Document:

<PAGE>
                         SECOND AMENDMENT AND WAIVER TO
                    FIFTH AMENDED AND RESTATED LOAN AGREEMENT

         This is the second amendment and waiver (the "Amendment") dated August
11, 2000, to the Fifth Amended And Restated Loan Agreement dated November 12,
1999 as amended by the first amendment dated March 24, 2000 (the "Loan
Agreement") by and between Blonder Tongue Laboratories, Inc. having an office at
One Jake Brown Road, Old Bridge, New Jersey 08857 (the "Borrower"), and First
Union National Bank having an office at 190 River Road, Summit, New Jersey 07901
(the "Bank").

                                    RECITALS

         A. As of June 30, 2000 Borrower was in breach of certain covenants
under the Loan Agreement and has requested a waiver of same together with an
amendment extending the "Termination Date" of the Loan Agreement to February 15,
2001.

         B. The Bank is willing to provide such a waiver and to amend the Loan
Agreement on the terms and conditions set forth herein.

         NOW, THEREFORE, in consideration of the agreement of the parties
contained herein, and intending to be legally bound, the parties hereto agree as
follows:

         1.       Definitions.

         Capitalized terms used herein and not defined shall have the meanings
assigned to them in the Loan Agreement as amended by any prior amendments.

         2.       Amendments to Loan Agreement.

         Section 2.1(a) is hereby amended to replace "September 30, 2000" with
"February 15, 2001".

         3.       Waivers.

         Subject to the terms and conditions set forth in this Amendment, the
Bank waives compliance with the financial covenants set forth in Subsections
7.1(b) and 7.1(c) of the Loan Agreement as of June 30, 2000, provided that as of
June 30, 2000 the Company had a Fixed Charge Ratio of not less than 1.17 to 1.00
and a Tangible Net Worth of not less than $22,250,000.

         4.       General.

         This Amendment is made pursuant to the Loan Agreement, and the parties
hereto acknowledge that all provisions of the Loan Agreement, except as amended
hereby, shall remain in full force and effect.

<PAGE>

         5.       Restated Line of Credit Note.

         In order to evidence and continue the Line of Credit Loans as amended
and modified pursuant to this Amendment, Borrower shall execute and deliver to
the Bank a replacement note in the form attached hereto as Exhibit A (the
"Restated Line of Credit Note"). The Restated Line of Credit Note amends,
restates, replaces and continues (but not a novation or repayment of) the Line
of Credit Note. Amounts owing under the Line of Credit Note shall be deemed to
be evidenced and continued by the Restated Line of Credit Note. Accrued and
unpaid interest due and owing under the Line of Credit Note as of the date of
execution of this Amendment shall be due at the time that the first payment of
interest under the Restated Line of Credit Note is due and payable. The existing
Line of Credit Note will be marked "replaced" and returned to the Borrower by
the Bank.

         6.       Definitions.

         Whenever appearing in the Loan Agreement or any other Loan Document,
the term "Agreement" shall be deemed to mean the Loan Agreement as amended
hereby. Whenever appearing in the Loan Agreement or any other Loan Document, the
term "Line of Credit Note" shall be deemed to mean the Restated Line of Credit
Note.

         7.       Representations and Warranties.

         The Borrower represents and warrants to the Bank that: (i) it has the
power, and has taken all necessary action to authorize, execute and deliver this
Amendment and the Restated Line of Credit Note and perform its obligations in
accordance with the terms thereunder, (ii) the Amendment and the Restated Line
of Credit Note are the legal, valid and binding obligation of the Borrower
enforceable against the Borrower in accordance with their terms without any
offsets, counterclaims or defenses, (iii) the execution, delivery and
performance of this Amendment by the Borrower will not (a) require any
governmental approval or any other consent or approval; or (b) violate, conflict
with, result in a breach of, constitute a default under any agreement to which
it is a party, or result in or require the creation of any lien upon any of the
assets of the Company or any Subsidiary, (iv) other than the financial covenant
non-compliance which is the subject of this Amendment, no Event of Default has
occurred and is continuing or will result from the execution by the Borrower of
this Amendment, and (v) the financial information provided by the Borrower to
the Bank in connection with the Borrower's request that the Bank enter into this
Amendment is true and correct in all material respects.

         8.       Amendment Fee.

         The Borrower shall pay to the Bank a fee of $35,000 in connection with
this Amendment which fee shall be due and payable upon the signing of this
Amendment.

         9.       Audits and Valuations.

         Without changing any of the Bank's other rights under the Loan
Agreement, the Borrower agrees to cooperate, and to pay the fees and expenses of

                                       2
<PAGE>

the Bank in connection, with a collateral audit to be conducted by Boston &
Associates. Reimbursement for or payment of any such fees and expenses shall be
made within ten business days following presentation of an invoice to the
Borrower by the Bank.

         10.      Fees of Bank's Counsel.

         The Borrower shall pay the fees and expenses of McCarter & English in
connection with the preparation and negotiation of this Amendment and all
related documents.

         11.      Conditions to Effectiveness.

         It shall be a condition to the effectiveness of this Amendment that the
Bank has received the following:

                  a.  This Amendment, duly executed on behalf of the Borrower
         and the Bank;

                  b.  The Restated Line of Credit Note, duly executed by the
         Borrower; and

                  c.  A certificate from the Secretary the Borrower (i) to
         which is attached a copy of the Certificate of Incorporation certified
         by the Secretary of State of Delaware and a copy of the By-laws of the
         Borrower (or a certification that such documents have not been modified
         since November 12, 1999), (ii) attesting to authorization of the person
         signing this Amendment on behalf of the Borrower, and (iii) setting
         forth the name and sample signature of the officers of the Borrower
         authorized to execute and deliver this Amendment.

         12.      Integration.

         This Amendment together with the Loan Agreement constitute the entire
agreement and understanding among the parties relating to the subject matter
hereof and thereof and supersedes all prior proposals, negotiations, agreements
and understandings relating to such subject matter.

         13.      Severability.

         If any provision of this Amendment shall be held invalid or
unenforceable in whole or in part in any jurisdiction, such provision shall, as
to such jurisdiction, be ineffective to the extent of such invalidity or
enforceability without in any manner affecting the validity or enforceability of
such provision in any other jurisdiction or the remaining provisions of this
Amendment in any other jurisdiction.

         14.      No Defenses, Off-Sets or Counterclaims.

         By executing this Amendment, Borrower confirms and acknowledges that as
of the date of execution hereof, Borrower has no defenses, off-sets or
counterclaims against any of Borrower's obligations to the Bank under the Loan

                                       3
<PAGE>

Documents, including the Loan Agreement (as amended hereby). Borrower hereby
acknowledges and agrees that the actual amounts outstanding on the date of
execution hereof are owing the Bank without defense, offset or counterclaim.

         15.      Incorporation by Reference.

         This Amendment is incorporated by reference into the Loan Agreement and
the other Loan Documents. Except as otherwise provided herein, all of the other
provisions of the Loan Agreement and the other Loan Documents are hereby
confirmed and ratified and shall remain in full force and effect as of the date
of this Amendment.

         16.      Governing Law; Successors and Assigns.

         This Amendment is governed by the laws of the State of New Jersey and
is binding upon the Borrower and the Bank and their respective successors and/or
assigns and/or heirs and executors, as the case may be.

         17.      Counterparts.

         This Amendment may be executed by one or more of the parties on any
number of separate counterparts, and all of said counterparts taken together
shall be deemed to constitute one and the same instrument.

         IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereunto duly authorized, on the date
first above written.

                                     BLONDER TONGUE LABORATORIES, INC.

                                     By:      /s/Peter Pugielli
                                          ---------------------------------
                                          Name:  Peter Pugielli
                                          Title:  C.F.O.
                                     FIRST UNION NATIONAL BANK

                                     By:      /s/Larry Lee
                                          ---------------------------------
                                          Name:  Larry Lee
                                          Title:  Vice President

                                       4
<PAGE>
                                    Exhibit A

                            SECOND RESTATEMENT OF THE
                 FIFTH AMENDED AND RESTATED LINE OF CREDIT NOTE

$5,500,000                                     As of November 12, 1999
                                               Restated on March 24, 2000
                                               Further restated August 11, 2000

         FOR VALUE RECEIVED, BLONDER TONGUE LABORATORIES, INC., a Delaware
corporation (the "Borrower"), hereby promises to pay to the order of FIRST UNION
NATIONAL BANK (the "Bank") on the Termination Date the principal amount of FIVE
MILLION FIVE HUNDRED THOUSAND DOLLARS ($5,500,000) or, if less, the aggregate
outstanding principal under the Line of Credit extended under the Fifth Amended
and Restated Loan Agreement dated November 12, 1999 by and between the Borrower
and the Bank as amended by the First Amendment and Waiver to the Fifth Amended
and Restated Loan Agreement dated March 24, 2000 and the Second Amendment and
Waiver to the Fifth Amended and Restated Loan Agreement dated the date hereof as
may be further amended, modified or restated from time to time (the "Loan
Agreement"). Terms capitalized but not defined herein shall have the meanings
given to them respectively in the Loan Agreement. Reference is made to the Loan
Agreement for a statement of the terms and conditions under which the loans
evidenced hereby have been made, secured, and may be prepaid or accelerated.
This Note amends and restates and replaces (but does not discharge) the
obligations of the Borrower under the Fifth Amended and Restated Line of Credit
Note dated as of November 12, 1999, as such note has been amended, modified
and/or extended.

         Until maturity (whether by acceleration or otherwise) interest shall
accrue on the outstanding principal balance hereof at the rate set forth in the
Loan Agreement. Interest shall be calculated on the basis of a 360-day year,
counting the actual number of days elapsed. Subsequent to maturity or the
occurrence of any Event of Default, and continuing after entry of any judgment
against the Borrower with respect to the obligations evidenced by this Note,
interest shall accrue at an annual rate which shall be two percent (2%) above
the rate of interest otherwise payable hereunder. Accrued interest shall be
payable monthly on the first day of each month commencing with the month
immediately following date hereof and if not paid when due, shall be added to
the principal. All amounts payable by the Borrower to the Bank hereunder shall
be paid directly to the Bank at 190 River Road, Summit, New Jersey 07901 (or at
such other address of which the Bank shall give notice to the Borrower in
accordance with the Loan Agreement) in immediately available funds.

         The Borrower hereby waives the requirements of demand, presentment,
protest, notice of protest and dishonor and all other demands or notices of any
kind in connection with the delivery, acceptance, performance, default, dishonor
or enforcement of this Note. The internal law of the State of New Jersey shall
govern the construction, interpretation and enforcement of this Note.

         This note amends, restates, replaces and continues (but is not a
novation or repayment of) the First Restatement of the Fifth Amended and
Restated Line of Credit Note dated March 24, 2000.

         IN WITNESS WHEREOF, and intending to be legally bound hereby, the
Borrower has caused this Note to be executed by its duly authorized officer as
of the day and year first above written.<PAGE>   1
                                                                    EXHIBIT 10.1

                       DATED THE 31ST DAY OF AUGUST, 2000

                         MAN SANG INTERNATIONAL LIMITED

                                       AND

                                CHENG CHUNG HING

                          -----------------------------

                                SERVICE AGREEMENT

                          -----------------------------
<PAGE>   2
                                     CONTENT

<TABLE>
<CAPTION>
   CLAUSE       DESCRIPTION                                                PAGE
   ------       -----------                                                ----
<S>             <C>                                                        <C>
   1.           INTERPRETATION .............................................  1
   2.           APPOINTMENT ................................................  2
   3.           DURATION ...................................................  2
   4.           EXECUTIVE'S DUTIES .........................................  2
   5.           REMUNERATION ...............................................  3
   6.           OTHER BENEFITS .............................................  3
   7.           EXPENSES ...................................................  4
   8.           DEDUCTIONS .................................................  4
   9.           LEAVE ......................................................  4
   10.          TERMINATION ................................................  5
   11.          EXECUTIVE'S UNDERTAKINGS ...................................  6
   12.          INTELLECTUAL PROPERTY RIGHTS ...............................  9
   13.          MISCELLANEOUS .............................................. 10
</TABLE>
<PAGE>   3
THIS AGREEMENT is made on the 31st day of August, 2000

BETWEEN:

(1)      MAN SANG INTERNATIONAL LIMITED, a company incorporated under the laws
         of Bermuda and having its registered office at Clarendon House, 2
         Church Street, Hamilton HM11, Bermuda and its principal place of
         business in Hong Kong at 21st Floor, Railway Plaza, 39 Chatham Road
         South, Tsimshatsui, Kowloon, Hong Kong (the "Company"); and

(2)      CHENG CHUNG HING of Apartment 1, 17th Floor, Silvercrest, 24 MacDonnell
         Road, Hong Kong (the "Executive").

WHEREBY IT IS AGREED as follows:

1.      INTERPRETATION

1.01     In this Agreement, unless the context requires otherwise:

         "Board" means the board of directors for the time being of the Company;

         "Group" means the Company and its subsidiaries from time to time and
         "member of the Group" shall be construed accordingly;

         "HK$" means Hong Kong dollars;

         "Hong Kong" means the Hong Kong Special Administrative Region of the
         People's Republic of China;

         "Listing Rules" means the Rules Governing the Listing of Securities on
         The Stock Exchange of Hong Kong Limited (as the same may be amended
         from time to time); and

         "month" means calendar month.

1.02     References herein to Clauses are to clauses in this Agreement unless
         the context requires otherwise.

1.03     The headings are inserted for convenience only and shall not affect the
         construction of this Agreement.

1.04     Unless the context requires otherwise, words importing the singular
         include the plural and vice versa and words importing a gender include
         every gender.

                                       1
<PAGE>   4
2.      APPOINTMENT

        The Company will employ the Executive and the Executive hereby agrees to
serve the Company as an executive director upon the terms and subject to the
conditions hereinafter appearing.

3.      DURATION

        Subject to termination as hereinafter provided, the Company will employ
        the Executive with effect from 1st September, 2000 for a term of three
        (3) years until terminated by either party giving to the other not less
        than three (3) months' notice in writing.

4.      EXECUTIVE'S DUTIES

        The Executive shall, during the continuance of his employment hereunder:

        (a)    serve the Company as the Chairman and an executive director and,
               in such capacity, perform the duties and exercise the powers from
               time to time assigned to or vested in him by the Board (including
               (without further remuneration unless otherwise agreed) serving on
               the board of directors, or in any other office, of any member(s)
               of the Group, as the Board may require) and he will perform those
               duties at such place or places in Hong Kong or elsewhere as the
               Board may from time to time determine;

        (b)    comply with and conform to any lawful instructions or directions
               from time to time given or made by the Board, or with the
               authority of the Board, and shall comply with the Company's
               rules, regulations, policies and procedures from time to time in
               force;

        (c)    faithfully and diligently serve the Group and use his best
               endeavours to promote the business and interests thereof;

        (d)    devote himself exclusively and diligently to the business and
               interests of the Group and personally attend thereto at all times
               during usual business hours and during such other times as the
               Company may reasonably require except in case of incapacity
               through illness or accident in which case he shall forthwith
               notify the Secretary of the Company of such incapacity and shall
               furnish to the Board such evidence thereof as it may require;

        (e)    keep the Board promptly and fully informed (in writing if so
               requested) of his conduct of the business or affairs of the Group
               and provide such explanations as the Board may require in
               connection therewith;

                                       2
<PAGE>   5
        (f)    carry out his duties and exercise his powers jointly with any
               other director or executive of any member of the Group as shall
               from time to time be appointed by the Board to act jointly with
               the Executive and the Board may at any time require the Executive
               to cease performing or exercising any of his duties or powers
               under this Agreement; and

        (g)    comply with the relevant requirements of all applicable laws,
               regulations, codes of practice and rules (including Securities
               (Insider Dealing) Ordinance, the Rules Governing the Listing of
               Securities on The Stock Exchange of Hong Kong Limited and the
               Model Code for Securities Transactions by Directors of Listed
               Companies set out in Appendix 10 therein and the rules of any
               other stock exchange, market or dealing system on which the
               securities of any member of the Group is traded and the
               applicable laws, regulations, codes of practice in that
               jurisdiction).

5.      REMUNERATION

        The remuneration of the Executive shall be:

        (a)    an annual salary package of HK$3,000,000.00, such salary to
               include any sum receivable as director's fees or other
               remuneration from any other member of the Group (if any). This
               salary will be reviewed by the Board each year at the time of the
               annual salary reviews for senior executives provided that the
               Executive shall abstain from voting and shall not be counted in
               the quorum in respect of any resolution regarding the amount
               payable to himself in relation to his employment under this
               Agreement which is proposed at any meeting of the Board;

        (b)    in respect of every financial year of the Company (which
               expression shall include any other financial period in respect of
               which the Company's accounts are made up), a discretionary bonus
               of such amount as shall be determined by the Board (provided that
               the aggregate of such amount and all discretionary bonuses
               payable by the Company to its executive directors in any
               financial year shall not exceed ten per cent. of the net profits
               (after tax and after extraordinary items) of the Company for such
               year as shown in its audited accounts), provided that such
               discretionary bonus shall be paid only on a pro rata basis in
               respect of any financial year of the Company during a portion
               only of which the Executive has served the Company hereunder,
               unless his employment shall have been terminated pursuant to
               Clause 10.02, in which case no discretionary bonus is payable.

                                       3
<PAGE>   6
6.      OTHER BENEFITS

6.01     In addition to the foregoing remuneration and benefits, the Executive
         shall also be entitled to the following during the continuance of his
         employment hereunder, subject to determination by the Board as to the
         appropriate level of cost of each item:

        (a)    the use of a residential property of the Company for
               accommodation as approved by the Board and the Company shall pay
               all rates, government rents, utilities and other outgoings for
               maintenance and repair in respect of the use of such premises;

        (b)    the use (whether for business or personal purposes) of a motor
               car of such type as may be approved by the Board 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; and

        (c)    the use of the corporate membership of the Group at Tower Club
               and the payment of all entrance fees, debentures, monthly
               subscriptions but not chits in connection therewith during the
               continuance of his employment hereunder, subject to determination
               by the Board as to the appropriate level of cost of each item.

6.02    In addition to the above benefits, the Executive shall also be entitled
        to such other benefits under any applicable employee benefit plan and
        employee share option scheme adopted by the Company and any member of
        the Group of which the Executive is a director or holds office for their
        respective employees (including the Executive) as the Board shall from
        time to time determine.

7.      EXPENSES

        The Company shall reimburse the Executive (against receipts or such
        other reasonable evidence of expenditure as the Board may require) for
        all reasonable expenses properly incurred in the course of his
        employment hereunder or in promoting or otherwise in connection with the
        business of the Company.

8.      DEDUCTIONS

        The Company shall be entitled, subject to any laws or agreements to the
        contrary, at any time to deduct from the Executive's remuneration
        hereunder any monies due from him to any member of the Group including,
        but not limited to, any outstanding loans, advances, the cost of
        repairing any damage to or loss of the Company's property caused by him
        (and of recovering the same) and any other monies owed by him to the

                                       4
<PAGE>   7
        Company or any of its subsidiaries.

9.      LEAVE

        The Executive shall be entitled after completion of each year of service
        with the Company to fifteen (15) days' leave (in addition to public
        holidays) with full pay, which leave shall be taken at such time or
        times as may be convenient to the Board having regard to the exigencies
        of the Group's business provided that:

        (a)    if the employment of the Executive hereunder is to cease on the
               completion of any year of service, the Executive shall be
               entitled to take his said leave immediately prior to the end of
               such year of service notwithstanding that at that time such year
               of service shall not have been completed;

        (b)    if the employment of the Executive hereunder is to cease (for any
               reason other than termination pursuant to Clause 10.02) during
               any year of service, the Executive shall be entitled to an amount
               of leave proportionate to the part of the year during which he
               has been employed by the Company, such leave to be taken
               immediately prior to the termination of his employment; and

        (c)    if for any reason the Executive shall not have taken his full
               entitlement of leave in any particular year he shall not have any
               claim against the Company in respect thereof nor, unless the
               reason is the exigencies of the Company's business (of which the
               Board shall be the sole judge), shall he be entitled to
               additional leave in any year in respect of leave not taken in
               previous years.

10.      TERMINATION

10.01    If the Executive is at any time incapacitated by illness, injury or
         accident from performing his duties hereunder and (if so required)
         furnishes the Board with evidence satisfactory to it of such incapacity
         and the cause thereof he shall be entitled to receive his full salary
         for the first three (3) months or any shorter period during which such
         incapacity continues and if he continues so incapacitated for a longer
         period than three (3) consecutive months or if he is so incapacitated
         at different times for more than ninety (90) days in any one period of
         fifty-two (52) consecutive weeks then and in either of such cases his
         employment may be terminated by the Company by one (1) month's notice
         in writing.

10.02    If at any time during the term of his employment hereunder the
         Executive shall be guilty of or commit any serious misconduct which in
         the absolute opinion of the Board is in any way detrimental to the
         interests of any member of the Group, or shall be in breach of any of
         the terms of this Agreement, or shall commit any act of bankruptcy or
         become insolvent, or make any arrangements or composition with his
         creditors generally, or become through mental disorder incapable of
         managing his own affairs, or fail to pay his personal debts or shall be
         guilty of persistent insobriety or be convicted of any criminal offense
         involving his integrity or honesty, the Company may terminate the
         Executive's employment hereunder forthwith without any notice or
         payment in lieu of notice and upon such termination, the Executive

                                       5
<PAGE>   8
         shall not be entitled to any bonus or any payment whatsoever (other
         than salary actually accrued due and payable pursuant to Clause 5(a))
         for or in respect of the then current year of service or to claim any
         compensation or damages for or in respect of or by reason of such
         termination.

10.03    In the event that: (a) the Executive is lawfully removed from his
         office as a director of the Company by virtue of a resolution passed by
         the members of the Company; or (b) the Executive, having retired from
         the office of director of the Company in accordance with the Bye-laws
         of the Company or any other applicable regulation or law, is not
         re-elected as a director of the Company by the shareholders of the
         Company at an annual general meeting of the Company, the Company may
         within seven (7) days of the date of such vacation from office by the
         Executive, terminate this Agreement forthwith by written notice to the
         Executive.

10.04 In the event of termination of the Executive's employment for whatever
reason, the Executive shall:

         (a)    (if not already vacated from such office(s)) forthwith resign as
                a director of the Company and from all directorships or other
                offices held by him in any member of the Group (and the
                Executive irrevocably authorises the Company in his name and on
                his behalf to execute all documents and do all things necessary
                to effect such resignation in the event of his failure to do
                so);

         (b)    shall cease to be entitled to any benefits under this Agreement;

         (c)    immediately return the car provided by the Company under Clause
                6.01 (b) and the keys in respect thereof to the Company at its
                principal place of business in Hong Kong or such other place in
                Hong Kong as the Company may reasonably request; and

         (d)    immediately vacate from the residential property of the Company
                provided for use pursuant to Clause 6.01 (a) and forthwith
                return the keys in respect thereof to the Company at its
                principal place of business in Hong Kong or such other place in
                Hong Kong as the Company may reasonably request

         and the Executive shall not be entitled to claim any other compensation
         whatsoever from the Company in respect of such termination except where
         the Board otherwise agrees or as expressly provided for under this
         Agreement.

10.05    Any delay or forbearance by the Company in exercising any right to
         terminate this Agreement shall not constitute a waiver of such right.

                                       6
<PAGE>   9
10.06    If notice is served by either party pursuant to Clause 3, then for up
         to a maximum period of three (3) months, the Company shall not be
         obliged, at any time after the notice of termination is served, to
         provide any work for the Executive or to assign to or vest in the
         Executive any powers, duties or functions and may in its absolute
         discretion suspend the Executive from work, and suspend the contractual
         benefits of the Executive set out in Clause 5(b) and 6 and to require
         the Executive to refrain from entering any premises of any member(s) of
         the Group and to refrain from contacting any customers, clients,
         employees or suppliers of any member(s) of the Group.

11.      EXECUTIVE'S UNDERTAKINGS

11.01    The Executive agrees to take good care of the car supplied by the
         Company under Clause 6.01(b) and the residential property provided by
         the Company under the Clause 6.01(a), and to ensure that the terms and
         conditions of the insurance policies in respect of the car and the
         residential property are observed.

11.02    The Executive shall not either during the continuance of his employment
         hereunder or at any time thereafter divulge to any person whomsoever or
         to any body corporate or unincorporated (except to those officers of
         the Group whose province it is to know the same) or use for his own
         purposes or for any purposes other than those of the Group and shall
         use his best endeavours to prevent the unauthorised publication or
         disclosure of any trade secret or any confidential information
         concerning the business or finances of any member of the Group or any
         of its dealings, transactions or affairs or those of its customers,
         suppliers, management and shareholders which may come to his knowledge
         during or in the course of his employment. Confidential information
         shall include, without limitation, lists or details of customers and
         suppliers, information relating to the working of any process of
         invention carried on or used by any member of the Group, information
         relating to research and other projects, prices, discounts, mark-ups,
         future business strategy and development, marketing, price-sensitive
         information and any other information which is not generally available
         to the public.

11.03    Forthwith upon the termination of the employment of the Executive
         hereunder, and/or at any other time if the Company shall so request:

         (a)      the Executive shall not, directly or indirectly, disseminate,
                  disclose, divulge, reveal, report, publish, transfer or use,
                  for any purpose whatsoever, any information which has been
                  obtained by or disclosed to the Executive as a result of or in
                  relation to the Executive's employment by the Company,
                  including without limitation any confidential information
                  (which includes without limitation all lists of customers and
                  clients, specific customer names and data, business plans,
                  marketing plans, business contracts, distribution and sales
                  and marketing networks, designs, specifications, processes,
                  formulas, trade secrets, business secrets, sales information,
                  systems, programs, procedures, manuals, financial and
                  personnel information, and any other proprietary information
                  or data which the Company has received in confidence from
                  others) and any of the terms and conditions of this Agreement;
                  provided, however, that disclosure of any confidential

                                       7
<PAGE>   10
                  information shall not be prohibited if (i) such disclosure is
                  directly pursuant to a valid and existing order of a court of
                  competent jurisdiction or other governmental body or agency,
                  (ii) the Executive shall first have given prompt notice to the
                  Company of any such possible or prospective order (or
                  proceeding pursuant to which any such order may result), and
                  (iii) the Company shall have been afforded a reasonable
                  opportunity to respond to (and if so advised by counsel, to
                  challenge) such order; provided further, that each party may
                  disclose terms and conditions of this Agreement to his or its
                  attorneys and accountants to the extent such disclosure is
                  necessary to enable such attorneys and accountants to render
                  professional services to such party;

         (b)      the Executive, his representatives, heirs, successors and
                  assigns shall completely release and forever discharge the
                  Company, its present, former or future parent, subsidiary,
                  affiliated, associated and other related companies, and any of
                  their present, former and future shareholders, directors,
                  officers, employees, agents, partners, consultants,
                  representatives and attorneys, and each of their successors
                  and assigns from all claims, demands, rights, causes of
                  action, obligations, liabilities and/or attorneys' fee claims,
                  of any and every kind, nature and character whatsoever
                  wheresoever, known or unknown, which the Executive may now
                  have or has ever had against the Group, including without
                  limitation those arising from or in any way connected with the
                  employment of the Executive by the Company or the resignation
                  or termination thereof, whether based on tort, express or
                  implied contract, law, rule, regulation or ordinance; and

         (c)      the Executive shall preserve the good name of, and shall not
                  make any disparaging comments about the Group and any of the
                  Company's present, former and future shareholders, directors,
                  officers, employees, agents, partners, consultants,
                  representatives and attorneys, and each of their successors
                  and assigns.

11.04    The Executive shall not file, or cause to be filed, in any court or
         with any governmental or quasi-governmental agency, any action, claim
         or charge against the Company, its present, former or future parent,
         subsidiary, affiliated, associated and other related companies and any
         of their present, former and future shareholders, directors, officers
         and employees and each of their succesors and assigns.

11.05    The Executive shall not at any time during the continuance of his
         employment hereunder or for a period of twelve (12) months thereafter,
         in any country or place where any member of the Group has carried on
         business, carry on or be employed or interested directly or indirectly
         in (whether as shareholder, director, partner, agent or otherwise and
         whether alone or jointly with others) any business carried on by any
         member of the Group during the continuance of the said employment in
         competition with any member of the Group (other than as a holder of not
         more than five (5) per cent of the issued shares, debentures or other
         securities of any company listed on any recognised stock exchange)
         provided that the provisions of this Clause 11.04 shall only apply in
         respect of business activities or services with which the Executive was
         personally concerned or for which he was responsible during his said
         employment.

                                       8
<PAGE>   11
11.06    The Executive shall not at any time during the continuance of his
         employment hereunder or for a period of twelve (12) months thereafter
         either on his own account or in conjunction with or on behalf of any
         other person or body corporate or unincorporated in competition with
         any member of the Group directly or indirectly solicit or entice away
         from any member of the Group, any person or body corporate or
         unincorporated who now is or at any time during or at the date of the
         termination of the said employment may have been or become a customer
         or supplier or prospective customer or supplier of any member of the
         Group and with whom the Executive had personal contact or dealings
         during his said employment.

11.07    The Executive shall not at any time during the continuance of his
         employment hereunder or for a period of twelve (12) months thereafter
         solicit or entice away from any member of the Group or employ or
         otherwise engage any person who now is or at any time during or at the
         date of the termination of the said employment may have become an
         employee of any member of the Group and with whom the Executive had
         contact during his said employment, whether or not such person would
         commit any breach of his contract of employment by reason of leaving
         the service of the relevant member of the Group.

11.08    The Executive shall not at any time or for any purpose after
         termination of his employment hereunder use either the English or
         Chinese name of the Company or any name similar thereto in connection
         with his own or any other name in any way calculated to suggest that he
         is or has been connected with the Company's business, nor in any way
         hold himself out as having had any such connection.

11.09    While the restrictions contained in Clauses 11.01 to 11.08 are
         considered by the parties to be reasonable for the protection of the
         business and interest of the Group and in all the circumstances and do
         not work harshly upon the Executive it is recognised that restrictions
         of the nature in question may fail for technical reasons unforeseen and
         accordingly it is hereby agreed and declared that if any such
         restrictions shall be adjudged to be void as going beyond what is
         reasonable in all the circumstances for the protection of the interests
         of the member(s) of the Group but would be valid if part of the wording
         thereof were deleted or the periods (if any) thereof were reduced or
         the range of products or area dealt with thereby were reduced in scope,
         the said restriction shall apply with such modifications as may be
         necessary to make it valid and effective.

12.      INTELLECTUAL PROPERTY RIGHTS

12.01    The Company (or any other member of the Group as the case may be) shall
         be entitled free of charge to the sole ownership and exclusive use of
         any invention or improvement made or discovered by the Executive and of
         any copyright, design right, trade mark, service mark or trade name
         created or used by the Executive (hereinafter referred to as the
         "intellectual property rights") in the course of or for the purpose of
         providing services hereunder to the Company or any other member of the
         Group.

12.02    The Executive shall forthwith and from time to time both during and
         after the term of this Agreement and at the request and cost of the
         Company, insofar as it is within

                                       9
<PAGE>   12
         his power, do such acts and things and execute such documents, as may
         in the opinion of the Company be reasonably necessary for obtaining
         letters patent, registration or other protection for any such
         intellectual property rights in any part of the world and shall effect
         such registration and vest such letters patent or other protection in
         the Company (or any other member of the Group as the case may be) or
         its nominees. The Executive irrevocably authorises the Company for the
         purposes aforesaid in the name of the Executive and execute any
         document or do anything on his behalf. The Executive shall at the cost
         and request of the Company render all reasonable assistance to the
         Company (or any other member of the Group as the case may be) for and
         in connection with the purposes aforesaid.

12.03    The Executive shall not during or after the termination of the
         Agreement use to the detriment or prejudice of the Group or divulge to
         any person any confidential information concerning the intellectual
         property rights of the Group which may have come to his knowledge.

13.      MISCELLANEOUS

13.01    This Agreement shall be in substitution for any subsisting agreement or
         arrangement (oral or otherwise) made between the Company and the
         Executive which shall be deemed to have been terminated by mutual
         consent as from the date on which the Executive's employment under this
         Agreement commences.

13.02    The expiration or termination of this Agreement howsoever arising shall
         not operate to affect such of the provisions hereof as in accordance
         with their terms are expressed to operate or have effect thereafter.

13.03    In the event of any variation of the remuneration payable to the
         Executive hereunder being made by consent of the parties hereto, such
         variation shall not constitute a new agreement but (subject to any
         express agreement to the contrary) the employment of the Executive
         hereunder shall continue subject in all respects to the terms and
         conditions of this Agreement with such variation as aforesaid.

13.04    Each notice, demand or other communication given or made under this
         Agreement shall be in writing and delivered or sent to the relevant
         party at its address or facsimile number set out below (or such other
         address or facsimile number as the addressee has by five (5) days'
         prior written notice specified to the other parties):

         To the Company:   Man Sang International Limited
                               21st Floor, Railway Plaza 39 Chatham Road South
                               Tsimshatsui, Kowloon Hong Kong
                               Fax number: (852) 2317 5243
                               Attention:      Mr. Cheng Tai Po

        To the Executive:  Cheng Chung Hing

                                       10
<PAGE>   13
                               Apartment 1, 17th Floor
                               Silvercrest
                               24 MacDonnell Road
                               Hong Kong

         Any notice, demand or other communication so addressed to the relevant
         party shall be deemed to have been delivered (a) if given or made by
         letter, by post, two (2) clear business days after the date of posting,
         or by recorded delivery, when actually delivered to the relevant
         address; and (b) if given or made by facsimile, when despatched subject
         to receipt of machine-printed confirmation of error-free despatch of
         the whole of the notice, demand or communication to the facsimile
         number of the intended addressee.

13.05    If at any time any provision of this Agreement is or becomes illegal,
         invalid or unenforceable in any respect, the legality, validity and
         enforceability of the remaining provisions of this Agreement shall not
         be affected or impaired thereby.

13.06    No failure or delay by the Company in exercising any right, power or
         remedy under this Agreement shall operate as a waiver thereof, nor
         shall any single or partial exercise of the same preclude any further
         exercise thereof or the exercise of any other right, power or remedy.
         Without limiting the foregoing, no waiver by the Company of any breach
         by the Executive of any provision in this Agreement shall be deemed to
         be a waiver of any subsequent breach of that or any other provision in
         this Agreement.

13.07    This Agreement shall be governed by and construed in accordance with
         the laws of Hong Kong and the parties hereby irrevocably submit to the
         non-exclusive jurisdiction of the Hong Kong courts.

                                       11
<PAGE>   14
IN WITNESS WHEREOF this Agreement has been executed on the day and year first
above written.

SIGNED by CHENG TAI PO for and on behalf of MAN SANG INTERNATIONAL LIMITED in
the presence of:

SIGNED by
Cheng Chung Hing
in the presence of:

                                       12

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