TRADE SECRETS IDENTIFICATION
AND CONFIRMATORY ASSIGNMENT

     

    This
Trade Secrets Identification and Confirmatory Assignment (“Agreement”) is
entered into effective as of  November 24, 2010 (the “Effective
Date”), by and between Wang Chen, an individual with an address at Room 204-209,
Flat 8, Zhonghuan House, No. 2 Wujiayao Road, Heping District, Tianjin, People’s
Republic of China 300221 (“Wang”), and Shengkai Innovations, Inc., a Florida
corporation having an office at No. 27, Wang Gang Road, Jin Nan (Shuang Gang)
Economic and Technology Development Area, Tianjin, People’s Republic of China
30035 (“Company”; Company and Wang each individually a “Party”, and collectively
the “Parties”).

    


    RECITALS

     

    A.           WHEREAS,
Wang is and has been employed by the Company, currently, as of the Effective
Date, as the Chief Executive Officer and Chairman of the Board of Directors of
the Company;

     

    B.           WHEREAS,
Wang developed or otherwise knows or has in his possession certain Trade Secrets
(as hereinafter defined) of the Company, including knowledge, information,
specifications, procedures, know how and trade secrets relating to the products
of the Company including the recipe, formulation, processing and manufacture of
products of the Company;

     

    C.           WHEREAS,
to facilitate the stock offering contemplated by that certain Underwriting
Agreement dated November 19, 2010, Wang has agreed to provide an identification
and explanation of the Trade Secrets, including Trade Secret Material, as
hereinafter defined to include diagrams, drawing, specifications and other
materials and information as necessary to enable the Company to understand and
use such Trade Secrets;

     

    D.           WHEREAS,
Company and Wang will cause the Trade Secret Material to be deposited in escrow
pursuant to the escrow agreement between Shengkai Innovations, Inc. and Iron Mountain Intellectual Property
Management, Inc., the form of which is attached hereto as Exhibit A (“Escrow
Agreement”); and

     

    E.           WHEREAS,
Wang desires to confirm that all rights, title and interest in and to the Trade
Secrets are owned by the Company.

     

    AGREEMENT

     

    NOW,
THEREFORE, in consideration of the foregoing Recitals, the terms and conditions
herein, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, each Party hereto hereby agrees as
follows:

     

    1.           Trade Secrets
Definition.  For purposes of this Agreement, the term “Trade
Secrets” means all of the following:

     

    
      
         


      

      
         


        
          

        

      

      
         


      

    

     

    (a)           all
knowledge, information, specifications, procedures, techniques, technology,
concepts, know how and creativity that relate to the products of the Company, or
that relate to or arise from the formulation, design, preparation, mixing,
processing, manufacturing, cooking, testing, quality control, packaging,
promotion, marketing, distribution, sales, timing of activities, composition,
ingredients, quantities, qualities, recipes, formulas, supplies, equipment,
sources of the foregoing, characteristics or nature of the products of the
Company, known to, owned, held, acquired, obtained or developed by
Wang;

     

    (b)           all
samples, prototypes, models, inventions, products, test results, data, written
information, documents, programs, diskettes, notes, memoranda, instructions,
proposals, copies, drawings, diagrams, sketches, pictures, prints, photographs,
designs, depictions, graphics, and other materials, items, elements, assets and
properties, that relate to or arise from the foregoing, known to, owned, held,
acquired, obtained or developed by Wang; and

     

    (c)           all
trade secret rights, confidential information rights, copyrights, patents,
patent rights, shop rights, trademarks, service marks, trade names, goodwill
pertaining to the foregoing, rights under the laws of the United States, the
Peoples Republic of China, and other countries and international conventions,
registration rights, pending application rights, renewals, assignments and
extensions of the foregoing, and all rights under all contracts, agreements,
licenses and leases, and other rights, that relate to or arise from any of the
foregoing.

     

    For the
avoidance of doubt, and further to and not in limitation of the foregoing, the
“recipe” to the unique method for creating structural ceramic valves referred to
in that certain Preliminary Prospectus Supplement of the Company dated November
18, 2010, is a Trade Secret of the Company, and the Company owns all rights,
title and interest in and to this recipe, and any and all modifications,
additions or improvements in or related thereto.

     

    2.           Acknowledgement and
Confirmatory Assignment.  For the avoidance of doubt, and
further to and not in limitation of the definition of Trade Secrets above, the
“recipe” to the unique method for creating structural ceramic valves referred to
in that certain Preliminary Prospectus Supplement of the Company dated November
18, 2010, is a Trade Secret of the Company, and Wang hereby acknowledges and
agrees that the Company owns all rights, title and interest in and to this
recipe, and any and all modifications, additions or improvements in or related
thereto.  To confirm Company’s ownership of the Trade Secrets
including this recipe, and in addition to his acknowledgement and agreement
above, Wang hereby unconditionally assigns, transfers, grants, conveys to
Company, forever, and Company hereby receives, and acquires , all right, title,
interest, tangible and intangible property, benefits, powers and privileges, of
every kind and nature, whatsoever, throughout the world, now and in the future,
in and to the Trade Secrets, including the recipe, individually and
collectively, without the necessity of any further consideration.  To
the extent the foregoing assignment may, for any reason, be invalid or
unenforceable with respect to any of the Trade Secrets, all such Trade Secrets
shall be considered works made for hire by Wang for Company within the meaning
of Title 17 of the United States Code, or its successor provision, and all such
Trade Secrets shall be owned by and remain exclusively the property of
Company.

     

    3.           Identification, Disclosure
and Delivery to Escrow of the Trade Secrets.  Upon execution of
this Agreement, Wang shall identify in tangible form, whether written or
electronic, all Trade Secrets.  Wang shall execute and deliver all
documents and other items and materials to, and cooperate with and undertake to
perform all tasks reasonably requested by, Company, to make the confirmatory
assignment and disclosure herein effective, and to allow Company to perfect or
improve Company’s rights in the Trade Secrets.  Further and not in
limitation of the foregoing, upon execution of this Agreement, Wang
shall:

     

    
      
         


      

      
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    (a)           identify
the Trade Secrets in writing or in an electronic medium, including any diagrams,
drawings, specifications, ingredients, timing of events, characteristics or
quality of material or ingredients, processes or methods of production and any
other information or material that is necessary for the Company to utilize such
Trade Secrets (such materials, “Trade Secret Material”);

     

    (b)           fully
cooperate with the Company to confirm the completeness and accuracy of the
identified and disclosed Trade Secret Material, including allowing different
employees responsible for discrete parts of the process or recipe to review that
portion of the Trade Secret Material to confirm that such portion is complete
and accurate;

     

    (c)           assist
Company in causing a complete and accurate copy of the Trade Secret Material to
be delivered and deposited in escrow pursuant to the Escrow Agreement;
and

     

    (d)           assist
Company in causing any updates, improvements, versions or other changes to the
Trade Secret Material to be deposited from time to time pursuant to the Escrow
Agreement to ensure that the Trade Secret Material remains current, and
accurately reflects the Trade Secrets in use by the Company from time to
time.

     

    4.           Confidentiality and Rights
Agreements.  In connection with the identification, disclosure
and delivery to escrow of the Trade Secrets pursuant to Section 3, and as of the
Effective Date of this Agreement, Company shall ensure that any employee of
Company with access to any part of the Trade Secret Material executes
Confidentiality and Rights Agreement substantially in the form attached hereto
as Exhibit B.  Further, upon execution of the Agreement,

     

    (a)           Company
will cause Guo Wei to execute the Confidentiality and Rights Agreement attached
hereto as Exhibit C;

     

    (b)           Wang
will execute the Confidentiality and Rights Agreement attached hereto as Exhibit
D; and

     

    (c)           Wang
will have his mother, Guo Chuanye, execute the Non-Disclosure Letter Agreement
attached hereto as Exhibit E.

     

    5.           Representations.

     

    (a)           Wang
represents and warrants that:

     

     (i)           Other
than Guo Wei and Guo Chuanye, Wang has not disclosed the Trade Secrets to any
other person or  entity, and to Wang’s best knowledge, no other person
or entity other than Ms. Guo Wei and Ms. Guo Chuanye have knowledge of the Trade
Secrets;

     

    
      
         


      

      
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    (ii)           The
Trade Secrets are free and clear of all claims, liens and
encumbrances;

     

    (iii)          Company
is, and the confirmatory assignment herein confirms that Company is and shall
be, the exclusive owner of all right, title and interest in the Trade
Secrets;

     

    (iv)          Wang
has not granted and will not grant any assignments, licenses, sublicenses,
transfers of ownership or other rights in or encumbrances of the Trade Secrets,
and has not and will not use, apply, register or disclose the Trade Secrets,
except as set forth in this Agreement;

     

    (v)           the
Trade Secrets do not infringe the copyrights, patents, trademarks, service
marks, trade names, trade secret rights or other rights of any third
party;

     

    (vi)          there
are no third parties who now claim or have ever claimed rights in, have
threatened suit concerning, or otherwise taken any action to enforce any claimed
rights in, the Trade Secrets; and

     

    (vii)         Company
is not assuming any liabilities whatsoever under this Agreement.

     

    (b)          Each
Party represents and warrants to the other that it has full power and authority
to enter into and perform its obligations under this Agreement.

     

    6.           Entire Agreement.  This Agreement
may not be altered, modified, amended or changed, in whole or in part, except by
a writing executed by the Parties.  The headings herein are for
reference only and shall not define or limit the provisions
hereof.  The Parties acknowledge and agree that this Agreement
constitutes the entire agreement between Wang and Company with respect to the
subject matter addressed herein, and all prior or contemporaneous agreements,
whether written or oral, as may relate to the same, are hereby superseded by
this Agreement.

     

    7.           Severability.  In the event that
any paragraph or provision of this Agreement shall be held to be illegal or
unenforceable, such paragraph or provisions shall be severed or otherwise
modified as may best preserve the intention of the parties hereto, and the
Agreement as so modified shall remain in full force and effect.

     

    8.           Successors and
Assigns.  This Agreement
shall be binding upon the Parties and their heirs, successors, assigns,
transferees, grantees, executors and administrators.

     

    9.           Governing
Law.  This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.

     

    
      
         


      

      
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    IN
WITNESS WHEREOF, each Party hereto has caused this Trade Secrets Identification
and Confirmatory Assignment to be executed as of the Effective
Date.

     

    
      
        
          	 
      	 
      	
                  Shengkai
      Innovations, Inc

                
	 
      	 
      	 
      
	
                  /s/ Wang Chen

                	 
      	
                  By:  

                	
                  /s/ Ming He

                
	
                  Wang
      Chen

                	 
      	 
      
	
                  Address:

                	 
      	
                  Address:

                
	 
      	 
      	 
      
	 
      	 
      	
                  No.
      27, Wang Gang Road,

                
	 
      	 
      	
                  Jin
      Nan (Shuang Gang) Economic and 

                  Technology
      Development Area,

                
	 
      	 
      	
                  Tianjin,
      People’s Republic of China
300350

                


        

      

    

     

    
      
         


      

      
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    Exhibit
A

     

    Escrow
Agreement

     

    (see
attached)

     

    [Filed
as Exhibit 10.1 to this Report]

     

    
      
         


      

      
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    Exhibit
B

     

    EMPLOYEE
CONFIDENTIALITY AND RIGHTS AGREEMENT

     

    THIS AGREEMENT (“Agreement”) is made by
and between ________. (“Company”) and __________________
(“Employee”).

     

    
      	
               
      

            	
              1.

            	
              Definitions.

            


    

     

    a.           “Company”
means the Company and any corporation or other business enterprise directly or
indirectly controlling, controlled by or under common control with Tianjin
Shengkai Industrial Development Company, Ltd., whether before or after the
execution of this Agreement.

     

    b.           “Customer”
means customers, clients, licensors, licensees, agents, consultants, suppliers
and contractors of the Company.

     

    c.           “Confidential
Information” means all information, whether or not reduced to writing, possessed
by the Company, or relating to the business of the Company or its Customers, or
any actual or demonstrably anticipated research and development of the Company
or its Customers, which is not generally known in the trade, including, but not
limited to, trade secrets, proprietary information, know-how, formulae, methods,
processes, mixtures, customer lists, computer programs and software, and
including Inventions (as hereinafter defined), and information conceived,
originated or developed by Employee during any period of employment with the
Company, whether alone or with others.

     

    d.           “Inventions”
means all discoveries, inventions, improvements, innovations, ideas, concepts
and other developments, including, but not limited to, methods, processes,
computer programs and software, relating to the business of the Company, or any
actual or demonstrably anticipated research or development of the Company, made
or conceived by Employee in whole or in part during any period of employment
with the Company, whether alone or with others, and whether or not patentable or
reduced to practice.

     

    2.           Consideration.  This
Agreement is entered in consideration of the hiring or continued employment of
Employee by the Company.

     

    3.           Confidentiality.  Employee
agrees to maintain the confidentiality of all Confidential Information, both
during and subsequent to any periods of employment with the Company, and
Employee will not, without express written authorization by the Company,
directly or indirectly reveal or cause to be revealed any such Confidential
Information to any person other than to Company employees who are authorized to
receive such Confidential Information in order to perform their duties for the
Company, nor will Employee use any such Confidential Information to the
detriment of the Company or its Customers, or other than in the course of
Employee’s employment with the Company.

     

    
      
         


      

      
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    4.           Return of Confidential
Material.  In the event that Employee’s employment with the
Company is terminated for any reason whatsoever, Employee agrees promptly to
deliver to the Company all Confidential Information Employee possess, and
Employee will not take or keep any Confidential Information, whether in its
original form or as copies, upon and following the termination of Employee’s
employment.

     

    5.           Return of
Documents.  All memoranda, notes, notebooks, reports, drawings,
photographs, plans, papers, recordings, tapes, computer discs or other forms of
records, made or compiled by, or made available to, the Employee during the
course of Employee’s employment, and any abstracts thereof, whether or not they
contain Confidential Information, are and shall be the property of the Company
and shall be immediately delivered by Employee to the Company at its request or
upon termination of Employee’s employment.

     

    6.           Rights In and To
Inventions.

     

    a.           Employee
hereby assigns and transfers to the Company without further consideration
Employee’s entire right, title and interest in and to all
Inventions.

     

    b.           Employee
shall disclose any Invention promptly and fully in writing to Employee’s
immediate supervisor at the Company, with a copy to the President of the
Company, to enable the Company to determine whether the Invention is subject to
this Agreement, regardless of whether Employee believes the Invention belongs to
him.  To the extent that such an Invention may belong to the Employee,
the Company shall protect such disclosures to the same extent that it protects
its own similar proprietary information.  The Company, however, shall
have no such obligations to the extent such an Invention is owned by the
Company.

     

    c.           Employee
will, at the Company’s request, promptly execute a written assignment of title
to the Company for any Invention required to be assigned by this Agreement, and
will preserve any such Invention as Confidential Information of the
Company.

     

    d.           Employee
shall, upon request by the Company, assist the Company or its designee (at
Company’s expense) in every reasonable way during and at any time after
Employee’s employment to patent and defend the Company’s or its designee’s title
to any Inventions in any and all countries, which patents shall be and remain
the sole and exclusive property of the Company or its nominee.

     

    7.           Other Rights.

     

    a.           It
is understood and agreed that any photographs, illustrations, writings, designs,
software, code or other material eligible for copyright protection, created by
Employee during Employee’s employment by the Company, whether created solely by
Employee or with others, and whether created on or off the Company’s premises,
for the Company and/or submitted to the Company, shall be works-made-for-hire
within the meaning of the United States Copyright Act.  In the event
any such materials are determined not to be a work-made-for-hire, or any other
issue arises affecting the Company’s right and title in and to such materials,
Employee hereby transfers and assigns to the Company, without further
consideration, Employee’s entire right, title and interest in and to all such
materials.

     

    
      
         


      

      
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    b.           Employee
will, at the Company’s request, promptly execute a written assignment of title
to the Company for any such materials required to be assigned by this Agreement,
and will preserve any such materials as Confidential Information of the
Company.

     

    c.           Employee
acknowledges and agrees that the Company may modify, crop, retouch, edit, revise
or otherwise alter such materials, and that publication, sale, distribution,
and/or usage of any such material is at the Company’s sole
discretion.

     

    8.           Employees Name and
Likeness.  Employee acknowledges and agrees that the Company
may use Employee’s name and likeness in its publications, and in connection with
the business of Company, including but not limited to, the promotion,
advertisement, marketing and sale of Company’s products and
services.

     

    9.           Extension of Obligations and
Agreement to Previous and Future Employment.  Employee
understands and agrees that the provisions of this Agreement extend to all
previous and future periods of Employee’s employment by the Company, and this
Agreement shall continue to be in full force and effect without re-execution in
the event Employee transfers between different employers within the Company,
whether or not there are periods between such transfers during which the
Employee is not employed by any employer within the Company.

     

    10.           Trade Secrets and Confidential
Information of Others.  Employee represents and warrants that
Employee’s performance of all the terms of this Agreement, and as an employee of
the Company, does not and shall not breach any agreement with any other party,
including but not limited to, agreements regarding non-competition or to keep in
confidence proprietary or confidential information of another party, and that
Employee shall not disclose to the Company, or induce the Company to use, any
proprietary or confidential information belonging to any other party including
but not limited to a previous employer.

     

    11.           Non-limitation of
Rights.  This Agreement shall not be construed to limit in any
way any “shop rights” or other common law or contractual right of the Company by
virtue of its relationship with the Employee.

     

    12.           Modification.  This
Agreement may only be modified or terminated by an instrument in writing, signed
by the Employee and the Company; provided, however, that Company may from time
to time publish and adopt supplementary policies with respect to the subject
matter of this Agreement, and Employee agrees that such supplemental policies
shall be binding upon Employee.

     

    13.           Remedies.  Employee
and Company acknowledge and stipulate that the covenants and agreements
contained in this Agreement are of a special nature, and that any breach,
violation or evasion by Employee of the terms of this Agreement will result in
immediate and irreparable injury and harm to the Company, and will cause damage
to the Company in amounts difficult to ascertain.  Accordingly, the
Company shall be entitled to the remedies of injunction and specific
performance, or either of such remedies, as well as to all other legal or
equitable remedies to which the Company may be entitled, including, without
limitation, termination of the employment of Employee.

     

    
      
         


      

      
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    14.           Entire
Agreement.  Employee hereby acknowledges receipt of a signed
counterpart of this Agreement, and acknowledges that it is Employee’s entire
Agreement with the Company with respect to the subject matter hereof, thereby
superseding any previous oral or written understanding or agreements with the
Company or any officer or representative of the Company.  Nothing in
this Agreement shall be deemed to be a contract of employment for a definite
period of time, or to limit the right of the Company to terminate the employment
of the Employee, with or without cause.

     

    15.           Severability.  In
the event that any paragraph or provision of this Agreement shall be held to be
illegal or unenforceable, such paragraph or provisions shall be severed or
otherwise modified as may best preserve the intention of the parties hereto, and
the Agreement as so modified shall remain in full force and effect.

     

    16.           Successors and
Assigns.  This Agreement shall be binding upon Employee’s
heirs, executors, administrators and other legal representatives, and is for the
benefit of the Company, it successors and assigns.

     

    17.           Governing Law.  This
Agreement shall be governed by and construed in accordance with the laws of the
___________ without regard to its choice of law provisions.  The
parties hereby irrevocably consent to the jurisdiction of the _____ courts
located in _____.

     

    IN WITNESS WHEREOF, the parties hereby
set their hands as of this _____ day of ____________________, 200_.

      

    
      
        
          
            
              
                
                  	 
      	 
      	
                          ________________.

                        
	
                          Employee

                        	 
      	
                          Company

                        
	 
      	 
      	 
      
	
                          Address:

                        	 
      	
                          By:

                        	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	
                          Name:  

                        	 
      
	
                          Street

                        	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	
                          Title:

                        	 
      
	
                          City,
      State and Zip Code

                        	 
      	 
      	 
      


                

              

            

          

        

      

    

     

    
      
         


      

      
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    Exhibit
C

     

    [Filed
as Exhibit 10.4 to this Report]
 

    
      
         


      

      
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    Exhibit
D

     

    WANG
CHEN CONFIDENTIALITY AND RIGHTS AGREEMENT

     

    [Filed
as Exhibit 10.3 to this Report]


    
      
         


      

      
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    Exhibit
E

    


    Guo
Chuanye Non-Disclosure Letter Agreement

    


    [Filed
as Exhibit 10.5 to this Report]
 

    
      
         


      

      
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