EXHIBIT
10.4
EMPLOYMENT
AGREEMENT
Employment
Agreement (“Agreement”) effective as of April 9, 2007
by and between Advanced Automation Group LLC (the
“Company” or “Employer”), a Delaware
limited liability company, and Xiaogang Luo (the
“Executive”) (collectively the Company and the
Executive are referred to as the “Parties”).
INTRODUCTION
WHEREAS , the Employer and the Executive wish to enter
into this Agreement to set forth the terms and conditions of the
Executive’s employment by the Company.
Accordingly, in
consideration of the mutual covenants and agreement set forth
herein and the mutual benefits to be derived herefrom, and
intending to be legally bound hereby, the Company and the Executive
agree as follows:
1.1
Duties.
The Company shall employ the
Executive on the terms and conditions set forth in this Agreement,
as Chief Engineer - (“Chief Engineer”). As Chief
Engineer , Executive will be responsible for managing managing
design and production of precision motor servo controllers for
industrial automation. The Executive accepts such employment with
the Company and shall perform and fulfill such other duties as are
assigned to him hereunder consistent with his status as a senior
executive of the Company, devoting his best efforts and
substantially all of his professional time and attention (which
shall constitute no less than forty (40) working hours per week) to
accomplish the performance and fulfillment of his duties hereunder
and to the advancement of the best interests of the Company,
subject only to the direction, approval, and control of the
Company’s specific directives of the Board of Managers of the
Company and Executive’s superiors (collectively,
“Senior Management”).
1.2
Place of
Performance. In
connection with his employment by the Company, the Executive shall
be based in the Minneapolis, Minnesota and Detroit, Michigan
metropolitan areas, except for required travel on Company
business.
2.
Term of
Employment.
The term of
employment of the Executive shall begin on the date entered above
and shall continue for eighteen (18) months, unless earlier
terminated as set forth herein. The Executive understands and
agrees that neither his job performance nor promotions,
commendations, bonuses or the like from the Company give rise to or
in any way serve as the basis for modification, amendment or
extension, by implication or otherwise, of his term of employment
with the Company.
3.
Compensation.
3.1
Base Salary.
During the term of this Agreement
the Executive shall receive a minimum annual salary (the
“Base Salary”) payable in installments at such times as
the Company customarily pays its other senior executive employees
and calculated as follows:
3.1.1
The Base Salary to be paid to
Executive shall be $95,000 on annualized basis;
3. 1.2
The Executive’s Base Salary
will be subject to review and adjustments will be made based upon
the Company’s normal performance review practices.
3.2
Bonus.
During the term of this Agreement,
the Executive may receive a bonus, which the Compensation Committee
of the Company’s Board of Managers shall determine annually
and which shall be based on the same criteria and/or formulae as
are used in determining the bonuses and non-salary distributions
paid to similarly situated employees.
3.3
Health Insurance and Other
Benefits. During the
term of this Agreement, the Executive shall be provided all
employee benefits provided by the Company to its management and all
other Company salaried employees, including without limitation, all
medical insurance and life insurance plans or arrangements and
shall be entitled to participate in all pension, profit sharing,
stock option and any other employee benefit plan or arrangement
established and maintained by the Company, all subject, however, to
the Company rules and policies then in effect regarding
participation therein. During the term of this Agreement, the
benefits provided to Executive, as described in the preceding
sentence, shall not be reduced except in accordance with the
general reduction of such benefits applicable to all salaried
employees generally, but then only to the extent that such benefits
are reduced for such other salaried employees.
4.
Reimbursement of
Expenses.
The Executive
shall be reimbursed for all items of travel, entertainment and
miscellaneous expenses which the Executive reasonably incurs in
connection with the performance of his duties hereunder, provided
that (a) all expenses over $500 are approved by Senior Management
prior to being incurred, (b) the Executive submits to the Company
on proper forms provided by the Company such statements and other
evidence supporting such expenses as the Company may reasonably
require and (c) such expenses meet the Company’s policy
concerning such matters.
5.
Vacations.
The Executive
shall be entitled to not less than three (3) weeks of paid vacation
in any calendar year (prorated in any Year during which the
Executive is employed hereunder for less than the entire
Year).
6.
Termination of
Employment.
6.1
Severance upon Termination
without Cause. If
the Executive’s employment is terminated by the Company
without Cause (as defined below) (the date of termination is
referred to as the “Termination Date”), then the
Company shall pay the Executive in lieu of other damages, an amount
(the “Severance Payments”) equal to his then current
Base Salary payable in installments at the same time the Company
pays salary to its other senior executive employees for four (4)
weeks (the “Severance Period”). The Company shall have
no liability to make any Severance Payments as provided for in this
paragraph unless (i) the Executive executes a Separation Agreement
and General Release in a form satisfactory to the Company, and (ii)
Executive complies with all provisions in Section 8 (Restrictive
Covenants). In addition, (i) any Company stock options not vested
at the time of termination shall immediately terminate and (ii) the
Company shall maintain during the Severance Period all employee
benefit plans and programs which the Executive participated in
immediately prior to such termination other than bonus, Commission,
incentive compensation and similar plans based on performance,
provided Executive’s participation is permissible under the
general terms and provisions of such plans. If Executive is
terminated for Cause, he shall receive only those amounts earned
but not distributed under the relevant plan, program or practice of
the Company.
6.2
Voluntary Termination;
Termination for Cause . If Executive’s employment with the
Company is terminated for “Cause” by the Company (as
defined below) or if the Executive voluntarily terminates his
employment with the Company at any time, then (i) all payments of
compensation by the Company to Executive hereunder will terminate
immediately (except as to amounts already earned), and (ii)
Executive will only be eligible for severance benefits in
accordance with the Company’s established policies as then in
effect.
7.
Definitions.
7.1
Cause.
For purposes of this Agreement,
“Cause” shall mean: (i) the Executive’s
continued substantial violations of his employment duties (other
than a failure resulting from the Executive’s in ability to
perform his duties because of illness or other physical or mental
incapacity (based on a medical report provided to the Company)
after the Executive has received written demand for performance
from the Company’s Chief Executive Officer or
Board which sets forth the factual basis for the
Company’s belief that the Executive has not substantially
performed his duties; (ii) the Executive engaging in illegal
conduct that was or is reasonably likely to
be materially injurious to the business or reputation of the
Company or its affiliates; (iii) the Executive’s
violation of a federal or state law or regulation materially
applicable to the Company’s Business; (iv) the
Executive’s material breach of the terms of any
confidentiality agreement or invention assignment agreement between
the Executive and the Company; or (v) the Executive being
convicted of, or entering a plea of nolo contendere to, a
felony (other than a traffic violation) or committing any act of
moral turpitude, dishonesty or fraud against, or the
misappropriation of material property belonging to, the Company or
its affiliates.
8.
Restrictive
Covenants.
8.1
Covenant Not to
Compete. Executive
recognizes that the Company is engaged in a highly competitive
business, personal contact is of primary importance in securing new
customers and in retaining the accounts and goodwill of present
customers and protecting the Business of the Company. The
Executive, therefore, agrees that during the Employment Period and
(x) during the Severance Period if Executive is receiving Severance
Payments or (y) after Executive’s employment is terminated
for Cause, for one (1) year following the Termination Date (either
of such periods of time is referred to as the “Restricted
Period”), he will not, with respect to the Company’s
Business (i) accept employment or render service to any Person that
is engaged in a business directly competitive with the
Company’s Business or (ii) enter into or t
