AGREEMENT

As used in this Agreement, the following terms shall have the meanings defined below:

Titles and headings to sections herein are inserted for convenience of reference only, and are not intended to be a part of or to affect the meaning or interpretation of this Agreement.

On the Closing Date, upon the terms and subject to the conditions set forth herein, Party Bs shall sell and deliver to Party A, and Party A shall purchase and acquire from Party Bs, all of the Acquisition Equity and Assets Corresponding to Acquisition Equity. Party B1 and Party B2 respectively give up the preemptive right on shares of Simo Motor for each other.

Acquisition Consideration and Payment

The total Acquisition Consideration shall be no more than eight (8) times of the audited total net profit that Simo Motor generated in 2008. Party A will conduct verification on the assets and capital of Simo Motor within 6 months from the Closing Date. In the event the net assets of Simo Motor confirmed based on such verification on the same day is less than that confirmed by audit report, the difference shall be deducted from the total Acquisition Consideration.   All the debts payable and owed by Simo Motor to Party B1 confirmed in audit report of Simo Motor are already included in such Acquisition consideration.

Party A shall make the payment amounted to equivalent to six (6) times of the audited total net profit that Simo Motor generated in 2008 as the first installment of Acquisition Consideration to the bank account mutually appointed by parties hereof within [10] working days after the effectiveness of this Agreement, and the remaining amount of Acquisition Consideration shall be confirmed upon verification on assets and capital and be paid to Party Bs by Party A within seven months from the Closing Date. Party Bs jointly acknowledge that the payment of Acquisition Consideration to the appointed bank account made by Party A or its assigned affiliate according to this Agreement shall be deemed as payment of Acquisition Consideration to Party Bs by Party A.

The delivery of the Acquisition Equity and the transfer of the corresponding rights and obligations contemplated by this Agreement shall take place on the Closing Date, on which (1) Party B1 and Party B2 shall deliver to Party A all the documents and instruments reasonably requested by Party A and with respect to all the Acquisition Equity required to be delivered by Party B1 and Party B2 pursuant to this Agreement; and (2) the registration of the entire share transfer of Simo Motor held by Party B1 and Party B2 to Party A with the competent Industrial and Commercial Bureau.

The parties hereof agree that: unless there is a delay resulting from reasons uncontrollable by Party Bs, Party Bs shall complete the registration of the entire share transfer of Simo Motor with the competent Industrial and Commercial Bureau within 15 working days immediately after the payment of the first installment of Acquisition Consideration made by Party A, otherwise Party Bs shall pay Party A 0.01% of Acquisition Consideration as penalty for each one day delayed, and in the event of delay more than [90] days, Party A shall be entitled to terminate this Agreement unilaterally and Party Bs shall refund the Acquisition Consideration paid by Party A within 5 working days after termination of this Agreement raised by Party A.

Upon consummation of this acquisition, if any costs listed below are discovered, these costs shall be assumed by Party B1 and unrelated to Party A or Simo Motor: (1) any costs incurred as a result of the prior reformation of Xi’an Motor Plant and the formation of Xi’an Simo Motor Co., Ltd. (the former Simo Motor); (2) any costs associated with the sort out of shares held by employees of Xi’an Simo Motor Co., Ltd. or Simo Motor ; (3) the payment of employment insurance and overtime pay of Simo Motor, including those expenses resulted from reformation of state-owned enterprises, which owed for periods prior to this acquisition; and (4) any other debts, expenses, liabilities or economic obligations arising from the reformation of Xi’an Motor Plant which should have been undertaken by Simo Motor (The costs exclude  those credits and liabilities arising from normal operation of Simo Motor prior to the reformation and accounted in the balance sheet of Simo Motor). The parties acknowledge that the foregoing factors and all the liabilities assumed by Party B1 as a result therefrom have been already fully considered and reflected in the Acquisition Consideration.

During the course of and/or upon the consummation of acquisition contemplated by this Agreement, Party Bs and the shareholders of Party Bs shall be liable for the debts of Simo Motor or its subsidiaries inconsistent with the representations and warranties made by Party Bs hereof, any claims or obligation of Simo Motor and its subsidiaries to a third party, arising from contractual liabilities, tort or any other reasons and existing prior to the Closing Date and not expressly disclosed to Party A by Party Bs.

Upon the consummation of this acquisition, the employment contract entered into by Simo Motor and its employees which are undue will remain valid, and the amendment, cancellation, termination and renewal of employment contract will be made by Simo Motor in accordance with related provisions of <Labor Law>, <Employment Contract Law>.

Party A and Party Bs shall bear respectively all and any taxes imposed in relation to the transactions contemplated under this Agreement in accordance with the PRC Laws and Regulations.

Party B1 and Party B2 jointly and severally, hereby represent and warrant to  Party A, as of the Closing Date as follows:

As of the Closing Date, (i) 100% shares of Simo Motor, and (ii) all of the shares of subsidiaries of Simo Motor held by Simo Motor are each free and clear of