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Unassociated Document

    EXHIBIT
10.1

     

    EXECUTIVE
EMPLOYMENT AGREEMENT

     

    This
EXECUTIVE EMPLOYMENT
AGREEMENT (this “Agreement”) is made and entered into effective as of the
23rd
day of February 2010, by and between Grand River Commerce, Inc., a Michigan
corporation (the “Company”), and Robert P.  Bilotti, an individual
resident of the State of New Jersey (the “Executive”).

     

    WHEREAS, the Executive has
served as the Company’s President and Chief Executive Officer since the
Company’s inception and has devoted substantial time and efforts to such roles
and expects to continue to do so;

     

    WHEREAS, the Company desires
to compensate the Executive for his services as President and Chief Executive
Officer, subject to and on the terms and conditions set forth in this Agreement;
and

     

    WHEREAS, both the Company and
the Executive have read and understood the terms and provisions set forth in
this Agreement and have been afforded a reasonable opportunity to review this
Agreement with their respective legal counsel.

     

    NOW, THEREFORE, in
consideration of the mutual promises and covenants set forth in this Agreement,
the Executive and the Company agree as follows:

     

    A. DURATION

     

    1.    This
Agreement shall become effective (the “Effective Date”) upon the date first set
forth above and, subject to Paragraph 2 below, will
expire and terminate by its own terms two years after the Effective Date, unless
earlier terminated as provided herein.

     

    2.    Both the
Company and the Executive acknowledge and agree that the parties may agree to
continue the employment relationship upon such terms as they may mutually
agree.  Following the initial two-year term, this Agreement shall
renew annually for an additional one (1) year term if the Company provides
notice of such renewal to the Executive at least thirty (30) days prior to the
expiration of the then current term.  Both parties acknowledge and
agree that, in the event this Agreement does not renew, this Agreement shall
terminate automatically upon the expiration of the then current term without any
additional liability or obligation on the part of either party, except as
expressly provided herein.

     

    B. COMPENSATION

     

    3.    All
payments of salary and other compensation to the Executive shall be payable in
accordance with the Company’s ordinary payroll and other policies and
procedures.

     

    a. During
the term of this Agreement, the Company agrees to pay the Executive a base
salary of not less than $50,000.00 annually, appropriately prorated for partial
months at the commencement and end of the term of this Agreement.

     

    b. The
Company shall have the right to deduct from any payment of compensation to the
Executive hereunder any federal, state or local taxes required by law to be
withheld with respect to such payments and any other amounts specifically
authorized to be withheld or deducted by the Executive.

     

    
      
        
        

      

      
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    c. The
Executive shall also be entitled to participate in any benefit programs
applicable to all employees of the Company or to executive employees of the
Company in accordance with Company policy and the provisions of said benefit
programs.

     

    4.    The
Company also shall reimburse the Executive for all reasonable expenses,
including, but not limited to, travel expenses, lodging expenses, and meals and
entertainment expenses, that the Executive may incur in the performance of his
or her duties and obligations under this Agreement; provided, however, that the
Executive shall be required to submit receipts or other acceptable documentation
to the cashier of the Company or such other officer designated by the Board of
Directors to verify such expenses prior to any reimbursements.

     

    5.    The Board
of Directors or a delegated committee shall review the amount of the Executive’s
compensation, including his or her base salary, not less than annually, to
determine if adjustments to such compensation are merited in the discretion of
the Board of Directors or such committee; provided, however, that the
Executive’s base salary shall not be less than the amount set forth in
Paragraph 3 at any time during the term of this
Agreement.

     

    6.    All
employee benefits provided to the Executive by the Company incident to the
Executive’s employment shall be governed by the applicable plan documents,
summary plan descriptions or employment policies, and may be modified, suspended
or revoked at any time, in accordance with the terms and provisions of the
applicable documents.

     

    7.    The
parties hereto acknowledge that the compensation set forth herein and the other
covenants and agreements of the Company contained herein are fair and adequate
compensation for the Executive’s services and for the covenants of the Executive
as set forth herein.

     

    C. RESPONSIBILITIES

     

    8.    The
Executive shall be employed as President and Chief Executive Officer of the
Company and shall faithfully devote his or her best efforts to his or her
position(s) with the Company.

     

    9.    The
Executive acknowledges and agrees that the duties and responsibilities of the
Executive required by his or her position as the President and Chief Executive
Officer of the Company are wholly within the discretion of its Board of
Directors, and may be modified, or new duties and responsibilities imposed by
the Board of Directors, at any time, without the approval or consent of the
Executive.  However, these new duties and responsibilities may not
constitute immoral or unlawful acts.

     

    10.    The
Executive acknowledges and agrees that, during the term of this Agreement, he or
she has a fiduciary duty of loyalty to the Company, and that he or she will not
engage in any activity during the term of this Agreement, which will or could,
in any significant way, harm the business, business interests, or reputation of
the Company or the reputation of the Board of Directors.

     

    11.    The
Executive shall not directly or indirectly engage in competition with the
Company at any time during the existence of the employment relationship between
the Company and the Executive, and the Executive will not on his or her own
behalf, or as another’s agent or employee, engage in any of the same or similar
duties and/or Company-related responsibilities required by the Executive’s
position with the Company, other than as an employee of the Company pursuant to
this Agreement or as specifically approved by the Board of
Directors.  In addition, without the prior written consent of the
Board of Directors, Executive shall not usurp for himself  any
corporate opportunity available to the Company.

     

    
      
        
        

      

      
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    D. TERMINATION

     

    12.    The Board
of Directors shall be entitled to terminate this Agreement, for any reason, by
providing the Executive with thirty (30) days written notice of the
termination.  However, if this Agreement is terminated by the Company
without Good Cause, as defined in this Agreement, the Company shall provide the
Executive with the severance set forth in Paragraph
22 of this Agreement.

     

    13.    For purposes of this
Agreement, “Good Cause” shall be defined as the occurrence of one of the
following events:

     

    a. The
determination by the Board of Directors, in the exercise of its reasonable
judgment, that Executive has violated any provision of this Agreement or is
negligent in the performance of his duties hereunder, and has failed to cure
such violation or the effects of such negligence within a reasonable period
after written notice to the Executive by the Company specifying in reasonable
detail the alleged violation;

     

    b. The
determination by the Board of Directors, in the exercise of its reasonable
judgment, that (i) Executive has failed to follow the policies adopted by the
Board of Directors and has failed to cure such failure within a reasonable
period after written notice to the Executive by the Company specifying in
reasonable detail the alleged failure; or (ii) Executive has engaged in such
actions or omissions that would constitute unsafe or unsound banking
practices;

     

    c. The
Executive is charged with a misdemeanor involving moral turpitude or a
felony;

     

    d. The
determination by the Board of Directors, in the exercise of its reasonable
judgment, that the Executive has engaged in gross misconduct in the course and
scope of his employment with the Company including indecency, immorality, gross
insubordination, dishonesty, unlawful harassment, or use of illegal
drugs;

     

    e. The
determination by the Board of Directors, in the exercise of its reasonable
judgment and in good faith, that the Executive’s job performance is
substantially unsatisfactory and that Executive has failed to cure such
performance within a reasonable period after written notice to the Executive by
the Company specifying in reasonable detail the nature of the unsatisfactory
performance;

     

    f. The
Executive is prohibited from engaging in the business of banking by any
governmental regulatory agency having jurisdiction over the Company;
or

     

    g. The
Company has entered into a formal administrative action.

     

    14.    Executive
shall be entitled to terminate this Agreement at any time, for any reason, with
or without cause, by providing thirty (30) days written notice to the
Company.  The effective date of such resignation shall be the 30th
calendar day following the date the notice is given or such other later date as
may be set forth in the notice.  Upon Executive’s resignation,
Executive shall be entitled to receive any base salary which has been earned by
him through the effective date of such resignation.

     

    
      
        
        

      

      
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    15.    If
Executive dies during the term of this Agreement and while in the employ of the
Company, this Agreement will terminate automatically, without notice, on the
date of the Executive’s death and the Company shall not have any further
obligation to Executive or his estate under this Agreement (other than death
benefits payable under any benefit plans to which Executive is a party), except
that the Company shall pay Executive’s estate that portion of Executive’s base
salary accrued through the date on which Executive’s death
occurred.  To the maximum extent, and for the term, permitted by the
health benefit provisions of the Consolidated Omnibus Budget Reconciliation Act
(COBRA) of 1986, if Executive dies during the term of this Agreement and while
in the employ of the Company, the Company shall provide or maintain health
insurance benefits, at the Company’s expense, for Executive’s
spouse.

     

    16.    This
Agreement will terminate immediately, without notice, in the event the Executive
is prevented from performing his duties hereunder by reason of becoming
physically or mentally disabled.  For purposes of this Agreement, the
term “disabled” shall have the meaning set forth in the Company’s long-term
disability plan or, if the Company has no long-term disability plan in effect at
the time of the Executive’s disability, then “disabled” shall mean that
Executive has become physically or mentally incapable (excluding infrequent and
temporary absences due to ordinary illness) of performing the essential
functions of his duties under this Agreement for a continuous period of three
(3) months, as determined by the Board of Directors upon the advice of a
qualified physician.  In the event a dispute arises between Executive
and the Company concerning Executive’s physical or mental ability to continue or
return to the performance of his duties, then Executive shall submit to an
examination by a competent physician mutually agreeable to the
parties.  The physician’s opinion as to the Executive’s capability to
perform his duties will be final and binding.  During any period prior
to termination during which the Executive fails to perform his duties as a
result of incapacity due to physical or mental illness, the Executive shall
continue to receive his full salary at the rate then in effect for such period
until his or her employment terminates pursuant to this Paragraph 16, provided
that payments so made to the Executive during such period shall be reduced by
the sum of the amounts, if any, payable to the Executive under any disability
benefit plans of the Company that were not previously applied to reduce such
payment.

     

    In the event of a termination pursuant
to this Paragraph 16, the Company shall be relieved of all its obligations under
this Agreement, except that Company shall pay to the Executive, or to his estate
in the event of his subsequent death, the Executive’s base salary under
Paragraph 3(a) through the date on which such termination shall have occurred,
reduced during such period by the amount of any benefits received by Executive
under any disability policy maintained by the Company and by any death benefits
payable under the benefit plans referenced in Paragraph 3.  All such
payments to the Executive or to his estate shall be made in the same manner as
other payroll obligations.

     

    17.    Executive
acknowledges that all memoranda, notes, records, reports, manuals, books,
papers, letters, client and customer lists, contracts, software programs,
information and records, drafts of instructions, guides and manuals, and other
documentation (whether in draft or final form), and other sales or financial
information and aids relating to the Company’s business, and any and all other
documents containing Propriety Information furnished to the Executive by any
representative of the Company or otherwise acquired or developed by the
Executive in connection with his or her duties under this Agreement
(collectively, the “Recipient Materials”) shall at all times be the property of
the Company.  Within three calendar days of the termination of this
Agreement, the Executive shall return to the Company, all Recipient Materials
(including all confidential information and trade secrets of the Company) that
is in his or her possession, custody or control.

     

    18.    The
provisions of provisions of Paragraphs 17-22 and 27 shall survive the
termination of this Agreement.

     

    
      
        
        

      

      
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    E.
CHANGE OF CONTROL

     

    19. The
parties acknowledge that the Executive has agreed to assume the position of
President and Chief Executive Officer and to enter into this Agreement based on
his confidence in the current owners of the Company and the direction of the
Company provided by the current Board of Directors.  Upon a “Change of
Control,” as defined below, the Executive may, at his option, notify the Company
within sixty (60) days following such Change of Control that he intends to
terminate this Agreement based upon the Change of Control.

     

    In the
event that Executive is terminated by the Company within sixty (60) days
following such Change of Control for any reason other than for Good Cause,
Executive shall be entitled to elect to receive as severance the lump sum amount
determined pursuant to Paragraph 20 upon written notice to the Company, in
which case the severance provisions of Paragraph 22 shall not
apply.

     

    20.    In the
event that the Executive elects to terminate this Agreement based upon the
Change of Control, the Company shall pay to the Executive, within thirty (30)
days of Company’s receipt of a notice of the Executive’s election to terminate
this Agreement, a cash lump sum payment equal to 1.99 times his Base Amount as
defined in section 280G(b)(3) of the Internal Revenue Code of 1986, as amended
(“Code”).

     

    In the
event that any compensation payable under this Agreement is determined to be a
“parachute payment” subject to the excise tax imposed by Section 4999 of the
Code or any successor provision (the “Excise Tax”), the Company agrees to pay to
the Executive an additional sum (the “Gross Up”) in an amount such that the net
amount retained by the Executive, after receiving both the payment and the Gross
Up and after paying: (i) any Excise Tax on the payment and the Gross Up, and
(ii) any federal, state, and local income taxes on the Gross Up, is equal to the
amount of the payment.

     

    For
purposes of determining the Gross Up, the Executive shall be deemed to pay
federal, state, and local income taxes at the highest marginal rate of taxation
in his filing status for the calendar year in which the payment is to be made
based upon the Executive’s domicile on the date of the event that triggers the
Excise Tax.  The determination of whether such Excise Tax is payable
and the amount of such Excise Tax shall be based upon the opinion of tax counsel
selected by the Company, subject to the reasonable approval of the
Executive.  If such opinion is not finally accepted by the Internal
Revenue Service, then appropriate adjustments shall be calculated (with
additional Gross Up determined based on the principals outlined in the previous
paragraph, if applicable) by such tax counsel based upon the final amount of
Excise Tax so determined together with any applicable penalties and
interest.  The final amount shall be paid, if applicable, within
thirty (30) days after such calculations are completed, but in no event later
than April 1st of the
year following the event that triggers the Excise Tax.  Such
compensation shall be payable in equal disbursements in accordance with the
Company’s ordinary payroll policies and procedures.

     

    21.    As used
in this Agreement, a “Change of Control” shall be deemed to have occurred in
each of the following instances:

     

    a. A
reorganization, merger, consolidation or other corporate transaction involving
the Company, in each case, with respect to which the shareholders of the
Company, immediately prior to such transaction do not, immediately after the
transaction, own more than fifty percent (50%) of the combined voting power of
the reorganized, merged or consolidated bank’s then outstanding voting
securities; provided, however that a Change of Control shall not be deemed to
have occurred upon the formation of a holding company for the Company if each
shareholder of the Company immediately prior to the formation of the holding
company retains substantially the same percentage ownership of the holding
company following such formation as he or she owned of the Company prior the
formation.

     

    
      
        
        

      

      
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    b. The sale,
transfer or assignment of all or substantially all of the assets of the Company
to any third party.

     

    c. The
acquisition by any individual, entity or “group,” within the meaning
of  Section 13(d)(3) or Section 14(d)(2) of the Exchange Act (a
“Person”), of beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of voting securities of the Company where such
acquisition causes any such Person to own twenty percent (20%) or more of the
combined voting power of the Company’s then outstanding capital stock then
entitled to vote generally in the election of directors; provided however, that
a Change of Control shall not be deemed to have occurred if a Person becomes the
beneficial owner of twenty percent of the combined voting power of the Company’s
then outstanding capital stock solely as a result of the repurchase of voting
securities by the Company.

     

    d. During
any period of two consecutive years, the persons who were directors of the
Company immediately before the beginning of the two year period (the “Incumbent
Directors”) shall cease to constitute at least a majority of the Board of
Directors; provided that any individual becoming a director subsequent to the
beginning of such two year period whose election, or nomination for election by
the Company’s shareholders, was approved by at least two-thirds of the directors
then comprising the Incumbent Directors shall be considered as though such
individual were an Incumbent Director unless such individual’s initial
assumption of office occurs as a result of either an actual or threatened
election contest (as such terms are used in Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act).

     

    Notwithstanding
anything contained herein to the contrary, if Executive’s employment is
terminated and he or she reasonably demonstrates that such termination was at
the request of a third party who has indicated an intention of taking steps
reasonably calculated to effect a Change of Control and who effects a Change of
Control, or such termination otherwise occurred in connection with, or in
anticipation of, a Change of Control which later actually occurs, then for all
purposes hereof, a Change of Control shall be deemed to have occurred on the day
immediately prior to the date of such termination of his or her
employment.

     

    F. SEVERANCE

     

    22.    Except as
otherwise expressly provided herein, if Company terminates Executive’s
employment for any reason other than Good Cause (as defined in this Agreement),
then Executive shall be entitled to severance pay in an amount not less than the
base salary that would have been due the Executive had he or she remained
employed for twelve (12) months following termination.  In the event
that the Executive is entitled to any payment under Section E, above, no payment
shall be due under this Section F.  Any severance pay due to Executive
pursuant to this Section F shall be paid in accordance with the terms of normal
payroll procedure of the Company.

     

    G. SEVERABILITY

     

    23.    If any
term or other provision of this Agreement is held to be illegal, invalid or
unenforceable by any rule of law or public policy:  (A) such term or
provision shall be fully severable and this Agreement shall be construed and
enforced as if such illegal, invalid or unenforceable provision were not a part
hereof; (B) the remaining provisions of this Agreement shall remain in full
force and effect and shall not be affected by such illegal, invalid or
unenforceable provision or by its severance from this Agreement; and (C) there
shall be added automatically as a part of this Agreement a provision as similar
in terms to such illegal, invalid or unenforceable provision as may be possible
and still be legal, valid and enforceable.  If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only as broad as is enforceable.

     

    
      
        
        

      

      
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    H. WAIVER

     

    24.    The
parties acknowledge and agree that the failure of either party to enforce any
provision of this Agreement shall not constitute a waiver of that particular
provision, or of any other provisions of this Agreement.

     

    I. SUCCESSORS
AND ASSIGNS

     

    25.    The
Executive acknowledges and agrees that this Agreement may be assigned by the
Company to any successor-in-interest and shall inure to the benefit of, and be
fully enforceable by, any successor and/or assignee; and this Agreement will be
fully binding upon, and may be enforced by the Executive against, any successor
and/or assignee of the Company.

     

    26.    The
Executive acknowledges and agrees that his or her obligations, duties and
responsibilities under this Agreement are personal and shall not be assignable,
and that this Agreement shall be enforceable by the Executive
only.  In the event of the Executive’s death, this Agreement shall be
enforceable by the Executive’s estate, executors and/or legal representatives,
only to the extent provided herein.

     

    J. CHOICE
OF LAW

     

    27.    THIS
AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND ALL QUESTIONS
CONCERNING THE CONSTRUCTION, VALIDITY, INTERPRETATION AND PERFORMANCE OF THIS
AGREEMENT SHALL BE GOVERNED BY, THE LAWS OF THE STATE OF MICHIGAN, WITHOUT
GIVING EFFECT TO PROVISION THEREOF REGARDING CONFLICT OF LAWS.  IT IS
STIPULATED THAT MICHIGAN HAS A COMPELLING STATE INTEREST IN THE SUBJECT MATTER
OF THIS AGREEMENT, AND THAT THE EXECUTIVE HAS OR WILL HAVE REGULAR CONTACT WITH
THE STATE OF MICHIGAN IN THE PERFORMANCE OF THIS AGREEMENT.

     

    K. MISCELLANEOUS

     

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

     

    29.    When a
reference is made in this Agreement to a Paragraph or a Section, such references
shall be to a Paragraph or a Section of this Agreement unless otherwise
indicated.  The headings contained in this Agreement are for
convenience of reference only and shall not affect in any way the meaning or
interpretation of this Agreement.  Whenever the words “include,”
“includes” or “including” are used in this Agreement, they shall be deemed to be
followed by the words “without limitation.”  The words “hereof,”
“herein” and “hereunder” and words of similar import when used in this Agreement
shall refer to this Agreement as a whole and not to any particular provision in
this Agreement.  Each use herein of the masculine, neuter or feminine
gender shall be deemed to include the other genders.  Each use herein
of the plural shall include the singular and vice versa, in each case as the
context requires or as is otherwise appropriate.  The word “or” is
used in the inclusive sense.  Any agreement or instrument defined or
referred to herein or in any agreement or instrument that is referred to herein
means such agreement or instrument as from time to time amended, modified or
supplemented, including by waiver or consent.  References to a person
are also to its permitted successors or assigns.

     

    
      
        
        

      

      
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    L.  NOTICES

     

    30.    All
notices and other communications required or permitted to be given or delivered
hereunder or by reason of the provisions of this Agreement shall be in writing
and shall be deemed to have been given properly if (a) delivered personally, (b)
delivered by a recognized overnight courier service, (c) sent by United States
mail, postage prepaid, or (d) sent by facsimile transmission followed by a
confirmation copy delivered by recognized overnight courier service the next
day.  Such notices, requests, consents and other communications shall
be sent to the respective parties as follows (or at such other address for a
party as shall be specified by like notice to the other party):

     

    If to the
Company:

     

    Jerry
Sytsma

    4471
Wilson Avenue

    Grandville,
MI  49418

     

    If to
Executive:

     

    Robert
Bilotti

    32
Glattly Drive

    Denville,
NJ  07834

     

    31.    Any
notice or other communication given pursuant to this Agreement shall be
effective (i) in the case of personal delivery, telex or facsimile transmission,
when received; (ii) in the case of mail, upon the earlier of actual receipt or
five (5) business days after deposit with the United States Postal Service,
first class certified or registered mail, postage prepaid, return receipt
requested; and (iii) in the case of a recognized overnight courier service, one
(1) business day after delivery to the courier service together with all
appropriate fees or charges and instructions for overnight
delivery.

     

    [signature
page follows]

     

    
      
        
        

      

      
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    [signature
page to Employment Agreement]

     

    EXECUTED
AS OF THE DATE FIRST WRITTEN.

     

    
      
        
          
            
              
                
                  	 
      	 	
                          EXECUTIVE

                        	 
	 
      	 	 
      	 
	 
      	 	 
      	 
	
                          
                            /s/
      Dave Hovingh

                          

                        	 	
                          
                            /s/
      Robert P. Bilotti

                          

                        	 
	
                          WITNESS

                        	 	
                          Robert
      P. Bilotti

                        	 
	 
      	 	 
      	 
	 
      	 	 
      	 
	 
      	 	 
      	 
	 
      	 	 
      	 
	 
      	 	
                          GRAND
      RIVER COMMERCE, INC.

                        	 
	 
      	 	 
      	 
	 
      	 	 
      	 
	
                          
                            /s/
      Lawrence B. Fitch

                          

                        	 	
                          By:

                        	
                          
                            /s/
      Jerry Sytsma

                          

                        	 
	
                          WITNESS

                        	 	 
      	
                          Jerry
      Sytsma, Vice President and Corporate Secretary

                        	 
	 
      	 	 
      	 
      	 

                

              

            

          

        

      

    

    

    
      
        
        

      

      
        9EMPLOYMENT
AGREEMENT

    

     

    THIS
AGREEMENT is dated as of the 25th day of
February, 2010 by and between Shengkai Innovations Inc., a Florida corporation
with its principal office at 27 Wanggang Road, Jin Nan (Shuang Gang) Economic
and Technology and Technology Development, Tianjin, People’s Republic of China
(the “Company”), and, David Ming He, residing at 1378 Perry St, Unit# 301,
Des Plaines, IL 60016, U.S.A. (“Executive”).

     

    WITNESSETH:

     

    WHEREAS,
the Company is desirous of engaging David Ming He as its Chief Financial Officer
and he is agreeable to being so appointed on the terms and conditions
hereinafter set forth.

     

    NOW,
THEREFORE, in consideration of the mutual promises set forth in this Agreement,
the parties agree as follows:

     

    1.      Effective Date of
Agreement.  This
Agreement and the obligations of the parties to adhere to the terms and
conditions contained herein shall not be deemed effective until (i) the earlier
of 30 days from the date of this Agreement, or (ii) the date that the Executive
has resolved any prior conflicts with his ability to assume his duties under the
terms of this Agreement.

     

    2.      Employment and
Duties.

     

    (a)           Subject
to the terms and conditions hereinafter set forth, the Company hereby employs
David Ming He as its Chief Financial Officer, and he shall have the duties and
responsibilities associated with a Chief Financial Officer of a public
corporation.  During the Term, as hereinafter defined,
Executive shall report to the Company’s Chief Executive Officer and
the audit committee of the board of directors. Executive  shall also
perform such other duties and responsibilities as may be determined by the
Company’s board of directors, audit committee and Chief Executive Officer, as
long as such duties and responsibilities are consistent with those of the
Company’s Chief Financial Officer.

     

    (b)           Executive shall
also serve in such executive capacity or capacities with respect to any
affiliate of the Company to which he may be elected or appointed, provided that
such duties are consistent with those of the Company’s Chief Financial
Officer.  During the Term, Executive shall receive no additional
compensation for services rendered pursuant to this Section
1(b).   For purposes of this Agreement, the term “affiliate”
shall mean an entity that is controlled by the Company.

     

    (c)           Unless
terminated earlier as provided in Section 5 of this Agreement, this Agreement
shall have an initial term (the “Initial Term”) commencing as of (i) the earlier
of 30 days from the date of this Agreement, or (ii) the date that the Executive
has resolved any prior conflicts with his ability to assume his duties under the
terms of this Agreement, and expiring on February 25, 2011, and continuing on a
year-to-year basis thereafter unless terminated by either party on not less than
thirty (30) days notice prior to the expiration of the Initial Term or any
one-year extension.  The Initial Term and the one-year extensions are
collectively referred to as the “Term.”

     

    3.      Performance.  Executive
hereby accepts the employment contemplated by this Agreement. During the Term,
he shall devote substantially all of his business time to the performance of his
duties under this Agreement, and shall perform such duties diligently, in good
faith and in a manner consistent with the best interests of the
Company.

     

    4.      Compensation and Other
Benefits.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    For his
services to the Company during the Term, the Company shall(a) pay Executive an
annual salary (“Salary”) at the rate of US$120,000 (say U.S. Dollars One Hundred
Twenty Thousand only) per annum, and (b) grant to Executive an option (“Option”)
to purchase 221,125 (Two Hundred Twenty One Thousand One Hundred Twenty Five)
shares of the Company’s common stock at an exercise price equivalent to the
closing price per share of common stock on the date of the grant, which option
shall vest in one-third installments over three years.

     

    All
Salary payments shall be payable in equal monthly installments at the end of
each calendar month, as the Company regularly pays its employees in accordance
with normal payroll practices.

     

    Executive’s
Salary as set forth above may be increased at the discretion of the compensation
committee of the Board of Directors.

     

    Cashless
exercise of the Option vested is allowed, with the number of shares of common
stock to be determined based on the following calculation: X = Y
[(A-B)/A]

    where:

     

    
      	
               
      

            	
              X =
      the number of shares of common stock to be issued to the
      Executive.

            

    

     

    
      	
               
      

            	
              Y =
      the number of shares of common stock with respect to which the Option is
      being exercised.

            

    

     

    
      	
               
      

            	
              A =
      the closing price for the first Trading Day immediately prior to the
      Exercise Date.

            

    

     

    
      	
               
      

            	
              B =
      the Exercise Price.

            

    

     

    5.      Reimbursement of
Expenses.  The Company shall reimburse Executive, upon
presentation of proper expense statements, for all authorized, ordinary and
necessary out-of-pocket expenses reasonably incurred by Executive  during
the Term in connection with the performance of his services pursuant to this
Agreement hereunder in accordance with the Company’s expense reimbursement
policy. 

     

    6.      Termination of
Employment.

     

    (a)           This
Agreement and Executive’s employment hereunder may be terminated by either for
any reason whatsoever, with or without cause, at any time within three (3)
months of the date of this Agreement (the “Probation Period”).

     

    (b)           This
Agreement and Executive’s employment hereunder shall terminate immediately upon
his death.

     

    (c)           This
Agreement and Executive’s employment pursuant to this Agreement, may be
terminated by him or the Company on not less than thirty (30) days’ written
notice in the event of Executive’s Disability. The term “Disability” shall mean
any illness, disability or incapacity of Executive which prevents him from
substantially performing his regular duties for a period of two (2) consecutive
months or three (3) months, even though not consecutive, in any twelve (12)
month period.  However, if Executive  is covered by long-term
disability insurance, the Company may not terminate this Agreement pursuant to
this Section 5(c) unless he  is eligible for disability payments under
his long-term disability insurance.

     

    (d)           The
Company may terminate this Agreement and Executive’s employment pursuant to this
Agreement for cause with no notice. The term “cause” shall mean:

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (i)           Repeated
failure to perform material instructions from the Company’s board of directors,
Chief Executive Office, Chief Operating Officer or audit committee,
provided that such instructions are reasonable and consistent with his duties as
set forth in Section 1 of this Agreement or any other failure or refusal by
Executive  to perform his duties required by said Section 1; provided,
however, that Executive shall have received notice from the Board specifying the
nature of such failure in reasonable detail and he shall have failed to cure the
failure within ten (10) business days after receipt of such notice:

     

    (ii)           a
breach of Section 6, 7 or 8 of this Agreement;

     

    (iii)           a
breach of trust whereby Executive obtains personal gain or benefit at the
expense of or to the detriment of the Company;

     

    (iv)            his
use of illegal substances;

     

    (v)            his
abuse of alcohol continuing after written notice from the board of directors or
the Company’s Chief Executive Officer or ;

     

    (vi)           any
fraudulent or dishonest conduct by Executive  or any other conduct by him,
which damages the Company or any of its affiliates or their property, business
or reputation;

     

    (vii)           a
conviction of or plea of nolo contendere by Executive of (A) any felony or (B)
any other crime involving fraud, theft, embezzlement or use or possession of
illegal substances; or

     

    (viii)                      the
admission by Executive of any matters set forth in Section 5(c)(vii) of this
Agreement.

     

    (ix)           failure
to ensure that the Company’s filings with the Securities and Exchange Commission
are on time;

     

    (x)           failure
to ensure the accuracy of Company’s filings with the Securities
and  Exchange Commission.

     

    (d)           Executive’s
resignation prior to the expiration of the Term, other than for Good Reason
shall be treated in the same manner as a termination for cause. The term “Good
Reason” shall mean:

     

    
      	
               
      

            	
              (i)

            	
              Any
      material breach by the Company of its obligations under this Agreement
      which are not cured within ten (10) business days after notice from
      Executive which sets forth in reasonable detail the nature of the
      breach.

            

    

     

    
      	
               
      

            	
              (ii)

            	
              Any
      change in Executive’s duties such that Executive is no longer the
      Company’s Chief Financial Officer, unless such change was made with his
      consent.

            

    

     

    
      	
               
      

            	
              (iii)

            	
              Any
      action on the part of the Company which impairs Executive’s ability to
      exercise his duties as the Company’s Chief Financial
    Officer.

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    6.      Trade Secrets and
Proprietary Information.  Executive  recognizes and
acknowledges that the Company, through the expenditure of considerable time and
money, has developed and will continue to develop in the future information
concerning customers, clients, marketing, products, services, business, research
and development activities and operational methods of the Company and its
customers or clients, contracts, financial or other data, technical data or
any other confidential or proprietary information possessed, owned or used by
the Company, the disclosure of which could or does have a material adverse
effect on the Company, its business, any business it proposes to engage in, its
operations, financial condition or prospects and that the same are confidential
and proprietary and considered “confidential information” of the Company for the
purposes of this Agreement. In consideration of his employment and engagement as
Chief Financial Officer, Executive agrees that he will not, during or after the
Term, without the consent of the Company’s Chief Executive Officer, make any
disclosure of confidential information now or
hereafter possessed by the Company, to any person, partnership, corporation or
entity either during or after the term here of, except that nothing in this
Agreement shall be construed to prohibit him from using or disclosing such
information (a) if such disclosure is necessary in the normal course of the
Company’s business in accordance with Company policies or instructions or
authorization from the board of directors or executive committee, (b) such
information shall become public knowledge other than by or as a result of
disclosure by a person not having a right to make such disclosure, (c) complying
with legal process; provided, that in the event he is required to make
disclosure pursuant to legal process, he  shall give the Company
prompt notice thereof and the opportunity to object to the disclosure, or (d)
subsequent to the Term, if such information shall have either (i) been developed
by him independent of any of the Company’s confidential or proprietary
information or (ii) been disclosed to him by a person not subject to a
confidentiality agreement with or other obligation of confidentiality to the
Company.  For the purposes of Sections 6, 7 and 8 of this Agreement,
the term “Company” shall include the Company, its parent, its subsidiaries and
its affiliates.

     

    7.      Covenant Not To Solicit or
Compete.

     

    (a)           During
the period from the date of this Agreement until one (1) year following the date
on which Executive’s employment is terminated, he will not, directly or
indirectly:

     

    (i)           Persuade
or attempt to persuade any person or entity which is or was a customer, client
or supplier of the Company to cease doing business with the Company, or to reduce the amount of
business it does with the Company (the terms “customer” and “client” as used in
this Section 7 to include any potential customer or client to whom the Company
submitted bids or proposals, or with whom the Company conducted negotiations,
during the term of Executive’s employment hereunder or during the twelve (12)
months preceding the termination of his employment);

     

    (ii)           solicit
for himself or any other person or entity other than the Company the business of
any person or entity which is a customer or client of the Company, or was a
customer or client of the Company within one (1) year prior to the termination
of his employment; or

     

    (iii)           persuade
or attempt to persuade any employee of the Company, or any individual who was an
employee of the Company during the one (1) year period prior to the lawful and
proper termination of this Agreement, to leave the Company’s employ, or to
become employed by any person or entity other than the Company.

     

    (b)                      Executive
acknowledges that the restrictive covenants (the “Restrictive Covenants”)
contained in Sections 6 and 7 of this Agreement are a condition of his
employment are reasonable and valid in geographical and temporal scope and in
all other respects. If any court determines that any of the Restrictive
Covenants, or any part of any of the Restrictive Covenants, is invalid or
unenforceable, the remainder of the Restrictive Covenants and parts thereof
shall not thereby be affected and shall remain in full force and effect,
without regard to the invalid portion. If any court determines that any of the
Restrictive Covenants, or any part thereof, is invalid or unenforceable because
of the geographic or temporal scope of such provision, such court shall have the
power to reduce the geographic or temporal scope of such provision, as the case
may be, and, in its reduced form, such provision shall then be
enforceable.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    8.      Inventions and
Discoveries. Executive agrees promptly to disclose in writing to the
Company any invention or discovery made by him during the period of time that
this Agreement remains in full force and effect, whether during or after working
hours, in any business in which the Company is then engaged or which otherwise
relates to any product or service dealt in by the Company and such inventions
and discoveries shall be the Company’s sole property. Executive acknowledges
that any such invention or discovery developed by him and any intellectual
property rights relating thereto shall be considered as “work performed for
hire.”  In the event that any such intellectual property rights are
not, for any reason, deemed work performed for hire, Executive hereby assigns to
the Company any and all of his right, title and interest therein to the
Company.  Upon the Company’s request, Executive shall execute and
assign to the Company all applications for copyrights and letters patent of the
United States and such foreign countries as the Company may designate, and
Executive shall execute and deliver to the Company such other instruments as the
Company deems necessary to confirm the Company’s sole ownership of all rights,
title and interest in and to such inventions and discoveries, as well as all
copyrights and/or patents. If services in connection with applications for
copyrights and/or patents are performed by Executive at the Company’s request
after the termination of his employment hereunder, the Company shall pay his
reasonable compensation for such services rendered after termination of this
Agreement.

     

    9.      Injunctive Relief.
Executive agrees that his violation or threatened violation of any of the
provisions of Sections 6, 7 or 8 of this Agreement shall cause immediate and
irreparable harm to the Company. In the event of any breach or threatened breach
of any of said provisions, Executive consents to the entry of preliminary and
permanent injunctions by a court of competent jurisdiction prohibiting
him  from any violation or threatened violation of such provisions and
compelling him to comply with such provisions. In the event an injunction is
issued against any such violation by Executive, the period referred to in
Section 7 of this Agreement shall continue until the later of the expiration of
the period set forth therein or one (1) month from the date a final judgment
enforcing such provisions is entered and the time for appeal has
lapsed.  The provisions of Sections 6, 7, 8 and 9 of this Agreement
shall survive any termination of this Agreement and Executive’s employment
pursuant to this Agreement.

     

    10.           Miscellaneous.

     

    (a)           Executive represents,
warrants, covenants and agrees that he has a right to enter into this Agreement,
that he is not a party to any agreement or understanding, oral or written, which
would prohibit performance of his obligations under this Agreement, and that he
will not use in the performance of his obligations hereunder any proprietary
information of any other party which he is legally prohibited from
using.

     

    (b)           If
requested by the Company, Executive will cooperate with the Company in
connection with the Company’s application to obtain key-man life insurance on
his life, on which the Company will be the beneficiary. Such cooperation shall
include the execution of any applications or other documents requiring his
signature and submission of insurance applications and submission to a
physical.

     

    (c)           Any
notice, consent or communication required under the provisions of this Agreement
shall be given in writing and sent or delivered by hand, overnight courier or
messenger service, against a signed receipt or acknowledgment of receipt, or by
registered or certified mail, return receipt requested, or telecopier or similar
means of communication if receipt is acknowledged or if transmission is
confirmed by mail as provided in this Section 11(c), to the parties at
their respective addresses set forth at the beginning of this Agreement or by
telecopier to the Company at 27 Wanggang Road, Jin Nan (Shuang Gang) Economic
and Technology and Technology Development, Tianjin, People’s Republic of
China,  or to Executive at 1378 Perry St, Unit# 301, Des Plaines, IL
60016, with notice to the Company being sent to the attention of the individual
who executed this Agreement on behalf of the Company. Either party may, by like
notice, change the person, address or telecopier number to which notice is to be
sent.  If no telecopier number is provided for Executive, notice to
him shall not be sent by telecopier.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (d)           This
Agreement shall in all respects be construed and interpreted in accordance with,
and the rights of the parties shall be governed by, the laws of the State
of New York applicable to contracts executed and to be performed wholly
within such State, without regard to principles of conflicts of
laws.  The parties hereto agree to submit to the exclusive
jurisdiction of the state and federal courts of New York, New York.

     

    (e)           If
any term, covenant or condition of this Agreement or the application thereof to
any party or circumstance shall, to any extent, be determined to be invalid or
unenforceable, the remainder of this Agreement, or the application of such term,
covenant or condition to parties or circumstances other than those as to which
it is held invalid or unenforceable, shall not be affected thereby and each
term, covenant or condition of this Agreement shall be valid and be enforced to
the fullest extent permitted by law, and any court having jurisdiction may
reduce the scope of any provision of this Agreement, including the geographic
and temporal restrictions set forth in Section 7(a) of this Agreement, so that
it complies with applicable law.

     

    (f)           This
Agreement constitutes the entire agreement of the Company and Executive as
to the subject matter hereof, superseding all prior or contemporaneous written
or oral understandings or agreements, including any and all previous employment
agreements or understandings, all of which are hereby terminated, with respect
to the subject matter covered in this Agreement. This Agreement may not be
modified or amended, nor may any right be waived, except by a writing which
expressly refers to this Agreement, states that it is intended to be a
modification, amendment or waiver and is signed by both parties in the case of a
modification or amendment or by the party granting the waiver. No course of
conduct or dealing between the parties and no custom or trade usage shall be
relied upon to vary the terms of this Agreement. The failure of a party to
insist upon strict adherence to any term of this Agreement on any occasion shall
not be considered a waiver or deprive that party of the right thereafter to
insist upon strict adherence to that term or any other term of this
Agreement.

     

    (g)           Neither
party hereto shall have the right to assign or transfer any of its or his rights
hereunder except in connection with a merger of consolidation of the Company or
a sale by the Company of all or substantially all of its business and
assets.

     

    (h)           This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective heirs, successors, executors, administrators and permitted
assigns.

     

    (i)           The
headings in this Agreement are for convenience of reference only and shall not
affect in any way the construction or interpretation of this
Agreement.

     

    (j)           No
delay or omission to exercise any right, power or remedy accruing to either
party hereto shall impair any such right, power or remedy or shall be construed
to be a waiver of or an acquiescence to any breach hereof. No waiver of any
breach hereof shall be deemed to be a waiver of any other breach hereof
theretofore or thereafter occurring. Any waiver of any provision hereof shall be
effective only to the extent specifically set forth in an applicable writing.
All remedies afforded to either party under this Agreement, by law or otherwise,
shall be cumulative and not alternative and shall not preclude assertion by such
party of any other rights or the seeking of any other rights or remedies against
any other party.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    IN WITNESS WHEREOF, the
parties have executed this Agreement as of the date first above
written.

     

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              	 	SHENGKAI
      INNOVATIONS , INC.	 
	 	 	 	 
	
                                       

                                    	
                                      By:
      

                                    	/s/
      Chen Wang	 
	 	 	Chen
      Wang	 
	 	 	Chairman,
      and Chief Executive Officer	 
	 	 	 	 
	 	 	 	 
	 	Executive
      :	 
	 	 	 	 
	 	/s/David
      Ming He	 
	 	David
      Ming He

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