Document:

Exhibit
10.4

 

Executive Employment Agreement

 

This EXECUTIVE EMPLOYMENT AGREEMENT (“Agreement”)
is made as of March 26,
2004, by and between Opta Systems, LLC dba Go Video, a Delaware limited
liability company (the “Company”), and Steven Davis (the “Executive”).

 

R E C I T A L S

 

WHEREAS, the Executive is employed by the Company and
currently serves as its Chief Financial Officer; and

 

WHEREAS, the Company and the Executive wish to
continue with their employment relationship on more specific terms and have determined
that it is in the best interests of both to enter into this Agreement for that
purpose.

 

NOW, THEREFORE, in consideration of the foregoing
recitals, the mutual covenants and conditions herein, and other good and
valuable consideration, the receipt and adequacy of which is hereby
acknowledged, the parties hereby agree as follows:

 

A G R E E M E N T

 

1.             Employment; Acceptance.  Effective as of March 21, 2004, the Company hereby employs
the Executive and the Executive hereby accepts continuing employment by the
Company on the terms and conditions hereinafter set forth.

 

2.             Duties and Powers.  Executive shall serve as the Company’s Chief
Financial Officer.  The Executive shall
be responsible for all financial matters relating to the Company, subject to
the direction and control of the President and the Managers of the Company (the “Managers”) and/or the Operating Agreement of
the Company, this Agreement, and applicable law.  The Executive agrees to devote his best efforts, diligence, and
abilities and his full attention to the business and affairs of the Company and
to the performance of his duties as the Company’s Chief Financial Officer, to
the exclusion of any other occupation or endeavor other than community,
charitable, political, and personal pursuits that do not interfere with his
performance under this Agreement; provided, however, that the President or
Managers may authorize other exceptions in their sole discretion upon the
request of the Executive.

 

3.             Term of Employment.  The term of employment under this Agreement shall commence on
March 26,  2004 (the “Effective Date”) and shall
continue for a period of two years, unless earlier terminated as set forth in
Section 7 below.  Thereafter, the
Agreement shall be automatically renewed for successive one year terms unless
either the Company or the Executive notifies the other party of non-renewal at
least 90 days prior to the renewal date or unless employment is terminated
pursuant to Section 7 prior to the commencement of what would be the next term.
Regardless of whether the operative term is the initial two year term or a
later one year term, if any, the employment relationship may be terminated at
any time pursuant to Section 7.

 

 

4.             Compensation.

 

4.1           Salary.  The Company hereby agrees to pay to the
Executive during his employment hereunder a base salary (starting at the
equivalent of $84,000 per year) payable in equal installments on the Company’s
regular paydays.  If the Executive’s
employment is terminated on any date other than a regular payday, the final
salary payable pursuant to this Section 4.1 shall be paid to the Executive on a
prorated basis.

 

4.2           Options.  The Executive is entitled to participate in
the Equity Incentive Plan of Lotus Pacific, Inc. (“Lotus”), the parent
company of the Company.

 

4.3           Incentive Compensation.  During his employment hereunder, the
Executive shall be entitled to participate in any incentive compensation
program approved by the Managers for which he is eligible, with such terms and
conditions as determined by the Managers.

 

5.             Other Benefits. 
During his employment by the Company, the Executive shall be entitled to
participate in any benefits provided by or through the Company for executive
level employees at the Executive’s level, subject to any terms, conditions, or
restrictions applicable to such benefits. 
The Company reserves the right to change these benefits from time to
time.  Such benefits would include:

 

5.1           Health, Medical and Life Insurance.  While the Executive is employed hereunder,
the Company shall pay for and provide the Executive and his dependents with the
same amount and type of health, medical and life insurance, if any, as is
provided from time to time to employees of the Executive’s level during the
term of this Agreement.

 

5.2           Vacation.  The Executive shall be entitled to vacation
with pay in accordance with the Company’s vacation policy as in effect at the
time in question.  In addition, the
Executive shall be entitled to such holidays as the Company may approve for its
employees of the Executive’s level.

 

5.3           Reimbursement for Business
Expenses.  Without limiting the
foregoing, the Company will reimburse the Executive for reasonable travel,
entertainment and other business expenses incurred in connection with the
performance of his duties hereunder, in accordance with the policy of the
Company with respect thereto.

 

6.             Key Person Insurance.  The Company shall have the right, at its sole expense, to procure
life or disability insurance on the Executive for its own benefit in such
amount or amounts it shall deem appropriate (such determination to be at the
sole discretion of the Managers), and the Executive hereby agrees to cooperate,
upon reasonable request, in obtaining or renewing such insurance from time to
time, including without limitation, submission to physical examination and
execution of normal and customary documents pertaining to such insurance.  The Company shall have no right to terminate
this Agreement based upon the results of a physical or other examination to
which the Executive submits pursuant to this paragraph or by reason of failure
of the Executive to qualify for any such insurance.

 

 

7.             Termination.

 

7.1           For Cause by the Company.  The Company may terminate the Executive’s
employment for cause, effective immediately on the day it sends notice of such
termination to the Executive.  “Cause”
for this purpose shall mean any one or more of the following acts of the
Executive:  (a) continuing material
neglect of duties; (b) fraud, embezzlement or the commission of any act relating
to the business or affairs of the Company involving moral turpitude; (c) gross
carelessness or gross misconduct (i.e., conduct contrary to the Company’s
policies); (d) willful failure to obey the lawful direction of the Company’s
Managers or
management; or (e) a material violation of any provision of this
Agreement.  On such termination for
cause, the Executive shall be entitled to any unpaid salary earned to the date
of such termination, payment at his final salary rate for any accrued but
unused vacation, and reimbursement for any expenses reimbursable under the
substantive and procedural rules of the Company’s business expense
reimbursement policy.  Stock options and
incentive compensation issues – including such issues as whether incentive
compensation has accrued and/or is payable as of the time of termination –
shall be governed by the agreements, plans, and polices then in effect.

 

7.2           Without Cause by the Company.  The Company may terminate the Executive’s
employment without cause on thirty (30) days’ prior written notice (any attempt
by the Company to terminate the Executive’s employment without such notice
shall not be a breach but shall not be effective until 30 days from the date on
which written notice is provided).  On
termination without cause by the Company, the Executive shall be entitled to
any unpaid salary earned to the date of such termination, payment at his final
salary rate for any accrued but unused vacation, any severance under other
Company policies and reimbursement for any expenses reimbursable under the
substantive and procedural rules of the Company’s business expense
reimbursement policy.  Stock options and
incentive compensation issues – including such issues as whether incentive compensation
has accrued and/or is payable as of the time of termination – shall be governed
by the agreements, plans, and polices then in effect. In addition, the Company
shall provide the following severance benefits upon termination by the Company
without cause: (a) a payment that is equal to the value of nine months of the
Executive’s then base salary subject to regular payroll withholdings, and (b)
reimbursement during the same period for any premium payments made by the
Executive to continue his participation and that of his eligible dependants in
the Company’s group health plans under COBRA, provided that the Executive is
entitled to continue such participation under applicable law and plan terms.

 

7.3           Disability.  If the Executive becomes unable to perform
his duties hereunder because of any physical, mental or legal disability
(including sickness or an injunction or similar order or decree of a court of
competent jurisdiction preventing the performance of his duties hereunder), he
shall be entitled to his compensation as provided herein until the total period
of disability (whether or not continuous and whether or not the same
disability) exceeds an aggregate of one hundred eighty (180) days in any
calendar year.  If the total period of
disability exceeds an aggregate of one hundred eighty (180) days in any
calendar year, the Company may terminate his employment upon notice to the
Executive, and such termination otherwise shall be treated as a termination for
cause by the Company pursuant to Section 7.1.

 

 

7.4           Death.  In the event of the death of the Executive,
his employment shall be terminated immediately without any notice
procedure.  In the event of such a
termination, the Executive’s legal representative shall be entitled to any
unpaid salary earned to the date of such termination, payment at the
Executive’s final salary rate for any accrued but unused vacation, and
reimbursement for any expenses reimbursable under the substantive and
procedural rules of the Company’s business expense reimbursement policy.  Stock options and incentive compensation
issues – including such issues as whether incentive compensation has accrued
and/or is payable as of the time of termination – shall be governed by the
agreements, plans, and polices then in effect.

 

7.5           Merger; Sale of Assets.  In the event of any voluntary or involuntary
dissolution, reorganization, merger, consolidation or transfer of substantially
all assets of the Company, or in the event of any other act or event of or
suffered by the Company, this Agreement shall not be terminated if a surviving
or resulting corporation or other entity or person continues the business of
the Company and assumes the contractual obligations of the Company vis-à-vis
the Executive without interruption.  In
any such event, if the business of the Company is not so continued or the
surviving or resulting corporation or other entity or person does not assume
the contractual obligations of the Company vis-à-vis the Executive, such event
shall be deemed to constitute termination without cause by the Company as
provided in Section 7.2.

 

7.6           Termination Due to Diminution of
Duties.   If the Executive’s duties,
as described in Section 2 of this Agreement and by the Company’s and
Executive’s pattern and practice, are changed so as to significantly diminish
the essential authorities, powers, functions, duties or responsibilities
attached to the Executive’s position which is not remedied within thirty (30)
days after receipt by the Company of written notice from the Executive, the
parties agree that the Executive may resign and that such termination of his
employment shall be treated as a termination without cause by the Company
pursuant to Section 7.2.

 

7.7           Resignation of Other Positions.  Upon termination of employment for any
reason whatsoever, the Executive shall be deemed to have resigned from any
office(s) then held by him with the Company.

 

7.8           Nonrenewal.  The Company may decide not to renew this
employment contract for additional one year terms by notifying the Executive at
least 90 days prior to the renewal date of the Agreement.  Upon such nonrenewal, the Agreement will
terminate and the Executive will become eligible to receive any severance
payment he would be eligible under any other Company policies except this
Agreement as though he had been terminated without cause.

 

8.             Proprietary Information.

 

8.1           Proprietary Information.  The Executive shall be required, as a
condition of his employment under this agreement, to sign the Company’s
standard Employee Proprietary Information and Inventions Agreement, which is
attached hereto as Exhibit A
and incorporated herein by reference.

 

8.2           Competition During Employment.  The Executive acknowledges and agrees that
he will not at any time during his employment by the Company directly or
indirectly own an interest in (other than a less than two percent (2%)
ownership interest in publicly traded companies), join,

 

 

operate,
control or participate in, or be connected as an officer, employee, agent,
independent contractor, consultant, partner, shareholder or principal with, any
corporation, partnership, proprietorship, association, or other entity or
person engaged in developing, producing, designing, providing, soliciting
orders for, selling, distributing or marketing products or services or a
business that directly or indirectly competes with the Company’s products,
services or business; provided, however, that the Managers may authorize
exceptions to this prohibition in its sole discretion upon the request of the
Executive.

 

8.3           Solicitation.  The Executive acknowledges and agrees that
he will not at any time during his employment by the Company, or immediately
following his termination for a period equal to the number of months of
severance pay he receives from the Company following his termination (but no
less than a three month period), hire any employees of the Company or either
directly or indirectly, solicit, induce, recruit or encourage any of the
Company’s employees to leave their employment, or take away such employees, or
attempt to solicit, induce, recruit, encourage or take away employees either
for himself or for any other person or entity. 
The Executive further acknowledges and agrees that all customers of the
Company, and all prospective customers from whom he has solicited business
while employed with the Company, shall be solely the customers of the Company,
and that he will not at any time during his employment by the Company, or
immediately following his termination for a period equal to the number of
months of severance pay he receives from the Company following his termination
(but no less than a three month period), either directly or indirectly, solicit
business, as to products or services competitive with those of the Company,
from any of the Company’s customers with whom he has had contact during and as
a result of his employment by the Company.

 

8.4           Corporate Opportunities.  If the Executive, during his employment,
shall become aware of any business opportunity related to the business of the
Company, the Executive shall not appropriate for himself or for any other
person other than the Company or any affiliate of the Company any such
opportunity unless, as to any particular opportunity, the President or Managers
of the Company, in their sole discretion, waive the Company’s rights to such
opportunity.  The Executive’s duty to
refrain from appropriating all such opportunities shall neither be limited by
nor shall such duty limit the application of the law of Arizona relating to the
fiduciary duties of an agent or employee.

 

8.5           Interference.  The Executive also acknowledges and agrees
that he will not at any time during his employment by the Company either
directly or indirectly interfere with the Company’s contracts and
relationships, or prospective contracts and relationships, including, but not
limited to, the Company’s customer or client contracts and relationships.

 

8.6           Post-Termination Competition.

 

(a)           The Executive acknowledges and agrees
that following the termination of his employment with the Company for any or no
reason, for a period equal to the number of months of severance pay he receives
from the Company (but no less than a three month period), he will not directly
or indirectly own an interest in (other than a less than two percent (2%)
ownership interest in publicly traded companies), join, operate, control or
participate in, or be connected as an officer, employee, agent, independent
contractor, consultant, partner, shareholder or principal with, any
corporation, partnership, proprietorship, association, or other entity or
person which

 

 

operates
or intends (as of the date of Executive’s termination) to operate a business
that directly or indirectly competes with the Company’s products, services or
business in any territory where the Company does business.

 

(b)            The Executive further acknowledges
and agrees that the time, geographic and scope limitations of his obligations
under subsection (a) above are reasonable, especially in light of the Company’s
desire to protect its proprietary and confidential information.

 

(c)           The covenant contained in subsection
(a) above shall be construed as a series of separate covenants, one for each
city, county, state, and country where the Company does business.  Except for geographic coverage, each such
separate covenant shall be deemed identical in terms to the covenant contained
in subsection (a) above.  If, in any
judicial proceeding, a court refuses to enforce any of such separate covenants
(or any part thereof), then such unenforceable covenant (or such part) shall be
eliminated from this Agreement to the extent necessary to permit the remaining
separate covenants (or portions thereof) to be enforced.  In the event the provisions of subsection
(a) above are deemed to exceed the time, geographic or scope limitations permitted
by applicable law, then such provisions shall be reformed to the maximum time,
geographic or scope limitations, as the case may be, then permitted by such
law.

 

8.7           Injunctive Relief.  The Executive acknowledges and agrees that
his failure to perform any of his covenants in this Section 8, including those
in the Employee Proprietary Information and Inventions Agreement, would cause
irreparable injury to the Company and cause damages to the Company which would
be difficult or impossible to ascertain or quantify.  Accordingly, without limiting any remedies that may be available
with respect to any breach of this Agreement, the Executive consents to the
entry of an injunction to restrain any breach of this Section

 

9.             Severability. 
The invalidity or unenforceability of any provision hereof shall in no
way affect the validity or enforceability of any other provision hereof.

 

10.           Notices.  Except as otherwise specifically provided
herein, any notice, consent, demand or other communication to be given under or
in connection with this Agreement shall be in writing and shall be deemed duly
given when delivered personally, when transmitted by facsimile transmission,
one day after being deposited with Federal Express or other nationally
recognized overnight delivery service or three days after being mailed by first
class mail, charges or postage prepaid, properly addressed, if to the Company,
at its principal office, and, if to the Executive, at his address last known to
the Company.  Either party may change
such address from time to time by notice to the other.

 

11.           Governing Law.  This Agreement shall be governed by and
construed and interpreted in accordance with the laws of the State of Arizona.

 

12.           Arbitration.  EXCEPT AS SET FORTH IN SECTION 8.7
HEREOF, THE COMPANY AND THE EXECUTIVE WAIVE THEIR RIGHT TO SEEK REMEDIES IN
COURT, INCLUDING ANY RIGHT TO A JURY TRIAL.  The
Company and the Executive agree that in the event of any dispute arising
between the Company and the Executive in connection with this Agreement, such
disputes shall be resolved by final and binding arbitration in accordance with
the following procedures:  The parties
shall first submit any dispute to non-binding mediation before a

 

 

mediator to be jointly
selected by the parties.  The Company
will pay the cost of any mediation.  If the
mediation does not resolve the dispute or the parties cannot agree on a
mediator, the parties agree that the dispute shall be resolved by final and
binding arbitration, to be held pursuant to the Employment Dispute Resolution
Rules of the American Arbitration Association (“AAA”) in effect at the time of
the arbitration, before a retired federal judge or justice, applying the
substantive and procedural laws of Arizona. 
Except as reviewable, arbitration shall be the exclusive and final
remedy for any dispute between the parties, including but not limited to
disputes involving claims for discrimination or harassment (such as claims
under the Fair Employment and Housing Act, Title VII of the Civil Rights Act of
1964, the Americans with Disabilities Act, or the Age Discrimination in
Employment Act), wrongful termination, breach of contract, violation of public
policy, physical or mental harm or distress. 
The parties agree that the arbitrator shall have the power to grant any
form of relief a court of law may provide.

 

13.           Assignment.  Except as otherwise specifically provided
herein, neither party shall assign this Agreement or any rights hereunder
without the consent of the other party, and any attempted or purported
assignment without such consent shall be void.

 

14.           Entire Agreement; Modification.  This Agreement contains the entire agreement
of the parties and supersedes all prior or contemporaneous negotiations,
correspondence, understandings and agreements between the parties regarding the
subject matter of this Agreement.  This
Agreement may not be amended or modified except in a writing signed by both
parties.

 

15.           Counterparts.  This Agreement may be executed
simultaneously in one or more counterparts, each of which shall be deemed an
original, but all of which shall constitute one and the same agreement.

 

16.           Waiver.  Neither party hereto shall be deemed to have
waived any rights under this Agreement unless there is a waiver in writing
signed by the waiving party.  No delay
in exercising any right shall be a waiver nor shall a waiver on one occasion
operate as a waiver of such right on a future occasion.

 

17.           Headings.  Section headings contained in this Agreement
are for convenience only and shall not be considered for any purpose in
construing the Agreement.

 

18.           Interpretation.  The language of all parts of this Agreement
shall in all cases be construed as a whole, according to its fair meaning, and
not strictly for or against either of the parties.

 

19.           Exhibits.  All Exhibits referred to are attached to
this Agreement and incorporated herein by this reference and made a part
hereof.

 

(Remainder of page intentionally left blank.)

 

 

IN WITNESS WHEREOF, this Agreement has been duly
executed by or on behalf of the parties hereto as of the date first above
written.

 

 

	
   

  	
  COMPANY:

  
	
   

  	
   

  
	
   

  	
  Opta Systems, LLC dba
  Go Video, a Delaware

  limited liability company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Vincent Yan

  	
   

  
	
   

  	
   Name: 

  	
  Vincent Yan

  
	
   

  	
  Its:

  	
  CEO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Steve Davis

  	
   

  
	
   

  	
  Name: Steven Davis

  
					

 

 

EXHIBIT A

 

EMPLOYEE PROPRIETARY INFORMATION AND
INVENTIONS AGREEMENT

 

In consideration of my continued employment by Opta
Systems, LLC dba Go Video, a Delaware limited liability company (the
“Company”), and the Executive Employment Agreement into which this is
incorporated, I hereby agree as follows:

 

1.             NONDISCLOSURE.

 

1.1  Recognition of Company’s Rights; Nondisclosure.  At all times during my employment and
thereafter, I will hold in strictest confidence and will not disclose, use,
lecture upon or publish any of the Company’s Proprietary Information (defined
below), except as such disclosure, use or publication may be required in
connection with my work for the Company, or unless an officer of the Company
expressly authorizes such in writing.  I
will obtain Company’s written approval before publishing or submitting for
publication any material (written, oral, or otherwise) that relates to my work
at Company and incorporates any Proprietary Information.  I hereby assign to the Company any rights I
may have or acquire in such Proprietary Information and recognize that all
Proprietary Information shall be the sole property of the Company and its
assigns.

 

1.2          Proprietary Information.  The term “Proprietary Information” shall
mean any and all confidential and/or proprietary works of authorship,
knowledge, data, designs or information of the Company.  By way of illustration but not limitation,
“Proprietary Information” includes (a) patents, trademarks, trade secrets,
inventions, copyrights, mask works, processes, formulas, source and object
codes, data, programs, other works of authorship, know-how, improvements,
discoveries, developments, designs, artwork, techniques, and any other
intellectual property that is protectable under United States or foreign laws
(hereinafter collectively referred to as “Inventions”); and (b) research,
development, new products, marketing and selling, business plans, budgets and
unpublished financial statements, licenses, prices and costs, suppliers and
customers; and (c) information regarding the skills and compensation of
employees and other independent contractors of the Company.  Notwithstanding the foregoing, it is
understood that, at all such times, information which is generally known in the
trade or industry; information which is not gained as result of a breach of
this Agreement; and information about my own, skill, knowledge, know-how and
experience are not included within the definition of Proprietary Information.

 

 

1.3          Third Party Information.  I understand, in addition, that the Company
has received and in the future will receive from third parties confidential or
proprietary information (“Third Party Information”), including, but not limited
to, works of authorship, subject to a duty on the Company’s part to maintain
the confidentiality of such information and to use it only for certain limited
purposes.  During the term of my
employment and thereafter, I will hold Third Party Information in the strictest
confidence and will not disclose to anyone (other than Company personnel who
need to know such information in connection with their work for the Company) or
use, except in connection with my work for the Company, Third Party Information
unless expressly authorized by an officer of the Company in writing.

 

1.4                          No Improper Use of
Information of Prior Employers and Others.  During my employment by the Company I will
not improperly use or disclose any confidential or proprietary information or
trade secrets, if any, of any former employer or any other person to whom I
have an obligation of confidentiality, and I will not bring onto the premises
of the Company any unpublished documents or any property belonging to any
former employer or any other person to whom I have an obligation of
confidentiality unless consented to in writing by that former employer or
person.  I will use in the performance
of my duties only information which is generally known and used by persons with
training and experience comparable to my own, which is common knowledge in the
industry or otherwise legally in the public domain, or which is otherwise
provided or developed by the Company.

 

2.             ASSIGNMENT
OF WORKS FOR HIRE AND OTHER INVENTIONS.

 

2.1          Proprietary Rights.  The term “Proprietary Rights” shall mean all
copyright, trade secret, patent, mask work and other intellectual property
rights throughout the world.

 

2.2          Prior Inventions.  Inventions, if any, patented or unpatented,
which I made prior to the commencement of my employment with the Company are
excluded from the scope of this Agreement. 
To preclude any possible uncertainty, I have set forth on Exhibit A
(Previous Inventions) attached hereto a complete list of all Inventions that I
have, alone or jointly with others, conceived, developed or reduced to practice
or caused to be conceived, developed or reduced to practice prior to the
commencement of my employment with the Company, that I consider to be my
property or the property of third parties and that I wish to have excluded from
the scope of this Agreement (collectively referred to as “Prior Inventions”).  If disclosure of any such Prior Invention
would cause me to violate any prior confidentiality agreement, I understand
that I am not to list such Prior Inventions in Exhibit A but am only to
disclose a cursory name for each such

 

 

invention, a listing of the party(ies) to whom it belongs and the fact
that full disclosure as to such inventions has not been made for that reason. A
space is provided on Exhibit A for such purpose.  If no such disclosure is attached, I
represent that there are no Prior Inventions. 
If, in the course of my employment with the Company, I incorporate a
Prior Invention into a Company product, process or machine, and it is within
any power to grant, I grant to the Company a nonexclusive, royalty-free,
irrevocable, perpetual, worldwide license (with rights to sublicense through
multiple tiers of sublicensees) to make, have made, modify, use and sell such
Prior Invention.  Notwithstanding the
foregoing, I agree that I will not incorporate, or permit to be incorporated,
Prior Inventions in any Company Inventions without the Company’s prior written
consent.

 

2.3  Assignment of Inventions.  Subject to Sections 2.4, and 2.6, I hereby
assign and agree to assign in the future (when any such Inventions or
Proprietary Rights are first reduced to practice or first fixed in a tangible
medium, as applicable) to the Company all my right, title and interest in and
to any and all Inventions (and all Proprietary Rights with respect thereto)
whether or not patentable or registrable under copyright or similar statutes,
made or conceived or reduced to practice or learned by me, either alone or
jointly with others, during the period of my employment with the Company.  Inventions assigned to the Company, or to a
third party as directed by the Company pursuant to this Section 2, are
hereinafter referred to as “Company Inventions.”

 

2.4          Nonassignable Inventions.  This Agreement does not apply to an
Invention which qualifies fully as a nonassignable Invention pursuant to Exhibit
B.  I have reviewed the notification
on Exhibit B (Limited Exclusion Notification) and agree that my
signature acknowledges receipt of the notification.

 

2.5          Obligation to Keep Company Informed.  During the period of my employment and for
six (6) months after termination of my employment with the Company, I will
promptly disclose to the Company fully and in writing all Inventions authored,
conceived or reduced to practice by me, either alone or jointly with
others.  In addition, I will promptly
disclose to the Company all patent applications filed by me or on my behalf
within a year after termination of employment. 
At the time of each such disclosure, I will advise the Company in
writing of any Inventions that I believe fully qualify for protection under Exhibit
B;
and I will at that time provide to the Company in writing all evidence
necessary to substantiate that belief. 
The Company will keep in confidence and will not use for any purpose or
disclose to third parties without my consent any confidential information
disclosed in writing to the Company pursuant to this Agreement relating to
Inventions that qualify fully for protection under Exhibit B.  I will preserve the confidentiality of any
Invention that does not fully qualify for protection under Exhibit B.

 

 

2.6          Government or Third Party.  I also agree to assign all my right, title
and interest in and to any particular Company Invention to a third party,
including without limitation the United States, as directed by the Company.

 

2.7          Works for Hire.  I acknowledge that all original works of
authorship which are made by me (solely or jointly with others) within the
scope of my employment and which are protectable by copyright are “works made
for hire,” pursuant to United States Copyright Act (17 U.S.C., Section 101).

 

2.8          Enforcement of Proprietary Rights.  I will assist the Company in every proper
way to obtain, and from time to time enforce, United States and foreign
Proprietary Rights relating to Company Inventions in any and all countries.  To that end I will execute, verify and
deliver such documents and perform such other acts (including appearances as a
witness) as the Company may reasonably request for use in applying for,
obtaining, perfecting, evidencing, sustaining and enforcing such Proprietary
Rights and the assignment thereof.  In
addition, I will execute, verify and deliver assignments of such Proprietary
Rights to the Company or its designee. 
My obligation to assist the Company with respect to Proprietary Rights
relating to such Company Inventions in any and all countries shall continue
beyond the termination of my employment, but the Company shall compensate me at
a reasonable rate after my termination for the time actually spent by me at the
Company’s request on such assistance. 
In the event the Company is unable for any reason, after reasonable
effort, to secure my signature on any document needed in connection with the
actions specified in the preceding paragraph, I hereby irrevocably designate
and appoint the Company and its duly authorized officers and agents as my agent
and attorney in fact, which appointment is coupled with an interest, to act for
and in my behalf to execute, verify and file any such documents and to do all
other lawfully permitted acts to further the purposes of the preceding
paragraph with the same legal force and effect as if executed by me.  I hereby waive and quitclaim to the Company
any and all claims, of any nature whatsoever, which I now or may hereafter have
for infringement of any Proprietary Rights assigned hereunder to the Company.

 

3.             RECORDS.  I agree to keep and maintain adequate and
current records (in the form of notes, sketches, drawings and in any other form
that may be required by the Company) of all Proprietary Information developed
by me and all Inventions made by me during the period of my employment at the
Company, which records shall be available to and remain the sole property of
the Company at all times.

 

4.             NO CONFLICTING OBLIGATION.  I represent that my performance of all the
terms of this Agreement does not and will not breach any agreement to keep in
confidence information acquired by me in confidence or in trust prior to my
employment by the Company.  I have not

 

 

entered into, and I agree I will not enter into, any agreement either
written or oral in conflict herewith.

 

5.             RETURN OF COMPANY DOCUMENTS.  When I leave the employment with the Company
(whether voluntarily or involuntarily), I will (upon request) deliver to the
Company any and all drawings, notes, memoranda, specifications, devices,
formulas, and documents, together with all copies thereof, and any other
material containing or disclosing any Company Inventions, Third Party
Information or Proprietary Information of the Company.  I further agree that any property situated
on the Company’s premises and owned by the Company, including disks and other
storage media, filing cabinets or other work areas, is subject to inspection by
Company personnel at any time with or without notice.  Prior to leaving, I will cooperate with the Company in completing
and signing the Company’s termination statement.

 

6.             LEGAL AND EQUITABLE REMEDIES.  Because my services are personal and unique
and because I may have access to and become acquainted with the Proprietary
Information of the Company, the Company shall have the right to enforce this
Agreement and any of its provisions by injunction, specific performance or
other equitable relief, without bond and without prejudice to any other rights
and remedies that the Company may have for a breach of this Agreement.

 

7.             NOTICES.  Any notices required or permitted hereunder
shall be given, if to the Company, at the address of its principal office and,
if to me, at my address last known to the Company.  Such notice shall be deemed given upon personal delivery to the
appropriate address or if sent by certified or registered mail, three (3) days
after the date of mailing.

 

8.             NOTIFICATION OF NEW EMPLOYER.  In the event that I leave the employment of
the Company, I hereby consent to the notification of any new employer by the
Company of my rights and obligations under this Agreement.

 

9.             GENERAL
PROVISIONS.

 

9.1          Governing Law.  This Agreement will be governed by and
construed according to the laws of the State of Arizona.

 

9.2          Severability.  In case any one or more of the provisions
contained in this Agreement shall, for any reason, be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect the other provisions of this Agreement, and
this Agreement shall be construed as if such invalid, illegal or unenforceable
provision had never been contained herein. 
If moreover, any one or more of the provisions contained in this
Agreement shall for any reason be held to be excessively

 

 

broad as to duration, geographical scope, activity or subject, it shall
be construed by limiting and reducing it, so as to be enforceable to the extent
compatible with the applicable law as it shall then appear.

 

9.3          Successors and Assigns.  This Agreement will be binding upon my
heirs, executors, administrators and other legal representatives and will be
for the benefit of the Company, its successors, and its assigns.

 

9.4          Survival.  The provisions of this Agreement shall
survive the termination of my employment and the assignment of this Agreement
by the Company to any successor in interest or other assignee.

 

9.5          Employment.  I agree and understand that nothing in this
Agreement shall confer any right with respect to continuation of employment by
the Company, nor shall it interfere in any way with my right or the Company’s
right to terminate my employment at any time, with or without cause.

 

9.6          Waiver.  No waiver by the Company of any breach of
this Agreement shall be a waiver of any preceding or succeeding breach.  No waiver by the Company of any right under
this Agreement shall be construed as a waiver of any other right.  The Company shall not be required to give
notice to enforce strict adherence to all terms of this Agreement.

 

9.7          Entire Agreement.  The obligations pursuant to Sections 1 and 2
of this Agreement shall apply to any time during which I was previously
engaged, or am in the future engaged, by the Company as an employee or
independent contractor if no other agreement governs nondisclosure and
assignment of inventions during such period. 
This Agreement is the final, complete and exclusive agreement of the
parties with respect to the subject matter hereof and supersedes and merges all
prior discussions between us.  No
modification of or amendment to this Agreement, nor any waiver of any rights
under this Agreement, will be effective unless in writing and signed by the
party to be charged.  Any subsequent
change or changes in my duties or compensation will not affect the validity or
scope of this Agreement.

 

This Agreement shall be effective as of the first day of my employment
with the Company.

 

I HAVE READ THIS AGREEMENT CAREFULLY AND UNDERSTAND
ITS TERMS.  I HAVE COMPLETELY FILLED OUT
EXHIBIT A TO THIS AGREEMENT.

 

	
  Dated:  3/36/2004

  
	
   

  
	
  /s/ Steve Davis

  	
   

  
	
  Steve Davis

  

 

 

	
  ACCEPTED AND AGREED TO:

  
	
   

  
	
  Opta Systems, LLC dba Go Video, a Delaware limited
  liability company

  
	
   

  
	
   

  
	
  By: 

  	
  /s/ Vincent Yan , CEO

  	
   

  

 

 

TO:                 Opta
Systems, LLC dba Go Video, a Delaware limited liability company

 

FROM:           Steve Davis

 

DATE:            March 26, 2004

 

SUBJECT:              Previous
Inventions

 

1.             Except as listed in Section 2
below, the following is a complete list of all inventions or improvements
relevant to the subject matter of my employment by
                              .
(the “Company”) that have been made or conceived or first reduced to practice
by me alone or jointly with others prior to my employment by the Company:

 

o            No inventions or improvements.

 

o            See below:

 

o            Additional sheets attached.

 

2.             Due to a prior confidentiality
agreement, I cannot complete the disclosure under Section 1 above with respect
to inventions or improvements generally listed below, the proprietary rights
and duty of confidentiality with respect to which I owe to the following
party(ies):

 

	
  Invention or Improvement

  	
   

  	
  Party(ies)

  	
   

  	
  Relationship

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1. N/A

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2. N/A

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3. N/A

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

o            Additional sheets attached.

 

 

EXHIBIT B

 

LIMITED EXCLUSION NOTIFICATION

 

THIS IS TO NOTIFY you that the foregoing
Agreement between you and the Company does not require you to assign or offer
to assign to the Company any invention that you developed entirely on your own
time without using the Company’s equipment, supplies, facilities or trade
secret information except for those inventions that either:

 

1.
Relate at the time of conception or reduction to practice of the invention to
the Company’s business, or actual or demonstrably anticipated research or
development of the Company; or

 

2.
Result from any work performed by you for the Company.

 

To the extent a provision in the foregoing Agreement
purports to require you to assign an invention otherwise excluded from the
preceding paragraph, the provision is unenforceable.

 

This limited exclusion does not apply to any patent or
invention covered by a contract between the Company and the United States or
any of its agencies requiring full title to such patent or invention to be in
the United States.

 

I ACKNOWLEDGE RECEIPT of a copy of this notification.

 

	
  By: 

  	
  /s/ Steve Davis

  	
   

  	
   

  
	
   

  	
  (Signature)

  	
   

  
	
   

  	
   

  
	
  MARCH 26, 2004Exhibit
10.5

 

EXCHANGE
AGREEMENT

 

THIS EXCHANGE AGREEMENT (this “Agreement”) is
entered into as of the 11th day of December, 2001, by and between
Lotus Pacific, Inc., a Delaware corporation (“Lotus”), and ARESCOM Inc., a
California corporation (the “Company”). Lotus and the Company are referred to
collectively herein as the parties.

 

RECITALS

 

WHEREAS, Lotus is the holder of the following
promissory notes issued by the Company: (i) that certain promissory note, dated
March 23, 2000, for the principal sum of $8,000,000 (the “March Note”), (ii)
that certain promissory note, dated May 22, 2000, for the principal sum of
$2,000,000 (the “May Note”), (iii) that certain promissory note, dated July 26,
2000, for the principal sum of $1,000,000 (the “July Note”), (iv) that certain
promissory note, dated August 25, 2000, for the principal sum of $500,000 (the
“August Note”), and (v) that certain promissory note, dated September 1, 2000,
for the principal sum of $500,000 (the “September Note”, and together with the
March Note, May Note, July Note and August Note, the “Prior Notes”);

 

WHEREAS as of December 3, 2001, the aggregate
accrued but unpaid interest on the March Note and the May Note is
$1,047,829.19, and the aggregate accrued but unpaid interest on the July Note,
August Note and September Note is $191,996.15.

 

WHEREAS, the Company and Lotus desire to (A)
exchange the Prior Notes, plus accrued but unpaid interest thereon, for shares
of Series B Preferred Stock of the Company, and (B) exchange the May Note, plus
accrued but unpaid interest thereon, for a promissory note in principal amount
of $2,191,996.15, all on the terms and conditions set forth in this Agreement.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the
foregoing and the mutual agreements herein contained and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereby agree as follows:

 

1.                                       Exchange.

 

As of the date of this Agreement, the Company
has filed its Third Amended and Restated Articles of Incorporation (the
“Articles”) with the Secretary of State of the State of California. Concurrent
with the execution of this Agreement (A) Lotus shall cancel all indebtedness,
including, without limitation, accrued interest, and other obligations of the
Company under, relating to, or arising out of the Prior Notes, and shall
deliver to the Company the original Prior Notes, stamped “cancelled”, and (B)
the Company shall issue to Lotus (i) 11,048 shares (the “Shares”) of Series B
Preferred Stock of the Company, and (ii) a promissory note substantially in the
form attached hereto as Exhibit A, in the principal amount of $2,191,996.15
(the “New Note”).

 

 

2.                                       Grant of Security Interest.

 

The payment of principal under the New Note
and interest thereon, shall be secured by the grants to Lotus of a security
interest in all of the Company’s right, title and interest in all amounts owing
to the Company from Microsoft Corporation under that certain Modem Purchase
Agreement, dated February 7, 2000, among the Company and Microsoft Corporation
and all amendments, replacements, successors or additions thereto, whether now
existing or receivable or hereafter acquired or arising (collectively, the
“Collateral’), pursuant to the Loan and Security Agreement of even date, attached
hereto as Exhibit B.

 

3.                                       Representations and Warranties of the
Company.

 

The Company hereby represents and warrants to
Lotus the following:

 

3.1           Incorporation,
Good Standing and Qualification. The Company represents that it is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of California, and has all required power and authority
necessary to carry out the transactions contemplated by this Agreement.

 

3.2           Authorization.
All corporate action on the part of the Company and its respective officers,
directors and shareholders necessary for the authorization, execution and
delivery of this Agreement, and all other agreements contemplated hereby to
which the Company is a party, the performance of all obligations of the Company
hereunder and thereunder, and the sale and issuance of the Shares and the New
Note being sold hereunder has been taken. This Agreement and the New Note
constitute valid and legally binding obligations of the Company, enforceable in
accordance with their respective terms, except (i) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting enforcement of creditors’ rights generally, and (ii) as
limited by laws relating to the availability of specific performance,
injunctive relief or other equitable remedies.

 

3.3           Valid
Issuance of Preferred and Common Stock. The Shares issued, sold and delivered
in accordance with the terms of this Agreement for the consideration expressed
herein, have been duly and validly issued, fully paid and nonassessable and are
free of restrictions on transfer, other than restrictions on transfer under
this Agreement and under applicable state and federal securities laws. The
Common Stock issuable upon conversion of the Shares (together with the Shares,
the “Securities’) purchased under this Agreement has been duly and validly
reserved for issuance and, upon issuance in accordance with the terms of the
Articles, will be duly and validly issued, fully paid and nonassessable and
will be free of restrictions on transfer, other than restrictions on transfer
under this Agreement and federal and state securities laws.

 

3.4           Offering.
Subject in part to the truth and accuracy of Lotus’s representations set forth
in Section 3 of this Agreement, the offer, sale and issuance of the Securities
as contemplated by this Agreement are exempt from the registration requirements
of the Securities Act of 1933, as amended (the “Act”), and the qualification or
registration requirements of the Act or other applicable blue sky laws. Neither
the Company nor any authorized agent acting on the Company’s behalf will take
any action hereafter that would cause the loss of such exemptions.

 

 

3.5           No
Other Liabilities. Except for indebtedness under the Prior Notes which is being
cancelled pursuant to this Agreement, indebtedness under the New Note and
obligations under this Agreement, the Company represents and warrants that
there are no other liabilities, obligations or indebtedness of Lotus to the
Company, and there are no other liabilities, obligations or indebtedness of the
Company to Lotus, whether now or hereafter due and payable, and whether accrued
or contingent.

 

4.             Representations,
Warranties and Covenants of Lotus.

 

Lotus hereby represents, warrants and
covenants to the Company the following:

 

4.1           Incorporation,
Good Standing and Qualification. Lotus represents that it is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware, and has all required power and authority necessary to carry out
the transactions contemplated by this Agreement.

 

4.2           Authorization.
All corporate action on the part of Lotus and its respective officers,
directors and stockholders necessary for the authorization, execution and
delivery of this Agreement, and all other agreements contemplated hereby to
which Lotus is a party, the performance of all obligations of Lotus hereunder
and thereunder, and the purchase of the Securities being purchased hereunder
has been taken. This Agreement, and all other agreements contemplated hereby to
which Lotus is a party constitute valid and legally binding obligations of
Lotus, enforceable in accordance with their respective terms, except (i) as
limited by applicable bankruptcy, insolvency, reorganization, moratorium and
other laws of general application affecting enforcement of creditors’ rights
generally, and (ii) as limited by laws relating to the availability of specific
performance, injunctive relief or other equitable remedies.

 

4.3           Purchase
Entirely for Lotus’s Own Account. The Securities are being acquired for
investment for Lotus’s own account, not as a nominee or agent, and not with a
view to the resale or distribution of any part thereof, and Lotus has no present
intention of selling, granting any participation in or otherwise distributing
the same. Lotus further represents that Lotus does not have any contract,
undertaking, agreement or arrangement with any person to sell, transfer or
grant participations to such person or to any third person, with respect to any
of the Securities.

 

4.4           Disclosure
of Information. Lotus believes it has received all the information it considers
necessary or appropriate for deciding whether to acquire the Shares. Lotus
further represents that it has had an opportunity to ask questions and receive
answers from the Company regarding the terms and conditions of the offering of
the Shares and the business, properties, prospects and financial condition of
the Company.

 

4.5           No
Public Market. Lotus understands that no public market now exists for any of
the securities issued by the Company and that there is no assurance that a
public market will ever exist for the Securities.

 

4.6           Business
or Financial Experience. By reason of Lotus’s business or financial experience
or the business or financial experience of Lotus’s professional advisors who
are unaffiliated with and who are not compensated, directly or indirectly, by
the Company, or any

 

 

affiliate or selling agent of the Company, Lotus
has the capacity to protect its own interests in connection with its investment
in the Shares.

 

4.7           Accredited
Investor. Lotus is an “accredited investor” within the meaning of Securities
and Exchange Commission (“SEC) Rule 501 of Regulation D, promulgated under the
Act, as presently in effect.

 

4.8           Restricted
Securities. Lotus understands that the Securities it is purchasing are
characterized as “restricted securities” under the federal securities laws
inasmuch as they are being acquired from the Company in a transaction not
involving a public offering and that under such laws and applicable regulations
the Securities may not be resold without registration under the Act except in
certain limited circumstances. In the absence of an effective registration
statement covering the Securities or an available exemption from registration
under the Act, the Securities must be held indefinitely. In this connection,
Lotus represents that it is familiar with SEC Rule 144, as presently in effect,
and understands the resale limitations imposed thereby and by the Act,
including without limitation the Rule 144 condition that current information
about the Company be available to the public. Such information is not now
available and the Company has no present plans to make such information
available.

 

4.9           Further
Limitations on Disposition. Without in any way limiting the representations set
forth above, Lotus further agrees not to make any disposition of all or any
portion of the Securities unless and until the transferee has agreed in writing
for the benefit of the Company to be bound by this Section 3, and:

 

(a)           there
is then in effect a registration statement under the Act covering such proposed
disposition and such disposition is made in accordance with such registration
statement; or

 

(b)           (i)
Lotus shall have notified the Company of the proposed disposition and shall
have furnished the Company with a detailed statement of the circumstances
surrounding the proposed disposition, and (ii) if requested by the Company,
Lotus shall have furnished the Company with an opinion of counsel, reasonably
satisfactory to the Company and its counsel that such disposition will not
require registration of such shares under the Act.

 

4.10         Stop
Transfer Instructions and Legends. Lotus understands that the Company will
issue, and Lotus consents to the issuing of, stop transfer instructions to the
Company’s transfer agent with respect to the Securities to assure compliance
with the Act. Lotus consents to the placement of the following legend, in
substantially the form below, on each certificate representing the Securities:

 

THE SECURITIES REPRESENTED HEREBY HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR
ANY STATE SECURITIES OR BLUE SKY LAWS AND MAY NOT BE OFFERED, SOLD,
TRANSFERRED, HYPOTHECATED OR OTHERWISE ASSIGNED EXCEPT (1) PURSUANT TO A
REGISTRATION STATEMENT WITH RESPECT TO SUCH SECURITIES WHICH IS EFFECTIVE UNDER
THE ACT OR (2) PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE
ACT RELATING TO

 

 

THE DISPOSITION OF SECURITIES AND (3) IN
ACCORDANCE WITH APPLICABLE STATE SECURITIES AND BLUE SKY LAWS.

 

4.11         “Market
Stand-Off” Agreement. Lotus hereby agrees that, during the period of duration
specified by the Company and an underwriter of common stock or other securities
of the Company, following the effective date of a registration statement of the
Company filed under the Act, it shall not, to the extent requested by the
Company and such underwriter, directly or indirectly sell, offer to sell,
contract to sell (including, without limitation, any short sale), grant any
option to purchase or otherwise transfer or dispose of (other than to donees
who agree to be similarly bound) any securities of the Company held by it at
any time during such period except common stock included in such registration;
provided, however, that:

 

(a)           such
agreement shall be applicable only to the first such registration statement of
the Company which covers common stock (or other securities) to be sold on its
behalf to the public in an underwritten offering;

 

(b)           all
officers, directors and one percent (1%) or greater shareholders of the Company
enter into similar agreements; and

 

(c)           such
market stand-off time period shall not exceed 180 days from the effective date
of such registration statement.

 

In order to enforce the foregoing covenant,
the Company may impose stop-transfer instructions with respect to the Shares,
the common stock issuable upon conversion of the Shares and any other
securities of the company held by Lotus until the end of such period.

 

Notwithstanding the foregoing, the
obligations described in this Section 3.11 shall not apply to a registration
relating solely to employee benefit plans on Form S-1 or Form S-8 or similar
forms which may be promulgated in the future, or a registration relating solely
to a SEC Rule 145 transaction on Form S-4 or similar forms which may be
promulgated in the future.

 

4.12         No
Other Liabilities. Except for indebtedness under the Prior Notes which is being
cancelled pursuant to this Agreement, indebtedness under the New Note and
obligations under this Agreement, Lotus represents and warrants that there are
no other liabilities, obligations or indebtedness of the Company to Lotus, and
there are no other liabilities, obligations or indebtedness of Lotus to the
Company, and whether now or hereafter due and payable, and whether accrued or
contingent.

 

5. Miscellaneous.

 

5.1           Further
Assurances. From and after the date hereof, the Company and Lotus shall execute
all certificates, instruments, documents or agreements and shall take any other
commercially reasonable action which it is requested to execute or take to
further effectuate the transaction contemplated by this Agreement.

 

5.2           Successors
and Assigns. This Agreement shall be binding upon and inure to the benefit of
the parties named herein and their respective successors and permitted assigns.
No party may

 

 

assign either this Agreement or any of the
rights, interests, or obligations hereunder without the prior written approval
of the other party.

 

5.3           Notices.
All notices required or permitted hereunder shall be in writing and shall be
deemed effectively given (i) upon personal delivery to the party to be
notified, (ii) when sent by confirmed telex or facsimile if sent during normal
business hours of the recipient, if not, then on the next business day, (iii)
five days after having been sent by registered or certified mail, return
receipt requested, postage prepaid, or (iv) one day after deposit with a
nationally recognized overnight courier, specifying next day delivery, with
written verification of receipt. All communications shall be sent to the
address as set forth on the signature page hereof or at such other address as
such party may designate by ten days advance written notice to the other
parties hereto.

 

5.4           Governing
Law. This Agreement shall be governed and interpreted by the internal laws (and
not the laws of conflicts) of the State of California as applied to agreements
among California residents entered into and to be performed entirely within
California.

 

5.5           Consent
to Jurisdiction and Forum Selection. The parties hereto agree that any action,
suit or proceeding relating to or arising out of this Agreement and the
consummation of the transactions contemplated herein that result in judicial
proceedings shall be brought, tried and litigated exclusively in the state and
federal courts located in the County of Santa Clara, State of California. The
aforementioned choice of venue is intended by the parties to be mandatory and
not permissive in nature, thereby precluding the possibility of litigation
between the parties with respect to or arising out of this Agreement or the
consummation of the transactions contemplated herein in any jurisdiction other
than that specified in this paragraph. Each party hereby waives any right it
may have to assert the doctrine of forum non conveniens or similar doctrine or
to object to venue with respect to any proceeding brought in accordance with
this paragraph, and stipulates that the state and federal courts located in the
County of Santa Clara, State of California shall have in personam jurisdiction
and venue over each of them for the purpose of litigating any dispute,
controversy, or proceeding arising out of or related to this Agreement. Each
party hereby authorizes and accepts service of process sufficient for personal
jurisdiction in any action against it as contemplated by this paragraph by
registered or certified mail, return receipt requested, postage prepaid, to its
address for the giving of notices as set forth in this Agreement, or in the
manner set forth in Section 5.3 of this Agreement for the giving of notice. Any
final judgment rendered against a party in any action or proceeding shall be
conclusive as to the subject of such final judgment and maybe enforced in other
jurisdictions in any manner provided by law.

 

5.6           Entire
Agreement. This Agreement together and the documents referred to herein
constitute the entire agreement between the parties and supersedes any prior
understandings, agreements, or representations by or between the parties,
written or oral, to the extent they have related in any way to the subject
matter hereof.

 

5.7           Amendments
and Waivers. Any term of this Agreement may be amended and the observance of
any term of this Agreement may be waived (either generally or in a particular
instance and either retroactively or prospectively), only with the written
consent of the parties.

 

 

5.8           Severability.
If one or more provisions of this Agreement are held to be unenforceable under
applicable law, such provision shall be excluded from this Agreement and the
balance of the Agreement shall be interpreted as if such provision were so
excluded and shall be enforceable in accordance with its terms.

 

5.9           Expenses.
The parties will bear their own costs and expenses (including legal fees and
expenses) incurred in connection with this Agreement and the transaction
contemplated hereby.

 

5.10         Counterparts.
This Agreement may be executed in one or more counterparts, including counterparts
transmitted by facsimile or other electronic means, each of which shall be
deemed an original but all of which together will constitute one and the same
instrument.

 

5.11         Headings.
The section headings contained in this Agreement are used for convenience only
and shall not affect in any way the meaning or interpretation of this
Agreement.

 

5.12         No
Third Party Beneficiaries. This Agreement shall not confer any rights or
remedies on any person other than the parties hereto and their respective successors
and permitted assigns.

 

[This space intentionally left blank.]

 

 

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

 

	
  LOTUS:

  
	
  LOTUS PACIFIC, INC.

  
	
   

  
	
  By: 

  	
  /s/ Vincent Y. Yan,
  President

  	
   

  
	
   

  
	
  Address:

  
	
  8001 Irvine Center Drive
  Suite 400

  
	
  Irvine, CA 92618 Attn:
  President Facsimile: (949) 754-4394

  
	
   

  
	
   

  
	
  THE COMPANY:

  
	
  ARESCOM, INC.

  
	
   

  
	
   

  
	
  By: 

  	
  /s/ Max Lu, President

  	
   

  
	
   

  
	
  Address:

  
	
  3 541 Gateway Blvd.
  Fremont, CA 94538 Attn: President Facsimile: (510) 445-3606

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