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. Employment

    


    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 take part in or lend his name,
      counsel or assistance to any business, either as proprietor, principal,
      investor, partner, director, officer, executive, consultant, advisor, agent,
      independent contractor, or in any other capacity whatsoever, for any purpose
      that would be competitive with the Company’s Business (all of the foregoing
      activities are collectively referred to as the “Prohibited Activity”). For these
      purposes, the Company’s Business shall mean (i)
      design, manufacturing and sales of precision servo motor controllers for
      industrial automation, and (ii) any other business engaged in by the Company
      on
      the Termination Date.

    


    8.2 Non-Disclosure
      of Information.
      The
      Executive shall:

    


    8.2.1 Never,
      directly or indirectly, disclose to any person or entity for any reason, or
      use
      for his own personal benefit, any “Confidential Information” as hereinafter
      defined; and

    


    8.2.2 At
      all
      times take all reasonable precautions necessary to protect from loss or
      disclosure by Executive or his subordinates any and all documents or other
      information containing, referring, or relating to such Confidential Information.
      Upon termination of employment with the Company for any reason, the Executive
      shall promptly return to the Company any and all documents or other tangible
      property containing, referring, or relating to such Confidential Information,
      whether prepared by him or others.

    


    8.2.3 Notwithstanding
      any provision to the contrary in Section 8, this paragraph shall not apply
      to
      information which the Executive is called upon by legal process (including,
      without limitation, by subpoena or discovery requirement) to disclose or any
      information which has become part of the public domain or is otherwise publicly
      disclosed through no fault or action of the Executive.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    8.2.4 For
      purposes of this Agreement, “Confidential Information” shall mean any
      information relating in any way to the business of the Company disclosed to
      or
      known to the Executive as a consequence of, result of, or through the
      Executive’s employment by the Company which may consist of, but not be limited
      to, technical and non-technical information about the Company’s proprietary
      products, processes, programs, concepts, forms, business methods, data, any
      and
      all financial and accounting data, employees, marketing, customers, customer
      lists, and services and information corresponding thereto acquired by the
      Executive during the term of the Executive’s employment by the Company.
      Confidential Information shall not include any of such items which are published
      or are otherwise part of the public domain, or freely available from trade
      sources or otherwise.

    


    8.2.5 Upon
      termination of this Agreement for any reason, the Executive shall return to
      a
      designated officer of the Company all equipment and/or tangible property then
      in
      the Executive’s possession or custody which belongs or relates to the Company,
      including, without limitation, copies or reproductions of correspondence,
      memoranda, reports, notebooks, drawings, photographs, data base, or any other
      documents or electronically stored information which constitutes Confidential
      Information.

    


    8.3 Trade
      Secrets - Intellectual Property Rights.
      Executive shall provide the Company with any copyrightable work, trade secrets
      and other protectable intellectual property that are related to the Company’s
      Business and that are developed or produced by Executive while in the employment
      of the Company pursuant to this Agreement (collectively, “Work
      Product”).

    


    8.3.1 All
      Work
      Product shall be considered works made for hire and shall be the exclusive
      property of the Company and the Company shall be considered the author and/or
      creator of such work for worldwide copyright purposes and renewals and
      extensions thereof. The Company may request, at its own cost and expense, that
      Executive assist the Company in obtaining worldwide patent, copyright and other
      property rights for the Work Product.

    


    8.3.2 If
      Executive’s rights in the Work Product cannot be assigned to the Company, the
      Executive waives enforcement of all such rights against the Company. The
      Executive further agrees to join in any action, at the Company’s sole cost and
      expense, to enforce or to procure a waiver of such rights.

    


    8.3.3 If
      the
      rights of the Work Product cannot be waived or the Work Product is not deemed
      a
“work for hire”, the Executive hereby grants the Company and its assigns a
      worldwide royalty-free license to reproduce, distribute, modify, publicly
      display, sublicense and assign such rights in all media or distribution
      technologies now known and hereinafter developed or devised.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    8.3.4 The
      Executive hereby appoints the Company as his attorney in fact to execute and
      file any patent, copyright or other lawful application with respect to the
      Work
      Product.

    


    8.4 Conflict
      of Interest.
      Executive shall exercise good judgment and maintain high ethical standards
      in
      the course of his dealings so as to preclude the possibility of a conflict
      between the interest of the Company and his own personal interest. Executive,
      therefore, has an obligation to avoid any activity, agreement, personal
      interest, or other relationship or situation which: (i) conflicts with the
      Company’s best interest; (ii) interferes with Executive’s responsibility to
      serve the Company to the best of Executive’s ability; or (iii) gives the
      appearance of self dealing.

    


    8.4.1 This
      policy requires that Executive shall not have any relationship, nor engage
      in
      any activity that might impair the independence or judgment in the execution
      of
      Executive’s duties. Executive shall not have any direct or indirect personal
      financial interests in suppliers of property, goods or services that would
      affect his decisions or actions on the Company’s behalf. Executive shall not
      accept gifts, benefits, or unusual hospitality that would be reasonably likely
      to influence Executive in the performance of his duties.

    


    8.4.2 If
      any
      possible conflict of interest situation arises, the Executive is responsible
      to
      immediately disclose the facts to the Board of Managers of the Company so that
      an evaluation may determine whether a problem exists and, if so, to eliminate
      it.

    


    8.5 Nonsolicitation.
      During
      the
      term of this Agreement and during the Restricted Period, Executive shall not,
      directly or indirectly, induce, attempt to induce, or aid others in inducing
      any
      of Company’s employees to accept employment or affiliation with another firm,
      partnership, association, or company. 

    


    8.6 Injunctive
      Relief/Legal Remedies.
      The
      Parties agree that the remedy at law for any breach by Executive of this
      Agreement, and specifically the provisions of Section 8 (“Restrictive
      Covenants”), will be inadequate and that the Company or any of its subsidiaries
      or other successors or assigns shall be entitled to injunctive relief without
      bond. Such injunctive relief shall not be exclusive, but shall be in addition
      to
      any other rights and remedies Company or any of its subsidiaries or their
      successors or assigns might have for such breach.

    


    8.6.1 The
      Employee acknowledges: (i) that compliance with the restrictive provisions
      contained in Section 8 is necessary to protect the business and goodwill of
      the
      Company and its subsidiaries, and (ii) that a breach of this Agreement will
      result in irreparable and continuing damage to the Company, for which monetary
      damages may not provide adequate relief. Consequently, Employee agrees that
      in
      the event of a breach or threatened breach of any of the restrictive covenants
      described herein, the Company, at its discretion, shall be entitled to seek
      both: (i) a preliminary and/or permanent injunction in order to prevent such
      damage, or continuation of such damage, and (ii) monetary damages as
      determinable. Nothing herein, however, shall be construed to restrict and/or
      prohibit the Company from pursuing any and all other remedies; the employee
      acknowledges that all remedies are cumulative.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    8.6.2 If
      any
      legal action arises to enforce the Company’s trade secrets, the prevailing party
      shall be entitled to recover any and all damages, as well as all costs and
      expenses, including reasonable attorney’s fees incurred in enforcing or
      attempting to enforce the Company’s trade secrets.

    


    9. Arbitration. 

    


    9.1 Any
      and
      all disputes, controversies and claims arising out of, or relating to, this
      Agreement, or with respect to the interpretation of this Agreement, or the
      rights or obligations of the Parties and their successors and permitted assigns,
      whether by operation of law or otherwise, shall be settled and determined by
      arbitration in New York, New York, pursuant to the then existing rules of the
      American Arbitration Association (“AAA”), for commercial arbitration. Each party
      shall pay their own legal fees. The losing party shall pay the fees and costs
      imposed by the AAA; if neither party clearly prevails in the arbitration, the
      parties shall request that the AAA appointed arbitrator apportion the AAA’s fees
      and costs between the parties. 

    


    9.2 The
      Parties covenant and agree that the decision of the AAA shall be final and
      binding and hereby waive their right to appeal therefrom.

    


    9.3 The
      arbitrator(s) will apply New York law to the merits of any dispute or claim,
      without reference to rules of conflicts of law. The arbitration proceedings
      will
      be governed by federal arbitration law and by then existing rules of the AAA,
      without reference to arbitration law. Executive and the Company hereby consent
      to the personal jurisdiction of the state and federal courts located in New
      York, New York for any action or proceeding arising from or relating to this
      Agreement or relating to any arbitration in which the Parties are
      participants.

    


    9.4 THE
      EXECUTIVE HAS READ AND UNDERSTANDS THIS SECTION, WHICH DISCUSSES ARBITRATION.
      THE EXECUTIVE UNDERSTANDS THAT BY SIGNING THIS AGREEMENT, EXECUTIVE AGREES
      TO
      SUBMIT ANY CLAIMS ARISING OUT OF, RELATING TO, OR IN CONNECTION WITH THIS
      AGREEMENT, OR THE INTERPRETATION, VALIDITY, CONSTRUCTION, PERFORMANCE, BREACH
      OR
      TERMINATION THEREOF TO BINDING ARBITRATION, AND THAT THIS ARBITRATION CLAUSE
      CONSTITUTES A WAIVER OF THE EXECUTIVE’S RIGHT TO A JURY TRIAL AND RELATES TO THE
      RESOLUTION OF ALL DISPUTES RELATING TO ALL ASPECTS OF THE EMPLOYER/EMPLOYEE
      RELATIONSHIP, INCLUDING BUT NOT LIMITED TO ADMINISTRATIVE CLAIMS.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    10. Miscellaneous.

    


    10.1 Notices.
      Any
      notice, demand or communication required or permitted under this Agreement
      shall
      be in writing and shall either be hand-delivered to the other party or mailed
      to
      the addresses set forth below by registered or certified mail, return receipt
      requested, or sent by overnight express mail or courier or facsimile to such
      address, if a party has a facsimile machine. Notice shall be deemed to have
      been
      given and received (i) when hand-delivered or after three (3) business days
      when
      deposited in the U.S. Mail, (ii) when transmitted and received by facsimile
      or
      sent by express mail properly addressed to the other party. The addresses
      are:

     

    To
      the
      Company:

    


    Advanced
      Automation Group LLC

    1685
      W.
      Hamlin Road

    Rochester
      Hills, Michigan 48309

     

    To
      the
      Executive:

    


    Xiaogang
      Luo

    14772
      64TH
      AVENUE
      NORTH

    MAPLE
      GROVE, MN 55311-4112

     

    The
      foregoing addresses may be changed at any time by either party by notice given
      in the manner herein provided.

    


    10.2 Integration;
      Modification.
      . This
      Agreement,
      the
      Letter Agreement dated as of March __, 2007 by and among Harbin Electric, Inc,
      Shelton Technology LLC, Executive and Xiaogang Luo ( the “Master Agreement”) and
      the License Agreement dated as of March __, 2007 by and between the Company,
      Shelton Technology LLC, Executive and Xiaogang Luo
      constitute the entire understanding and agreement between the Company and the
      Executive regarding its subject matter, and supersedes all prior negotiations
      and agreements or interpretations, whether oral or written. This Agreement
      may
      not be modified except by written agreement signed by the Executive and a duly
      authorized officer of the Company. In the event of any conflict between the
      terms of this Agreement and the terms of the Master Agreement, the terms of
      the
      Master Agreement shall govern. 

    


    10.3 Binding
      Effect.
      This
      Agreement shall be binding upon and inure to the benefit of the parties,
      including and their respective heirs, executors, successors and assigns, except
      that this Agreement may not be assigned by the Executive.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    10.4 Waiver
      of Breach.
      No
      waiver by either party of any condition or of the breach by the other of any
      term or covenant contained in this Agreement, whether conduct or otherwise,
      in
      any one (1) or more instances shall be deemed or construed as a further or
      continuing waiver of any such condition or breach or a waiver of any other
      condition, or the breach of any other term or covenant set forth in this
      Agreement. Moreover, the failure of either party to exercise any right hereunder
      shall not bar the later exercise thereof with respect to other future
      breaches.

    


    10.5 Governing
      Law.
      This
      Agreement shall be governed by the internal laws of the State of New
      York.

    


    10.6 Headings.
      The
      headings of the various sections and paragraphs have been included herein for
      convenience only and shall not be considered in interpreting this
      Agreement.

    


    10.7 Counterparts.
      This
      Agreement may be executed in several counterparts, each of which shall be deemed
      to be an original but all of which together will constitute one (1) and the
      same
      instrument.

    


    10.8 Due
      Authorization.
      The
      Company represents that all corporate action required to authorize the
      execution, delivery and performance of this Agreement has been duly
      taken.

     

    IN
      WITNESS WHEREOF,
      this
      Agreement has been executed by the Executive and on behalf of the Company by
      its
      duly authorized officer on the day and year first above written.

    
      	 	 	 
	 	
              ADVANCED
                AUTOMATION GROUP, LLC

            
	 
 	 
 	 
 
	
            	By:  	/s/
              Tianfu Yang    
	 	
              

              Chairman
                and Chief Executive Officer

            
	 	
              April
                9, 2007

              
                Date

              

            


    

     

    
      	 	 	 
	 	
              EXECUTIVE:

            
	 
 	 
 	 
 
	
            	
            	
              /s/
                Xiaogang Luo    

            
	 	
              

              Xiaogang
                Luo

            
	 	
              April
                9, 2007

              
                Date