Employment Agreement
  1.
    
    Employment and DutiesThe Company shall employ the Executive and the Executive shall serve the Company as
President and Chief Executive Officer of the Company. The Executive shall use his best
efforts to promote the interests of the Company, and shall perform his duties in relation
to the Company and/or its subsidiaries (collectively the Group) faithfully and
diligently, consistent with sound business practices.2.
    
    Term of EmploymentThe Executive shall be employed by the Company under this Agreement for a period of three
(3) years commencing as of the date of this agreement.3.
    
    Remuneration and Reimbursement
 (A)
    
    Subject to Clause 5, the Executive shall receive during the continuance
of the Appointment:
 (1)
    
    A salary at the rate of HK$2,400,000 per annum such salary to
accrue on a day to day basis (including any sum receivable by the Executive as
directors fee from any company in the Group) and to be payable monthly in
twelve equal installments in arrears on the last day of each calendar month
provided that if the Appointment is terminated prior to the end of a calendar
month, the Executive shall only be entitled to a proportionate part of such
salary in respect of the period of service during the relevant month up to the
date of termination. Such salary shall be adjusted on annual basis at a rate
to be determined by the Board as its absolute discretion having regard to the
operating results of the Group and the performance of the Executive.(2)
    
    An annual management bonus of a sum to be determined by the
Board at its absolute discretion having regard to the operating results of the
Group and the performance of the Executive during the relevant financial year
or any proportionate part thereof in which service of the Executive pursuant
to this Agreement is rendered. The management bonus shall be payable in
arrears in respect of each relevant financial year within one month after the
issue of the consolidated audited accounts of the Group for such financial
year. The amount payable to the Executive shall be decided by majority
decision of the
 1




---



##### 



members of the Board present in the meeting called for that purpose provided
that the Executive shall abstain from voting and not be counted in the
quorum in respect of the resolution regarding the amount so payable to
himself.
 (B)
    
    The Executive shall continue to receive his salary during any period of
absence on medical grounds up to a maximum of 12 weeks in any period of 12 months
provided that the Executive shall if required supply the Company with medical
certificates covering the period of absence.(C)
    
    The Executive shall be reimbursed all reasonable out-of-pocket
expenses (including expenses of entertainment subsistence and travelling) incurred by
him on the Groups business which expenses shall be evidenced in such manner as the
Board may require.(D)
    
    The Executive will be entitled to the benefits of any medical or provident
fund scheme as maybe maintained by the Group from to time.(E)
    
    The Executive shall be entitled to 12 working days paid vacation each year.
 4.
    
    Other BenefitsThe Executive shall be entitled, during the continuance of the Executives engagement
hereunder, to the use of a motor car and the Company shall pay all vehicle registration
fees, taxes and insurance premiums in respect of the car and shall pay or reimburse
against receipts all maintenance, repair and other running costs in respect of the car and
the cost of petrol.5.
    
    Termination of the Appointment
 (A)
    
    Without prejudice to the accrued rights (if any) or remedies of either
party under or pursuant to this Agreement:
 (1)
    
    the Executive shall be entitled to terminate the Appointment by two months
notice in writing to the Company if any money payable by the Company to the Executive
under or pursuant to this Agreement is not paid in full by the Company to the
Executive within a period of 30 days from any written demand by the Executive for the
payment thereof;(2)
    
    the Company shall be entitled to terminate the Appointment without any
compensation to the Executive:
 (a)
    
    by not less than three months notice in writing given at
any time while the Executive shall have been incapacitated or prevented by
reason of ill health, injury or accident from performing his duties hereunder
for a period of or periods aggregating 90 days in the proceeding 12 months
provided that if at any time during the currency of a notice given pursuant
to this sub-paragraph the Executive shall provide a medical certificate
satisfactory to the Board to
 
 2




---



##### 



the effect that he has fully recovered his physical and/or mental health and that
no recurrence of illness or incapacity can reasonably be anticipated the Company
shall withdraw such notice; or(b)
    
    by summary notice in writing if the Executive shall at any time:
 i.
    
    commit any serious or persistent breach of any of the
provisions herein contained (and to the extent that such breach is capable of
remedy shall fail to remedy such breach within 60 days after within warning
given by the Board);ii.
    
    be guilty of any given misconduct or willful neglect in the
discharge of his duties (and to the extent that such breach is capable of
remedy shall fail to remedy such breach within 60 days after written warning
given by the Board);iii.
    
    become bankrupt or have a receiving order made against him;iv.
    
    become a lunatic or of unsound mind;v.
    
    absent himself from the meetings of the Board during a
continuous period of three months, without special leave of absence from the
Board, and his alternate director (if any) shall not during such period have
attended in his stead;vi.
    
    become prohibited by law from acting as a director;vii.
    
    be guilty of conduct tending to bring himself or any company in
the Group into disrepute;viii.
    
    be prohibited by law from fulfilling his duties hereunder; orix.
    
    be convicted of any criminal offence (other than an offence
which in the reasonable opinion of the Board does not effect his position as a
director of the Company).
 (B)
    
    If the Company becomes entitled to terminate the Appointment pursuant to sub-clause
(A)(2)(b) it shall be entitled (but without prejudice to its right subsequently to terminate
the Appointment on the same or any other ground) to suspend the Executive without payment of
salary in full or in part for so long as it may think fit.(C)
    
    If the Executive shall have refused or failed to agree to accept without reasonable grounds
an appointment offered to him on terms no less favourable to him than the terms in effects
under this Agreement, either by a company which has acquired or agreed to acquire the whole or
substantially the whole of the undertaking and assets of the Company or which shall own or has
agreed to acquire the whole or not less than 90% of the issued share capital of the Company,
the Executive shall
 3




---



##### 



have no claim against the Company by reason of the subsequent voluntary winding up
of any company in the Group or of the disclaimer or termination of this Agreement
by the Company within three months after such refusal or failure to agree.(D)
    
    On the termination of the Appointment howsoever arising the Executive shall :
 (1)
    
    at any time and from time to time thereafter at the request
of the Company resign from office as a director of the Company and all offices
held by him in any company in the Group and shall transfer without payment to
the Company or as the Company may direct any qualifying shares provided by it
or any shares held by the Executive as nominee for the Company or any company
in the Group provided by it and the Executive hereby irrevocable appoints the
Company to be his attorney and in his name and on his behalf to sign and do
any documents or things necessary or requisite to give effect thereto and a
certificate in writing signed by any director or by the secretary of the
Company that any instrument or act falls within the authority hereby conferred
shall be conclusive evidence that such is the case and any third party shall
be entitled to rely on such certificate without further enquiry provided
however that such resignation or resignations shall be given and accepted on
the footing that it is or they are without prejudice to any claims which the
Executive may have against any such company or which any such company may have
against the Executive arising out of this Agreement or of the termination of
the appointment; and(2)
    
    forthwith deliver to the Company all books, documents,
papers, materials, credit cards (if any) and other property of or relating to
the business of the Group which may then be in his possession or under his
power or control.
 (E)
    
    Save as expressly provided herein, neither party may terminate this Agreement.
 6.
    
    ConfidentialityThe Company shall not, at any time during or after his employment under this agreement,
disclose to any third party, except in the performance of his duties under this agreement,
any confidential information regarding the Companys customers, suppliers, trade secrets
or business. The Executive shall return all tangible evidence of such confidential
information to the Company prior to or at the termination of his employment.7.
    
    Waiver
 (A)
    
    Time is of the essence of this Agreement but no failure or delay on the part
of either party to exercise any power, right or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise by either party of any
power, right or remedy preclude any other or further exercise thereof or the exercise
of any other power, right or remedy by that party.
 4




---



##### 



(B)
    
    The remedies provided herein are cumulative and are not exclusive of any
remedies provided by law.
 8.
    
    Former Service AgreementsThis agreement contains a complete statement of all the arrangements between the parties
with respect to its subject matter, supersedes all existing and former agreements between
them with respect to that subject matter, may not be changed or terminated orally and any
amendment or modification must be in writing and signed by the party to be charged.9.
    
    NoticesAll notices, requests, demands, consents or other communications to or upon the parties
under or pursuant to this Agreement shall be in writing addressed to the relevant party at
such partys address set out below (or at such other address as such party may hereafter
specify to the other party) and shall be deemed to have been duly given or made :-
 (A)
    
    in the case of a communication by letter 48 hours after despatch or, if such
letter is delivered by hand, on the day of delivery;(B)
    
    in the case of communication by telex or facsimile, when sent. The Companys address :Unit 12, 12/F., Block A, Focal Industrial Centre
21 Man Lok Street, Hunghom
Kowloon, HONG KONGThe Executives address :House No. K80, Stage IV,
Marina Cove, Sai Kung
HONG KONG
 10.
    
    AssignabilityThis Agreement shall be binding upon and ensure to the benefit of each party hereto and
its successors and assigns and personal representatives (as the case may be), provided
always that the Executive may not assign his obligations and liabilities under this
Agreement without the prior written consent of the Company.11.
    
    RelationshipNone of the provisions of this Agreement shall be deemed to constitute a partnership or
joint venture between the parties for any purpose.
 5




---



##### 



12.
    
    AmendmentThis Agreement may not be amended, supplemented or modified except by a written agreement
or instrument signed by or on behalf of the parties hereto.13.
    
    SeverabilityAny provision of this Agreement prohibited by or unlawful or unenforceable under any
applicable law actually applied by any court of competent jurisdiction shall, to the extent
required by such law, be severed from this Agreement and rendered ineffective so far as is
possible without modifying the remaining provisions of this Agreement. Where, however, the
provisions of any such applicable law may be waived, they are hereby waived by the parties
to the full extent permitted by such law to the end that this Agreement shall be a valid
and binding agreement enforceable in accordance with its terms.14.
    
    Law and JurisdictionThis Agreement shall be governed and construed in all respects in accordance with the laws
of the British Virgin Islands and the parties hereby submit to the non-exclusive
jurisdiction of the courts of the British Virgin Islands.
 st
 Signed byFor and on behalf ofLJ INTERNATIONAL INC.Alfonsa AUAuthorized Signature(s)/s/
YIH Yu ChuanLJ International Inc.
    
    YIH Yu Chuan
 6