
appointment of Party B, if The Pinnacle Fund does not agree to Party B’s
appointment, the Agreement will be void automatically.

2.  Position:

The position of Party B is independent director of Party A’s board of directors
and the chairman of the Audit Committee.

3. Responsibilities:

1)  
Party B provides consulting services to Party A as independent director and
chairman of the Audit Committee. Party B is not deemed as a full-time employee
of Party A and thus does not have insurance and other benefits other than the
salary and the option.

2)  
Party B shall keep all the business activities and trade secret of Party A
confidential and shall not disclose to any third parties without permission of
Party A.

3)  
Party B agrees, during the contract term and within two (2) years after the
expiration of the contract term, not to engage in any business which will
compete with the business activities of Party A and not to join in any companies
which compete with Party A.

 
4.  Remuneration:

Monthly salary: US $ 1,000 base salary
Date of payment: Party A will pay Party B the salaries for half year ($6,000)
within one week after the Agreement becomes effective. Party A will pay Party B
on a bi-yearly basis afterwards.
Method of payment for the remuneration: payment in US Dollar or in RMB according
to the foreign exchange ratio on the date when the payment is actually made.
 
5.  Stock Options

Considering the actual work performance of Party B and upon approval of the
Board of Directors, within three month of Party B’s employment, Party A will
grant Party B stock options to purchase 45,000 shares of the Company’s common
stock at the exercise price of $4 per share. In a period of two years, Party B
may exercise 33.336% of his options (or 15,000 shares) on the first anniversary
of her employment with the Company. Party B may exercise 8.333% of the remaining
options (or 3,750 shares) every three months after the first anniversary until
the options are fully exercised. The ceiling of the options should be the
above-mentioned percentages. All unexercised options shall be carried over to
the next exercise. Party A shall cancel all unexercised options after five years
since the issuance of the options.

6.  Mediation and Arbitration

The disputes arising from the performance of this Agreement shall be resolved
first through consultation.  In the event that the disputes can not be resolved
through consultation, the disputes can be resolved through mediation by the
Disputes Mediation Commission where Party A is located or through arbitration by
the Labor Disputes Arbitration Commission where Party A is located within sixty
(60) days after the disputes have arose.  If not satisfied with the arbitration
awards, either Party may institute a lawsuit with the people’s court where Party
A is located within fifteen (15) days after receiving the arbitration awards.
 
 

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7.  Amendment

Any amendment to this Agreement shall not take into effect before the amendment
is signed and recognized in writing by both Parties.

8.  Governing Law

This Agreement shall be governed by the laws of the People’s Republic of
China.  During the contract term, in case of any discrepancy between the
articles of this Agreement and the provisions of the law, the latter shall
prevail.

Because Party A is an American public listing company, after conclusion of this
Agreement, Party A is obliged to file an 8-K report on hiring Party B to
SEC.  Party B shall also be obliged to provide Party A any materials required
for filing 8-K report.  Meanwhile, all the behaviors and activities of Party B,
as CFO of Party A, shall also be supervised and governed by SEC.

Party A or Representative
(Signature or Seal)
Party B or Representative
(Signature or Seal)
 
Signature: /s/ Siping Fang                
                   Siping Fang
                   CEO, President and Chairman
 
Signature: /s/ Peter Li         
 
 
Date: November 22, 2008
 
Date: November 22, 2008