Exhibit
10.40

     

    ENGLISH
TRANSLATION OF EMPLOYMENT AGREEMENT

     

    EMPLOYMENT
AGREEMENT

     

    This employment
agreement (the “Agreement”) is
entered into as of January 24, 2011 by and between Fujian Xing Gang
Port Service Co., Ltd. (“Party A”) and Mr.
Fangjie Gu (the “Party B”) (collectively
the “Parties”;
individually a “Party”).

     

    WHEREAS, China Dredging Group
Co., Ltd., a British Virgin Islands parent company which is indirectly
holding Party A has signed the Employment Agreement with Mr. Fangjie
Gu on August 26, 2010 (hereafter referred to as “Employment
Agreement ”), to
engage him as the Chief Operating Officer (the “COO”) of China
Dredging Group Co., Ltd.

     

    WHEREAS, China Dredging Group
Co., Ltd. desires to designate Party B to be the General Manager of Party A and
Party B desires to accept such designation, and the Parties intend to
enter into the agreement on the to set forth employment related
matters.

     

    NOW, THEREFORE, based on the
principle of equality, voluntariness and unanimity through consultation,the Parties agree
as follows:

     

    1.      
 Term of
Employment. The term of the Agreement is from January 1, 2011 to
January 1, 2014 (“Term”), unless the employment is terminated prior to the
expiration of such three-year period pursuant to the provisions
hereunder.

     

    2.   
    Position. Party B
shall render services to Party A in the position of general manager and perform
all services appropriate to that position as well as other services as may
reasonably be assigned by Party A.  Party B’s domestic principal place of
employment shall be at Fuzhou or any other place as agreed by the Parties from
time to time. 

     

    3.  
     Remuneration.  During
the Term, Party B shall be entitled to the following remuneration :

     

    (1) Salary. 
Pursuant to the stipulations of Employment Agreement and Supplemental Employment
Agreement signed by Party B and the China Dredging Group Co., Ltd, Party B is
entitled to the base salary paid by Party A. Party B’s annual base salary is RMB
96,000 by monthly payment (the “Monthly Salary”). The
Monthly Salary should be paid before the fifth day of the next month during the
term of the Employment.


    
      
         


      

      
        1

        
          

        

      

      
         


      

    


    (2) Bonus. 
China Dredging Group Co., Ltd. shall pay Party B the any payable bonus (the
“Annual Bonus”) pursuant to the provisions of Employment Agreement.

     

    4.  
     Benefits. During the
Term, Party B shall be entitled to the following benefits:

     

    (1) Employee Benefit
Plans. Party B shall be granted any standard employee benefit that
currently exists in Party A or may be established by Party A in the future,
including, but not limited to, any retirement plan, and travel holiday
policy.

     

    (2)
Expenses. Party A shall reimburse Party B for reasonable and
necessary business expenses incurred by Party B in connection with the
performance of the working content as set forth herein during the Term; provided Party B shall
provide reasonable supporting documentation with respect to such expenses, if
requested.

     

    (3)
Indemnification.  Party A shall fully indemnify Party B for any
losses incurred in his capacity as an officer of Party A. Such indemnification
should be sufficient to cover all the losses incurred in Party B’s capacity as
an officer of Party A pursuant to the PRC laws. However, Party A shall not be
responsible for any losses caused by or attributable to the Party B’s gross
negligence or willful misconducts, except as otherwise required by the
laws.

     

    5.       
Duties and
responsibilities. Party B shall devote all of his working time, attention
and skill to the discharge of his duties of his office and shall faithfully and
diligently perform such duties and exercise such powers as may from time to time
be assigned to or vested in him, and shall observe and comply with all
resolutions and directions from time to time made or given by the Board of
Directors of Party A (the “Board”).  The
Party B shall at all times keep the Board promptly and fully informed of his
conduct relating to material matters, decisions and transactions affecting or
involving Party A or its related companies, including but not limited to, China
Dredging Group Co., Ltd. and each of its subsidiaries and variable interest
entities (the “Related
Company”), and provide such explanations as may reasonably be
required.  Insofar as the internal rules and regulations of Party A
and the Related Companies are applicable to Party B, Party B undertakes to abide
by such rules and regulations.


    
      
         


      

      
        2

        
          

        

      

      
         


      

    


    6.      
Early Termination by
Party A.  Party A may dismiss Party B for cause at any time as
provided by the PRC Labor Law without any liability. “Cause” shall include: (a)
Party B materially breaches Party A’s rules and regulations or any agreement
with the Company or a Related Company; (b) Party B causes substantial loss to
Party A due to his serious dereliction of duty or engagement in graft for
personal gain; (c) Party B establishes an employment relationship with another
employer simultaneously which materially affects the completion of his task with
Party A, or he refuses to rectify the situation after being cautioned by Party A
unless Party B is employed by a Related Company or obtains approval from Party
A; (d) through fraud, coercion or exploitation of the other party’s
disadvantageous position, Party B causes Party A to conclude or amend the
Agreement against the latter’s true intent; or (e) Party B is subject to
criminal liability in accordance with PRC law. In addition, Party A may dismiss
Party B by serving Party B three (3) months’ prior written notice. 
During such notice period, Party B shall continue to diligently perform all of
Party B’s duties hereunder.  In the event of dismissal without Cause, Party
B will be eligible to receive an amount equal to the Monthly Salary multiplied
by (M + 3), where M shall mean the number of years Party B has been employed by
Party A  after this Agreement coming into effect, payable in full
immediately following the receipt by Party B of such written
notice.

     

    7.        Early Termination by Party
B.

     

    (1) If
Party B selects to terminate the Agreement for Good Reason (as hereinafter
defined), the Party B will be eligible to receive an amount equal to the Monthly
Salary multiplied by (M + 3), where M shall mean the number of years Party B has
been employed by Party A after this Agreement coming into effect, payable in
full immediately following Party A’s receipt of such termination notice, except
as otherwise required by the laws.  No Annual Bonus shall be payable upon
such termination.  Thereafter (subject to Section 15 hereof) all
obligations of Party A under this Agreement shall cease. For the purpose of this
Agreement, “Good Reason” shall mean any of the following events if the
event is effected by Party A without the consent of Party B and (ii) such
event is not rectified within twenty (20) days by Party A to Party B’s
reasonable satisfaction:


    
      
         


      

      
        3

        
          

        

      

      
         


      

    


    (a)   a
significant change in Party B’s position with Party A or a change to his duties
or responsibilities which materially reduces Party B’s level of responsibility;
or

     

    (b)   Party
A fails to perform this Agreement or violates the relevant labor laws,
regulations or infringes upon any of Party B’s rights or interests;
or

     

    (c)   the
imposition by the Board on Party B of any action or responsibility involving the
commission of (i) a felony, (ii) criminal dishonesty, (iii) any crime involving
moral turpitude or (iv) fraud; or

     

    (d)   any
action by the Board requiring Party B to breach Party B’s obligations and
responsibilities under this Agreement; or

     

    (e)   any
action of the Board constituting a constructive discharge or an unreasonable
interference with Party B’s ability to fulfill Party B’s obligations under this
Agreement; or

     

    (f)    a
Change of Control of Party A (For purposes of this Agreement, a “Change of
Control of Party A” shall mean (i) the sale of all or substantially all of the
assets of Party A in a transaction or series of transactions, (ii) any
transaction or series of transactions in which an unaffiliated third party
acquires all or substantially all the issued and outstanding capital stock of
Party A, or (iii) any merger, consolidation or reorganization to which Party A
is a party, except for a merger, consolidation or reorganization in which, after
giving effect to such merger, consolidation or reorganization, the stockholders
holding a majority of the outstanding voting power of Party A immediately prior
to the merger, consolidation or reorganization of Party A have at least a
majority of the outstanding voting power of the surviving entity after the
merger, consolidation or reorganization. In the circumstance of Change of
Control of Party A, Party B may terminate the Agreement without any liability
regardless whether the duties in his capacity ceases.


    
      
         


      

      
        4

        
          

        

      

      
         


      

    


    (2)  Termination other than for
Good Reason. Party B may terminate employment with Party A at any
time for any reason other than Good Reason or for no reason at all, upon Party
B’s delivery to Party A three (3) months’ advance written notice. 
Upon a termination other than for Good Reason, the Party B shall not be entitled
to any compensation. No Annual Bonus shall be payable upon such
termination.  During such notice period the Party B shall continue to
diligently perform all of its duties hereunder.  Party A shall have the
option, in its sole discretion, to make the Party B’s termination effective at
any time prior to the end of such notice period as long as Party A pays the
Party B all compensation under Section 3 and 4 hereof to which the Party B
is entitled through the last day of the three (3) month notice
period.

     

    8.      
Termination
Obligations. Party B agrees that on or before termination of
employment, he should promptly return to Party A all documents and materials of
any nature (including any materials in electronic form) pertaining to his work
with Party A, including all originals and copies of all or any part of any
Confidential Information along with any and all equipment and other tangible and
intangible property of Party A.  Party B agrees not to retain any documents
or materials or copies thereof containing any Confidential Information (as
defined below). If this Agreement terminates by the expiration other than any
earlier termination, and without any extension, Party B is not entitled to any
compensation from the Party A , except as otherwise stipulated by PRC
laws.

     

    9.       
Income Tax. Party B should pay the income tax for any payments made by Party A
pursuant to Section 3, 4 or 4 of this Agreement.

     

    10.     
Confidentiality;
Non-Compete; Non-Solicitation; No Conflict;
Non-Disparagement.


    
      
         


      

      
        5

        
          

        

      

      
         


      

    


    (1) Confidentiality
Obligation.  The Party B hereby agrees at all times during the term
of his employment and after termination, to hold in the strictest confidence,
and not to use, except for the benefit of Party A and its related companies, or
to disclose to any person, corporation or other entity without written consent
of Party A, any Confidential Information.  Party B understands that
“Confidential Information” means any proprietary or confidential information of
Party A, its affiliates, their clients, customers or partners, and licensors of
Party A and its related companies, including, without limitation: technical
data, trade secrets, research and development information, product plans,
services, customer lists and customers (including, but not limited to, customers
of Party A and its related companies on whom the Party B called or with whom the
Party B became acquainted during the term of his employment), supplier lists and
suppliers, software, developments, inventions, processes, formulas, technology,
designs, drawings, engineering, hardware configuration information, personnel
information, marketing, finances, information about the clients, customers,
suppliers, joint ventures, licensors, licensees, distributors and other persons
with whom Party A and its related companies do business, information regarding
the skills and compensation of other employees of Party A and its related
companies or other business information disclosed to the Party B by or obtained
by the Party B from Party A and its related companies, its affiliates, or their
clients, customers, suppliers or partners either directly or indirectly in
writing, orally or by drawings or observation of parts or equipment. 
Notwithstanding the foregoing, Confidential Information shall not include
information that is common knowledge or that the Party B demonstrates was or
became generally available to the public other than as a result of a disclosure
by Party B.

     

    (2)  Non-Compete
and Non-Solicitation.  Party B undertakes to Party A that, he will
not (i) during his term of employment with Party A take up any Party B
position in any company other than Party A and its related companies and will
commit all of his efforts towards the development of the business and operations
of Party A and its related companies and (ii) for a period of twelve (12)
months (or less than twelve (12) months if agreed by the Board) after he
ceases to be employed by Party A and/or its related companies (collectively the
“Non-Compete
Period”):

     

    (a)
either on his own account or in conjunction with or on behalf of any person,
firm or company carry on or be employed, engaged, concerned, provide technical
expertise or be interested directly or indirectly in, any business, whether as
shareholder, director, executive, partner, agent or otherwise, that is, in the
opinion of Party A in competition (whether directly or indirectly) with any
business carried on or proposed to be carried on by Party A and its related
companies from time to time;

     

    (b)  either
on his own account or in conjunction with or on behalf of any other person, firm
or company, solicit or entice away or attempt to solicit or entice away from
Party A and its related companies from time to time, the customer of any person,
firm, company or organization who shall at any time have been a customer,
client, agent or correspondent of the Party A or its related companies or in the
habit of dealing with Party A or its related companies;

     


    
      
         


      

      
        6

        
          

        

      

      
         


      

    


    (c)
either on his own account or in conjunction with or on behalf of any other
person, firm or company, solicit or entice away or attempt to solicit or entice
away from Party A and its related companies from time to time, any person who is
an officer, manager or executive of Party A or its related companies whether or
not such person would commit a breach of his contract of or employment by reason
of leaving such employment.

     

    (d) Party
B shall be entitled to monthly compensation in consideration of fulfilling the
obligation under this Section, in an amount equal to the Monthly Salary, for the
period of the Non-Compete Period.

     

    (3) No
Conflict.  The Party B represents and warrants that Party B’s
execution of this Agreement, his employment with Party A, and the performance of
his proposed duties under this Agreement shall not violate any obligations he
may have to any former employer or other party, including any obligations with
respect to proprietary or confidential information or intellectual property
rights of such party.

     

    (4) Provisions reasonable
for protection of legitimate interest.  The Parties agree that the
restrictions in paragraph (1) and (2) under this Section are considered to
be reasonable in all circumstances.  Notwithstanding the foregoing, it is
agreed between the Parties that if any one or more of such restrictions shall,
either by itself or together with other restrictions, be adjudged to go beyond
what is reasonable in all the circumstances for the protection of the legitimate
interest of Party A and its Related Companies from time to time, but would be
adjudged reasonable if any particular restriction or restrictions were deleted
or if any part or parts of the wording thereof were deleted, restricted or
limited in any particular manner then the restrictions shall apply with such
deletions, restrictions or limitations, as the case may be.


    
      
         


      

      
        7

        
          

        

      

      
         


      

    


    (5) Non-Disparagement.
Following the date hereof, Party B shall not, directly or indirectly, in
person or through an agent or intermediary, disparage or make negative,
derogatory or defamatory statements about Party A and any of its officers,
directors employees or stockholders or their respective business activities or
the business activities of any of their affiliates or their respective officers,
directors, managers, employees or stockholders to any other person or entity,
whether true or not.

     

    11.  
 Intellectual Property

     

    The Party
B agrees with and undertakes to Party A that:

     

    (1)  he
will not divulge, use (other than for the purpose and benefit of Party A and its
related companies) or infringe the trade marks, logos, inventions, know-how,
technology, proprietary information and other intellectual property rights of
Party A and its related companies; and

     

    (2)  all
trademarks, logos, inventions, know-how, technology, proprietary information and
other intellectual property rights developed, acquired or filed by Party B in
the course of his work or employment shall belong solely to Party A. Party B
agrees he will, upon demand by Party A, execute any documents reasonably
necessary to transfer any such intellectual property rights to Party
A.

     

    12.  
 Survival.  The Parties’ obligations under Sections 10 and
11 hereof shall survive and continue in effect after the termination of this
Supplementary Agreement, whatever the reason for such termination.

     

    13.  
 Continuing Obligations. The obligations in this Agreement will
continue in the event that Party B is hired, renders services to or for the
benefit of or is otherwise retained at any time by any present or future Related
Company of Party A.

     

    14.  Governing Law and Dispute
Resolution. The execution, validity, interpretation and performance
of and resolution of disputes under the Agreement shall be governed by and
construed in accordance with the laws of the PRC. 

     

    Any
disputes or claims relating to the Agreement or the interpretation, breach,
termination or validity hereof shall be resolved through friendly consultations,
commencing upon written notice given by one Party to the other Party of the
existence of such a claim or dispute.  If the dispute or claim cannot be
resolved after thirty (30) days of such notice, either Party may request
arbitration by a labor dispute arbitration committee established in accordance
with the labor law of the PRC.  If either Party disagrees with the arbitral
award of the labor dispute arbitration committee, such Party may institute legal
proceedings with the authorized people’s court within 15 days after notification
of the arbitral award, except as otherwise required by the
laws.


    
      
         


      

      
        8

        
          

        

      

      
         


      

    


    15. Assignability. The
terms of the Agreement will remain in effect and shall be binding upon any
successor in interest of Party A including any entity with which Party A may
merge or consolidate or to which all or substantially all of its assets may be
transferred.  A reference to Party A shall include its successors. 
Except as set forth in the preceding sentence, the Agreement may not be assigned
by a Party to any third party, without the prior consent of the other
Party.

     

    16. Social Insurance. Party
A shall handle the social insurance for Party B pursuant to related laws and
regulations.

     

    17. Notices. Notices
under the Agreement shall be given in writing to the relevant Party at the
address stated herein (or to such other address as it shall have notified the
other Party previously in writing).

    
       

      to Party
A at:

      


      Floor 18,
Tower A Zhongshan Building

      No. 154
Hudong Road, Gulou District

      Fuzhou City 350003
P.R.C.                        

      


      Attention:
The legal representative or the authorized representative

       

      Lin
Qing                                                                           


       

      to Party
B at:

       

      Room
1805, Building 4, Ronghuijiangshan Building

      No. 289
Yangqiaoxi Road, Gulou District

      Fuzhou City 350003
P.R.C.         

      


      Gu
Fangjie                                                                      


    

     

    
      
         


      

      
        9

        
          

        

      

      
         


      

    


    18.  Miscellaneous

     

    (1) This
Agreement shall be executed in two (2) original copies. Each Party shall receive
one (1) original copy, all of which shall be equally valid and
enforceable.

     

    (2) This
Agreement shall become effective as of the date that the legal representatives
or authorized representatives of Party A and Party B sign and affix the seals
respectively.

     

    [REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK AND SIGNATURE PAGE

    FOLLOWS]

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

     

    IN WITNESS WHEREOF, the
undersigned has hereunto caused this Agreement to be executed as of the day and
year first above written.

     

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  	 	Party
      A: Fujian Xing Gang Port Service Co., Ltd.
	 	
                                          By:

                                        	
                                          /s/ Lin
      Qing

                                        
	 	 	 
	 	
                                          Name:

                                        	
                                          Lin
      Qing

                                        
	 	 	 
	 	
                                          Title:

                                        	
                                          Legal
      Representative

                                        
	 	 
      	 
      
	 	Party
      B : Fangjie Gu
	 	ID
      No. : 370602197811020736
	 	
                                          By:

                                        	
                                          /s/ Fangjie
      Gu

                                        
	 	
                                           
      

                                        	
                                          Fangjie
      Gu

                                        


                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

     

    
      
         

      

      
        11