Document:

EMPLOYMENT
      AGREEMENT

     

    THIS
      AGREEMENT
      is made
      on August 30, 2007 and shall be effective as of and contingent upon the
      consummation of the IPO, as defined below.

     

    
      BETWEEN:

       

    

    
      	
              (1)

            	
              FUQI
                INTERNATIONAL, INC.,
                incorporated under the laws of the State of Delaware, U.S.A., whose
                registered office is at Room 1307, 13/F, Hang Seng TST Building,
                18
                Carnarvon Road, Tsim Sha Tsui, Kowloon, HKSAR (the Company);
                and

            

    

     

    
      	
              (2)

            	
              Xi
                Zhou Zhuo (holder
                of PRC identity card no. 440524196810295478)
                of
                Suite 107, No. 220, Guang Shan Free Way, Xia Shan, Chao Nan District,
                Guangdong, PRC (the Employee).

            

    

     

    
      WHEREAS:

       

    

    
      	
              (A)

            	
              The
                Company intends to conduct an initial public offering of securities
                in the
                United States (“IPO”).

            

    

     

    
      	
              (B)

            	
              Prior
                to the execution of this agreement, the Employee was employed by
                the
                Company, and the Company and the Employee have agreed to reduce the
                terms
                of the employment in writing as recorded by the provisions of this
                Agreement. 

            

    

     

    
      	
              (C)

            	
              The
                parties desire to enter into this Agreement to establish the terms
                and
                conditions of the Employee’s employment, which shall be contingent on and
                effective as of the consummation of the Company’s
                IPO.

            

    

     

    IT
      IS AGREED
      as
      follows:

     

    
      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;

     

    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; 

     

    Termination
      Date
      means
      the date on which the Employment is terminated howsoever caused.

     

    
      TERM
        AND APPOINTMENT

       

    

    
      	
              2.1

            	
              According
                to the terms of this Agreement, the Employee shall be appointed as
                the
                Marketing Director of the Company.

            

    

     

    
      	
              2.2

            	
              Subject
                to clause 10, the Employment shall commence upon the closing of the
                Company’s currently proposed IPO and shall continue for a period of three
                (3) years from such date unless or until terminated by either party
                according to clause 9. This Agreement is contingent upon the consummation
                of the Company’s currently proposed IPO, and in the event that the
                currently proposed IPO does not close, for whatever reason, within
                the
                sixty (60) day period following the date of this Agreement, this
                Agreement
                shall be terminated and have no
                effect.

            

    

     

    
      	
              2.3

            	
              Employee
                shall bear his individual income tax by himself according to applicable
                law and shall be responsible to properly report his personal income
                tax to
                his country or place of residency. Notwithstanding the Employee’s
                reporting and payment obligations with respect to income taxes, Employee
                agrees that the Company or Group Company is entitled to withhold
                the tax
                according to applicable law.

            

    

     

    
      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;

            

    

     

    
      
         

      

      
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          2

        
          

        

      

      
         

      

    

     

    
      	 	
              (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

            

    

     

    
      	 	
              (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 Shenzhen, China. However, the Employee
                may be assigned to work in either of the Company’s offices in Hong Kong
                and may be required to make overseas business trips as may be required
                for
                the proper performance of his duties under the
                Employment.

            

    

     

    
      SALARY

    

     

    
      	
              4.1

            	
              The
                Employee’s base salary shall be One Hundred Twenty Thousand US Dollars
                (US$120,000) 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

            	
              The
                Employee shall receive, on an annual basis, stock options with a
                ten-year
                term to acquire shares of the Company’s common stock having a market value
                of 1% of our annual profit before tax, not exceeding $120,000 in
                value, as
                set forth in our annual report on Form 10-K for the relevant period
                as
                filed with the Securities and Exchange Commission. The per share
                exercise
                price of these options shall be 100% of the fair market value of
                the
                Company’s common stock on the date of grant.

            

    

     

    
      	
              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.

            

    

     

    
      
         

      

      
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          3

        
          

        

      

      
         

      

    

     

    
      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.

            

    

     

    
      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.

            

    

     

    
      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.

            

    

     

    
      
         

      

      
        Page
          4

        
          

        

      

      
         

      

    

     

    
      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.

            

    

     

    
      TERMINATION

    

     

    
      	
              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);

            

    

     

    
      
         

      

      
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          5

        
          

        

      

      
         

      

    

     

    
      	 	
              (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. 

            

    

     

    
      	
              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. 

            

    

     

    
      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

            

    

     

    
      
         

      

      
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          6

        
          

        

      

      
         

      

    

     

    
      	 	
              (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.

            

    

     

    
      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;

            

    

     

    
      	 	
              (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.

            

    

     

    
      
         

      

      
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          7

        
          

        

      

      
         

      

    

     

    
      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;

            

    

     

    
      	
              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,

            

    

     

    
      
         

      

      
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          8

        
          

        

      

      
         

      

    

     

    
      	 	
              (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.
                

            

    

     

    
      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.

            

    

     

    
      	
              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.

            

    

     

    
      
         

      

      
        Page
          9

        
          

        

      

      
         

      

    

     

    
      	
              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]

     

    
      
         

      

      
        Page
          10

        
          

        

      

      
         

      

       

    

    IN
      WITNESS WHEREOF
      this
AGREEMENT
      has
      been
      signed on the date the day and year first above written.

    

      
        	
                SIGNED
                  by
                  XI
                  ZHOU ZHUO

              	
                )

              	
                /s/XI
                  ZHUO ZHUO

              
	
                in
                  the presence of: 

              	
                )

              	 
	 	 	 
	
                SIGNED
                  for
                  and on behalf of

              	
                )

              	
                /s/
                  YU KWAI CHONG

              
	
                FUQI
                  INTERNATIONAL, INC.
                  in
                  the presence of:

              	
                )

              	 

      

    

     

    
      
         

      

      
        Page
          11

        
          

        

      

      
         

      

    

    DATED
      THE
      30 DAY OF AUGUST, 2007

    

    FUQI
      INTERNATIONAL, INC.

    

    and

    

    XI
      ZHOU ZHUO

     

    
      
        

      

    

    

    EMPLOYMENT
      AGREEMENTUnassociated Document

     

    Exhibit
      10.1

     

    

      DEALERADVANCE
        INC. 2007 INCENTIVE STOCK PLAN

      

      

      This
        Dealeradvance,
        inc. 2007 Incentive Stock Plan
        (the
        "Plan")
        is
        designed to retain directors, executives and selected employees and consultants
        and reward them for making major contributions to the success of the Company.
        These objectives are accomplished by making long-term incentive awards under
        the
        Plan thereby providing Participants with a proprietary interest in the growth
        and performance of the Company.

      

      	1.  	
              Definitions.

            

      

      	(a)  	
              "Board"
                -
                The Board of Directors of the Company.

            

      

      	(b)  	
              "Code"
                -
                The Internal Revenue Code of 1986, as amended from time to
                time.

            

      

      	(c)  	
              "Committee"
                -
                The Compensation Committee of the Company's Board, or such other
                committee
                of the Board that is designated by the Board to administer the Plan,
                composed of not less than two members of the Board all of whom are
                disinterested persons, as contemplated by Rule 16b-3 ("Rule
                16b-3")
                promulgated under the Securities Exchange Act of 1934, as amended
                (the
                "Exchange
                Act").

            

      

      	(d)  	
              "Company"
                -
                DealerAdvance, Inc. and its subsidiaries including subsidiaries of
                subsidiaries.

            

      

      	(e)  	
              "Exchange Act"
                -
                The Securities Exchange Act of 1934, as amended from time to
                time.

            

      

      	(f)  	
              "Fair
                Market Value"
                -
                The fair market value of the Company's issued and outstanding Stock
                as
                determined in good faith by the Board or
                Committee.

            

       

       

      	(g)  	
              "Grant"
                -
                The grant of any form of stock option, stock award, or stock purchase
                offer, whether granted singly, in combination or in tandem, to a
                Participant pursuant to such terms, conditions and limitations as
                the
                Committee may establish in order to fulfill the objectives of the
                Plan.

            

      

      	(h)  	
              "Grant
                Agreement"
                -
                An agreement between the Company and a Participant that sets forth
                the
                terms, conditions and limitations applicable to a
                Grant.

            

      

      	(i)  	
              "Option"
                -
                Either an Incentive Stock Option, in accordance with Section 422
                of Code,
                or a Nonstatutory Option, to purchase the Company's Stock that may
                be
                awarded to a Participant under the Plan. A Participant who receives
                an
                award of an Option shall be referred to as an "Optionee."

            

      

      	(j)  	
              "Participant"
                -
                A director, officer, employee or consultant of the Company to whom
                an
                Award has been made under the Plan.

            

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      	(k)  	
              "Restricted
                Stock Purchase Offer"
                -
                A Grant of the right to purchase a specified number of shares of
                Stock
                pursuant to a written agreement issued under the
                Plan.

            

      

      	(l)  	
              "Securities
                Act"
                -
                The Securities Act of 1933, as amended from time to
                time.

            

      

      	(m)  	
              "Stock"
                -
                Authorized and issued or unissued shares of common stock of the
                Company.

            

      

      	(n)  	
              "Stock
                Award"
                -
                A Grant made under the Plan in stock or denominated in units of stock
                for
                which the Participant is not obligated to pay additional
                consideration.

            

      

      	2.  	
              Administration.
                The Plan shall be administered by the Board, provided however, that
                the
                Board may delegate such administration to the Committee. Subject
                to the
                provisions of the Plan, the Board and/or the Committee shall have
                authority to (a) grant, in its discretion, Incentive Stock Options
                in
                accordance with Section 422 of the Code, or Nonstatutory Options,
                Stock
                Awards or Restricted Stock Purchase Offers; (b) determine in good
                faith
                the fair market value of the Stock covered by any Grant; (c) determine
                which eligible persons shall receive Grants and the number of shares,
                restrictions, terms and conditions to be included in such Grants;
                (d)
                construe and interpret the Plan; (e) promulgate, amend and rescind
                rules
                and regulations relating to its administration, and correct defects,
                omissions and inconsistencies in the Plan or any Grant; (f) consistent
                with the Plan and with the consent of the Participant, as appropriate,
                amend any outstanding Grant or amend the exercise date or dates thereof;
                (g) determine the duration and purpose of leaves of absence which
                may be
                granted to Participants without constituting termination of their
                employment for the purpose of the Plan or any Grant; and (h) make
                all
                other determinations necessary or advisable for the Plan's administration.
                The interpretation and construction by the Board of any provisions
                of the
                Plan or selection of Participants shall be conclusive and final.
                No member
                of the Board or the Committee shall be liable for any action or
                determination made in good faith with respect to the Plan or any
                Grant
                made thereunder.

            

      

      	3.  	
              Eligibility.

            

      

      	(a)  	
              General:
                The persons who shall be eligible to receive Grants shall be directors,
                officers, employees or consultants to the Company. The term consultant
                shall mean any person, other than an employee, who is engaged by
                the
                Company to render services and is compensated for such services.
                An
                Optionee may hold more than one Option. Any issuance of a Grant to
                an
                officer or director of the Company subsequent to the first registration
                of
                any of the securities of the Company under the Exchange Act shall
                comply
                with the requirements of Rule 16b-3.

            

      

      	(b)  	
              Incentive
                Stock Options:
                Incentive Stock Options may only be issued to employees of the Company.
                Incentive Stock Options may be granted to officers or directors,
                provided
                they are also employees of the Company. Payment of a director's fee
                shall
                not be sufficient to constitute employment by the
                Company.

            

      

      The
        Company shall not grant an Incentive Stock Option under the Plan to any employee
        if such Grant would result in such employee holding the right to exercise
        for
        the first time in any one calendar year, under all Incentive Stock Options
        granted under the Plan or any other plan maintained by the Company, with
        respect
        to shares of Stock having an aggregate fair market value, determined as of
        the
        date of the Option is granted, in excess of $100,000. Should it be determined
        that an Incentive Stock Option granted under the Plan exceeds such maximum
        for
        any reason other than a failure in good faith to value the Stock subject
        to such
        option, the excess portion of such option shall be considered a Nonstatutory
        Option. To the extent the employee holds two (2) or more such Options which
        become exercisable for the first time in the same calendar year, the foregoing
        limitation on the exercisability of such Option as Incentive Stock Options
        under
        the Federal tax laws shall be applied on the basis of the order in which
        such
        Options are granted. If, for any reason, an entire Option does not qualify
        as an
        Incentive Stock Option by reason of exceeding such maximum, such Option shall
        be
        considered a Nonstatutory Option.

      

      
        
          
          

        

        
          -2-

          
            

          

        

        
          
          

        

      

      	(c)  	
              Nonstatutory
                Option:
                The provisions of the foregoing Section 3(b) shall not apply to any
                Option
                designated as a "Nonstatutory
                Option"
                or which sets forth the intention of the parties that the Option
                be a
                Nonstatutory Option.

            

      

      	(d)  	
              Stock
                Awards and Restricted Stock Purchase Offers:
                The provisions of this Section 3 shall not apply to any Stock Award
                or
                Restricted Stock Purchase Offer under the
                Plan.

            

      

      	4.  	
              Stock.

            

      

      	(a)  	
              Authorized
                Stock:
                Stock subject to Grants may be either unissued or reacquired
                Stock.

            

      

      	(b)  	
              Number
                of Shares:
                Subject to adjustment as provided in Section 5(i) of the Plan, the
                total
                number of shares of Stock which may be purchased or granted directly
                by
                Options, Stock Awards or Restricted Stock Purchase Offers, or purchased
                indirectly through exercise of Options granted under the Plan shall
                not
                exceed Two Million (2,000,000). If any Grant shall for any reason
                terminate or expire, any shares allocated thereto but remaining
                unpurchased upon such expiration or termination shall again be available
                for Grants with respect thereto under the Plan as though no Grant
                had
                previously occurred with respect to such shares. Any shares of Stock
                issued pursuant to a Grant and repurchased pursuant to the terms
                thereof
                shall be available for future Grants as though not previously covered
                by a
                Grant.

            

      

      	(c)  	
              Reservation
                of Shares:
                The Company shall reserve and keep available at all times during
                the term
                of the Plan such number of shares as shall be sufficient to satisfy
                the
                requirements of the Plan. If, after reasonable efforts, which efforts
                shall not include the registration of the Plan or Grants under the
                Securities Act, the Company is unable to obtain authority from any
                applicable regulatory body, which authorization is deemed necessary
                by
                legal counsel for the Company for the lawful issuance of shares hereunder,
                the Company shall be relieved of any liability with respect to its
                failure
                to issue and sell the shares for which such requisite authority was
                so
                deemed necessary unless and until such authority is
                obtained.

            

      

      	(d)  	
              Application
                of Funds:
                The
                proceeds received by the Company from the sale of Stock pursuant
                to the
                exercise of Options or rights under Stock Purchase Agreements will
                be used
                for general corporate purposes.

            

      

      
        
          
          

        

        
          -3-

          
            

          

        

        
          
          

        

      

      	(e)  	
              No
                Obligation to Exercise:
                The issuance of a Grant shall impose no obligation upon the Participant
                to
                exercise any rights under such Grant.

            

      

      	5.  	
              Terms
                and Conditions of Options. Options granted hereunder shall be evidenced
                by
                agreements between the Company and the respective Optionees, in such
                form
                and substance as the Board or Committee shall from time to time approve.
                The form of Incentive Stock Option Agreement attached hereto as
                Exhibit
                A
                and the three forms of a Nonstatutory Stock Option Agreement for
                employees, for directors and for consultants, attached hereto as
                Exhibit
                B-1, Exhibit
                B-2
                and
                Exhibit B-3,
                respectively, shall be deemed to be approved by the Board. Option
                agreements need not be identical, and in each case may include such
                provisions as the Board or Committee may determine, but all such
                agreements shall be subject to and limited by the following terms
                and
                conditions:

            

      

      	(a)  	
              Number
                of Shares:
                Each Option shall state the number of shares to which it
                pertains.

            

      

      	(b)  	
              Exercise
                Price:
                Each Option shall state the exercise price, which shall be determined
                as
                follows:

            

      

      	(i)  	
              Any
                Incentive Stock Option granted to a person who at the time the Option
                is
                granted owns (or is deemed to own pursuant to Section 424(d) of the
                Code)
                stock possessing more than ten percent (10%) of the total combined
                voting
                power or value of all classes of stock of the Company ("Ten
                Percent Holder")
                shall have an exercise price of no less than 110% of the Fair Market
                Value
                of the Stock as of the date of grant; and

            

      

      	(ii)  	
              Incentive
                Stock Options granted to a person who at the time the Option is granted
                is
                not a Ten Percent Holder shall have an exercise price of no less
                than 100%
                of the Fair Market Value of the Stock as of the date of
                grant.

            

      

      For
        the
        purposes of this Section 5(b), the Fair Market Value shall be as determined
        by
        the Board in good faith, which determination shall be conclusive and binding;
        provided however, that if there is a public market for such Stock, the Fair
        Market Value per share shall be the average of the bid and asked prices (or
        the
        closing price if such stock is listed on the NASDAQ National Market System
        or
        Small Cap Issue Market) on the date of grant of the Option, or if listed
        on a
        stock exchange, the closing price on such exchange on such date of
        grant.

      

      	(c)  	
              Medium
                and Time of Payment:
                The exercise price shall become immediately due upon exercise of
                the
                Option and shall be paid in cash or check made payable to the Company.
                Should the Company's outstanding Stock be registered under Section
                12(g)
                of the Exchange Act at the time the Option is exercised, then the
                exercise
                price may also be paid as follows:

            

       

      	(i)  	
              in
                shares of Stock held by the Optionee for the requisite period necessary
                to
                avoid a charge to the Company's earnings for financial reporting
                purposes
                and valued at Fair Market Value on the exercise date,
                or

            

      

      	(ii)  	
              through
                a special sale and remittance procedure pursuant to which the Optionee
                shall concurrently provide irrevocable written instructions (a) to
                a
                Company designated brokerage firm to effect the immediate sale of
                the
                purchased shares and remit to the Company, out of the sale proceeds
                available on the settlement date, sufficient funds to cover the aggregate
                exercise price payable for the purchased shares plus all applicable
                Federal, state and local income and employment taxes required to
                be
                withheld by the Company by reason of such purchase and (b) to the
                Company
                to deliver the certificates for the purchased shares directly to
                such
                brokerage firm in order to complete the sale
                transaction.

            

      

      
        
          
          

        

        
          -4-

          
            

          

        

        
          
          

        

      

      At
        the
        discretion of the Board, exercisable either at the time of Option grant or
        of
        Option exercise, the exercise price may also be paid (i) by Optionee's delivery
        of a promissory note in form and substance satisfactory to the Company and
        permissible under the Securities Rules of the applicable state and bearing
        interest at a rate determined by the Board in its sole discretion, but in
        no
        event less than the minimum rate of interest required to avoid the imputation
        of
        compensation income to the Optionee under the Federal tax laws, or (ii) in
        such
        other form of consideration permitted by the applicable state corporations
        law
        as may be acceptable to the Board.

      

      	(d)  	
              Term
                and Exercise of Options:
                Any Option granted to an employee of the Company shall become exercisable
                over a period of no longer than five (5) years, and no less than
                twenty
                percent (20%) of the shares covered thereby shall become exercisable
                annually. No Option shall be exercisable, in whole or in part, prior
                to
                one (1) year from the date it is granted unless the Board shall
                specifically determine otherwise, as provided herein. In no event
                shall
                any Option be exercisable after the expiration of ten (10) years
                from the
                date it is granted, and no Incentive Stock Option granted to a Ten
                Percent
                Holder shall, by its terms, be exercisable after the expiration of
                five
                (5) years from the date of the Option. Unless otherwise specified
                by the
                Board or the Committee in the resolution authorizing such Option,
                the date
                of grant of an Option shall be deemed to be the date upon which the
                Board
                or the Committee authorizes the granting of such Option.
                

            

      

      Each
        Option shall be exercisable to the nearest whole share, in installments or
        otherwise, as the respective Option agreements may provide. During the lifetime
        of an Optionee, the Option shall be exercisable only by the Optionee and
        shall
        not be assignable or transferable by the Optionee, and no other person shall
        acquire any rights therein. To the extent not exercised, installments (if
        more
        than one) shall accumulate, but shall be exercisable, in whole or in part,
        only
        during the period for exercise as stated in the Option agreement, whether
        or not
        other installments are then exercisable.

      

      	(e)  	
              Termination
                of Status as Employee, Consultant or Director:
                If
                Optionee's status as an employee shall terminate for any reason other
                than
                Optionee's disability or death, then Optionee (or if the Optionee
                shall
                die after such termination, but prior to exercise, Optionee's personal
                representative or the person entitled to succeed to the Option) shall
                have
                the right to exercise the portions of any of Optionee's Incentive
                Stock
                Options which were exercisable as of the date of such termination,
                in
                whole or in part, not less than 30 days nor more than three (3) months
                after such termination (or, in the event of "termination
                for good cause"
                as that term is defined in the applicable state case law related
                thereto,
                or by the terms of the Plan or the Option Agreement or an employment
                agreement, the Option shall automatically terminate as of the termination
                of employment as to all shares covered by the Option).
                

            

      

      
        
          
          

        

        
          -5-

          
            

          

        

        
          
          

        

      

      With
        respect to Nonstatutory Options granted to employees, directors or consultants,
        the Board may specify such period for exercise, not less than 30 days (except
        that in the case of "termination
        for cause"
        or
        removal of a director, the Option shall automatically terminate as of the
        termination of employment or services as to shares covered by the Option,
        following termination of employment or services as the Board deems reasonable
        and appropriate. The Option may be exercised only with respect to installments
        that the Optionee could have exercised at the date of termination of employment
        or services. Nothing contained herein or in any Option granted pursuant hereto
        shall be construed to affect or restrict in any way the right of the Company
        to
        terminate the employment or services of an Optionee with or without
        cause.

      

      	(f)  	
              Disability
                of Optionee:
                If
                an Optionee is disabled (within the meaning of Section 22(e)(3) of
                the
                Code) at the time of termination, the three (3) month period set
                forth in
                Section 5(e) shall be a period, as determined by the Board and set
                forth
                in the Option, of not less than six months nor more than one year
                after
                such termination. 

            

      

      	(g)  	
              Death
                of Optionee:
                If
                an Optionee dies while employed by, engaged as a consultant to, or
                serving
                as a Director of the Company, the portion of such Optionee's Option
                which
                was exercisable at the date of death may be exercised, in whole or
                in
                part, by the estate of the decedent or by a person succeeding to
                the right
                to exercise such Option at any time within (i) a period, as determined
                by
                the Board and set forth in the Option, of not less than six (6) months
                nor
                more than one (1) year after Optionee's death, which period shall
                not be
                more, in the case of a Nonstatutory Option, than the period for exercise
                following termination of employment or services, or (ii) during the
                remaining term of the Option, whichever is the lesser. The Option
                may be
                so exercised only with respect to installments exercisable at the
                time of
                Optionee's death and not previously exercised by the
                Optionee.

            

      

      	(h)  	
              Nontransferability
                of Option:
                No
                Option shall be transferable by the Optionee, except by will or by
                the
                laws of descent and distribution.

            

      

      	(i)  	
              Recapitalization:
                Subject to any required action of shareholders, the number of shares
                of
                Stock covered by each outstanding Option, and the exercise price
                per share
                thereof set forth in each such Option, shall be proportionately adjusted
                for any increase or decrease in the number of issued shares of Stock
                of
                the Company resulting from a stock split, stock dividend, combination,
                subdivision or reclassification of shares, or the payment of a stock
                dividend, or any other increase or decrease in the number of such
                shares
                affected without receipt of consideration by the Company; provided,
                however, the conversion of any convertible securities of the Company
                shall
                not be deemed to have been "effected
                without receipt of consideration"
                by the Company.

            

      

      In
        the
        event of a proposed dissolution or liquidation of the Company, a merger or
        consolidation in which the Company is not the surviving entity, or a sale
        of all
        or substantially all of the assets or capital stock of the Company
        (collectively, a "Reorganization"),
        unless otherwise provided by the Board, this Option shall terminate immediately
        prior to such date as is determined by the Board, which date shall be no
        later
        than the consummation of such Reorganization. In such event, if the entity
        which
        shall be the surviving entity does not tender to Optionee an offer, for which
        it
        has no obligation to do so, to substitute for any unexercised Option a stock
        option or capital stock of such surviving of such surviving entity, as
        applicable, which on an equitable basis shall provide the Optionee with
        substantially the same economic benefit as such unexercised Option, then
        the
        Board may grant to such Optionee, in its sole and absolute discretion and
        without obligation, the right for a period commencing thirty (30) days prior
        to
        and ending immediately prior to the date determined by the Board pursuant
        hereto
        for termination of the Option or during the remaining term of the Option,
        whichever is the lesser, to exercise any unexpired Option or Options without
        regard to the installment provisions of Paragraph 6(d) of the Plan; provided,
        that any such right granted shall be granted to all Optionees not receiving
        an
        offer to receive substitute options on a consistent basis, and provided further,
        that any such exercise shall be subject to the consummation of such
        Reorganization.

      

      
        
          
          

        

        
          -6-

          
            

          

        

        
          
          

        

      

      Subject
        to any required action of shareholders, if the Company shall be the surviving
        entity in any merger or consolidation, each outstanding Option thereafter
        shall
        pertain to and apply to the securities to which a holder of shares of Stock
        equal to the shares subject to the Option would have been entitled by reason
        of
        such merger or consolidation.

      

      In
        the
        event of a change in the Stock of the Company as presently constituted, which
        is
        limited to a change of all of its authorized shares without par value into
        the
        same number of shares with a par value, the shares resulting from any such
        change shall be deemed to be the Stock within the meaning of the
        Plan.

      

      To
        the
        extent that the foregoing adjustments relate to stock or securities of the
        Company, such adjustments shall be made by the Board, whose determination
        in
        that respect shall be final, binding and conclusive. Except as expressly
        provided in this Section 5(i), the Optionee shall have no rights by reason
        of
        any subdivision or consolidation of shares of stock of any class or the payment
        of any stock dividend or any other increase or decrease in the number of
        shares
        of stock of any class, and the number or price of shares of Stock subject
        to any
        Option shall not be affected by, and no adjustment shall be made by reason
        of,
        any dissolution, liquidation, merger, consolidation or sale of assets or
        capital
        stock, or any issue by the Company of shares of stock of any class or securities
        convertible into shares of stock of any class.

      

      The
        Grant
        of an Option pursuant to the Plan shall not affect in any way the right or
        power
        of the Company to make any adjustments, reclassifications, reorganizations
        or
        changes in its capital or business structure or to merge, consolidate, dissolve,
        or liquidate or to sell or transfer all or any part of its business or
        assets.

      

      	(j)  	
              Rights
                as a Shareholder:
                An
                Optionee shall have no rights as a shareholder with respect to any
                shares
                covered by an Option until the effective date of the issuance of
                the
                shares following exercise of such Option by Optionee. No adjustment
                shall
                be made for dividends (ordinary or extraordinary, whether in cash,
                securities or other property) or distributions or other rights for
                which
                the record date is prior to the date such stock certificate is issued,
                except as expressly provided in Section 5(i) hereof.
                

            

      

      
        
          
          

        

        
          -7-

          
            

          

        

        
          
          

        

      

      	(k)  	
              Modification,
                Acceleration, Extension, and Renewal of Options:
                Subject to the terms and conditions and within the limitations of
                the
                Plan, the Board may modify an Option, or, once an Option is exercisable,
                accelerate the rate at which it may be exercised, and may extend
                or renew
                outstanding Options granted under the Plan or accept the surrender
                of
                outstanding Options (to the extent not theretofore exercised) and
                authorize the granting of new Options in substitution for such Options,
                provided such action is permissible under applicable state securities
                law.
                Notwithstanding the provisions of this Section 5(k), however, no
                modification of an Option shall, without the consent of the Optionee,
                alter to the Optionee's detriment or impair any rights or obligations
                under any Option theretofore granted under the
                Plan.

            

      

      	(l)  	
              Exercise
                Before Exercise Date:
                At
                the discretion of the Board, the Option may, but need not, include
                a
                provision whereby the Optionee may elect to exercise all or any portion
                of
                the Option prior to the stated exercise date of the Option or any
                installment thereof. Any shares so purchased prior to the stated
                exercise
                date shall be subject to repurchase by the Company upon termination
                of
                Optionee's employment as contemplated by Section 5(n) hereof prior
                to the
                exercise date stated in the Option and such other restrictions and
                conditions as the Board or Committee may deem
                advisable.

            

      

      	(m)  	
              Other
                Provisions:
                The Option agreements authorized under the Plan shall contain such
                other
                provisions, including, without limitation, restrictions upon the
                exercise
                of the Options, as the Board or the Committee shall deem advisable.
                Shares
                shall not be issued pursuant to the exercise of an Option, if the
                exercise
                of such Option or the issuance of shares thereunder would violate,
                in the
                opinion of legal counsel for the Company, the provisions of any applicable
                law or the rules or regulations of any applicable governmental or
                administrative agency or body, such as the Code, the Securities Act,
                the
                Exchange Act, state and securities laws, and the rules promulgated
                under
                the foregoing or the rules and regulations of any exchange upon which
                the
                shares of the Company are listed. Without limiting the generality
                of the
                foregoing, the exercise of each Option shall be subject to the condition
                that if at any time the Company shall determine that (i) the satisfaction
                of withholding tax or other similar liabilities, or (ii) the listing,
                registration or qualification of any shares covered by such exercise
                upon
                any securities exchange or under any state or federal law, or (iii)
                the
                consent or approval of any regulatory body, or (iv) the perfection
                of any
                exemption from any such withholding, listing, registration, qualification,
                consent or approval is necessary or desirable in connection with
                such
                exercise or the issuance of shares thereunder, then in any such event,
                such exercise shall not be effective unless such withholding, listing
                registration, qualification, consent, approval or exemption shall
                have
                been effected, obtained or perfected free of any conditions not acceptable
                to the Company.

            

      

      	(n)  	
              Repurchase
                Agreement:
                The Board may, in its discretion, require as a condition to the Grant
                of
                an Option hereunder, that an Optionee execute an agreement with the
                Company, in form and substance satisfactory to the Board in its discretion
                ("Repurchase
                Agreement"),
                (i) restricting the Optionee's right to transfer shares purchased
                under
                such Option without first offering such shares to the Company or
                another
                shareholder of the Company upon the same terms and conditions as
                provided
                therein; and (ii) providing that upon termination of Optionee's employment
                with the Company, for any reason, the Company (or another shareholder
                of
                the Company, as provided in the Repurchase Agreement) shall have
                the right
                at its discretion (or the discretion of such other shareholders)
                to
                purchase and/or redeem all such shares owned by the Optionee on the
                date
                of termination of his or her employment at a price equal to: (A)
                the fair
                value of such shares as of such date of termination; or (B) if such
                repurchase right lapses at 20% of the number of shares per year,
                the
                original purchase price of such shares, and upon terms of payment
                permissible under applicable state securities rules; provided that
                in the
                case of Options or Stock Awards granted to officers, directors,
                consultants or affiliates of the Company, such repurchase provisions
                may
                be subject to additional or greater restrictions as determined by
                the
                Board or Committee.

            

      

      
        
          
          

        

        
          -8-

          
            

          

        

        
          
          

        

      

      	6.  	
              Stock
                Awards and Restricted Stock Purchase
                Offers.

            

      

      	(a)  	
              Types
                of Grants.

            

      

      	(i)  	
              Stock
                Award.
                All or part of any Stock Award under the Plan may be subject to conditions
                established by the Board or the Committee, and set forth in the Stock
                Award Agreement, which may include, but are not limited to, continuous
                service with the Company, achievement of specific business objectives,
                increases in specified indices, attaining growth rates and other
                comparable measurements of Company performance. Such Awards may be
                based
                on Fair Market Value or other specified valuation. All Stock Awards
                will
                be made pursuant to the execution of a Stock Award Agreement substantially
                in the form attached hereto as Exhibit
                C.

            

      

      	(ii)  	
              Restricted
                Stock Purchase Offer.
                A
                Grant of a Restricted Stock Purchase Offer under the Plan shall be
                subject
                to such (i) vesting contingencies related to the Participant's continued
                association with the Company for a specified time and (ii) other
                specified
                conditions as the Board or Committee shall determine, in their sole
                discretion, consistent with the provisions of the Plan. All Restricted
                Stock Purchase Offers shall be made pursuant to a Restricted Stock
                Purchase Offer substantially in the form attached hereto as Exhibit
                D.

            

      

      	(b)  	
              Conditions
                and Restrictions.
                Shares of Stock which Participants may receive as a Stock Award under
                a
                Stock Award Agreement or Restricted Stock Purchase Offer under a
                Restricted Stock Purchase Offer may include such restrictions as
                the Board
                or Committee, as applicable, shall determine, including restrictions
                on
                transfer, repurchase rights, right of first refusal, and forfeiture
                provisions. When transfer of Stock is so restricted or subject to
                forfeiture provisions it is referred to as "Restricted
                Stock".
                Further, with Board or Committee approval, Stock Awards or Restricted
                Stock Purchase Offers may be deferred, either in the form of installments
                or a future lump sum distribution. The Board or Committee may permit
                selected Participants to elect to defer distributions of Stock Awards
                or
                Restricted Stock Purchase Offers in accordance with procedures established
                by the Board or Committee to assure that such deferrals comply with
                applicable requirements of the Code including, at the choice of
                Participants, the capability to make further deferrals for distribution
                after retirement. Any deferred distribution, whether elected by the
                Participant or specified by the Stock Award Agreement, Restricted
                Stock
                Purchase Offers or by the Board or Committee, may require the payment
                be
                forfeited in accordance with the provisions of Section 6(c). Dividends
                or
                dividend equivalent rights may be extended to and made part of any
                Stock
                Award or Restricted Stock Purchase Offers denominated in Stock or
                units of
                Stock, subject to such terms, conditions and restrictions as the
                Board or
                Committee may establish.

            

      

      
        
          
          

        

        
          -9-

          
            

          

        

        
          
          

        

      

      	(c)  	
              Cancellation
                and Rescission of Grants.
                Unless the Stock Award Agreement or Restricted Stock Purchase Offer
                specifies otherwise, the Board or Committee, as applicable, may cancel
                any
                unexpired, unpaid, or deferred Grants at any time if the Participant
                is
                not in compliance with all other applicable provisions of the Stock
                Award
                Agreement or Restricted Stock Purchase Offer, the Plan and with the
                following conditions:

            

      

      	(i)  	
              A
                Participant shall not render services for any organization or engage
                directly or indirectly in any business which, in the judgment of
                the chief
                executive officer of the Company or other senior officer designated
                by the
                Board or Committee, is or becomes competitive with the Company, or
                which
                organization or business, or the rendering of services to such
                organization or business, is or becomes otherwise prejudicial to
                or in
                conflict with the interests of the Company. For Participants whose
                employment has terminated, the judgment of the chief executive officer
                shall be based on the Participant's position and responsibilities
                while
                employed by the Company, the Participant's post-employment
                responsibilities and position with the other organization or business,
                the
                extent of past, current and potential competition or conflict between
                the
                Company and the other organization or business, the effect on the
                Company's customers, suppliers and competitors and such other
                considerations as are deemed relevant given the applicable facts
                and
                circumstances. A Participant who has retired shall be free, however,
                to
                purchase as an investment or otherwise, stock or other securities
                of such
                organization or business so long as they are listed upon a recognized
                securities exchange or traded over-the-counter, and such investment
                does
                not represent a substantial investment to the Participant or a greater
                than ten percent (10%) equity interest in the organization or
                business.

            

      

      	(ii)  	
              A
                Participant shall not, without prior written authorization from the
                Company, disclose to anyone outside the Company, or use in other
                than the
                Company's business, any confidential information or material, as
                defined
                in the Company's Proprietary Information and Invention Agreement
                or
                similar agreement regarding confidential information and intellectual
                property, relating to the business of the Company, acquired by the
                Participant either during or after employment with the Company.
                

            

      

      	(iii)  	
              A
                Participant, pursuant to the Company's Proprietary Information and
                Invention Agreement, shall disclose promptly and assign to the Company
                all
                right, title and interest in any invention or idea, patentable or
                not,
                made or conceived by the Participant during employment by the Company,
                relating in any manner to the actual or anticipated business, research
                or
                development work of the Company and shall do anything reasonably
                necessary
                to enable the Company to secure a patent where appropriate in the
                United
                States and in foreign countries.

            

      

      	(iv)  	
              Upon
                exercise, payment or delivery pursuant to a Grant, the Participant
                shall
                certify on a form acceptable to the Committee that he or she is in
                compliance with the terms and conditions of the Plan. Failure to
                comply
                with all of the provisions of this Section 6(c) prior to, or during
                the
                six months after, any exercise, payment or delivery pursuant to a
                Grant
                shall cause such exercise, payment or delivery to be rescinded. The
                Company shall notify the Participant in writing of any such rescission
                within two years after such exercise, payment or delivery. Within
                ten days
                after receiving such a notice from the Company, the Participant shall
                pay
                to the Company the amount of any gain realized or payment received
                as a
                result of the rescinded exercise, payment or delivery pursuant to
                a Grant.
                Such payment shall be made either in cash or by returning to the
                Company
                the number of shares of Stock that the Participant received in connection
                with the rescinded exercise, payment or
                delivery.

            

      

      
        
          
          

        

        
          -10-

          
            

          

        

        
          
          

        

      

      	(d)  	
              Nonassignability.

            

      

      	(i)  	
              Except
                pursuant to Section 6(e)(iii) and except as set forth in Section
                6(d)(ii),
                no Grant or any other benefit under the Plan shall be assignable
                or
                transferable, or payable to or exercisable by, anyone other than
                the
                Participant to whom it was granted.

            

      

      	(ii)  	
              Where
                a Participant terminates employment and retains a Grant pursuant
                to
                Section 6(e)(ii) in order to assume a position with a governmental,
                charitable or educational institution, the Board or Committee, in
                its
                discretion and to the extent permitted by law, may authorize a third
                party
                (including but not limited to the trustee of a "blind" trust), acceptable
                to the applicable governmental or institutional authorities, the
                Participant and the Board or Committee, to act on behalf of the
                Participant with regard to such Awards.

            

      

      	(e)  	
              Termination
                of Employment.
                If
                the employment or service to the Company of a Participant terminates,
                other than pursuant to any of the following provisions under this
                Section
                6(e), all unexercised, deferred and unpaid Stock Awards or Restricted
                Stock Purchase Offers shall be cancelled immediately, unless the
                Stock
                Award Agreement or Restricted Stock Purchase Offer provides otherwise:
                

            

      

      	(i)  	
              Retirement
                Under a Company Retirement Plan.
                When a Participant's employment terminates as a result of retirement
                in
                accordance with the terms of a Company retirement plan, the Board
                or
                Committee may permit Stock Awards or Restricted Stock Purchase Offers
                to
                continue in effect beyond the date of retirement in accordance with
                the
                applicable Grant Agreement and the exercisability and vesting of
                any such
                Grants may be accelerated.

            

      

      	(ii)  	
              Rights
                in the Best Interests of the Company.
                When a Participant resigns from the Company and, in the judgment
                of the
                Board or Committee, the acceleration and/or continuation of outstanding
                Stock Awards or Restricted Stock Purchase Offers would be in the
                best
                interests of the Company, the Board or Committee may (i) authorize,
                where
                appropriate, the acceleration and/or continuation of all or any part
                of
                Grants issued prior to such termination and (ii) permit the exercise,
                vesting and payment of such Grants for such period as may be set
                forth in
                the applicable Grant Agreement, subject to earlier cancellation pursuant
                to Section 9 or at such time as the Board or Committee shall deem
                the
                continuation of all or any part of the Participant's Grants are not
                in the
                Company's best interest.

            

      

      
        
          
          

        

        
          -11-

          
            

          

        

        
          
          

        

      

      	(iii)  	
              Death
                or Disability of a Participant. 

            

      

      	(1)  	
              In
                the event of a Participant's death, the Participant's estate or
                beneficiaries shall have a period up to the expiration date specified
                in
                the Grant Agreement within which to receive or exercise any outstanding
                Grant held by the Participant under such terms as may be specified
                in the
                applicable Grant Agreement. Rights to any such outstanding Grants
                shall
                pass by will or the laws of descent and distribution in the following
                order: (a) to beneficiaries so designated by the Participant; if
                none,
                then (b) to a legal representative of the Participant; if none, then
                (c)
                to the persons entitled thereto as determined by a court of competent
                jurisdiction. Grants so passing shall be made at such times and in
                such
                manner as if the Participant were living.

            

      

      	(2)  	
              In
                the event a Participant is deemed by the Board or Committee to be
                unable
                to perform his or her usual duties by reason of mental disorder or
                medical
                condition which does not result from facts which would be grounds
                for
                termination for cause, Grants and rights to any such Grants may be
                paid to
                or exercised by the Participant, if legally competent, or a committee
                or
                other legally designated guardian or representative if the Participant
                is
                legally incompetent by virtue of such
                disability.

            

      

      	(3)  	
              After
                the death or disability of a Participant, the Board or Committee
                may in
                its sole discretion at any time (1) terminate restrictions in Grant
                Agreements; (2) accelerate any or all installments and rights; and
                (3)
                instruct the Company to pay the total of any accelerated payments
                in a
                lump sum to the Participant, the Participant's estate, beneficiaries
                or
                representative; notwithstanding that, in the absence of such termination
                of restrictions or acceleration of payments, any or all of the payments
                due under the Grant might ultimately have become payable to other
                beneficiaries.

            

      

      	(4)  	
              In
                the event of uncertainty as to interpretation of or controversies
                concerning this Section 6, the determinations of the Board or Committee,
                as applicable, shall be binding and
                conclusive.

            

      

      	7.  	
              Investment
                Intent. All Grants under the Plan are intended to be exempt from
                registration under the Securities Act provided by Rule 701 thereunder.
                Unless and until the granting of Options or sale and issuance of
                Stock
                subject to the Plan are registered under the Securities Act or shall
                be
                exempt pursuant to the rules promulgated thereunder, each Grant under
                the
                Plan shall provide that the purchases or other acquisitions of Stock
                thereunder shall be for investment purposes and not with a view to,
                or for
                resale in connection with, any distribution thereof. Further, unless
                the
                issuance and sale of the Stock have been registered under the Securities
                Act, each Grant shall provide that no shares shall be purchased upon
                the
                exercise of the rights under such Grant unless and until (i) all
                then
                applicable requirements of state and federal laws and regulatory
                agencies
                shall have been fully complied with to the satisfaction of the Company
                and
                its counsel, and (ii) if requested to do so by the Company, the person
                exercising the rights under the Grant shall (i) give written assurances
                as
                to knowledge and experience of such person (or a representative employed
                by such person) in financial and business matters and the ability
                of such
                person (or representative) to evaluate the merits and risks of exercising
                the Option, and (ii) execute and deliver to the Company a letter
                of
                investment intent and/or such other form related to applicable exemptions
                from registration, all in such form and substance as the Company
                may
                require. If shares are issued upon exercise of any rights under a
                Grant
                without registration under the Securities Act, subsequent registration
                of
                such shares shall relieve the purchaser thereof of any investment
                restrictions or representations made upon the exercise of such
                rights.

            

      

      
        
          
          

        

        
          -12-

          
            

          

        

        
          
          

        

      

      	8.  	
              Amendment,
                Modification, Suspension or Discontinuance of the Plan. The Board
                may,
                insofar as permitted by law, from time to time, with respect to any
                shares
                at the time not subject to outstanding Grants, suspend or terminate
                the
                Plan or revise or amend it in any respect whatsoever, except that
                without
                the approval of the shareholders of the Company, no such revision
                or
                amendment shall (i) increase the number of shares subject to the
                Plan,
                (ii) decrease the price at which Grants may be granted, (iii) materially
                increase the benefits to Participants, or (iv) change the class of
                persons
                eligible to receive Grants under the Plan; provided, however, no
                such
                action shall alter or impair the rights and obligations under any
                Option,
                or Stock Award, or Restricted Stock Purchase Offer outstanding as
                of the
                date thereof without the written consent of the Participant thereunder.
                No
                Grant may be issued while the Plan is suspended or after it is terminated,
                but the rights and obligations under any Grant issued while the Plan
                is in
                effect shall not be impaired by suspension or termination of the
                Plan.

            

      

      In
        the
        event of any change in the outstanding Stock by reason of a stock split,
        stock
        dividend, combination or reclassification of shares, recapitalization, merger,
        or similar event, the Board or the Committee may adjust proportionally (a)
        the
        number of shares of Stock (i) reserved under the Plan, (ii) available for
        Incentive Stock Options and Nonstatutory Options and (iii) covered by
        outstanding Stock Awards or Restricted Stock Purchase Offers; (b) the Stock
        prices related to outstanding Grants; and (c) the appropriate Fair Market
        Value
        and other price determinations for such Grants. In the event of any other
        change
        affecting the Stock or any distribution (other than normal cash dividends)
        to
        holders of Stock, such adjustments as may be deemed equitable by the Board
        or
        the Committee, including adjustments to avoid fractional shares, shall be
        made
        to give proper effect to such event. In the event of a corporate merger,
        consolidation, acquisition of property or stock, separation, reorganization
        or
        liquidation, the Board or the Committee shall be authorized to issue or assume
        stock options, whether or not in a transaction to which Section 424(a) of
        the
        Code applies, and other Grants by means of substitution of new Grant Agreements
        for previously issued Grants or an assumption of previously issued
        Grants.

      

      	9.  	
              Tax
                Withholding. The Company shall have the right to deduct applicable
                taxes
                from any Grant payment and withhold, at the time of delivery or exercise
                of Options, Stock Awards or Restricted Stock Purchase Offers or vesting
                of
                shares under such Grants, an appropriate number of shares for payment
                of
                taxes required by law or to take such other action as may be necessary
                in
                the opinion of the Company to satisfy all obligations for withholding
                of
                such taxes. If Stock is used to satisfy tax withholding, such stock
                shall
                be valued based on the Fair Market Value when the tax withholding
                is
                required to be made. 

            

       

      	10.  	
              Availability
                of Information. During the term of the Plan and any additional period
                during which a Grant granted pursuant to the Plan shall be exercisable,
                the Company shall make available, not later than one hundred and
                twenty
                (120) days following the close of each of its fiscal years, such
                financial
                and other information regarding the Company as is required by the
                bylaws
                of the Company and applicable law to be furnished in an annual report
                to
                the shareholders of the Company. 

            

       

      
        
          
          

        

        
          -13-

          
            

          

        

        
          
          

        

      

      	11.  	
              Notice.
                Any written notice to the Company required by any of the provisions
                of the
                Plan shall be addressed to the chief personnel officer or to the
                chief
                executive officer of the Company, and shall become effective when
                it is
                received by the office of the chief personnel officer or the chief
                executive officer. 

            

      

      	12.  	
              Indemnification
                of Board. In addition to such other rights or indemnifications as
                they may
                have as directors or otherwise, and to the extent allowed by applicable
                law, the members of the Board and the Committee shall be indemnified
                by
                the Company against the reasonable expenses, including attorneys'
                fees,
                actually and necessarily incurred in connection with the defense
                of any
                claim, action, suit or proceeding, or in connection with any appeal
                thereof, to which they or any of them may be a party by reason of
                any
                action taken, or failure to act, under or in connection with the
                Plan or
                any Grant granted thereunder, and against all amounts paid by them
                in
                settlement thereof (provided such settlement is approved by independent
                legal counsel selected by the Company) or paid by them in satisfaction
                of
                a judgment in any such claim, action, suit or proceeding, except
                in any
                case in relation to matters as to which it shall be adjudged in such
                claim, action, suit or proceeding that such Board or Committee member
                is
                liable for negligence or misconduct in the performance of his or
                her
                duties; provided that within sixty (60) days after institution of
                any such
                action, suit or Board proceeding the member involved shall offer
                the
                Company, in writing, the opportunity, at its own expense, to handle
                and
                defend the same. 

            

       

      	13.  	
              Governing
                Law. The Plan and all determinations made and actions taken pursuant
                hereto, to the extent not otherwise governed by the Code or the securities
                laws of the United States, shall be governed by the law of the State
                of
                Texas and construed accordingly. 

            

      

      	14.  	
              Effective
                and Termination Dates. The Plan shall become effective on the date
                it is
                approved by the holders of a majority of the shares of Stock then
                outstanding. The Plan shall terminate ten years later, subject to
                earlier
                termination by the Board pursuant to Section 8.

            

    

     

    
      
        
        

      

      
        -14-

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