8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

__________________

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) of the

SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of Earliest Event Reported):  February 21, 2011

CHINA ARCHITECTURAL ENGINEERING, INC.

(Exact Name of Registrant as Specified in Charter)

Delaware	001-33709	51-05021250
(State or other jurisdiction	(Commission	(IRS Employer
of incorporation)	File Number)	Identification No.)

Research Building, No.801 Wuzhong Road, Changzhou Science and Education Industrial Park Wujin District, Changzhou, Jiangsu, People’s Republic of China	213164
(Address of principal executive offices)	(Zip code)
Registrant’s telephone number, including area code:	0086-519-86339908

N/A

(Former Name or Former Address, If Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

On February 21, 2011, the Board of Directors (the “Board”) of China Architectural Engineering, Inc. (the “Company”) appointed Zhixin (Steven) Xing to serve as Chief Executive Officer ("CEO") and director of the Company, effective immediately.  Also effective February 21, 2011, Wing Lun (Alan) Leung submitted his resignation to the Board and ceased to serve as the Company’s Chief Executive Officer and a member of the Board, effective immediately. Mr. Leung’s resignation was for personal reasons.

Since November 2010, Mr. Xing, 39, has served as the president of Shanghai ConnGame Network Co. Ltd., subsidiary of the Company ("ConnGame"). Prior to joining ConnGame, Mr. Xing had worked for Microsoft for more than 10 years with a primary focus on distribution business management. From April 2004 to December 2006, he served as the APJ regional director of Microsoft Global Technical Engineering Center focused on channel development and support. From December 2006 to July 2008, Mr. Xing worked for Microsoft China managing the channel business.  From July 2008 to May 2009, he served as director of East China region for Microsoft China and was responsible for Small & Medium business.  Mr. Xing obtained an Executive Master of Business Administration Degree from Shanghai JiaoTong University in 2008 and a Bachelor’s Degree in Computer-Based Education from East China Normal University in 1996.

In connection with Mr. Xing’s appointment as Chief Executive Officer of the Company, Mr. Xing and the Company entered into an Employment Agreement.  The Employment Agreement has an effective date of February 21, 2011.  According to the Employment Agreement, Mr. Xing will receive an annual base salary of US$54,000.  Mr. Xing will also be entitled to reimbursement of reasonable business expenses and two weeks of paid vacation annually.  The Employment Agreement has three year term, subject to early termination by the Company and/or Mr. Xing with the required amount of notice as set forth the Employment Agreement.  In addition, Mr. Xing will be subject to non-competition and client and employee non-solicitation clauses during his employment with the Company and for certain periods of time after the termination of employment. A copy of the Employment Agreement with Mr. Xing is attached to this Current Report on Form 8-K as Exhibit 10.1.

In connection with Mr. Leung’s resignation, Mr. Leung entered into a Separation and Waiver Agreement with the Company pursuant to which waive and release the Company from any and all claims as of the date of separation and waiver agreement, including but not limited to, any claims arising out of or relating to his employment with the Company, his employment agreement, and any and all rights, rights to compensation (including but not limited to cash, non-cash, residual and bonus compensation), among other things. A copy of the Separation and Waiver Agreement is attached to this Current Report on Form 8-K as Exhibit 10.2.

Mr. Xing does not have any family relationships with any of the Company's directors or executive officers and is not a party to any transactions listed in Item 404(a) of Regulation S-K.

ITEM 7.01             REGULATION FD DISCLOSURE.

On February 23, 2011, the Company issued a press release announcing the appointment of Mr. Xing and resignation of Mr. Leung.  A copy of the press release is attached to this Current Report on Form 8-K as Exhibit 99.1 and the information therein is incorporated herein by reference.

The information reported under Item 7.01 in this Current Report on Form 8-K, including Exhibit 99.1 attached hereto, shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in such filing.

ITEM 9.01.            FINANCIAL STATEMENTS AND EXHIBITS

9.01 (d) Exhibits

Exhibit Number	Description
10.1	Employment Agreement dated February 21, 2011 entered into by and between Zhi-xin (Steven) Xing and the Company.
10.2	Separation and Waiver Agreement dated February 21, 2011 entered into by and between Wing Lun (Alan) Leung and the Company.
99.1	Press Release dated February 23, 2011

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date:   February 22, 2011	CHINA ARCHITECTURAL ENGINEERING, INC.
	By:	/s/ Andy Lu
	Name:	Andy Lu
	Title:	Acting Chief Financial Officer

EX-10.1

EMPLOYMENT AGREEMENT

This employment agreement (this “Agreement”) has been entered into as of the 21st day of February 2011 (the “Execution Date”) by and between China Architectural Engineering, Inc. (NASDAQ:CAEI) (“CAEI”), and, an individual residing in Shanghai, People’s Republic of China (“Employee”).

W I T N E S S E T H

WHEREAS, Employee has the experience, know-how, ability and qualifications to serve as the CAEI’s Chief Executive Officer.

WHEREAS, as CAEI desires to secure the services of the Employee as Chief Executive Officer and the Employee desires to accept such employment.

WHEREAS, the parties desire to enter into this Agreement to establish the terms and conditions of the Employee’s employment as Chief Executive Officer of CAEI.

NOW THEREFORE, in consideration of the material advantages accruing to the two parties and the mutual covenants contained herein, and intending to be legally and ethically bound hereby, CAEI and the Employee agree with each other as follows:

1.           Employment, Duties and Performance. The Employee will render full-time professional services to CAEI in the capacity of Chief Executive Officer of CAEI.  He will at all times, diligently, in good faith, in a manner consistent with the best interests of CAEI, and to the best of his ability, perform all duties that may be required of him by virtue of his position as Chief Executive Officer and all duties set forth in CAEI’s bylaws and in policy statements of the Board of the Directors of CAEI (the “Board”).  It is understood that these duties shall be substantially the same as those of a chief executive officer of a business corporation. The Employee is hereby vested with authority to act on behalf of the Board in keeping with policies adopted by the Board, as amended from time to time. In addition, he shall perform in the same manner any special duties assigned or delegated to him by the Board.  In the course of his employment, Employee shall comply with all policies, including Codes of Ethics, that are applicable to the CAEI’s officers in general and the chief executive officer, in particular.

2.           Term.  This Agreement shall have an effective date as of February 21, 2011 (the “Effective Date”) and shall expire, unless terminated earlier pursuant to and in accordance with the provisions of this Agreement, or extended by mutual agreement of the parties, on February 20, 2014 (the “Term”).   If the parties desire to renew this Agreement, terms of a new contract shall be completed, or the decision made not to negotiate a new contract made, not later than the end of the tenth month of the year of expiration. This contract and all its terms and conditions shall continue in effect until terminated.

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3.           Compensation.

(a)            Base Salary.  In consideration for the Employee’s services as Chief Executive Officer, CAEI agrees to pay the Employee a base salary of U.S. Dollars ($ 54,000 USD) per annum, which shall paid monthly at the rate of U.S. Dollars ($ 4,500 USD) per month, subject to all legally required deductions and withholdings, in accordance with the customary payroll practices of CAEI (“Base Salary”).

(b)           Equity Compensation.  The Employee shall be eligible to receive securities grants under CAEI’s equity incentive plan, with such grants being at the discretion of CAEI’s Board and/or Compensation Committee.

4.           Business Expenses.  All reasonable business expenses incurred by Employee in connection with the performance of his duties shall be reimbursed or pre-paid. Reimbursement shall be paid after submission of itemized business expense reports with supporting receipts, and such payment shall be made in accordance CAEI’s reimbursement payment policies, but in no event later than 20 days after submission of the business expense report.

5.           Benefits, Vacation, and Other Matters.

(a)           The Employee shall be entitled to two (2) weeks on compensated vacation time in each of the contract years during the Term, to be taken at times mutually agreed upon between him and the Chairman of the Board.

(b)           In the event of a period of prolonged inability to work due to the result of Employee’s sickness or an injury, the Employee will be compensated at his full rate pay up to three (3) months from the date of the sickness or injury.

(c)           In addition, the Employee, as have been mutually agreed upon between him and the Chairman of the Board, will be permitted to be absent from CAEI during working days to attend professional meetings and to attend to such outside professional duties.

(d)           CAEI agrees to pay dues to professional associations and societies and to such service organizations and clubs of which the Employee is a member, as may be approved by the Chairman of the Board as being in the best interests of CAEI.

(e)           CAEI also agrees to (i) insure the Employee under its general liability insurance policy for all acts done by him in good faith as Chief Executive Officer throughout the Term of this contract; and (ii) provide comprehensive health and major medical health insurance for the Employee and his family.

(f)            In addition, the Employee shall be entitled to all other fringe benefits to which all other general employees of the CAEI are entitled.

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6.           Termination.

(a)           The Board may, in its sole discretion, and with or without cause, terminate this Agreement and the Employee's employment.  Such action shall require majority vote of the entire Board and become effective upon written notice to the Employee or at such later time as may be specified in said notice. After such termination, all rights, duties and obligations of both parties shall cease except that CAEI shall continue to pay the Employee his then monthly Base Salary for the month in which his duties were terminated and for two (2) consecutive months thereafter (the “Severance Period”) as an agreed upon severance payment (“Severance Payment”), subject and conditioned on the Employee signing a full release and waiver agreement in substantially the form as provided by CAEI to effect the Releases, as defined below in Paragraph 6 (the “Release Agreement”).  During the Severance Period, the Employee shall not be required to perform any duties for CAEI, other than providing reasonable assistance in good faith to CAEI solely for the purpose of transitioning the Employees’ duties.

(b)           Neither shall the fact that the Employee seeks, accepts and/or undertakes other employment during the Severance Period affect such Severance Payments. Also, CAEI agrees to keep the Employee's health and major medical insurance coverage paid up and in effect during the Severance Period.

(c)           CAEI may terminate Employee’s employment immediately, without notice, if CAEI determines that Cause exists.  For purposes of this Agreement, “Cause” shall mean: (i)  An act of dishonesty, fraud, embezzlement, or misappropriation of funds or proprietary information in connection with the Employee’s responsibilities as an Employee;  (ii)  Employee’s conviction of, or plea of nolo contendere to, a felony or a crime involving moral turpitude;  (iii)  Employee’s willful or gross misconduct in connection with his employment duties which, directly or indirectly, has a material adverse effect on CAEI; or (iv)  Employee’s habitual failure or refusal to perform his employment duties under this Agreement, if such failure or refusal is not cured by Employee within ten (10) days after receiving written notice thereof from CAEI.  In the event that Employee’s employment is terminated for Cause, the Employee shall only be entitled to that portion of the Base Salary that has been earned but unpaid prior to such termination for Cause, and any expense reimbursements due and owing to Employee as of such termination date.

(d)           Should the Board, without written consent of the Employee, reduce the Employee's duties or authority so it can reasonably be found that the Employee is no longer performing as the Chief Executive Officer, the Employee shall have the right, in his complete discretion, to provide written notice of termination of this Agreement to the Chairman of the Board, with such termination to be effective within ninety (90) days of such written notice, unless such ninety (90) day period is waived in writing by CAEI.

(e)           Should the Employee at his discretion elect to terminate this contract for any other reason than as stated in Sub-Paragraph 6(d) and Paragraph 7, he shall provide to the Board ninety (90) days' written notice of his decision to terminate.  The Employee will not be entitled to the Severance Payments or any other severance benefits if the Employee terminates this Agreement under this Sub-Paragraph 6(e).  At the end of the ninety (90) days, all rights, duties and obligations of both parties to the contract shall cease, provided, however, that CAEI, in its sole discretion, may elect to waive the 90 days notice period and effect the Employee’s election to terminate this Agreement immediately.

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(f)           If an event described in Sub-Paragraphs 6(a) or Paragraph 7 occurs, and the Employee accepts any of the Severance Payments and severance benefits described therein, to the extent not prohibited by law, the Employee shall be deemed to voluntary release and forever discharge the CAEI and its officers, directors, employees, agents, and related corporations and their successors and assigns, both individually and collectively and in their official capacities (hereinafter referred to collectively as "Releases"), from any and all liability arising out of his employment and/or the cessation of said employment. Further, Employee agrees that he must execute and abide by the Release Agreement to confirm his obligations under the Releases.  Nothing contained in this paragraph and nothing shall prevent the Employee from bringing an action to enforce the terms of this Agreement.

7.           Change of Control.  If CAEI  undergoes a Change of Control, as defined below, the Employee may terminate his employment at his discretion or be retained as Chief Executive Officer  of CAEI or any successor corporation under the terms and conditions of this Agreement.  If the Employee elects to terminate his employment at such time, he shall be entitled to the same severance arrangement as would be applicable under Sub-Paragraph 6(a) if CAEI had terminated his employment at such time.  If the Employee continues to be employed by CAEI or its successor organization, all of the terms and conditions of this Agreement shall remain in effect. CAEI agrees that neither it nor its present or any future holding company shall enter into any agreement that would negate or contradict the provisions of this Agreement.  For purposes of this Agreement, “Change in Control” shall mean (i) the time, after the date of this Agreement, that CAEI first determines that any person and all other persons who constitute a group (within the meaning of § 13(d)(3) of the Securities Exchange Act of 1934 (“Exchange Act”)) have acquired direct or indirect beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act) of fifty percent (50%) or more of CAEI’s outstanding securities, unless a majority of the “Continuing Directors” approves the acquisition not later than ten (10) business days after CAEI makes that determination, or (ii) the first day on which a majority of the members of CAEI's board of directors are not “Continuing Directors.” “Continuing Directors” shall mean, as of any date of determination, any member of CAEI's board of directors who (i) was a member of that board of directors on the date of this Agreement, (ii) has been a member of that board of directors for the two years immediately preceding such date of determination, or (iii) was nominated for election or elected to CAEI’s board of directors with the affirmative vote of the greater of (x) a majority of the Continuing Directors who were members of CAEI’s board of directors at the time of such nomination or election or (y) at least three Continuing Directors.

8.           Confidentiality.  The Employee shall maintain confidentiality with respect to information that he receives in the course of his employment and not disclose any such information. The Employee shall not, either during the Term of employment of thereafter, use or permit the use of any information of or relating to CAEI in connection with any activity or business and shall not divulge such information to any person, firm, or corporation whatsoever, except as may be necessary in the performance of his duties hereunder or as may be required by law or legal process.  Immediately following the termination of Employee’s employment with CAEI, Employee will return to CAEI all materials, all works created by Employee or others in the course of his or their employment duties during the term of Employee’s employment hereunder, and all copies thereof.  Employee further realizes that any trading in CAEI’s common stock or other securities or aiding or assisting others in trading in CAEI’s common stock or other securities, including disclosing any non-public information concerning CAEI or its affiliates to a person who uses such information in trading in the CAEI’s common stock or other securities, may constitute a violation of federal and state securities laws.  Employee will not engage in any transactions involving the CAEI’s common stock or other securities while in the possession of material non-public information in a manner that would constitute a violation of federal and state securities laws.

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9.           Non-Compete.  During the term of his employment and during the 12-month period following termination of his employment, the Employee shall not directly own, manage, operate, join, control, or participate in or be connected with, as an officer, employee, partner, stockholder or otherwise, any firm that is in competition to CAEI within service area. Employee declares that the foregoing limitations are reasonable and necessary to protect the business of CAEI and its affiliates.  If any portion of these restrictions be declared invalid by a court of competent jurisdiction, the validity or enforceability of the remainder of such restrictions shall not thereby be adversely affected, but rather such court shall reform the provision deemed invalid so that it shall be as near to the terms of this Agreement as possible and still remain enforceable under applicable law.

10.           Non-Solicitation.  The Employee shall not directly or indirectly through his own efforts, or otherwise, during the term of this Agreement, and for a period of 24 months thereafter, employ, solicit to employ, or otherwise contract with, or in any way retain the services of any employee or former employee of CAEI. The Employee will not interfere with the relationship of CAEI and any of its employees and the Employee will not attempt to divert from CAEI any business in which CAEI has been actively engaged during his employment.  Nor shall the Employee directly or indirectly through his own efforts, or otherwise, during the term of this Agreement, and for a period of 24 months thereafter, solicit or attempt to solicit the business of any customer or client of CAEI, or induce or attempt to induce any client or customer of CAEI to reduce its business with CAEI.

11.           Entire Agreement.  This Agreement constitutes the entire agreement between the parties and contains all the agreements between them with respect to the subject matter hereof. It also supersedes any and all other agreements or contracts, either oral or written, between the parties with respect to the subject matter hereof.

12.           Amendments.  Except as otherwise specifically provided, the terms and conditions of this contract may be amended at any time by mutual agreement of the parties, provided that before any amendment shall be valid or effective it shall have been reduced to writing and signed by CAEI’s Chief Executive Officer and the Employee.

13.           Applicable Law; Severability.  This Agreement shall be construed and enforced under and in accordance with the laws of the State of Delaware.  The invalidity or unenforceability of any particular provision of this contract shall not affect its other provisions, and this contract shall be construed in all respects as if such invalid or unenforceable provisions had been omitted.

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14.           Successors; Assignability.  This agreement shall be binding upon the CAEI, its successors and assigns, including, without limitation, any corporation into which CAEI may be merged or by which it may be acquired, and shall inure to the benefit of the Employee, his administrators, executors, legatees, heirs and assigns.  This Agreement is personal in nature, and neither this Agreement nor any part of any obligation herein shall be assignable by Employee.

15.           Notices.  All notices and other communications required or permitted under this Agreement, which are addressed as provided below (or otherwise provided in writing by the party to receive such notice) shall be delivered personally, or sent by certified or registered mail with postage prepaid, or sent by Federal Express or similar courier service with courier fees paid by the sender, and, in either case, shall be effective upon delivery.

If to CAEI: Jun Tang

Address: NORTH 65/F, WORLD FINANCE CENTRE

NO 100, CENTURY AVENUE SHANGHAI, CHINA

If to Employee: Xing Zhixin

Address：1502, #3 BUILDING, NO.569 XINHUA RD., SHANGHAI

16.           Captions.  The paragraph captions herein are inserted only as a matter of convenience and reference and in no way define, limit or describe the scope of this Agreement or the intent of any provisions hereof.

17.           Counterparts.  This Agreement may be executed in one or more facsimile counterparts, and by the parties hereto in separate facsimile counterparts, each of which when executed shall be deemed to be an original while all of which taken together shall constitute one and the same instrument.

[SIGNATURE PAGE TO FOLLOW]

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IN WITNESS WHEREOF, this Agreement is executed as of the day and year first above written.

CHINA ARCHITECTURAL ENGINEERING, INC.
	Witness:
	[ILLEGIBLE]
/s/ Jun Tang
By:  Jun Tang	By:
Title:  Chairman of the Board	Address:

EMPLOYEE
	Witness:
	[ILLEGIBLE]
/s/ Xing Zhixin
By: Xing Zhixin	By:
Title: Chief Executive Officer	Address:

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EX-10.2

SEPARATION AGREEMENT AND RELEASE

This SEPARATION AGREEMENT AND RELEASE ("Agreement") is made and entered into as of this 21st day of February 2011 (the “Effective Date”), by and between China Architectural Engineering, Inc., a Delaware corporation (the “Company”), and Wing Lun (Alan) Leung ("Mr. Leung").

WHEREAS, Mr. Leung has been employed by the Company as Chief Executive Officer pursuant to an agreement between Mr. Leung and the Company dated September 12, 2010 (referred to herein as the “Employment Agreement”), a copy of which is attached hereto as Exhibit A;

WHEREAS, on 21 February 2011, Mr. Leung gave the Company notice of his resignation as Chief Executive Officer, member of the Board of Directors, and all other positions that he may hold with the Company and its subsidiaries, effective immediately;

WHEREAS, the parties mutually desire to enter into this Agreement to effectuate the termination of Mr. Leung’s employment with the Company and to set forth the benefits to be provided to Mr. Leung in exchange for Mr. Leung’s covenants as set forth herein;

NOW, THEREFORE, in consideration of the mutual promises set forth below, the parties agree as follows:

1.           Termination of Employment.  The Company and Mr. Leung agree that Mr. Leung’s employment with the Company terminated by virtue of his voluntary resignation effective as of 21 February 2011 (the “Termination Date”).

2.           Termination of Duties and Responsibilities.  As of the Termination Date, Mr. Leung is relieved of all duties and responsibilities of employment with the Company and shall have no authority to enter into any contracts on behalf of the Company, make any commitments on behalf of the Company or to contact or otherwise do business with any customers, vendors or employees of the Company.  Mr. Leung shall not visit any non-public facility of the Company as of the Termination Date except as expressly requested of his by the Chairman of the Board Of Directors of the Company.

3.           No Payments Due.

(a)           Provided that Mr. Leung has complied with all terms and conditions of this Agreement, Company shall permit Mr. Leung to terminate the Employment Agreement without Cause, as defined in the Employment Agreement, and the Company shall waive any notice provisions required under the Employment Agreement.  Mr. Leung agrees that such waiver by the Company constitutes due and valid consideration for his execution of this Agreement.  Mr. Leung expressly agrees and acknowledges that the Company is under no pre-existing obligation to provide Mr. Leung with such waiver as described in this Section 3(a).

(b)           Mr. Leung and Company agree that they shall not issue any communication or make any statement, written or otherwise, that disparages, criticizes or otherwise reflects adversely on or encourages any adverse action against the other or the Released Parties (as defined below).  Mr. Leung further agrees not to make any disparaging or negative remarks regarding the Company or its products or employees.

Initial __________       __________

(c)           Mr. Leung specifically acknowledges that he is not due any business related expenses or otherwise, under the Employment Agreement or otherwise.  Notwithstanding the foregoing, Mr. Leung has agreed to provide normal transitional assistance to the Company, however, for anything beyond normal transitional assistance, the Company and Mr. Leung may agree by execution of separate agreement for Mr. Leung to provide certain additional transitional services to the Company, where such agreement shall govern the terms of such services.

5.           Release And Waiver of Claims.

(a)           “Released Parties” means Company and its parents, subsidiaries, affiliates, divisions, partners, or predecessors, current and former stockholders, directors, officers, employees, and agents of Company and these companies, and any and all employee pension or welfare benefit plans of Company and these companies, including current and former trustees and administrators of these plans, and all those who succeed to their rights, interests, or responsibilities.

(b)           Mr. Leung does hereby waive, release, acquit and forever discharge each and all of the Released Parties, respectively, from any and all claims, actions, charges, complaints, grievances and causes of action (hereinafter collectively referred to as “claims”), of whatever nature, whether known or unknown, which exist or may exist against the Released Parties, respectively, as of the date of this Agreement, including but not limited to, any claims arising out of or relating to his employment with the Company, the Employment Agreement, any and all rights, rights to compensation (including but not limited to cash, non-cash, residual and bonus compensation), statutory claims, all claims for injunctive relief, compensatory damages, consequential damages, incidental damages, punitive damages interest, costs, expenses, attorneys’ fees and/or any other type of damages or monetary relief cognizable in law or equity, and any and all claims arising under any federal, state, city and/or other governmental statute, law, regulation or ordinance relating to corporate governance responsibilities or securities; provided, however, that nothing in this Agreement shall waive, compromise or otherwise negate the rights, privileges and claims directly provided under this Agreement.  It is further understood and agreed by Mr. Leung that as a condition of this Agreement, Mr. Leung hereby expressly waives and relinquishes any and all claims, rights or benefits that it may have but of which it does not know or suspect to exist in its favor at the time of executing this Agreement which if known by it must have materially affected its settlement.  In connection with such waiver and relinquishment, Mr. Leung hereby acknowledges that his attorneys may hereafter discover claims or facts in addition to, or different from, those which it now knows or believes to exist, but that it expressly agrees to fully, finally and forever settle and release any and all claims, known or unknown, suspected or unsuspected, which exist or may exist on his behalf against the Released Parties at the time of execution of this Agreement, including, but not limited to, any and all claims relating to or arising from the Employment Agreement and his employment with the Company. Mr. Leung further acknowledges, understands and agrees that this representation and commitment is essential to the Release Parties and that this Agreement would not have been entered into were it not for this representation and commitment.

Initial __________       __________

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(c)           Mr. Leung specifically releases all claims and rights arising from or relating to Mr. Leung’s employment or other relationship with the Released Parties, including but not limited to any claims or rights Mr. Leung may have under Title VII of the Civil Rights Act of 1964, as amended, and the Civil Rights Act of 1991, the Age Discrimination in Employment Act, the Americans with Disabilities Act, the federal or any similar state Worker Adjustment and Retraining Notification Act, Section 1981 of the Civil Rights Act of 1866, the Employee Retirement Income Security Act, the Delaware State Human Rights Law, the Delaware City Human Rights Act, the Delaware State Equal Pay Law, the Delaware State Labor Law, the Delaware Whistleblower Law, the Delaware State Wage Payment Law, the Delaware State Wage and Hour Law, the Delaware State Minimum Wage Act, any federal, state or local laws or regulations against discrimination or protecting whistleblowers, or any other federal, state, or local law, common law, regulation or constitution relating to employment, wages, hours, or any other terms and conditions of employment, whether any of the foregoing based on laws of domestic or international jurisdictions.

(d)           Nothing in this Agreement prohibits Mr. Leung from filing a complaint with the United States Equal Employment Opportunity Commission, the National Labor Relations Board, or any similar state or local administrative agency; provided, however, that Mr. Leung waives the right to any monetary relief by virtue of filing any such charge or complaint by or on behalf of Mr. Leung.  In addition, this Agreement does not release any statutory claims that cannot be released by Mr. Leung as a matter of law.

(e)           The Company, on behalf of itself and the Released Parties, hereby releases the Mr. Leung from all claims and rights that the Company or the Released Parties have against Mr. Leung including, but not limited to, those claims of which the Company and the Released Parties are not aware, those claims not mentioned in this Agreement, and all claims for attorney’s fees, costs, and interest. The Company, on behalf of itself and the Released Parties, releases Mr. Leung from all claims and rights resulting from anything that has happened up to the Termination Date.  This release of claims by the Company and the Released Parties do not apply to claims arising after the Termination Date.

4.           Confidentiality and Return of Property.  Mr. Leung recognizes that any knowledge or information of any type whatsoever of a confidential nature relating to the business of the Company or any of its parents, subsidiaries, divisions or affiliates, including, without limitation, all types of trade secrets, client lists or information, information regarding product development, production methods and processes, marketing plans, management organization, operating policies or manuals, performance results, business plans, financial records, or other financial, commercial, business or technical information (collectively “Confidential Information”), must be protected as confidential, and not copied, disclosed or used other than for the benefit of the Company at any time, unless and until such knowledge or information is in the public domain through no wrongful act by Mr. Leung or any other person.  Mr. Leung further agrees not to divulge to anyone (other than the Company or any persons employed or designated by the Company), publish or make use of any such Confidential Information without the prior written consent of the Company, except by an order of a court having competent jurisdiction or under subpoena from an appropriate government agency.  Mr. Leung further agrees that not later than the Termination Date, unless waived or delayed in writing by the President of the Company, he will return to the Company all of its property and documents (and any copies thereof) including, without limitation, all Confidential Information, all computer software and disks, all reports, memoranda, notes, records, projections, lists, Company or client financial information, keys, credit cards, and equipment.  Mr. Leung further agrees that he will abide by the terms and conditions of Section 8 of the Employment Agreement, which shall survive this Agreement and continue in full force and effect according to its stated terms following the Termination Date.

Initial __________       __________

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5.           Binding Effect.  This Agreement is binding upon anyone who succeeds to the rights, interests or responsibilities of the parties.  This Agreement may be assigned by the Company.  Mr. Leung makes the releases contained in this Agreement for the benefit of the Released Parties and all who succeed to their rights, interests, or responsibilities.  This Agreement shall inure to the benefit of and be enforceable by Mr. Leung and his personal or legal representatives, executors, administrators, heirs, distributees, devisees and legatees.  Mr. Leung may not assign his obligations under this Agreement.

6.           Enforceability.  If a court rules that any provision of this Agreement is not enforceable in the manner set forth in this Agreement, that provision should be enforceable to the maximum extent possible under applicable law and should be reformed accordingly.  If a court rules that any provision of this Agreement is invalid or unenforceable, that ruling shall not affect the validity or enforceability of the other portions of this Agreement, which shall continue in full force and effect.

7.           Entire Agreement.  Except as expressly provided for in this Agreement, this Agreement supersedes any and all prior oral and/or written agreements between the Company and Mr. Leung, including any existing oral or written agreements with respect to Mr. Leung’s employment with the Company, except that the provisions of Section 9 and Section 10 of the Employment Agreement shall survive this Agreement.  No representations regarding the Released Parties' relationship with Mr. Leung, or any obligations to Mr. Leung, have been made, or survive, except as set forth in this Agreement.

8.           Amendment.  This Agreement cannot be amended, except by a written document signed by the party against whom enforcement of any such amendment is sought.

9.           Legal Counsel.  Mr. Leung has had ample time to consult with an attorney before signing this Agreement and acknowledges that he has been advised to consult with an attorney before signing this Agreement.

10.           Confidentiality.  Mr. Leung agrees that the existence of and the terms and conditions of this Agreement shall forever remain confidential as between the parties and he shall not disclose them to any other person, provided however that he may disclose the terms of this Agreement to his attorney, accountant, financial advisor and spouse.  Without limiting the generality of the foregoing, Mr. Leung specifically agrees that he shall not disclose information regarding this Agreement to any current, former or future employee of the Company.

Initial __________       __________

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11.           Notices.  All notices under this Agreement must be in writing and must be sent via certified mail to the appropriate addresses set forth below:

If to Company:

Mr. Jun Tang

Research Building, No.801 Wuzhong Road,

Changzhou Science and Education Industrial Park

Wujin District,

Changzhou, Jiangsu, 213164

People’s Republic of China

If to Mr. Leung:

12.           Full Understanding.  Mr. Leung has read this Agreement carefully, fully understands the meaning of its terms, and is signing this Agreement knowingly and voluntarily.

13.           Compromise.  The Parties agree and acknowledge that this Agreement is the result of a compromise and shall never be construed as an admission of liability, wrongdoing or responsibility on the part of the Company.  Indeed, the Company expressly denies any such liability, wrongdoing or responsibility.

14.           Governing Law.  This Agreement shall be interpreted in accordance with the laws of the State of Delaware, without regard to its principles of conflicts of law.  Any action relating to this Agreement shall be instituted in the State of Delaware and the parties agree to submit to the jurisdiction of the state and federal courts of Delaware for this purpose.

15.           Company Covenant Regarding Indemnification. The Company agrees that it shall not, with respect to Mr. Leung, reduce or withhold the indemnification provided to his as of the Termination Date as an officer or employee of the Company, or as a former officer or employee of the Company.

[SIGNATURE PAGE TO FOLLOW]

Initial __________       __________

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IN WITNESS WHEREOF, the parties hereto have executed this Separation Agreement and Release on the date indicated above.

WING LUN (ALAN) LEUNG

Date: 

CHINA ARCHITECTURAL ENGINEERING, INC.

By:

Name: 

Title:

Date:

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Exhibit A

Copy of

Employment Agreement

Dated September 12, 2010

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EX-99.1

China Architectural Engineering Appoints New Chief Executive Officer

CHANGZHOU, China, February 23, 2011 -- China Architectural Engineering, Inc. (Nasdaq: CAEI), a self-developer of online games and a provider of high-end building envelope architectural systems, today announced that it has appointed Mr. Steven Zhixin Xing as Chief Executive Officer and as a member of the Company's Board of Directors.

Mr. Xing is the president of Shanghai ConnGame Network Co. Ltd., a subsidiary of the Company. Previously, Mr. Xing had worked for Microsoft for more than 10 years developing an expertise in distribution business management. In April 2004, he was promoted to APJ regional director of Microsoft Global Technical Engineering Center and focused on Channel Development and Support. In late 2006, he transferred to Microsoft China with a focus on managing the channel business. From January 2007 to June 2008, the 10 regional software distributors managed by Mr. Xing benefited from his efforts and grew their aggregate business revenue from US$65 million to US$120 million. Mr. Xing also served as the director of East China region for Microsoft China and was responsible for Small and Medium business. Mr. Xing holds Master Degree in EMBA from Shanghai JiaoTong University and Bachelor Degree in Computer-Based Education from East China Normal University.

Mr. Jun Tang, Chairman of the Board of China Architectural Engineering, commented, "We are delighted to welcome Steven Zhixin Xing to our team. His extensive experience with Chinese online gaming and the IT industry, as well as his proven leadership and communication skills make him a unique and invaluable asset to our Company. I have known and personally worked with Steven over the past few years, and I am fully confident that he will be able to help lead our Company to the forefront of the Chinese online gaming industry."

Mr. Xing commented, "I am greatly honored to join CAE's team and take on the role of CEO. I will diligently work to strengthen our execution capabilities to grow our Company and further enhance our communication with investors. I believe we have a balanced combination of people, technology, and expertise to execute on our goals, and I look forward to employing my deep industry knowledge and experience to lead CAE to sustainable business growth in the near future."

About China Architectural Engineering

China Architectural Engineering, Inc. is a self-developer of online games and provider of high-end building envelope architectural systems. Through its subsidiary, Shanghai ConnGame Network, the Company leverages its innovative game engines, scalable development platforms, and accomplished production teams to develop and operate MMORPGs. The first game "Warring State" focuses on China's historic themes and the second game "Revolution" focuses at Western fantasy style. The Company also provides design, engineering, fabrication and installation services of high-end curtain wall systems, roofing systems, steel construction systems, and eco-energy systems. For further information on China Architectural Engineering, Inc., please visit www.caebuilding.com.

Forward-Looking Statements

In addition to historical information, the statements set forth above may include forward-looking statements that may involve risk and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Actual results could differ materially from the expectations contained in forward-looking statements as a result of risks and uncertainties, including, but not limited to, the Company's failure to make required payments under the waiver agreement and ability to negotiate with the bondholders for an extension to make such required payments; the bondholders ability to call the bonds of $28 million principal amount for immediate repayment; the Company's ability to integrate the personnel and operations of the Company and ConnGame that was acquired in the third quarter 2010; difficulties in moving into the online gaming market; the effect of dilution if the conversion price of the bonds are adjusted downward due to the Company's failure to comply with the waiver; the Company's ability to successfully and timely develop and commercially launch its first MMORPG game; identification and remediation of the Company's deficiencies and weaknesses in its internal controls over financial reporting; ability to identify and secure debt, equity, and/or other financing required to continue the operations of the Company; reduction or reversal of the Company's recorded revenue or profits due to "percentage of completion" method of accounting and expenses; increasing provisions for bad debt related to the Company's accounts receivable; fluctuation and unpredictability of costs related to our products and services; adverse capital and credit market conditions; fluctuation and unpredictability of costs related to the Company's products and services; expenses and costs associated with its convertible bonds, regulatory approval requirements and competitive conditions; and various other matters, many of which are beyond our control. These and other factors that may result in differences are discussed in greater detail in the Company's reports and other filings with the Securities and Exchange Commission.

Investor Contact:

Email: ir@caebuilding.com