EXHIBIT 10.1

DIRECTOR AGREEMENT

This DIRECTOR AGREEMENT is made as of this ___day of June___, 2010 (the
"Agreement"), by and between China Electric Motor, Inc., a Delaware corporation
(the "Company") and Tony Shen (the “Director”).

WHEREAS, the Company is engaged in the design, manufacture, sale and marketing
of micro-motors and micro-motor components with a range of applications in
automobiles, power tools, home appliances and consumer electronics (the
“Business”);

WHEREAS, the Company wishes to appoint the Director as a non-executive member of
the Board of Directors of the Company (the “Board”) and enter into an agreement
with the Director with respect to such appointment; and

WHEREAS, the Director wishes to accept such appointment and to serve the Company
on the terms set forth herein, and in accordance with, the provisions of this
Agreement.

NOW, THEREFORE, in consideration of the mutual covenants contained herein, the
parties hereto agree as follows:

1.           Directorship.  Subject to the terms and provisions of this
Agreement, the Company shall cause the Director to be appointed as non-executive
member of the Board and the Director hereby agrees to serve the Company in that
directorship upon the terms and conditions hereinafter set forth, provided
however, that the Director's continued service on the Board after the initial
term on the Board shall be subject to any necessary approval by the Company's
stockholders.

2.           Duties.  During the Directorship Term (as defined in Section 5
hereof), the Director shall serve as a member of the Board, and the Director
shall make reasonable business efforts to attend all Board meetings, serve on
appropriate subcommittees as reasonably requested by the Board, make himself
available to the Company at mutually convenient times and places, attend
external meetings and presentations, as appropriate and convenient, and perform
such duties, services and responsibilities and have the authority commensurate
to such directorship.

The Director will use his best efforts to promote the interests of the Company.
The Company recognizes that the Director (i) is a full-time executive employee
of another entity and that his responsibilities to such entity must have
priority and (ii) may sit on the Board of Directors of other entities; although
Director will use reasonable business efforts to coordinate his respective
commitments so as to fulfill his obligations to the Company and, in any event,
will fulfill his legal obligations as a director. Other than as set forth above,
the Director will not, without the prior written approval of the Board, engage
in any other business activity which could materially interfere with the
performance of his duties, services and responsibilities hereunder or which is
in violation of the reasonable policies established from time to time by the
Company, provided that the foregoing shall in no way limit his activities on
behalf of (i) his current employer and its affiliates or (ii) the boards of
directors of those entities on which he sits.
 
 

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3.           Monetary Remuneration.

(a)  Fees and Compensation. During the Directorship Term the Director shall
receive a monthly fee of US$1,500.00, and when serving as Chair of Audit
Committee, an additional monthly fee of US$700.00. Such fees shall be payable on
the first day of each month.  The Director's status during the Directorship Term
shall be that of an independent contractor and not, for any purpose, that of an
employee or agent with authority to bind the Company in any respect. All
payments and other consideration made or provided to the Director under Sections
3 and 4 shall be made or provided without withholding or deduction of any kind,
and the Director shall assume sole responsibility for discharging, all tax or
other obligations associated therewith.

(b) Expense Reimbursements.  During the Directorship Term, the Company shall
reimburse the Director for all reasonable out-of-pocket expenses incurred by the
Director in attending any in-person meetings and in performing other tasks (as
defined in Section 2 hereof) for the Company, provided that the Director
complies with the generally applicable policies, practices and procedures of the
Company for submission of expense reports, receipts or similar documentation of
such expenses. Any reimbursements for allocated expenses (as compared to
out-of-pocket expenses of the Director) must be approved in advance by the
Company.

4.           Equity Arrangement.  Within five (5) business days after the
approval of an equity incentive plan (the “Plan”) by the Company’s stockholders,
the Company agrees to grant the  Director Twenty Thousand (20,000) shares of
restricted common stock of the Company (the “Shares”) pursuant to the Plan.
These Shares will vest in Two (2) years with Twenty Five Hundred (2,500) Shares
being vested every quarter, starting from the effective date of this Agreement.
Other terms and conditions of the Shares, shall be determined by the Company’s
Board of Directors in accordance with the Plan at the time of the grant and set
forth in a stock grant agreement to be executed by the Company and the Director.
If the Plan is not yet approved by the end of any quarter during the Term of
this Agreement, the Director will be paid an additional fee equal to the market
value of Shares that would have been vested by then, in lieu of the Shares that
would have been vested by then.

5.           Directorship Term.  The "Directorship Term", as used in this
Agreement, shall mean the period commencing on the date hereof and terminating
on the earliest of the following to occur:

(a) the death of the Director;

(b) the termination of the Director from the position of member of the Board by
votes of the Company’s stockholders;

(c) the resignation by the Director from the Board for any reason.

6.           Director's Representation and Acknowledgment.  Based on the
understanding that the Company is currently only engaged in the Business, the
Director represents to the Company that his execution and performance of this
Agreement shall not be in violation of any agreement or obligation (whether or
not written) that he may have with or to any person or entity, including without
limitation, any prior employer. The Director hereby acknowledges and agrees that
this Agreement (and any other agreement or obligation referred to herein) shall
be an obligation solely of the Company, and the Director shall have no recourse
whatsoever against any stockholder of the Company or any of their respective
affiliates with regard to this Agreement.
 
 
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7.           Director Covenants.

(a)  Unauthorized Disclosure. The Director agrees and understands that in the
Director's position with the Company, the Director has been and will be exposed
to and receive information relating to the confidential affairs of the Company,
including but not limited to technical information, business and marketing
plans, strategies, customer information, other information concerning the
Company's products, promotions, development, financing, expansion plans,
business policies and practices, and other forms of information considered by
the Company to be confidential and in the nature of trade secrets. The Director
agrees that during the Directorship Term and thereafter, the Director will keep
such information confidential and will not disclose such information, either
directly or indirectly, to any third person or entity without the prior written
consent of the Company; provided, however, that (i) the Director shall have no
such obligation to the extent such information is or becomes publicly known or
generally known in the Company's industry other than as a result of the
Director's breach of his obligations hereunder and (ii) the Director may, after
giving prior notice to the Company to the extent practicable under the
circumstances, disclose such information to the extent required by applicable
laws or governmental regulations or judicial or regulatory process. This
confidentiality covenant has no temporal, geographical or territorial
restriction. Upon termination of the Directorship Term, the Director will
promptly return to the Company all property, keys, notes, memoranda, writings,
lists, files, reports, customer lists, correspondence, tapes, disks, cards,
surveys, maps, logs, machines, technical data or any other tangible product or
document which has been produced by, received by or otherwise submitted to the
Director in the course or otherwise as a result of the Director's position with
the Company during or prior to the Directorship Term, provided that, the Company
shall retain such materials and make them available to the Director if requested
by him in connection with any litigation against the Director under
circumstances in which (i) the Director demonstrates to the reasonable
satisfaction of the Company that the materials are necessary to his defense in
the litigation, and (ii) the confidentiality of the materials is preserved to
the reasonable satisfaction of the Company.

(b)  Non-Solicitation.  During the Directorship Term and for a period of [one
(1) ] year after the termination of the Directorship Term, the Director shall
not interfere with the Company's relationship with, or endeavor to entice away
from the Company, any person who, on the date of the termination of the
Directorship Term, was an employee or customer of the Company or otherwise had a
material business relationship with the Company.

The provisions of this Section 7 shall survive any termination of the
Directorship Term, and the existence of any claim or cause of action by the
Director against the Company, whether predicated on this Agreement or otherwise,
shall not constitute a defense to the enforcement by the Company of the
covenants and agreements of this Section 7.
 
 
 
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8.           Indemnification.  The Company agrees to indemnify the Director for
his activities as a director of the Company to the fullest extent permitted by
law, and to cover the Director under any directors and officers liability
insurance obtained by the Company. Such liability insurance coverage shall be
US$10,000,000.00 or higher per occurrence and in aggregate, and shall start on
or before July 1, 2010. Further, the Company and the Director agree to enter
into an indemnification agreement on or before July 1, 2010, substantially in
the form of agreement entered into by the Company and its other Board members.

9.           Non-Waiver of Rights.  The failure to enforce at any time the
provisions of this Agreement or to require at any time performance by the other
party of any of the provisions hereof shall in no way be construed to be a
waiver of such provisions or to affect either the validity of this Agreement or
any part hereof, or the right of either party to enforce each and every
provision in accordance with its terms. No waiver by either party hereto of any
breach by the other party hereto of any provision of this Agreement to be
performed by such other party shall be deemed a waiver of similar or dissimilar
provisions at that time or at any prior or subsequent time.

10.           Notices.  Every notice relating to this Agreement shall be in
writing and shall be given by personal delivery or by registered or certified
mail, postage prepaid, return receipt requested; to:

If to the Company:

Sunna Motor Industry Park
Jian’an, Fuyong Hi-Tech Park
Baoan District, Shenzhen, Guangdong, China
 
 
If to the Director:
 
Room 502,
6 Fangcun Avenue West,
Guangzhou, Guangdong, China
 
 
Either of the parties hereto may change their address for purposes of notice
hereunder by giving notice in writing to such other party pursuant to this
Section 10.

11.           Binding Effect/Assignment.  This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective heirs,
executors, personal representatives, estates, successors (including, without
limitation, by way of merger) and assigns. Notwithstanding the provisions of the
immediately preceding sentence, neither the Director nor the Company shall
assign all or any portion of this Agreement without the prior written consent of
the other party.
 
 
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12.           Entire Agreement.  This Agreement (together with the other
agreements referred to herein) sets forth the entire understanding of the
parties hereto with respect to the subject matter hereof and supersedes all
prior agreements, written or oral, between them as to such subject matter.

13.           Severability.  If any provision of this Agreement, or any
application thereof to any circumstances, is invalid, in whole or in part, such
provision or application shall to that extent be severable and shall not affect
other provisions or applications of this Agreement.

14.           Governing Law.  This Agreement shall be governed by and construed
in accordance with the internal laws of the State of Delaware, without reference
to the principles of conflict of laws. All actions and proceedings arising out
of or relating to this Agreement shall be heard and determined in any Delaware
state or federal court and the parties hereto hereby consent to the jurisdiction
of such courts in any such action or proceeding; provided, however, that neither
party shall commence any such action or proceeding unless prior thereto the
parties have in good faith attempted to resolve the claim, dispute or cause of
action which is the subject of such action or proceeding through mediation by an
independent third party.

15.           Legal Fees.  The parties hereto agree that the non-prevailing
party in any dispute, claim, action or proceeding between the parties hereto
arising out of or relating to the terms and conditions of this Agreement or any
provision thereof (a "Dispute"), shall reimburse the prevailing party for
reasonable attorney's fees and expenses incurred by the prevailing party in
connection with such Dispute; provided, however, that the Director shall only be
required to reimburse the Company for its fees and expenses incurred in
connection with a Dispute, if the Director's position in such Dispute was found
by the court, arbitrator or other person or entity presiding over such Dispute
to be frivolous or advanced not in good faith.

16.           Modifications.  Neither this Agreement nor any provision hereof
may be modified, altered, amended or waived except by an instrument in writing
duly signed by the party to be charged.

17.           Tense and Headings.  Whenever any words used herein are in the
singular form, they shall be construed as though they were also used in the
plural form in all cases where they would so apply. The headings contained
herein are solely for the purposes of reference, are not part of this Agreement
and shall not in any way affect the meaning or interpretation of this Agreement.

18.           Counterparts.  This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.

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IN WITNESS WHEREOF, the Company has caused this Director Agreement to be
executed by authority of its Board of Directors, and the Director has hereunto
set his hand, on the day and year first above written.

CHINA ELECTRIC MOTOR, INC.

/s/ Yue Wang

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By:  Name:  Yue Wang
        Title:    Chief Executive Officer

DIRECTOR

/s/ Tony Shen

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Name:  Tony Shen
 
 
 
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