AMENDMENT
NO. 1 TO EMPLOYMENT AGREEMENT

     

    THIS
AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT (the “Amendment”) is made
and entered into by and between China Electric Motor, Inc. (“Company”), a Delaware
corporation, and Xinming Xiao (“Employee”), effective
as of August 26, 2010.  (Company and Employee are sometimes referred
to herein as “Party” or
collectively as the “Parties.”)

     

    RECITALS

     

    WHEREAS,
on May 29, 2010 the Parties entered into an Employment Agreement effective as of
June 1, 2010 (the “Agreement”);

     

    WHEREAS,
pursuant to the Agreement, the Company agreed to issue to the Employee 50,000
shares of Common Stock of the Company within 5 business days of the Company’s
stockholders’ approval of an equity incentive plan (the “Grant”);

     

    WHEREAS,
the Parties desire to amend the Agreement to amend the terms of the Grant by
entering into this Amendment; and

     

    WHEREAS,
Section 6.3 of the Agreement permits the Parties to amend the Agreement only by
a written instrument by the Parties.

     

    NOW,
THEREFORE, in consideration of the mutual promises and covenants contained
herein, the Parties agree as follows:

     

    1.           Section
3.3 of the Agreement is hereby amended and restated in its entirety as
follows:

    


    3.3        Stock
Grant.  The Company agrees to grant to Employee Twenty-Five
Thousand (25,000) shares of Common Stock of the Company pursuant to the Plan on
January 29, 2012, which will vest immediately, and an additional Twenty-Five
Thousand (25,000) shares of Common Stock pursuant to the Plan on the third
anniversary of the effective date of the Agreement.  Additional terms
and conditions of the grants 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
Employee.

     

    2.           Except
as amended herein, the Agreement shall remain in full force and
effect.

     

    3.           This
Amendment may be executed in any number of facsimile counterparts, each of which
shall be an original, but which together constitute one and the same
instrument.  This Amendment may be executed and delivered by
facsimile.

     

    [SIGNATURES
ON FOLLOWING PAGE]

     

    
      
         


      

      
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    WHEREFORE,
the parties hereto have executed this Agreement on the dates indicated below, to
be effective as of the Effective Date, regardless of the dates actually
signed.

     

    
      
        
          
            	
                    Dated:  August
      26, 2010

                  	
                    CHINA
      ELECTRIC MOTOR, INC.

                  
	 
      	 
      	 
      
	 
      	
                    By:  

                  	
                       /s/ Yue
    Wang

                  
	 
      	
                    Name:
      Yue Wang

                  
	 
      	
                    Title:
      Chief Executive Officer

                  
	 
      	 
      	 
      
	
                    Dated:  August
      26, 2010

                  	
                    XINMING
      XIAO

                  
	 	 	 
	 
      	
                      /s/ Xinming
  Xiao

                  


          

        

      

    

     

    
      
         


      

      
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