AEGIS
        CAPITAL CORP.

       

      May
        26,
        2008

    

     

    This
      letter agreement (this “Agreement”) confirms the engagement of AEGIS CAPITAL
      CORP Inc. (“ACC”) and TIANJIN SHENGKAI INDUSTRIAL TECHNOLOGY DEVELOPMENT CO.,
      LTD. (“SHENGKAI” or the “Company”) as non-exclusive placement agent and
      financial advisor to arrange the sale of equity or equity-linked securities
      including convertible preferred, convertible debt and debt with warrants
      (“Equity” or the “Securities”) on behalf of the Company as noted below.


    


    a.
       Pipe
      Financing.
      ACC
      will use its best efforts to provide up to $20,000,000 USD in financing to
      SHENGKAI. This financing will be accomplished under the terms and conditions
      that are mutually agreeable to SHENGKAI, ACC and its investors. 

    


    Retention.
      Subject
      to the terms and conditions of this Agreement, SHENGKAI hereby engages ACC
      to
      act on behalf of the Company as its non-exclusive placement agent and financial
      advisor during the Authorization Period (as defined below), to arrange for
      the
      sale of Securities in an amount and on terms and conditions satisfactory to
      the
      Company, and ACC hereby accepts such engagement.

    


    Authorization
      Period.
      ACC’s
      engagement shall become effective upon the signing of this agreement and shall
      remain effective for a period of ninety (90) calendar days. The Company may,
      upon thirty (30) days notice, terminate this agreement.

    


    Compensation.
      SHENGKAI shall pay ACC the compensation set forth below: 

    


    a. Cash
      Fee for Equity.
      SHENGKAI shall pay ACC a cash placement fee equal to one 1% per cent on any
      gross proceeds received by the Company in connection with the sale of Securities
      or a Financing. In addition SHENGKAI will pay Aegis Asia Capital Corp. a
      non-accountable allowance of 6% of the gross proceeds raised in the financing..
      The cash placement fee shall be paid by wire transfer on the closing date on
      which the Company receives such aggregate consideration. 

     

    4. Representations,
      Warranties and Covenants of SHENGKAI.
      SHENGKAI represents and warrants to, and covenants with, ACC as
      follows:

     

    a.
       Neither
      the Company nor any person acting on its behalf has taken, and SHENGKAI shall
      not and shall not permit its affiliates to take, directly or indirectly, any
      action so as to cause any of the transactions contemplated by this Agreement
      to
      fail to be entitled to exemption from registration or qualification under all
      applicable securities laws or which constitutes general advertising or general
      solicitation (as those terms are used in Regulation D under the Securities
      Act)
      with respect to the Securities.

     

    b. 
      SHENGKAI
      shall take and shall cause its affiliates to take such actions as may be
      required to cause compliance with this Agreement. ACC acknowledges that it
      may
      cause its affiliates to perform any of its obligations hereunder; provided,
      however, that SHENGKAI’s intention to do so (or any action by SHENGKAI or ACC in
      respect thereof) shall not relieve SHENGKAI from its obligation to perform
      such
      obligations when due.

    


    c. The
      Company will furnish, or cause to be furnished, to ACC such information as
      ACC
      believes appropriate to its engagement hereunder (all such information, the
      "Information"), and the Company represents that all such Information will be
      accurate and complete in all material respects. The Company will promptly notify
      ACC of any change that may be material in such Information. It is understood
      that ACC will be entitled to rely on and use the Information and other
      information that is publicly available without independent verification, and
      will not be responsible in any respect for the accuracy, completeness or
      reasonableness of all such Information or to conduct any independent
      verification or any appraisal or physical inspection of properties or
      assets.

     

    
      810
        Seventh Ave., 11th
        Floor, New York, NY 10019 (212) 813-100/Fax (212) 813-1047

      Member
        NASD/PCX/SIPC

       

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

      

      AEGIS
        CAPITAL CORP.

    

     

    5.
       Representations,
      Warranties and Covenants of ACC.
      ACC
      represents and warrants to, and covenants with, SHENGKAI as
      follows:

    


    a. None
      of
      ACC, its affiliates or any person acting on behalf of ACC or any of such
      affiliates has engaged or will engage in any general solicitation or general
      advertising (as those terms are used in Regulation D under the Securities Act)
      with respect to the Securities.

    


    b.
       ACC
      will
      use its best efforts to conduct the offering and sale of Securities so that
      Securities are sold in a transaction or series of transactions exempt from
      registration under the Securities Act.

     

    c.
       ACC
      will
      send Materials related to the Financings only to persons that the ACC reasonably
      believes are “accredited investors” (as defined under Rule 501(a) of the
      Securities Act).

     

    6. Indemnification. 
      The
      Company agrees to the indemnification and other agreements set forth in the
      attached Indemnification Agreement, the provisions of which are incorporated
      herein by reference.

     

    7. Survival
      of Certain Provisions.
      The
      expense, indemnification, reimbursement and contribution obligations of SHENGKAI
      provided herein and in the attached Indemnification Agreement and ACC’s rights
      to compensation (which term includes all fees, amounts and Warrants due or
      which
      may become due) shall remain operative and in full force and effect regardless
      of (i) any withdrawal, termination or consummation of or failure to initiate
      or
      consummate any transaction described herein or (ii) any termination or the
      completion or expiration of this Agreement.

    


    8. Notices.
      Notice
      given pursuant to any of the provisions of this Agreement shall be given in
      writing and shall be sent by recognized overnight courier (a) if to the Company,
      to Mr. Chen Wang Tianjin ShengKai Industrial Technology Development Co., Ltd
      No.
      27, Wanggang Rd., 

    Jinnan
      (Shuanggang) Dev. Area, Tianjin, P. R. China with a copy to Marc J. Ross, Esq.
      of Sichenzia Ross Friedman Ference LLP at 61 Broadway 32nd
      Floor,
      New York, NY 10006 and (b) if to ACC, to its office at 810 Seventh Avenue,
      11th
      floor,
      New York, NY 10019 Attention Robert Eide. 

    


    10. Confidentiality.
      No
      financial advice rendered by ACC pursuant to this Agreement may be disclosed
      publicly in any manner without ACC’s prior written consent, except as may be
      required by law, regulation or court order but subject to the limitation below.
      If the Company is required or reasonably expects to be so required to disclose
      any advice, SHENGKAI shall provide ACC with prompt notice thereof so that ACC
      may seek a protective order or other appropriate remedy and take reasonable
      efforts to assure that all of such advice disclosed will be covered by such
      order or other remedy. Whether or not such a protective order or other remedy
      is
      obtained, SHENGKAI will and will cause its affiliates to disclose only that
      portion of such advice, which the Company is so required to
      disclose.

    


    11.
       Miscellaneous.
      This
      Agreement (including the attached Indemnification Agreement) sets forth the
      entire agreement between the parties, supersedes and merges all prior written
      or
      oral agreements with respect to the subject matter hereof, may only be amended
      in writing and shall be governed by the laws of the State of New York applicable
      to agreements made and to be performed entirely within such State. The parties
      shall make reasonable efforts to resolve any dispute concerning this Agreement,
      its construction or its alleged breach by face-to-face negotiations. If such
      negotiations fail to resolve the dispute, the dispute shall be finally decided
      by arbitration in accordance with the rules then in effect of the American
      Arbitration Association. Any arbitration will be conducted in the New York
      City
      metropolitan area. SHENGKAI (for the Company, for anyone claiming through or
      in
      the name of the Company and on behalf of the equity holders of the Company)
      and
      ACC each hereby irrevocably waives any right it may have to trial by jury in
      respect of any claim arising out of this Agreement or the transactions
      contemplated hereby.

     

    
      810
        Seventh Ave., 11th
        Floor, New York, NY 10019 (212) 813-100/Fax (212) 813-1047

      Member
        NASD/PCX/SIPC

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

      

      AEGIS
        CAPITAL CORP.

    

     

    Either
      party may assign this Agreement with the prior written consent of the other
      party.

    


    If
      any
      provision of this Agreement is determined to be invalid or unenforceable in
      any
      respect, such determination will not effect such provision in any other respect
      or any other provision of this Agreement.

    


    Please
      confirm that the foregoing correctly sets forth our agreement by signing and
      returning to ACC the enclosed duplicate copy of this Agreement.

    


    
      	 	
              Very
                truly yours,

            
	 	 
	 	
              AEGIS
                CAPITAL CORP, AEGIS ASIA CAPITAL CORP.

            
	 	 
	 	
              By:

            	
              /s/
                Robert J. Eide

            	
            
	 	
              Name:
                Robert J. Eide

            
	 	
              Title:  
                CEO – Aegis Capital Corp.

            


    

    


    ACCEPTED
      AND AGREED TO

    This
      26th
      day of
      May 2008

    


    TIANJIN
      SHENGKAI INDUSTRIAL TECHNOLOGY DEVELOPMENT CO., LTD.

    
      	
              By:

            	
              /s/
                Chen Wang

            
	Name:
              Chen Wang
	Title:  
              Chairman & CEO


    

     

    
      810
        Seventh Ave., 11th
        Floor, New York, NY 10019 (212) 813-100/Fax (212) 813-1047

      Member
        NASD/PCX/SIPC