Document:

Unassociated Document

    EXHIBIT
      10.9

     

    EMPLOYMENT
      AGREEMENT

     

    This
      EMPLOYMENT AGREEMENT (this “Agreement”),
      dated
      as of June 6, 2006 between Wang Changli, residing at No. 27 Building,
      Wanquanxinxin Community, Wanliu, Haidian District, Beijing “Executive”),
      and
      HLS Systems International, Ltd. a British Virgin Islands corporation having
      its
      principal office at 625 Broadway, Suite 1111, San Diego, CA 92101 (the
“Company”)

     

    WHEREAS,
      the Company believes that Executive provides unique management services for
      the
      Company and wishes to retain the continued services of Executive as its Chief
      Executive Officer; and

     

    WHEREAS,
      the Company and Executive have reached an understanding with respect to
      Executive’s employment with the Company for a three year period commencing as of
      the consummation of the stock purchase under the Stock Purchase Agreement dated
      as of February 2, 2006 (the “Gifted
      Time Transaction”)
      and

     

    WHEREAS,
      die Company and Executive desire to evidence their agreement in writing and
      to
      provide for the employment of Executive by the Company on the terms set forth
      herein.

     

    NOW,
      THEREFORE, IN CONSIDERATION of the foregoing facts, the mutual covenants and
      agreements contained herein and other good and valuable consideration, the
      parties hereby agree as follows:

     

    1. Employment,
      Duties and Acceptance.

     

    1.1 Effective
      as of the consummation of the Gifted Time Transaction, the Company hereby agrees
      to the employment of Executive as its Chief Executive Officer, and Executive
      hereby accepts such employment on the terms and conditions contained in this
      Agreement. During the term of this Agreement, Executive shall make himself
      available to the Company to pursue the business of the Company subject to the
      supervision and direction of the Board of Directors of the Company (the
“Board”
or
      “Board
      of Directors”).

     

    1.2 The
      Board
      may assign Executive such general management and supervisory responsibilities
      and executive duties for the Company as are appropriate and commensurate with
      Executive’s position as Chief Executive Officer of the Company and would
      otherwise be consistent in stature and prestige with the responsibilities of
      a
      Chief Executive Officer.

     

    1.3 Executive
      accepts such employment and agrees to devote substantially all of his business
      time, energies and attention to the performance of his duties hereunder and
      as
      an executive officer or director of subsidiaries of the Company; provided,
      however, that Executive may continue to be actively involved in educational
      and
      civic activities to the extent that such activities do not materially detract
      from the reasonable performance of his duties (such material detraction to
      be
      evidenced by a resolution approved by the majority of the Board and a written
      notice to Executive, in which event Executive shall have one hundred and twenty
      (120) days to

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    reduce
      the level of such activities in a reasonable manner). The Company recognizes
      the
      value to it of Executive’s continued involvement in these activities taken on
      behalf of the Company and will reimburse Executive for reasonable expenses
      incurred by him in connection with such activities. Nothing herein shall be
      construed as preventing Executive from (i) making and supervising investments
      on
      a personal or family basis (including trusts, funds and investment entities
      in
      which Executive or members of his family have an interest) and (ii) serving
      on
      the Board of Directors of not more than five corporations involved primarily
      in
“for profit” business activities; provided, however, that these activities do
      not materially interfere with the performance of his duties hereunder or violate
      the provisions of Section 4.4 hereof.

     

    2. Compensation
      and Benefits.

     

    2.1 The
      Company shall pay to Executive a salary at an annual base rate of not less
      than
      US$120,000 during the term hereof. During Executive’s employment, salary will be
      paid not less frequently than every two weeks without the prior written consent
      of Executive.

     

    2.2 The
      Company shall also pay to Executive such bonuses as may be determined from
      time
      to time by the Compensation Committee of the Board of Directors. The amount
      of
      annual bonus payable to Executive may vary at the discretion of the Compensation
      Committee of the Board of Directors; provided, however, that the total annual
      bonus shall not exceed 250% of Executive’s annual base rate under Section 2.1 as
      of the date the bonus is awarded. In determining the annual bonus to be paid
      to
      Executive, the Compensation Committee may, among other factors they believe
      to
      be appropriate, consider, and give varying degrees of importance to, Executive’s
      contribution to the following:

     

    (a) achievement
      by the Company of specific identified targets selected by the Committee from
      time to time;

     

    (b) the
      attraction and retention of key executive personnel by the Company;

     

    (c) satisfaction
      of the Company’s capital requirements;

     

    (d) the
      establishment of strategic direction and significant Company goals;

     

    (e) growth
      in
      the Company’s per share value; and

     

    (f) such
      other criteria as the Compensation Committee deems to be relevant.

     

    2.3 Executive
      shall be entitled to such insurance and other benefits including, among others,
      medical and disability coverage and life insurance as are afforded to other
      senior executives of the Company, subject to applicable waiting periods and
      other conditions which may be generally applicable. The Company also shall
      purchase if possible (i) long term disability insurance of not less than 50%
      of
      Executive’s then current annual salary and (ii) split dollar life insurance with
      coverage of not less than $1.0 million. The beneficiary of these

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    policies
      shall be designated by Executive and these policies shall be transferred to
      Executive or his designees by the Company at his written request.

     

    2.4 Executive
      shall be entitled to five weeks of vacation in each calendar year and to a
      reasonable number of other days off for religious and personal
      reasons.

     

    2.5 Executive
      shall be entitled, at his option, to maintain a suitable automobile for business
      use. The Company or one of its subsidiaries shall reimburse Executive for the
      costs of leasing such automobile and for all other costs associated with the
      use
      of the vehicle, including insurance costs, repairs and maintenance.

     

    2.6 The
      Company will pay or reimburse executive for all transportation, hotel and other
      expenses incurred by Executive on business trips (including business or first
      class air travel on scheduled flights of more than five (5) consecutive hours)
      and for all other ordinary and reasonable out-of-pocket expenses actually
      incurred by him in the conduct of the business of the Company against itemized
      vouchers submitted with respect to any such expenses.

     

    2.7 The
      Company shall not require Executive to move within fifty (50) miles of his
      current personal residence located in Beijing, China without Executive’s written
      consent. If such consent is provided, the Company will reimburse Executive
      for
      the following, which may be taxable to Executive:

     

    (a) Usual
      and
      customary expenses incurred if Executive sells his home himself or through
      a
      broker; however, reimbursement for the broker’s commission (if Executive
      utilizes the services of a broker) may not exceed six (6) percent of the sales
      proceeds;

     

    (b) Reasonable
      expenses incurred in moving furniture, normal household goods and personal
      belongings to the new location and incidental expenses related to the
      move;

     

    (c) Reasonable
      expenses (including travel and hotel) while house-hunting, including four trips
      to the new location with Executive’s spouse and children;

     

    (d) Reasonable
      and customary closing costs incurred in buying Executive’s new home;
      and

     

    (e) Reasonable
      temporary living expenses incurred while awaiting occupancy in Executive’s new
      quarters.

     

    3. Term
      and Termination.

     

    3.1 The
      term
      of this Agreement commences as of the consummation of the Gifted Time
      Transaction and shall continue for three (3) years unless sooner terminated
      as
      herein provided.

     

    3.2 If
      Executive dies during the term of this Agreement, this Agreement shall thereupon
      terminate, except that the Company shall pay to the legal representative of
      Executive’s estate the base salary due Executive pursuant to Section 2.1 hereof
      through the first anniversary

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    of
      Executive’s death (or the scheduled expiration under Section 3.1, if earlier
      than the first anniversary date) as well as a pro rata allocation of bonus
      payments under Section 2.2 based on the days of service during the year of
      death, and all amounts owing to Executive at the time of termination, including
      for previously accrued but unpaid bonuses, expense reimbursements and accrued
      but unused vacation pay.

     

    3.3 If
      Executive shall be rendered incapable by an incapacitating illness or disability
      (either physical or mental) of complying with the terms, provisions and
      conditions hereof on his part to be performed for a period in excess of 180
      consecutive days during any consecutive twelve (12) month period, then the
      Company, at its option, may terminate this Agreement by written notice to
      Executive (the “Disability
      Notice”)
      delivered prior to the date Executive resumes the rendering of services
      hereunder; provided, however, if requested by Executive (or a representative
      thereof) such termination shall not occur until after examination of Executive
      by a medical doctor (retained by the Company with the consent of Executive
      which
      consent shall not be unreasonably withheld) who certifies in a written report
      to
      the Board with a copy of such report delivered simultaneously to Executive
      that
      Executive is and shall be incapable of performing his duties for in excess
      of
      two additional months because of the continuing existence of such incapacitating
      illness or disability. Notwithstanding such termination, the Company (a) shall
      make a payment to Executive of a pro rata allocation of payments under Section
      2.2 based on the days of service during the year in which the Disability Notice
      is delivered and (b) shall pay to Executive the base salary due Executive
      pursuant to Section 2.1 hereof through the second anniversary of the date of
      such notice (the “Disability
      Period”),
      less
      any amount Executive receives for such period from any Company-sponsored or
      Company-paid for source of insurance, disability compensation or governmental
      program. The Company shall also pay to Executive all amounts owing to Executive
      at the time of termination, including for previously accrued but unpaid bonuses,
      expense reimbursements and accrued but unused vacation pay.

     

    3.4 The
      Company, by notice to Executive, may terminate this Agreement for Cause. As
      used
      herein, “Cause” means (a) the refusal in bad faith by Executive to carry out
      specific written directions of the Board, (b) intentional fraud or dishonest
      action by Executive in his relations with the Company (“dishonest” for these
      purposes shall mean Executive’s knowingly making of a material misstatement to
      the Board for the purpose of obtaining direct personal benefit); or (c) the
      conviction of Executive of any crime involving an act of significant moral
      turpitude after appeal or the period for appeal has elapsed without an appeal
      being filed by Executive. Notwithstanding the foregoing, no Cause for
      termination shall be deemed to exist with respect to Executive’s acts described
      in clause (a) or (b) above, unless the Board shall have given written notice
      to
      Executive (after five (5) days advance written notice to Executive and a
      reasonable opportunity to Executive to present his views with respect to the
      existence of Cause), specifying the Cause with particularity and , within twenty
      (20) business days after such notice, Executive shall not have disputed the
      Board’s determination or in reasonably good faith taken action to cure or
      eliminate prospectively the problem or thing giving rise to such Cause,
      provided, however, that a repeated breach after notice and cure, of any
      provision of clause (a) or (b) above, involving the same or substantially
      similar actions or conduct, shall be grounds for termination for cause upon
      not
      less than five (5) days additional notice from the Company.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    3.5 Executive,
      by notice to the Company, may terminate this Agreement if a Good Reason exists.
      For purposes of this Agreement, “Good Reason” means the occurrence of any of the
      following circumstances without Executive’s prior express written consent: (a) a
      material adverse change in the nature of Executive’s title, duties or
      responsibilities with the Company that represents a demotion from his title,
      duties or responsibilities as in effect immediately prior to such change; (b)
      a
      material breach of this Agreement by the Company; (c) a failure by the Company
      to make any payment to Executive when due, unless the payment is not material
      and is being contested by the Company, in good faith; (d) a liquidation,
      bankruptcy or receivership of the Company; or (e) if Executive is at any time
      not a member of the Board of Directors of the Company and a member of the
      Executive Committee thereof (if such a committee exists), unless he voluntarily
      resigns therefrom; or (f) any person or entity other than the Company and/or
      any
      officers or directors of the Company as of the date of this Agreement acquires
      securities of the Company other than from Executive or his affiliates (in one
      or
      more transactions) having 51% or more of the total voting power of all the
      Company’s securities then outstanding.

     

    Notwithstanding
      the foregoing, no Good Reason shall be deemed to exist with respect to the
      Company’s acts described in clauses (a), (b) or (c) above, unless Executive
      shall have given written notice to the Company specifying the Good Reason with
      reasonable particularity and, within twenty (20) business days after such
      notice, the Company shall not have cured or eliminated the problem or thing
      giving rise to such Good Reason; provided, however, that a repeated breach
      after
      notice and cure of any provision of clauses (a), (b) or (c) above involving
      the
      same or substantially similar actions or conduct, shall be grounds for
      termination for Good Reason without any additional notice from
      Executive.

     

    3.6 In
      the
      event that Executive terminates this Agreement for Good Reason, pursuant to
      the
      provisions of paragraph 3.5, or the Company terminates this Agreement without
      Cause, as defined in paragraph 3.4, the Company shall pay to Executive (or
      in
      the case of his death, the legal representative of Executive’s estate or such
      other person or persons as Executive shall have designated by written notice
      to
      the Company), the compensation at an annual base rate of US$500,000 from the
      date of termination to the term of this Agreement; provided, however, that
      Executive’s insurance coverage shall terminate upon Executive becoming covered
      under a similar program by reason of employment elsewhere. If Executive’s
      employment is terminated for Good Reason or without Cause, Executive shall
      have
      no duty to mitigate awards paid or payable to him pursuant to this subsection,
      and any compensation paid or payable to Executive from sources other than the
      Company will not offset or terminate the Company’s obligation to pay to
      Executive the full amounts pursuant to this subsection 3.6.

     

    4. Protection
      of Confidential Information; Non-Competition.

     

    4.1 Executive
      acknowledges that:

     

    (a) As
      a
      result of his current employment with the Company, Executive will obtain secret
      and confidential information concerning the business of the Company and its
      subsidiaries and affiliates (referred to collectively in this Article 4 as
      the
“Company”), including, without limitation, financial information, designs and
      other proprietary rights, trade secrets and know-how, customers and sources
      (“Confidential Information”).

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (b) The
      Company will suffer substantial damage which will be difficult to compute if,
      during the period of his employment with the Company or thereafter, Executive
      should enter a business competitive with the Company or divulge Confidential
      Information.

     

    (c) The
      provisions of this Agreement are reasonable and necessary for the protection
      of
      the business of the Company.

     

    4.2 Executive
      agrees that he will not at any time, either during the term of this Agreement
      or
      thereafter, divulge to any person or entity any Confidential Information
      obtained or learned by him as a result of his employment with the Company,
      except (i) in the course of performing his duties hereunder, (ii) to the extent
      that any such information is in the public domain other than as a result of
      Executive’s breach of any of his obligations hereunder, (iii) where required to
      be disclosed by court order, subpoena or other government process or (iv) if
      such disclosure is made without Executive’s knowing intent to cause material
      harm to the Company. If Executive shall be required to make disclosure pursuant
      to the provisions of clause (iii) of the preceding sentence, Executive promptly,
      but in no event more than 72 hours after learning of such subpoena, court order,
      or other government process, shall notify, by personal delivery or by electronic
      means, confirmed by mail, the Company and, at the Company’s expense, Executive
      shall: (a) take reasonably necessary and lawful steps required by the Company
      to
      defend against the enforcement of such subpoena, court order or other government
      process, and (b) permit the Company to intervene and participate with counsel
      of
      its choice in any proceeding relating to the enforcement thereof.

     

    4.3 Upon
      termination of his employment with the Company, Executive will promptly deliver
      to the Company all memoranda, notes, records, reports, manuals, drawings,
      blue-prints and other documents (and all copies thereof) relating to the
      business of the Company and all property associated therewith, which he may
      then
      possess or have under his control; provided, however, that Executive shall
      be
      entitled to retain one copy of such documents for his personal use and
      records.

     

    4.4 During
      the period commencing upon the closing of the Gifted Time Transaction and
      terminating three years after termination of employment, Executive, without
      the
      prior written permission of the Company, shall not, anywhere in the People’s
      Republic of China, (i) enter into the employ of or render any services to any
      person, firm or corporation engaged in any business which is directly in
      competition with the Company’s principal existing business at the time of
      termination (“Competitive Business”); (ii) engage in any Competitive Business as
      an individual, partner, shareholder, creditor, director, officer, principal,
      agent, employee, trustee consultant, advisor or in any other relationship or
      capacity; (iii) employ, or have or cause any other person or entity to employ,
      any person who was employed by the Company at the time of termination of
      Executive’s employment by the Company (other than Executive’s personal secretary
      and assistant); or (iv) solicit, interfere with, or endeavor to entice away
      from
      the Company, for the benefit of a Competitive Business, any of its customers.
      Notwithstanding the foregoing, Executive shall not be precluded from investing
      and managing the investment of, his or his family’s assets in the securities of
      any corporation or other business entity which is engaged in a Competitive
      Business if such securities are traded on a national stock exchange or in the
      over-the-counter market and if such investment does not result in his
      beneficially owning,

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    at
      any
      time, more than 5% of any class of the publicly-traded equity securities of
      such
      Competitive Business; provided, however, that for a period commencing upon
      the
      closing of the Gifted Time Transaction and terminating three years after
      termination of Executive’s employment (except for investments in a class of
      securities trading on public markets), Executive shall refer to the Company
      for
      consideration (before any other party) any and all opportunities to acquire
      or
      purchase, or otherwise make equity or debt investments in, companies primarily
      involved in a Competitive Business if such opportunities becomes known to
      Executive while he is the Chief Executive Officer of the Company. If the Company
      determines not to exploit any opportunity referred to in the foregoing sentence,
      the Company shall determine what, if anything, should be done with such
      opportunity. Executive shall not be entitled to any compensation, as a finder
      or
      otherwise, if either the Company or Executive introduces such opportunity to
      other persons, it being understood that all such compensation shall be paid
      to
      the Company. Notwithstanding the foregoing, in the event the Company terminates
      this Agreement without cause or if Executive terminates this Agreement for
      Good
      Reason under Section 3.5 hereof, Executive’s obligations under this Section 4.4
      shall terminate one month following termination.

     

    4.5 If
      Executive commits a breach of any of the provisions of Sections 4.2 or 4.4,
      the
      Company shall have the right:

     

    (a) to
      have
      the provisions of this Agreement specifically enforced by any court having
      equity jurisdiction, it being acknowledged and agreed by Executive that the
      services being rendered hereunder to the Company are of a special, unique and
      extraordinary character and that any breach or threatened breach will cause
      irreparable injury to the Company and that money damages will not provide an
      adequate remedy to the Company; and

     

    (b) to
      require Executive to account for and pay over to the Company all monetary
      damages determined by a non-appealable decision by a court of law to have been
      suffered by the Company as the result of any actions constituting a breach
      of
      any of the provisions of Section 4.2 or 4.4, and Executive hereby agrees to
      account for and pay over such damages to the Company (up to the maximum of
      all
      payments made under the Agreement).

     

    4.6 If
      Executive shall violate any covenant contained in Section 4.4, the duration
      of
      such covenant so violated shall be automatically extended for a period of time
      equal to the period of such violation.

     

    4.7 If
      any
      provision of Sections 4.2 or 4.4 is held to be unenforceable because of the
      scope, duration or area of its applicability, the tribunal making such
      determination shall not have the power to modify such scope, duration, or area,
      or all of them and such provision or provisions shall be void ab
      initio.

     

    5. Miscellaneous
      Provisions.

     

    5.1 All
      notices provided for in this Agreement shall be in writing, and shall be deemed
      to have been duly given when delivered personally to the party to receive the
      same, when transmitted by electronic means, or when mailed first class postage
      prepared, by certified mail, return receipt requested, addressed to the party
      to
      receive the same at his or its address set forth below, or such other address
      as
      the party to receive the same shall have specified by written

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    notice
      given in the manner provided for in this Section 5.1. All notices shall be
      deemed to have been given as of the date of personal delivery, transmittal
      or
      mailing thereof.

     

    If
      to
      Executive:

    Wang
      Changli

    No. 10
      Jiancaicheng Middle Road

    Xisanqi,
      Haidian District, Beijing 100096

    Fax:
      (8610)82923980

     

    If
      to the
      Company:

    HLS
      Systems International, Ltd.

    625
      Broadway, Suite 1111

    San
      Diego, CA 92101

    Fax:
      619-795-9639

     

    5.2 In
      the
      event of any claims, litigation or other proceedings arising under this
      Agreement (including, among others, arbitration under Section 3.4), Executive
      shall be reimbursed by the Company within thirty (30) days after delivery to
      the
      Company of statements for the costs incurred by Executive in connection with
      the
      analysis, defense and prosecution thereof, including reasonable attorneys’ fees
      and expenses; provided, however, that Executive shall reimburse the Company
      for
      all such costs if it is determined by a non-appealable final decision of a
      court
      of law that Executive shall have acted in bad faith with the intent to cause
      material damage to the Company in connection with any such claim, litigation
      or
      proceeding.

     

    5.3 The
      Company, shall to the fullest extent permitted by law, indemnify Executive
      for
      any liability, damages, losses, costs and expenses arising out of alleged or
      actual claims (collectively, “Claims”) made against Executive for any actions or
      omissions as an officer and/or director of the Company or its subsidiary. To
      the
      extent that the Company obtains director and officers insurance coverage for
      any
      period in which Executive was an officer, director or consultant to the Company,
      Executive shall be a named insured and shall be entitled to coverage
      thereunder.

     

    5.4 The
      provision of Article 4, Sections 5.2 and 5.3 and any provisions relating to
      payments owed to Executive after termination of employment shall survive
      termination of this Agreement for any reason.

     

    5.5 This
      Agreement sets forth the entire agreement of the parties relating to the
      employment of Executive and are intended to supersede all prior negotiations,
      understandings and agreements. No provisions of this Agreement may be waived
      or
      changed except by a writing by the party against whom such waiver or change
      is
      sought to be enforced. The failure of any party to require performance of any
      provision hereof or thereof shall in no manner affect the right at a later
      time
      to enforce such provision.

     

    5.6 All
      questions with respect to the construction of this Agreement, and the rights
      and
      obligations of the parties hereunder, shall be determined in accordance with
      the
      law of the British Virgin Islands applicable to agreements made and to be
      performed entirely in the British Virgin Islands.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    5.7 This
      Agreement shall inure to the benefit of and be binding upon the successors
      and
      assigns of the Company. This Agreement shall not be assignable by Executive,
      but
      shall inure to the benefit of and be binding upon Executive’s heirs and legal
      representatives.

     

    5.8 Should
      any provision of this Agreement become legally unenforceable, no other provision
      of this Agreement shall be affected, and this Agreement shall continue as if
      the
      Agreement had been executed absent the unenforceable provision.

     

    IN
      WITNESS WHEREOF, the parties have executed this Agreement as of the date first
      above written.

     

    
      	
              “COMPANY”

               

              HLS
                SYSTEMS INTERNATIONAL, LTD.

               

              By:________________________________________

               

              Title:_______________________________________

            	
              “EXECUTIVE”

               

              WANG
                CHANGLI

               

              By:
                /s/ Wang Changli

            

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    5.9 Should
      any provision of this Agreement become legally unenforceable, no other provision
      of this Agreement shall be affected, and this Agreement shall continue as if
      the
      Agreement had been executed absent the unenforceable provision.

     

    IN
      WITNESS WHEREOF, the parties have executed this Agreement as of the date first
      above written.

     

    
      	
              “COMPANY”

               

              HLS
                SYSTEMS INTERNATIONAL, LTD.

               

              By:_______________________________________

               

              Title:______________________________________

            	
              “EXECUTIVE”

               

              WANG
                CHANGLI

               

              By:
                /s/ Wang Changli

            

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    5.10 Should
      any provision of this Agreement become legally unenforceable, no other provision
      of this Agreement shall be affected, and this Agreement shall continue as if
      the
      Agreement had been executed absent the unenforceable provision.

     

    IN
      WITNESS WHEREOF, the parties have executed this Agreement as of the date first
      above written.

     

    
      	
              “COMPANY”

               

              HLS
                SYSTEMS INTERNATIONAL, LTD.

               

              By:_______________________________________

               

              Title:______________________________________

            	
              “EXECUTIVE”

               

              WANG
                CHANGLI

               

              By:
                /s/ Wang ChangliUnassociated Document

    EXHIBIT
      10.10

     

    EMPLOYMENT
      AGREEMENT

     

    This
      EMPLOYMENT AGREEMENT (this “Agreement”),
      dated
      as of June 6, 2006 between Qiao Li, residing at No. 6 Building,
      Zhuchundongli, Shuangyushu, Haidian District, Beijing (“Executive”), and HLS
      Systems International, Ltd. a British Virgin Islands corporation having its
      principal office at 625 Broadway, Suite 1111, San Diego, CA 92101 (the
“Company”)

     

    WHEREAS,
      the Company believes that Executive provides unique management services for
      the
      Company and wishes to retain the continued services of Executive as its Chairman
      of the Board of Directors; and

     

    WHEREAS,
      the Company and Executive have reached an understanding with respect to
      Executive’s employment with the Company for a three year period commencing as of
      the consummation of the stock purchase under the Stock Purchase Agreement dated
      as of February 2, 2006 (the “Gifted
      Time Transaction”)
      and

     

    WHEREAS,
      the Company and Executive desire to evidence their agreement in writing and
      to
      provide for the employment of Executive by the Company on the terms set forth
      herein.

     

    NOW,
      THEREFORE, IN CONSIDERATION of the foregoing facts, the mutual covenants and
      agreements contained herein and other good and valuable consideration, the
      parties hereby agree as follows:

     

    1. Employment,
      Duties and Acceptance.

     

    1.1 Effective
      as of the consummation of the Gifted Time Transaction, the Company hereby agrees
      to the employment of Executive as its Chairman of the Board of Directors, and
      Executive hereby accepts such employment on the terms and conditions contained
      in this Agreement. During the term of this Agreement, Executive shall make
      herself available to the Company to pursue the business of the Company subject
      to the supervision and direction of the Board of Directors of the Company (the
      “Board”
or
      “Board
      of Directors”).

     

    1.2 The
      Board
      may assign Executive such general management and supervisory responsibilities
      and executive duties for the Company as are appropriate and commensurate with
      Executive’s position as Chairman of the Board of the Company and would otherwise
      be consistent in stature and prestige with the responsibilities of Chairman
      of
      the Board.

     

    1.3 Executive
      accepts such employment and agrees to devote substantially all of her business
      time, energies and attention to the performance of her duties hereunder and
      as
      Chairman of the Board of the Company; provided, however, that Executive may
      continue to be actively involved in educational and civic activities to the
      extent that such activities do not materially detract from the reasonable
      performance of her duties (such material detraction to be evidenced by a
      resolution approved by the majority of the Board and a written notice to
      Executive, in which event Executive shall have one hundred and twenty (120)
      days
      to reduce the level of such activities in a reasonable manner). The Company
      recognizes the value to it of Executive’s continued involvement in these
      activities taken on behalf of the Company and will

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    reimburse
      Executive for reasonable expenses incurred by her in connection with such
      activities. Nothing herein shall be construed as preventing Executive from
      (i)
      making and supervising investments on a personal or family basis (including
      trusts, funds and investment entities in which Executive or members of her
      family have an interest) and (ii) serving on the Board of Directors of not
      more
      than five corporations involved primarily in “for profit” business activities;
      provided, however, that these activities do not materially interfere with the
      performance of her duties hereunder or violate the provisions of Section 4.4
      hereof.

     

    2. Compensation
      and Benefits.

     

    2.1 The
      Company shall pay to Executive a salary at an annual base rate of not less
      than
      US$120,000 during the term hereof. During Executive’s employment, salary will be
      paid not less frequently than every two weeks without the prior written consent
      of Executive.

     

    2.2 The
      Company shall also pay to Executive such bonuses as may be determined from
      time
      to time by the Compensation Committee of the Board of Directors. The amount
      of
      annual bonus payable to Executive may vary at the discretion of the Compensation
      Committee of the Board of Directors; provided, however, that the total annual
      bonus shall not exceed 250% of Executive’s annual base rate under Section 2.1 as
      of the date the bonus is awarded. In determining the annual bonus to be paid
      to
      Executive, the Compensation Committee may, among other factors they believe
      to
      be appropriate, consider, and give varying degrees of importance to, Executive’s
      contribution to the following:

     

    (a) achievement
      by the Company of specific identified targets selected by the Committee from
      time to time;

     

    (b) the
      attraction and retention of key executive personnel by the Company;

     

    (c) satisfaction
      of the Company’s capital requirements;

     

    (d) the
      establishment of strategic direction and significant Company goals;

     

    (e) growth
      in
      the Company’s per share value; and

     

    (f) such
      other criteria as the Compensation Committee deems to be relevant.

     

    2.3 Executive
      shall be entitled to such insurance and other benefits including, among others,
      medical and disability coverage and life insurance as are afforded to other
      senior executives of the Company, subject to applicable waiting periods and
      other conditions which may be generally applicable. The Company also shall
      purchase if possible (i) long term disability insurance of not less than 50%
      of
      Executive’s then current annual salary and (ii) split dollar life insurance with
      coverage of not less than $1.0 million. The beneficiary of these policies
      shall be designated by Executive and these policies shall be transferred to
      Executive or her designees by the Company at her written request.

     

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

     

    2.4 Executive
      shall be entitled to five weeks of vacation in each calendar year and to a
      reasonable number of other days off for religious and personal
      reasons.

     

    2.5 Executive
      shall be entitled, at her option, to maintain a suitable automobile for business
      use. The Company or one of its subsidiaries shall reimburse Executive for the
      costs of leasing such automobile and for all other costs associated with the
      use
      of the vehicle, including insurance costs, repairs and maintenance.

     

    2.6 The
      Company will pay or reimburse executive for all transportation, hotel and other
      expenses incurred by Executive on business trips (including business or first
      class air travel on scheduled flights of more than five (5) consecutive hours)
      and for all other ordinary and reasonable out-of-pocket expenses actually
      incurred by she in the conduct of the business of the Company against itemized
      vouchers submitted with respect to any such expenses.

     

    2.7 The
      Company shall not require Executive to move within fifty (50) miles of her
      current personal residence located in Beijing, China without Executive’s written
      consent. If such consent is provided, the Company will reimburse Executive
      for
      the following, which may be taxable to Executive:

     

    (a) Usual
      and
      customary expenses incurred if Executive sells her home herself or through
      a
      broker; however, reimbursement for the broker’s commission (if Executive
      utilizes the services of a broker) may not exceed six (6) percent of the sales
      proceeds;

     

    (b) Reasonable
      expenses incurred in moving furniture, normal household goods and personal
      belongings to the new location and incidental expenses related to the
      move;

     

    (c) Reasonable
      expenses (including travel and hotel) while house-hunting, including four trips
      to the new location with Executive’s spouse and children;

     

    (d) Reasonable
      and customary closing costs incurred in buying Executive’s new home;
      and

     

    (e) Reasonable
      temporary living expenses incurred while awaiting occupancy in Executive’s new
      quarters.

     

    3. Term
      and Termination.

     

    3.1 The
      term
      of this Agreement commences as of the consummation of the Gifted Time
      Transaction and shall continue for three (3) years unless sooner terminated
      as
      herein provided.

     

    3.2 If
      Executive dies during the term of this Agreement, this Agreement shall thereupon
      terminate, except that the Company shall pay to the legal representative of
      Executive’s estate the base salary due Executive pursuant to Section 2.1 hereof
      through the first anniversary of Executive’s death (or the scheduled expiration
      under Section 3.1, if earlier than the first anniversary date) as well as a
      pro
      rata allocation of bonus payments under Section 2.2 based on the days of service
      during the year of death, and all amounts owing to Executive at the time
      of

     

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

     

    termination,
      including for previously accrued but unpaid bonuses, expense reimbursements
      and
      accrued but unused vacation pay.

     

    3.3 If
      Executive shall be rendered incapable by an incapacitating illness or disability
      (either physical or mental) of complying with the terms, provisions and
      conditions hereof on her part to be performed for a period in excess of 180
      consecutive days during any consecutive twelve (12) month period, then the
      Company, at its option, may terminate this Agreement by written notice to
      Executive (the “Disability
      Notice”)
      delivered prior to the date Executive resumes the rendering of services
      hereunder; provided, however, if requested by Executive (or a representative
      thereof) such termination shall not occur until after examination of Executive
      by a medical doctor (retained by the Company with the consent of Executive
      which
      consent shall not be unreasonably withheld) who certifies in a written report
      to
      the Board with a copy of such report delivered simultaneously to Executive
      that
      Executive is and shall be incapable of performing her duties for in excess
      of
      two additional months because of the continuing existence of such incapacitating
      illness or disability. Notwithstanding such termination, the Company (a) shall
      make a payment to Executive of a pro rata allocation of payments under Section
      2.2 based on the days of service during the year in which the Disability Notice
      is delivered and (b) shall pay to Executive the base salary due Executive
      pursuant to Section 2.1 hereof through the second anniversary of the date of
      such notice (the “Disability
      Period”),
      less
      any amount Executive receives for such period from any Company-sponsored or
      Company-paid for source of insurance, disability compensation or governmental
      program. The Company shall also pay to Executive all amounts owing to Executive
      at the time of termination, including for previously accrued but unpaid bonuses,
      expense reimbursements and accrued but unused vacation pay.

     

    3.4 The
      Company, by notice to Executive, may terminate this Agreement for Cause. As
      used
      herein, “Cause”
means
      (a) the refusal in bad faith by Executive to carry out specific written
      directions of the Board, (b) intentional fraud or dishonest action by Executive
      in her relations with the Company (“dishonest” for these purposes shall mean
      Executive’s knowingly making of a material misstatement to the Board for the
      purpose of obtaining direct personal benefit); or (c) the conviction of
      Executive of any crime involving an act of significant moral turpitude after
      appeal or the period for appeal has elapsed without an appeal being filed by
      Executive. Notwithstanding the foregoing, no Cause for termination shall be
      deemed to exist with respect to Executive’s acts described in clause (a) or (b)
      above, unless the Board shall have given written notice to Executive (after
      five
      (5) days advance written notice to Executive and a reasonable opportunity to
      Executive to present her views with respect to the existence of Cause),
      specifying the Cause with particularity and , within twenty (20) business days
      after such notice, Executive shall not have disputed the Board’s determination
      or in reasonably good faith taken action to cure or eliminate prospectively
      the
      problem or thing giving rise to such Cause, provided, however, that a repeated
      breach after notice and cure, of any provision of clause (a) or (b) above,
      involving the same or substantially similar actions or conduct, shall be grounds
      for termination for cause upon not less than five (5) days additional notice
      from the Company.

     

    3.5 Executive,
      by notice to the Company, may terminate this Agreement if a Good Reason exists.
      For purposes of this Agreement, “Good
      Reason”
means
      the occurrence of any of the following circumstances without Executive’s prior
      express written consent: (a) a material adverse change in the nature of
      Executive’s title, duties or responsibilities with the

     

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

     

    Company
      that represents a demotion from her title, duties or responsibilities as in
      effect immediately prior to such change; (b) a material breach of this Agreement
      by the Company; (c) a failure by the Company to make any payment to Executive
      when due, unless the payment is not material and is being contested by the
      Company, in good faith; (d) a liquidation, bankruptcy or receivership of the
      Company; or (e) if Executive is at any time not a member of the Board of
      Directors of the Company and a member of the Executive Committee thereof (if
      such a committee exists), unless she voluntarily resigns therefrom; or (f)
      any
      person or entity other than the Company and/or any officers or directors of
      the
      Company as of the date of this Agreement acquires securities of the Company
      other than from Executive or her affiliates (in one or more transactions) having
      51% or more of the total voting power of all the Company’s securities then
      outstanding.

     

    Notwithstanding
      the foregoing, no Good Reason shall be deemed to exist with respect to the
      Company’s acts described in clauses (a), (b) or (c) above, unless Executive
      shall have given written notice to the Company specifying the Good Reason with
      reasonable particularity and, within twenty (20) business days after such
      notice, the Company shall not have cured or eliminated the problem or thing
      giving rise to such Good Reason; provided, however, that a repeated breach
      after
      notice and cure of any provision of clauses (a), (b) or (c) above involving
      the
      same or substantially similar actions or conduct, shall be grounds for
      termination for Good Reason without any additional notice from
      Executive.

     

    3.6 In
      the
      event that Executive terminates this Agreement for Good Reason, pursuant to
      the
      provisions of paragraph 3.5, or the Company terminates this Agreement without
      Cause, as defined in paragraph 3.4, the Company shall pay to Executive (or
      in
      the case of her death, the legal representative of Executive’s estate or such
      other person or persons as Executive shall have designated by written notice
      to
      the Company), the compensation at an annual base rate of US$500,000 from the
      date of termination to the term of this Agreement; provided, however, that
      Executive’s insurance coverage shall terminate upon Executive becoming covered
      under a similar program by reason of employment elsewhere. If Executive’s
      employment is terminated for Good Reason or without Cause, Executive shall
      have
      no duty to mitigate awards paid or payable to her pursuant to this subsection,
      and any compensation paid or payable to Executive from sources other than the
      Company will not offset or terminate the Company’s obligation to pay to
      Executive the full amounts pursuant to this subsection 3.6.

     

    4. Protection
      of Confidential Information: Non-Competition.

     

    4.1 Executive
      acknowledges that:

     

    (a) As
      a
      result of her current employment with the Company, Executive will obtain secret
      and confidential information concerning the business of the Company and its
      subsidiaries and affiliates (referred to collectively in this Article 4 as
      the
“Company”), including, without limitation, financial information, designs and
      other proprietary rights, trade secrets and know-how, customers and sources
      (“Confidential
      Information”).

     

    (b) The
      Company will suffer substantial damage which will be difficult to compute if,
      during the period of her employment with the Company or thereafter,

     

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

       

    

    Executive
      should enter a business competitive with the Company or divulge Confidential
      Information.

     

    (c) The
      provisions of this Agreement are reasonable and necessary for the protection
      of
      the business of the Company.

     

    4.2 Executive
      agrees that she will not at any time, either during the term of this Agreement
      or thereafter, divulge to any person or entity any Confidential Information
      obtained or learned by she as a result of her employment with the Company,
      except (i) in the course of performing her duties hereunder, (ii) to the extent
      that any such information is in the public domain other than as a result of
      Executive’s breach of any of her obligations hereunder, (iii) where required to
      be disclosed by court order, subpoena or other government process or
      (iv) if such disclosure is made without Executive’s knowing intent to cause
      material harm to the Company. If Executive shall be required to make disclosure
      pursuant to the provisions of clause (iii) of the preceding sentence, Executive
      promptly, but in no event more than 72 hours after learning of such
      subpoena, court order, or other government process, shall notify, by personal
      delivery or by electronic means, confirmed by mail, the Company and, at the
      Company’s expense, Executive shall: (a) take reasonably necessary and lawful
      steps required by the Company to defend against the enforcement of such
      subpoena, court order or other government process, and (b) permit the Company
      to
      intervene and participate with counsel of its choice in any proceeding relating
      to the enforcement thereof.

     

    4.3 Upon
      termination of her employment with the Company, Executive will promptly deliver
      to the Company all memoranda, notes, records, reports, manuals, drawings,
      blueprints and other documents (and all copies thereof) relating to the business
      of the Company and all property associated therewith, which she may then possess
      or have under her control; provided, however, that Executive shall be entitled
      to retain one copy of such documents for her personal use and
      records.

     

    4.4 During
      the period commencing upon the closing of the Gifted Time Transaction and
      terminating three years after termination of employment, Executive, without
      the
      prior written permission of the Company, shall not, anywhere in the People’s
      Republic of China, (i) enter into the employ of or render any services to any
      person, firm or corporation engaged in any business which is directly in
      competition with the Company’s principal existing business at the time of
      termination {“Competitive Business”); (ii) engage in any Competitive Business as
      an individual, partner, shareholder, creditor, director, officer, principal,
      agent, employee, trustee consultant, advisor or in any other relationship or
      capacity; (iii) employ, or have or cause any other person or entity to employ,
      any person who was employed by the Company at the time of termination of
      Executive’s employment by the Company (other than Executive’s personal secretary
      and assistant); or (iv) solicit, interfere with, or endeavor to entice away
      from
      the Company, for the benefit of a Competitive Business, any of its customers.
      Notwithstanding the foregoing, Executive shall not be precluded from investing
      and managing the investment of, her or her family’s assets in the securities of
      any corporation or other business entity which is engaged in a Competitive
      Business if such securities are traded on a national stock exchange or in the
      over-the-counter market and if such investment does not result in her
      beneficially owning, at any time, more than 5% of any class of the
      publicly-traded equity securities of such Competitive Business; provided,
      however, that for a period commencing upon the closing of the

     

    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

    

     

    Gifted
      Time Transaction and terminating three years after termination of Executive’s
      employment (except for investments in a class of securities trading on public
      markets), Executive shall refer to the Company for consideration (before any
      other party) any and all opportunities to acquire or purchase, or otherwise
      make
      equity or debt investments in, companies primarily involved in a Competitive
      Business if such opportunities becomes known to Executive while she is the
      Chairman of the Board of the Company. If the Company determines not to exploit
      any opportunity referred to in the foregoing sentence, the Company shall
      determine what, if anything, should be done with such opportunity. Executive
      shall not be entitled to any compensation, as a finder or otherwise, if either
      the Company or Executive introduces such opportunity to other persons, it being
      understood that all such compensation shall be paid to the Company.
      Notwithstanding the foregoing, in the event the Company terminates this
      Agreement without cause or if Executive terminates this Agreement for Good
      Reason under Section 3.5 hereof, Executive’s obligations under this Section 4.4
      shall terminate one month following termination.

     

    4.5 If
      Executive commits a breach of any of the provisions of Sections 4.2 or 4.4,
      the
      Company shall have the right:

     

    (a) to
      have
      the provisions of this Agreement specifically enforced by any court having
      equity jurisdiction, it being acknowledged and agreed by Executive that the
      services being rendered hereunder to the Company are of a special, unique and
      extraordinary character and that any breach or threatened breach will cause
      irreparable injury to the Company and that money damages will not provide an
      adequate remedy to the Company; and

     

    (b) to
      require Executive to account for and pay over to the Company all monetary
      damages determined by a non-appealable decision by a court of law to have been
      suffered by the Company as the result of any actions constituting a breach
      of
      any of the provisions of Section 4.2 or 4.4, and Executive hereby agrees to
      account for and pay over such damages to the Company (up to the maximum of
      all
      payments made under the Agreement).

     

    4.6 If
      Executive shall violate any covenant contained in Section 4.4, the duration
      of
      such covenant so violated shall be automatically extended for a period of time
      equal to the period of such violation.

     

    4.7 If
      any
      provision of Sections 4.2 or 4.4 is held to be unenforceable because of the
      scope, duration or area of its applicability, the tribunal making such
      determination shall not have the power to modify such scope, duration, or area,
      or all of them and such provision or provisions shall be void ab
      initio.

     

    5. Miscellaneous
      Provisions.

     

    5.1 All
      notices provided for in this Agreement shall be in writing, and shall be deemed
      to have been duly given when delivered personally to the party to receive the
      same, when transmitted by electronic means, or when mailed first class postage
      prepared, by certified mail, return receipt requested, addressed to the party
      to
      receive the same at her or its address set forth below, or such other address
      as
      the party to receive the same shall have specified by written

     

    
      
        
        

      

      
        -7-

        
          

        

      

      
        
        

      

    

     

    notice
      given in the manner provided for in this Section 5.1. All notices shall be
      deemed to have been given as of the date of personal delivery, transmittal
      or
      mailing thereof.

     

    
      
        
        

      

      
        -8-

        
          

        

      

      
        
        

      

    

     

    If
      to
      Executive:

    Qiao
      Li

    No. 10
      Jiancaicheng Middle Road

    Xisanqi,
      Haidian District, Beijing 100096

    Fax:
      (8610)82923980

     

    If
      to the
      Company:

    HLS
      Systems International, Ltd.

    625
      Broadway, Suite 1111

    San
      Diego, CA 92101

    Fax:
      619-795-9639

     

    5.2 In
      the
      event of any claims, litigation or other proceedings arising under this
      Agreement (including, among others, arbitration under Section 3.4), Executive
      shall be reimbursed by the Company within thirty (30) days after delivery to
      the
      Company of statements for the costs incurred by Executive in connection with
      the
      analysis, defense and prosecution thereof, including reasonable attorneys’ fees
      and expenses; provided, however, that Executive shall reimburse the Company
      for
      all such costs if it is determined by a non-appealable final decision of a
      court
      of law that Executive shall have acted in bad faith with the intent to cause
      material damage to the Company in connection with any such claim, litigation
      or
      proceeding.

     

    5.3 The
      Company, shall to the fullest extent permitted by law, indemnify Executive
      for
      any liability, damages, losses, costs and expenses arising out of alleged or
      actual claims (collectively, “Claims”) made against Executive for any actions or
      omissions as an officer and/or director of the Company or its subsidiary. To
      the
      extent that the Company obtains director and officers insurance coverage for
      any
      period in which Executive was an officer, director or consultant to the Company,
      Executive shall be a named insured and shall be entitled to coverage
      thereunder.

     

    5.4 The
      provision of Article 4, Sections 5.2 and 5.3 and any provisions relating to
      payments owed to Executive after termination of employment shall survive
      termination of this Agreement for any reason.

     

    5.5 This
      Agreement sets forth the entire agreement of the parties relating to the
      employment of Executive and are intended to supersede all prior negotiations,
      understandings and agreements. No provisions of this Agreement may be waived
      or
      changed except by a writing by the party against whom such waiver or change
      is
      sought to be enforced. The failure of any party to require performance of any
      provision hereof or thereof shall in no manner affect the right at a later
      time
      to enforce such provision.

     

    5.6 All
      questions with respect to the construction of this Agreement, and the rights
      and
      obligations of the parties hereunder, shall be determined in accordance with
      the
      law of the British Virgin Islands applicable to agreements made and to be
      performed entirely in the British Virgin Islands.

     

    5.7 This
      Agreement shall inure to the benefit of and be binding upon the successors
      and
      assigns of the Company. This Agreement shall not be assignable by Executive,
      but
      shall inure to the benefit of and be binding upon Executive’s heirs and legal
      representatives.

     

    
      
        
        

      

      
        -9-

        
          

        

      

      
        
        

      

    

     

    5.8 Should
      any provision of this Agreement become legally unenforceable, no other provision
      of this Agreement shall be affected, and this Agreement shall continue as if
      the
      Agreement had been executed absent the unenforceable provision.

     

    IN
      WITNESS WHEREOF, the parties have executed this Agreement as of the date first
      above written.

     

    
      	
              “COMPANY”

               

              HLS
                SYSTEMS INTERNATIONAL, LTD.

               

              By:_________________________________________

               

              Title:________________________________________

            	
              “EXECUTIVE”

               

              QIAO
                LI

               

              By:
                /s/ Qiao Li

            

    

     

    
 

    
      
        
        

      

      
        -10-

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF, the parties have executed this Agreement as of the date first
      above written.

     

    
      	
              “COMPANY”

               

              HLS
                SYSTEMS INTERNATIONAL, LTD.

               

              By:________________________________________

               

              Title:______________________________________

            	
              “EXECUTIVE”

               

              QIAO
                LI

               

              By:
                /s/ Qiao Li

            

    

     

     

    
      
        
        

      

      
        -11-

        
          

        

      

      
        
        

      

    

    

    IN
      WITNESS WHEREOF, the parties have executed this Agreement as of the date first
      above written.

     

    
      	
              “COMPANY”

               

              HLS
                SYSTEMS INTERNATIONAL, LTD.

               

              By:_______________________________________

               

              Title:______________________________________

            	
              “EXECUTIVE”

               

              QIAO
                LI

               

              By:
                /s/ Qiao Li

            

    

     

    
 

    
      
        
        

      

      -12-

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