Document:

Unassociated Document

     

    Exhibit
10.25

    First
Reliance Bank

    Salary
Continuation Agreement

    

    This Salary
Continuation Agreement (this “Agreement”) is entered into as of June 2,
2008, by and between First Reliance Bank, a South Carolina-chartered bank (the
“Bank”), and Craig Evans, an officer of the Bank (the “Executive”).

    

    Whereas,
the Executive has, and will, contribute substantially to the Bank’s success and
the Bank desires that the Executive continue in its employ,

    

    Whereas,
to encourage the Executive to remain a Bank employee, the Bank is willing to
provide to the Executive salary continuation benefits payable from the Bank’s
general assets,

    

    Whereas,
none of the conditions or events included in the definition of the term “golden
parachute payment” that is set forth in section 18(k)(4)(A)(ii) of the Federal
Deposit Insurance Act [12 U.S.C. 1828(k)(4)(A)(ii)] and in Federal Deposit
Insurance Corporation Rule 359.1(f)(1)(ii) [12 CFR 359.1(f)(1)(ii)] exists or,
to the best knowledge of the Bank, is contemplated insofar as the Bank is
concerned, and

    

    Whereas,
the parties hereto intend that this Agreement shall be considered an unfunded
arrangement maintained primarily to provide supplemental retirement benefits for
the Executive, and to be considered a non-qualified benefit plan for purposes of
the Employee Retirement Income Security Act of 1974, as amended
(“ERISA”).  The parties do not intend that this Agreement be
considered an employment agreement or contract.  The Executive is
fully advised of the Bank’s financial status.

    

    Now
Therefore, in consideration of these premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Executive and the Bank hereby agree as follows.

    

    Article
1

    Definitions

    

    1.1           “Accrual Balance” means the
liability that should be accrued by the Bank under generally accepted accounting
principles (“GAAP”) for the Bank’s obligation to the Executive under this
Agreement, applying Accounting Principles Board Opinion No. 12, as amended by
Statement of Financial Accounting Standards No. 106.  The Accrual
Balance shall be calculated using a discount rate determined by the Plan
Administrator, resulting in an Accrual Balance at the Executive’s Normal
Retirement Age that is equal to the present value of the normal retirement
benefits.  The discount rate means the rate used by the Plan
Administrator to determine the Accrual Balance.  In its sole
discretion the Plan Administrator may adjust the discount rate to maintain the
rate within reasonable standards according to GAAP.

    

    1.2           “Beneficiary” means each
designated person, or the estate of the deceased Executive, entitled to
benefits, if any, upon the death of the Executive, determined according to
Article 4.

    

    1.3           “Beneficiary Designation Form”
means the form established from time to time by the Plan Administrator that the
Executive completes, signs, and returns to the Plan Administrator to designate
one or more Beneficiaries.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    1.4           “Change in Control” means a
change in control as defined in Internal Revenue Code section 409A and rules,
regulations, and guidance of general application thereunder issued by the
Department of the Treasury, including –

    

    (a)           Change in ownership: a change
in ownership of First Reliance Bancshares, Inc., a South Carolina corporation of
which the Bank is a wholly owned subsidiary, occurs on the date any one person
or group accumulates ownership of First Reliance Bancshares, Inc. stock
constituting more than 50% of the total fair market value or total voting power
of First Reliance Bancshares, Inc. stock, or

    

    (b)           Change in effective control:
(x) any one person or
more than one person acting as a group acquires within a 12-month period
ownership of First Reliance Bancshares, Inc. stock possessing 30% or more of the
total voting power of First Reliance Bancshares, Inc., or (y) a majority of First
Reliance Bancshares, Inc.’s board of directors is replaced during any 12-month
period by directors whose appointment or election is not endorsed in advance by
a majority of First Reliance Bancshares, Inc.’s board of directors,
or

    

    (c)           Change in ownership of a substantial
portion of assets: a change in ownership of a substantial portion of
First Reliance Bancshares, Inc.’s assets occurs if in a 12-month period any one
person or more than one person acting as a group acquires from First Reliance
Bancshares, Inc. assets having a total gross fair market value equal to or
exceeding 40% of the total gross fair market value of all of First Reliance
Bancshares, Inc.’s assets immediately before the acquisition or
acquisitions.  For this purpose, gross fair market value means the
value of First Reliance Bancshares, Inc.’s assets, or the value of the assets
being disposed of, determined without regard to any liabilities associated with
the assets.

    

    1.5           “Code” means the Internal
Revenue Code of 1986, as amended, and rules, regulations, and guidance of
general application issued thereunder by the Department of the
Treasury.

    

    1.6           “Disability”  means,
because of a medically determinable physical or mental impairment that can be
expected to result in death or that can be expected to last for a continuous
period of at least 12 months, (x) the Executive is unable to
engage in any substantial gainful activity, or (y) the Executive is receiving
income replacement benefits for a period of at least three months under an
accident and health plan of the employer.  Medical determination of
disability may be made either by the Social Security Administration or by the
provider of an accident or health plan covering employees of the
Bank.  Upon request of the Plan Administrator, the Executive must
submit proof to the Plan Administrator of the Social Security Administration’s
or provider’s determination.

    

    1.7           “Early Termination” means
Separation from Service before Normal Retirement Age for reasons other than
death, Disability, or Termination with Cause.  Early Termination
excludes a Separation from Service governed by section 2.4.

    

    1.8           “Effective Date” means January
1, 2009.

    

    1.9           “Intentional,” for purposes of
this Agreement, no act or failure to act on the Executive’s part shall be deemed
to have been intentional if it was due primarily to an error in judgment or
negligence.  An act or failure to act on the Executive’s part shall be
considered intentional if it is not in good faith and if it is without a
reasonable belief that the action or failure to act is in the Bank’s best
interests.

    

    1.10           “Normal Retirement Age” means
the Executive’s 65th birthday.

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    

    1.11           “Plan Administrator” or “Administrator” means the plan
administrator described in Article 8.

    

    1.12           “Plan Year” means a
twelve-month period commencing on January 1 and ending on December 31 of each
year.  The initial Plan Year shall commence on the effective date of
this Agreement.

    

    1.13           “Separation from Service” means
separation from service as defined in Internal Revenue Code section 409A and
rules, regulations, and guidance of general application thereunder issued by the
Department of the Treasury, including termination for any reason of the
Executive’s service as an executive and independent contractor to the Bank and
any member of a controlled group, as defined in Code section 414, other than
because of a leave of absence approved by the Bank or the Executive’s
death.  For purposes of this Agreement, if there is a dispute about
the employment status of the Executive or the date of the Executive’s Separation
from Service, the Bank shall have the sole and absolute right to decide the
dispute unless a Change in Control shall have occurred.

    

    1.14           “Termination” and Termination for
Cause” shall have the same meaning specified in any effective severance
or employment agreement existing on the date hereof or hereafter entered into
between the Executive and the Bank or between the Executive and First Reliance
Bancshares, Inc.

    

    1.15           “Voluntary Termination with Good
Reason” means a voluntary Separation from Service by the Executive within
24 months after a Change in Control if the following conditions (x) and (y) are satisfied: (x) a voluntary Separation
from Service by the Executive will be considered a Voluntary Termination with
Good Reason if any of the following occur without the Executive’s advance
written consent –

    

    1)           a
material diminution of the Executive’s base salary,

    

    2)           a
material diminution of the Executive’s authority, duties, or
responsibilities,

    

    3)           a
material diminution in the authority, duties, or responsibilities of the
supervisor to whom the Executive is required to report,

    

    4)           a
material diminution in the budget over which the Executive retains
authority,

    

    5)           a
material change in the geographic location at which the Executive must perform
services for the Bank, or

    

    6)           any
other action or inaction that constitutes a material breach by the Bank of the
agreement under which the Executive provides services to the Bank.

    

    (y)           the
Executive must give notice to the Bank of the existence of one or more of the
conditions described in clause (x) within 90 days after the
initial existence of the condition, and the Bank shall have 30 days thereafter
to remedy the condition.  In addition, the Executive’s voluntary
termination because of the existence of one or more of the conditions described
in clause (x) must
occur within 24 months after the earlier of the initial existence of the
condition or the date of the Change in Control.

     

    
      
         

      

      
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    Article
2

    Lifetime
Benefits

    

    2.1           Normal
Retirement.  Unless Separation from Service occurs before
Normal Retirement Age, when the Executive attains Normal Retirement Age the Bank
shall pay to the Executive the benefit described in this section 2.1 instead of
any other benefit under this Agreement.  If the Executive’s Separation
from Service is a Termination with Cause or if this Agreement terminates under
Article 5, no further benefits shall be paid.

    

    2.1.1         Amount of
benefit.  The annual benefit under this section 2.1 is
$87,678.

    

    2.1.2         Payment of
benefit.  The Bank shall pay the annual benefit to the
Executive in 12 equal monthly installments on the first day of each month,
beginning with the month immediately after the month in which the Executive
attains Normal Retirement Age.  The annual benefit shall be paid to
the Executive for 15 years.

    

    2.2           Early
Termination.  If Early Termination occurs both (x) on or after the date the
Executive attains age 55 and (y) after the Executive has
been continuously employed by the Bank for at least ten consecutive years when
Early Termination occurs, including employment before the Effective Date of this
Agreement, the Bank shall pay to the Executive the benefit described in this
section 2.2 instead of any other benefit under this Agreement.  If
Early Termination occurs before the Executive attains age 55 and before the
Executive has been continuously employed by the Bank for at least ten
consecutive years when Early Termination occurs, including employment before the
Effective Date of this Agreement, no benefit shall be payable under this section
2.2 or any other section of this Agreement.  Neither the Bank nor the
Executive shall be entitled to elect in the 24-month period after a Change in
Control between the benefit under this section 2.2 versus the benefit under
section 2.4.  If the Executive’s Separation from Service within 24
months after a Change in Control is an involuntary termination without Cause or
a Voluntary Termination with Good Reason, no benefit shall be payable under this
section 2.2 and the Executive shall instead be entitled to the benefit under
section 2.4 or, if the Executive first attained Normal Retirement Age, section
2.1.  No benefits shall be payable under this Agreement if the
Executive’s Separation from Service is a Termination with Cause or if this
Agreement terminates under Article 5.

    

    2.2.1         Amount of
benefit.  The annual benefit under this section 2.2 is
calculated as the amount that fully amortizes the Accrual Balance existing at
the end of the month immediately before the month in which Separation from
Service occurs, amortizing that Accrual Balance over the period beginning with
the Executive’s Normal Retirement Age and taking into account interest at the
discount rate or rates established by the Plan Administrator.

    

    2.2.2         Payment of
benefit.  Beginning with the later of (x) the seventh month after
the month in which the Executive’s Separation from Service occurs, or (y) the month immediately
after the month in which the Executive attains Normal Retirement Age, the Bank
shall pay the annual benefit to the Executive in equal monthly installments on
the first day of each month.  The annual benefit shall be paid to the
Executive for 15 years.

    

    2.3           Disability.  Upon
Separation from Service because of Disability before Normal Retirement Age, the
Bank shall pay to the Executive the benefit described in this section 2.3
instead of any other benefit under this Agreement.

    

    2.3.1         Amount of
benefit.   The annual benefit under this section 2.3 is
calculated as the amount that fully amortizes the Accrual Balance existing at
the end of the month immediately before the month in which Separation from
Service occurs, amortizing that Accrual Balance over 15 years and taking into
account interest at the discount rate or rates established by the Plan
Administrator.

    
      
         

      

      
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    2.3.2         Payment of
benefit.  Beginning with the later of (x) the seventh month after
the month in which the Executive’s Separation from Service occurs, or (y) the month immediately
after the month in which the Executive attains Normal Retirement Age, the Bank
shall pay the annual benefit to the Executive in 12 equal monthly installments
on the first day of each month.  The annual benefit shall be paid to
the Executive for 15 years.

    

    2.4           Change in
Control.  If the Executive’s Separation from Service is a
termination by Bank other than a Termination for Cause or is a Voluntary
Termination with Good Reason, in either case within 24 months after a Change in
Control, the Bank shall pay to the Executive the benefit described in this
section 2.4 instead of any other benefit under this
Agreement.  Neither the Bank nor the Executive shall be entitled to
elect in the 24-month period after a Change in Control between the benefit under
this section 2.4 versus the Early Termination benefit under section
2.2.  If the Executive’s Separation from Service within 24 months
after a Change in Control is an involuntary termination without Cause or a
Voluntary Termination with Good Reason, no benefit shall be payable under
section 2.2 and the Executive shall instead be entitled to the benefit under
this section 2.4.  But if the Executive shall have attained Normal
Retirement Age when Separation from Service within 24 months after a Change in
Control occurs, whether Separation from Service is voluntary or involuntary for
any reason other than Termination for Cause, the Executive shall be entitled
solely to the benefit provided by section 2.1, not this section 2.4 or section
2.2.  No benefits shall be payable under this Agreement if the
Executive’s Separation from Service is a Termination with Cause or if this
Agreement terminates under Article 5.

    

    2.4.1         Amount of
benefit.  The benefit under this section 2.4 is the Accrual
Balance maintained by the Bank as of the end of the month immediately before the
month in which Separation from Service occurs, plus interest to the date of
payment at a rate or rates determined by the Plan Administrator.

    

    2.4.2         Payment of
benefit.  The Bank shall pay the benefit under this section 2.4
to the Executive in a single lump sum on the first day of the seventh month
after the month in which the Executive’s Separation from Service
occurs.

    

    2.5           Lump-sum Payment of Normal Retirement
Benefit, Early Termination Benefit, or Disability Benefit Being Paid to the
Executive when a Change in Control Occurs.  If when a Change in
Control occurs the Executive is receiving the benefit under section 2.1, the
Bank shall pay the remaining salary continuation benefits to the Executive in a
single lump sum within three days after the Change in Control.  If
when a Change in Control occurs the Executive is receiving or is entitled at
Normal Retirement Age to receive the benefit under sections 2.2 or 2.3, the Bank
shall pay the remaining salary continuation benefits to the Executive in a
single lump sum on the later of (x) the third day after the
Change in Control or (y) the first day of the
seventh month after the month in which the Executive’s Separation from Service
occurs.  The lump-sum payment due to the Executive as a result of a
Change in Control shall be an amount equal to the Accrual Balance amount
corresponding to the particular benefit when the Change in Control
occurs.

    

    2.6           Contradiction Between the Agreement
and Schedule A.  If there is a contradiction between this
Agreement and Schedule A attached hereto concerning the actual amount of a
particular benefit due to the Executive under sections 2.1, 2.2, 2.3, or 2.4
hereof, the amount of the benefit determined under this Agreement shall
control.  If the Plan Administrator changes the discount rate employed
for purposes of calculating the Accrual Balance, the Plan Administrator shall
prepare or cause to be prepared a revised Schedule A, which shall supersede and
replace any and all Schedules A previously prepared under or attached to this
Agreement.

    
      
         

      

      
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    2.7           Savings Clause Relating to Compliance
with Code Section 409A.  The Bank and Executive intend that
their exercise of authority or discretion under this Agreement shall comply with
Code section 409A, as amended.  Despite any contrary provision of this
Agreement, if when the Executive’s employment terminates the Executive is a
specified employee, as defined in Code section 409A, and if any payments under
Article 2 of this Agreement will result in additional tax or interest to the
Executive because of section 409A, the Executive shall not be entitled to the
payments under Article 2 until the earliest of (x) the date that is at least
six months after termination of the Executive’s employment for reasons other
than the Executive’s death, (y) the date of the
Executive’s death, or (z) any earlier date that does
not result in additional tax or interest to the Executive under section
409A.  If any provision of this Agreement would subject the Executive
to additional tax or interest under section 409A, the Bank shall reform the
provision.  However, the Bank shall maintain to the maximum extent
practicable the original intent of the applicable provision without subjecting
the Executive to additional tax or interest, and the Bank shall not be required
to incur any additional compensation expense as a result of the reformed
provision.

    

    2.8           One Benefit
Only.  Despite anything to the contrary in this Agreement, the
Executive and Beneficiary are entitled to one benefit only under this Agreement,
which shall be determined by the first event to occur that is dealt with by this
Agreement.  Except as provided in section 2.5 or Article 3, subsequent
occurrence of events dealt with by this Agreement shall not entitle the
Executive or Beneficiary to other or additional benefits under this
Agreement.

    

    Article
3

    Death
Benefits

    

    3.1           Death Before Separation from
Service.  Except as provided in section 5.2, if the Executive
dies before Separation from Service, the Executive’s Beneficiary shall be
entitled at the Executive’s death to an amount in cash equal to the Accrual
Balance existing at the Executive’s death.  If a benefit is payable to
the Executive’s Beneficiary under this section 3.1, the benefit shall be paid in
a single lump 90 days after the Executive’s death.  However, no
benefits under this Agreement shall be paid or payable to the Executive or the
Executive’s Beneficiary if this Agreement is terminated under Article
5.

    

    3.2           Death after Separation from
Service.  If the Executive dies after Separation from Service
and if Separation from Service was not a Termination with Cause, at the
Executive’s death the Executive’s Beneficiary shall be entitled to an amount in
cash equal to the Accrual Balance remaining at the Executive’s death, unless the
Change-in-Control benefit shall have previously been paid to the Executive under
section 2.4 or unless a Change-in-Control payout shall have occurred under
section 2.5.  If a benefit is payable to the Executive’s Beneficiary
under this section 3.2, the benefit shall be paid in a single lump sum 90 days
after the Executive’s death.  However, no benefits under this
Agreement shall be paid or payable to the Executive or the Executive’s
Beneficiary if this Agreement is terminated under Article 5.

    

    Article
4

    Beneficiaries

    

    4.1           Beneficiary
Designations.  The Executive shall have the right to designate
at any time a Beneficiary to receive any benefits payable under this Agreement
at the Executive’s death.  The Beneficiary designated under this
Agreement may be the same as or different from the beneficiary designation under
any other benefit plan of the Bank in which the Executive
participates.

    
      
         

      

      
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    4.2           Beneficiary Designation:
Change.  The Executive shall designate a Beneficiary by
completing and signing the Beneficiary Designation Form and delivering it to the
Plan Administrator or its designated agent.  The Executive’s
Beneficiary designation shall be deemed automatically revoked if the Beneficiary
predeceases the Executive or if the Executive names a spouse as Beneficiary and
the marriage is subsequently dissolved.  The Executive shall have the
right to change a Beneficiary by completing, signing, and otherwise complying
with the terms of the Beneficiary Designation Form and the Plan Administrator’s
rules and procedures, as in effect from time to time.  Upon the
acceptance by the Plan Administrator of a new Beneficiary Designation Form, all
Beneficiary designations previously filed shall be cancelled.  The
Plan Administrator shall be entitled to rely on the last Beneficiary Designation
Form filed by the Executive and accepted by the Plan Administrator before the
Executive’s death.

    

    4.3           Acknowledgment.  No
designation or change in designation of a Beneficiary shall be effective until
received, accepted, and acknowledged in writing by the Plan Administrator or its
designated agent.

    

    4.4           No Beneficiary
Designation.  If the Executive dies without a valid beneficiary
designation or if all designated Beneficiaries predecease the Executive, the
Executive’s spouse shall be the designated Beneficiary.  If the
Executive has no surviving spouse the benefits shall be paid to the personal
representative of the Executive’s estate.

    

    4.5           Facility of Payment. If a
benefit is payable to a minor, to a person declared incapacitated, or to a
person incapable of handling the disposition of his or her property, the Bank
may pay the benefit to the guardian, legal representative, or person having the
care or custody of the minor, incapacitated person, or incapable
person.  The Bank may require proof of incapacity, minority, or
guardianship as it may deem appropriate before distribution of the
benefit.  Distribution shall completely discharge the Bank from all
liability for the benefit.

    

    Article
5

    General
Limitations

    

    5.1           Termination with
Cause.  Despite any contrary provision of this Agreement, the
Bank shall not pay any benefit under this Agreement and this Agreement shall
terminate if Separation from Service is a Termination with Cause.

    

    5.2           Suicide or
Misstatement.  The Bank shall not pay any benefit under this
Agreement if the Executive commits suicide within two years after the date of
this Agreement or if the Executive makes any material misstatement of fact on
any application or resume provided to the Bank or on any application for
benefits provided by the Bank.

    

    5.3           Removal.  If the
Executive is removed from office or permanently prohibited from participating in
the Bank’s affairs by an order issued under section 8(e)(4) or (g)(1) of the
Federal Deposit Insurance Act, 12 U.S.C. 1818(e)(4) or (g)(1), all obligations
of the Bank under this Agreement shall terminate as of the effective date of the
order.

     

    
      
         

      

      
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    5.4           Default.  Despite
any contrary provision of this Agreement, if the Bank is in “default” or “in
danger of default,” as those terms are defined in section 3(x) of the Federal
Deposit Insurance Act, 12 U.S.C. 1813(x), all obligations under this Agreement
shall terminate.

    

    5.5           FDIC Open-Bank
Assistance.  All obligations under this Agreement shall
terminate, except to the extent determined that continuation of the contract is
necessary for the continued operation of the Bank, when the Federal Deposit
Insurance Corporation enters into an agreement to provide assistance to or on
behalf of the Bank under the authority contained in Federal Deposit Insurance
Act section 13(c).  12 U.S.C. 1823(c).  Rights of the
parties that have already vested shall not be affected by such action,
however.

    

    5.6           Covenant Not to
Compete.  Despite any contrary provision of this Agreement, the
Bank shall not pay any benefit under this Agreement and this Agreement shall
terminate if the Executive violates the covenant against competition set forth
in Article 9.

    

    Article
6

    Claims
and Review Procedures

    

    6.1           Claims Procedure.  A
person or beneficiary (“claimant”) who has not received benefits under this
Agreement that he or she believes should be paid shall make a claim for such
benefits as follows –

    

    6.1.1         Initiation – written
claim.  The claimant initiates a claim by submitting to the
Administrator a written claim for the benefits.  If the claim relates
to the contents of a notice received by the claimant, the claim must be made
within 60 days after the notice was received by the claimant.  All
other claims must be made within 180 days after the date of the event that
caused the claim to arise.  The claim must state with particularity
the determination desired by the claimant.

    

    6.1.2         Timing of Bank
response.  The Bank shall respond to the claimant within 90
days after receiving the claim.  If the Bank determines that special
circumstances require additional time for processing the claim, the Bank may
extend the response period by an additional 90 days by notifying the claimant in
writing before the end of the initial 90-day period that an additional period is
required.  The notice of extension must state the special
circumstances and the date by which the Bank expects to render its
decision.

    

    6.1.3         Notice of
decision.  If the Bank denies part or all of the claim, the
Bank shall notify the claimant in writing of the denial.  The Bank
shall write the notification in a manner calculated to be understood by the
claimant.  The notification shall set forth –

    

    
      	
               
      

            	
              6.1.3.1

            	
              the
      specific reasons for the denial,

            

    

    

    
      	
               
      

            	
              6.1.3.2

            	
              a
      reference to the specific provisions of the Agreement on which the denial
      is based,

            

    

    

    
      	
               
      

            	
              6.1.3.3

            	
              a
      description of any additional information or material necessary for the
      claimant to perfect the claim and an explanation of why it is
      needed,

            

    

     

    
      
         

      

      
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              6.1.3.4

            	
              an
      explanation of the Agreement’s review procedures and the time limits
      applicable to such procedures, and

            

    

    

    
      	
               
      

            	
              6.1.3.5

            	
              a
      statement of the claimant’s right to bring a civil action under ERISA
      section 502(a) following an adverse benefit determination on
      review.

            

    

    

    6.2           Review
Procedure.  If the Bank denies part or all of the claim, the
claimant shall have the opportunity for a full and fair review by the Bank of
the denial, as follows –

    

    6.2.1         Initiation – written
request.  To initiate the review, the claimant, within 60 days
after receiving the Bank’s notice of denial, must file with the Bank a written
request for review.

    

    6.2.2         Additional submissions – information
access.  The claimant shall then have the opportunity to submit
written comments, documents, records, and other information relating to the
claim.  The Bank shall also provide the claimant, upon request and
free of charge, reasonable access to and copies of all documents, records, and
other information relevant (as defined in applicable ERISA regulations) to the
claimant’s claim for benefits.

    

    6.2.3         Considerations on
review.  In considering the review, the Bank shall take into
account all materials and information the claimant submits relating to the
claim, without regard to whether the information was submitted or considered in
the initial benefit determination.

    

    6.2.4         Timing of Bank
response.  The Bank shall respond in writing to the claimant
within 60 days after receiving the request for review.  If the Bank
determines that special circumstances require additional time for processing the
claim, the Bank may extend the response period by an additional 60 days by
notifying the claimant in writing before the end of the initial 60-day period
that an additional period is required.  The notice of extension must
state the special circumstances and the date by which the Bank expects to render
its decision.

    

    6.2.5         Notice of
decision.  The Bank shall notify the claimant in writing of its
decision on review.  The Bank shall write the notification in a manner
calculated to be understood by the claimant.  The notification shall
set forth –

    

    
      	
               
      

            	
              6.2.5.1

            	
              the
      specific reason for the denial,

            

    

    

    
      	
               
      

            	
              6.2.5.2

            	
              a
      reference to the specific provisions of the Agreement on which the denial
      is based,

            

    

    

    
      	
               
      

            	
              6.2.5.3

            	
              a
      statement that the claimant is entitled to receive, upon request and free
      of charge, reasonable access to and copies of all documents, records, and
      other information relevant (as defined in applicable ERISA regulations) to
      the claimant’s claim for benefits,
and

            

    

    

    
      	
               
      

            	
              6.2.5.4

            	
              a
      statement of the claimant’s right to bring a civil action under ERISA
      section 502(a).

            

    

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    Article
7

    Miscellaneous

    

    7.1           Amendments and
Termination.  This Agreement may be amended solely by a written
agreement signed by the Bank and by the Executive, and except for termination
occurring under Article 5 this Agreement may be terminated solely by a written
agreement signed by the Bank and by the Executive.

    

    7.2           Binding
Effect.  This Agreement shall bind the Executive, the Bank, and
their beneficiaries, survivors, executors, successors, administrators, and
transferees.

    

    7.3           No Guarantee of
Employment.  This Agreement is not an employment policy or
contract.  It does not give the Executive the right to remain an
employee of the Bank, nor does it interfere with the Bank’s right to discharge
the Executive.  It also does not require the Executive to remain an
employee or interfere with the Executive’s right to terminate employment at any
time.

    

    7.4           Non-Transferability.  Benefits
under this Agreement may not be sold, transferred, assigned, pledged, attached,
or encumbered.

    

    7.5           Successors; Binding
Agreement.  The Bank shall require any successor (whether
direct or indirect, by purchase, merger, consolidation, or otherwise) to all or
substantially all of the business or assets of the Bank, by an assumption
agreement in form and substance satisfactory to the Executive, to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Bank would be required to perform this Agreement had no
succession occurred.

    

    7.6           Tax
Withholding.  The Bank shall withhold any taxes that are
required to be withheld from the benefits provided under this
Agreement.

    

    7.7           Applicable
Law.  This Agreement and all rights hereunder shall be governed
by the laws of the State of South Carolina, except to the extent preempted by
the laws of the United States of America.

    

    7.8           Unfunded
Arrangement.  The Executive and Beneficiary are general
unsecured creditors of the Bank for the payment of benefits under this
Agreement.  The benefits represent the mere promise by the Bank to pay
benefits.  Rights to benefits are not subject to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance, attachment, or
garnishment by creditors.  Any insurance on the Executive’s life is a
general asset of the Bank to which the Executive and Beneficiary have no
preferred or secured claim.

    

    7.9           Entire
Agreement.  This Agreement constitutes the entire agreement
between the Bank and the Executive concerning the subject matter.  No
rights are granted to the Executive under this Agreement other than those
specifically set forth.

    

    7.10         Severability.  If
any provision of this Agreement is held invalid, such invalidity shall not
affect any other provision of this Agreement not held invalid, and each such
other provision shall continue in full force and effect to the full extent
consistent with law.  If any provision of this Agreement is held
invalid in part, such invalidity shall not affect the remainder of the provision
not held invalid, and the remainder of such provision together with all other
provisions of this Agreement shall continue in full force and effect to the full
extent consistent with law.

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    7.11         Headings.  Caption
headings and subheadings herein are included solely for convenience of reference
and shall not affect the meaning or interpretation of any provision of this
Agreement.

    

    7.12         Notices.  All
notices, requests, demands and other communications hereunder shall be in
writing and shall be deemed to have been duly given if delivered by hand or
mailed, certified or registered mail, return receipt requested, with postage
prepaid, to the following addresses or to such other address as either party may
designate by like notice.  If to the Bank, notice shall be given to
the board of directors, First Reliance Bank, 2170 West Palmetto Street,
Florence, South Carolina 29501, or to such other or additional person or persons
as the Bank shall have designated to the Executive in writing.  If to
the Executive, notice shall be given to the Executive at the Executive’s address
appearing on the Bank’s records, or to such other or additional person or
persons as the Executive shall have designated to the Bank in
writing.

    

    7.13         Payment of Legal
Fees.  The Bank is aware that after a Change in Control
management of the Bank could cause or attempt to cause the Bank to refuse to
comply with its obligations under this Agreement, or could institute or cause or
attempt to cause the Bank to institute litigation seeking to have this Agreement
declared unenforceable, or could take or attempt to take other action to deny
Executive the benefits intended under this Agreement.  In these
circumstances the purpose of this Agreement would be frustrated.  The
Bank desires that the Executive not be required to incur the expenses associated
with the enforcement of rights under this Agreement, whether by litigation or
other legal action, because the cost and expense thereof would substantially
detract from the benefits intended to be granted to the Executive
hereunder.  The Bank desires that the Executive not be forced to
negotiate settlement of rights under this Agreement under threat of incurring
expenses.  Accordingly, if after a Change in Control occurs it appears
to the Executive that (x) the Bank has failed to
comply with any of its obligations under this Agreement, or (y) the Bank or any other
person has taken any action to declare this Agreement void or unenforceable, or
instituted any litigation or other legal action designed to deny, diminish, or
to recover from the Executive the benefits intended to be provided to the
Executive hereunder, the Bank irrevocably authorizes the Executive from time to
time to retain counsel of the Executive’s choice, at the Bank’s expense as
provided in this section 7.13, to represent the Executive in the initiation or
defense of any litigation or other legal action, whether by or against the Bank
or any director, officer, stockholder, or other person affiliated with the Bank,
in any jurisdiction.  Despite any existing or previous attorney-client
relationship between the Bank and any counsel chosen by the Executive under this
section 7.13, the Bank irrevocably consents to the Executive entering into an
attorney-client relationship with that counsel, and the Bank and the Executive
agree that a confidential relationship shall exist between the Executive and
that counsel.  The fees and expenses of counsel selected from time to
time by the Executive as provided in this section shall be paid or reimbursed to
the Executive by the Bank on a regular, periodic basis upon presentation by the
Executive of a statement or statements prepared by counsel in accordance with
counsel’s customary practices, up to a maximum aggregate amount of $100,000,
whether suit be brought or not, and whether or not incurred in trial,
bankruptcy, or appellate proceedings.  The Bank’s obligation to pay
the Executive’s legal fees provided by this section 7.13 operates separately
from and in addition to any legal fee reimbursement obligation the Bank may have
with the Executive under any separate employment, severance, or other agreement
between the Executive and the Bank.  Despite any contrary provision
within this Agreement however, the Bank shall not be required to pay or
reimburse the Executive’s legal expenses if doing so would violate section 18(k)
of the Federal Deposit Insurance Act [12 U.S.C. 1828(k)] and Rule 359.3 of the
Federal Deposit Insurance Corporation [12 CFR 359.3].

    

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

    Article
8

    Administration
of Agreement

    

    8.1           Plan Administrator
Duties.  This Agreement shall be administered by a Plan
Administrator consisting of the Bank’s board of directors or such committee or
person(s) as the board shall appoint.  The Executive may not be a
member of the Plan Administrator.  The Plan Administrator shall have
the discretion and authority to (x) make, amend, interpret,
and enforce all appropriate rules and regulations for the administration of this
Agreement and (y)
decide or resolve any and all questions that may arise, including
interpretations of this Agreement.

    

    8.2           Agents.  In the
administration of this Agreement the Plan Administrator may employ agents and
delegate to them such administrative duties as it sees fit (including acting
through a duly appointed representative) and may from time to time consult with
counsel, who may be counsel to the Bank.

    

    8.3           Binding Effect of
Decisions.  The decision or action of the Plan Administrator
concerning any question arising out of the administration, interpretation, and
application of the Agreement and the rules and regulations promulgated hereunder
shall be final and conclusive and binding upon all persons having any interest
in the Agreement.  No Executive or Beneficiary shall be deemed to have
any right, vested or nonvested, regarding the continued use of any previously
adopted assumptions, including but not limited to the discount rate and
calculation method described in section 1.1.

    

    8.4           Indemnity of Plan
Administrator.  The Bank shall indemnify and hold harmless the
members of the Plan Administrator against any and all claims, losses, damages,
expenses, or liabilities arising from any action or failure to act with respect
to this Agreement, except in the case of willful misconduct by the Plan
Administrator or any of its members.

    

    8.5           Bank
Information.  To enable the Plan Administrator to perform its
functions, the Bank shall supply full and timely information to the Plan
Administrator on all matters relating to the date and circumstances of the
retirement, Disability, death, or Separation from Service of the Executive and
such other pertinent information as the Plan Administrator may reasonably
require.

    

    Article
9

    Competition
After Separation from Service

    

    9.1           Covenant Not to Solicit
Employees.  The Executive agrees not to solicit the services of
any officer or employee of the Bank for one year after the Executive’s
Separation from Service.

    

    9.2           Covenant Not to
Compete.  (a)  The Executive covenants and agrees
that the Executive will not, without advance written consent of the Bank,
compete directly or indirectly with the Bank for two years after Separation from
Service, plus any period during which the Executive is in violation of this
covenant not to compete and any period during which the Bank seeks by litigation
to enforce this covenant not to compete.  For purposes of this section
–

    

    1)            the
term “compete” means

    

    (a)           providing
financial products or services on behalf of any financial institution for any
person residing in the territory,

     

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

    (b)           assisting
(other than through the performance of ministerial or clerical duties) any
financial institution in providing financial products or services to any person
residing in the territory, or

    

    (c)           inducing
or attempting to induce any person who was a customer of the Bank at the date of
the Executive’s Separation from Service to seek financial products or services
from another financial institution.

    

    2)           
the phrase “compete directly or indirectly” means –

    

    (a)           acting
as a consultant, officer, director, independent contractor, incorporator,
organizer, or employee of any financial institution in competition with the Bank
in the territory, or

    

    (b)           communicating
to such financial institution the names or addresses or any financial
information concerning any person who was a customer of the Bank at the
Executive’s Separation from Service.

    

    
      	
               
      

            	
              3)

            	
              the
      term “customer” means any person to whom the Bank is providing financial
      products or services on the date of the Executive’s Separation from
      Service.

            

    

    

    
      	
               
      

            	
              4)

            	
              the
      term “financial institution” means any bank, savings association, or bank
      or savings association holding company, or any other institution,
      including a financial institution in organization, the business of which
      is or will be engaging in activities that are financial in nature or
      incidental to such financial activities as described in section 4(k) of
      the Bank Holding Company Act of 1956, other than the Bank or any of its
      affiliated corporations.

            

    

    

    
      	
               
      

            	
              5)

            	
              “financial
      product or service” means any product or service that a financial
      institution or a financial holding company could offer by engaging in any
      activity that is financial in nature or incidental to such a financial
      activity under section 4(k) of the Bank Holding Company Act of 1956 and
      that is offered by the Bank or an affiliate on the date of the Executive’s
      Separation from Service, including but not limited to banking activities
      and activities that are closely related to and a proper incident to
      banking.

            

    

    

    
      	
               
      

            	
              6)

            	
              the
      term “person” means any individual or individuals, corporation,
      partnership, fiduciary or
association.

            

    

    

    
      	
               
      

            	
              7)

            	
              the
      term “territory” means the State of South Carolina.  Executive
      agrees to this territory since he is a senior officer with
      responsibilities over all offices and is involved in plans and decisions
      for future expansion of the Bank.

            

    

    

    (b)           If
any provision of this section or any word, phrase, clause, sentence or other
portion thereof (including, without limitation, the geographical and temporal
restrictions contained therein) is held to be unenforceable or invalid for any
reason, the unenforceable or invalid provision or portion shall be modified or
deleted so that the provisions hereof, as modified, are legal and enforceable to
the fullest extent permitted under applicable law.

     

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

    9.3           Remedies.  Because
of the unique character of the services to be rendered by the Executive
hereunder, the Executive understands that the Bank would not have an adequate
remedy at law for the material breach or threatened breach by the Executive of
any one or more of the Executive’s covenants set forth in this Article
9.  Accordingly, the Executive agrees that the Bank’s remedies for a
material breach or threatened breach of this Article 9 include but are not
limited to (x)
forfeiture of any money representing accrued salary, contingent payments, or
other fringe benefits due and payable to the Executive, (y) forfeiture of any benefits
under this Agreement, and (z) a suit in equity by the
Bank to enjoin the Executive from the breach or threatened breach of such
covenants.  The Executive hereby waives the claim or defense that an
adequate remedy at law is available to the Bank and the Executive agrees not to
urge in any such action the claim or defense that an adequate remedy at law
exists.  Nothing herein shall be construed to prohibit the Bank from
pursuing any other remedies for the breach or threatened breach.

    

    9.4           Article 9 Survives
Termination.  The rights and obligations set forth in this
Article 9 shall survive termination of this Agreement.

    

    9.5           Article 9 Not Affected by Other
Agreements.  This Article 9 shall apply to this Agreement and
benefits received thereunder regardless of any other covenants not to compete
contained in any employment agreement or any other agreement between Executive
and the Bank or between Executive and First Reliance Bancshares,
Inc.

    

    

    In Witness
Whereof, the Executive and a duly authorized officer of the Bank have
executed this Salary Continuation Agreement as of the date first written
above.

    

    
      	
              Executive:

            	 
      	
              Bank:

            
	 
      	 
      	
              First
      Reliance Bank

            
	 
      	 
      	 
      	 
      
	
              

                /s/
      Craig Evans

              

            	 
      	
              By:

            	
              

                /s/
      F.R. Saunders

              

            
	
              Craig
      Evans

            	 
      	 
      	
              F.R.
      Saunders

            
	 
      	 
      	 
      	
              Its:
      President and Chief Executive
Officer

            

    

    

    

    
      	 
      	
              And
      By:

            	
              

                /s/
      Leonard A. Hoogenboom

              

            
	 
      	 
      	
              Leonard
      A. Hoogenboom

            
	 
      	
              Its:

            	
              Chairman
      of the Board

            

    

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

    Beneficiary
Designation

    First
Reliance Bank

    Salary
Continuation Agreement

    

    I, Craig Evans, designate the following
as beneficiary of any death benefits under this Salary Continuation Agreement
–

    

    
      	
              Primary:

            	
               

            
	 
      	 
      
	
              .

            
	 
      	 
      
	
              Contingent:

            	
               

            
	 
      	 
      
	
              .

            

    

    

    Note:  To name a trust as
beneficiary, please provide the name of the trustee(s) and the exact name and
date of the trust agreement.

    

    I understand that I may change these
beneficiary designations by filing a new written designation with the
Bank.  I further understand that the designations will be
automatically revoked if the beneficiary predeceases me, or if I have named my
spouse as beneficiary and our marriage is subsequently dissolved.

    

    
      	
              Signature:

            	
              

                 

              

            	 
	 
      	
              Craig
      Evans

            	 
	 
      	 
      	 
	
              Date:

            	
                                                          ,
      2008

            	 

    

    

    

    Accepted by the Bank this                     
 day of                           
, 2008

    

    
      	
              By:

            	
               

            	 
	 
      	 
      	 
	
              Print
      Name:

            	
               

            	 
	 
      	 
      	 
	
              Title:

            	
               

            	 

    

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

    Schedule
A

    First
Reliance Bank

    Salary
Continuation Agreement

    

    Craig
Evans

    
      	
              Plan
      Year

            	 
      	
              Plan
      Year ending December 31,

            	 
      	
              age
      at Plan Year end

            	 
      	
              Accrual
      Balance @ 6.25% (1)

            	 
      	
              Early
      Termination annual benefit payable at Normal Retirement Age
      (2)

            	 
      	
              Disability
      annual benefit payable at Normal Retirement Age (2)

            	 
      	
              Change-in-Control
      benefit payable in a lump sum (3)

            
	
              1

            	 
      	
              2009

            	 
      	
              47

            	 
      	
              $15,553

            	 
      	
              0

            	 
      	
              $4,739

            	 
      	
              $15,553

            
	
              2

            	 
      	
              2010

            	 
      	
              48

            	 
      	
              $33,107

            	 
      	
              0

            	 
      	
              $9,479

            	 
      	
              $33,107

            
	
              3

            	 
      	
              2011

            	 
      	
              49

            	 
      	
              $52,855

            	 
      	
              0

            	 
      	
              $14,218

            	 
      	
              $52,855

            
	
              4

            	 
      	
              2012

            	 
      	
              50

            	 
      	
              $75,007

            	 
      	
              0

            	 
      	
              $18,957

            	 
      	
              $75,007

            
	
              5

            	 
      	
              2013

            	 
      	
              51

            	 
      	
              $99,789

            	 
      	
              0

            	 
      	
              $23,697

            	 
      	
              $99,789

            
	
              6

            	 
      	
              2014

            	 
      	
              52

            	 
      	
              $127,449

            	 
      	
              0

            	 
      	
              $28,436

            	 
      	
              $127,449

            
	
              7

            	 
      	
              2015

            	 
      	
              53

            	 
      	
              $158,255

            	 
      	
              0

            	 
      	
              $33,175

            	 
      	
              $158,255

            
	
              8

            	 
      	
              2016

            	 
      	
              54

            	 
      	
              $192,496

            	 
      	
              0

            	 
      	
              $37,915

            	 
      	
              $192,496

            
	
              9

            	 
      	
              2017

            	 
      	
              55

            	 
      	
              $230,488

            	 
      	
              0

            	 
      	
              $42,654

            	 
      	
              $230,488

            
	
              10

            	 
      	
              2018

            	 
      	
              56

            	 
      	
              $272,570

            	 
      	
              $47,394

            	 
      	
              $47,394

            	 
      	
              $272,570

            
	
              11

            	 
      	
              2019

            	 
      	
              57

            	 
      	
              $319,113

            	 
      	
              $52,133

            	 
      	
              $52,133

            	 
      	
              $319,113

            
	
              12

            	 
      	
              2020

            	 
      	
              58

            	 
      	
              $370,515

            	 
      	
              $56,872

            	 
      	
              $56,872

            	 
      	
              $370,515

            
	
              13

            	 
      	
              2021

            	 
      	
              59

            	 
      	
              $427,209

            	 
      	
              $61,612

            	 
      	
              $61,612

            	 
      	
              $427,209

            
	
              14

            	 
      	
              2022

            	 
      	
              60

            	 
      	
              $489,664

            	 
      	
              $66,351

            	 
      	
              $66,351

            	 
      	
              $489,664

            
	
              15

            	 
      	
              2023

            	 
      	
              61

            	 
      	
              $558,386

            	 
      	
              $71,090

            	 
      	
              $71,090

            	 
      	
              $558,386

            
	
              16

            	 
      	
              2024

            	 
      	
              62

            	 
      	
              $633,923

            	 
      	
              $75,830

            	 
      	
              $75,830

            	 
      	
              $633,923

            
	
              17

            	 
      	
              2025

            	 
      	
              63

            	 
      	
              $716,866

            	 
      	
              $80,569

            	 
      	
              $80,569

            	 
      	
              $716,866

            
	
              18

            	 
      	
              2026

            	 
      	
              64

            	 
      	
              $807,857

            	 
      	
              $85,308

            	 
      	
              $85,308

            	 
      	
              $807,857

            
	
              19

            	 
      	
              2027

            	 
      	
              65

            	 
      	
              $856,585
      (4)

            	 
      	
              $87,678

            	 
      	
              $87,678

            	 
      	
              $856,585

            

    

    

    

    (1)           Calculations
are approximations.  Benefit calculations are based on prior year-end
accrual balances for illustrative purposes.  The accrual balance
reflects payment at the beginning of each month, beginning July 1,
2027.

    

    (2)           The
Early Termination and Disability benefits are calculated as the annual amount
that fully amortizes the Accrual Balance existing at the end of the month
immediately before the month in which Separation from Service occurs, amortizing
that Accrual Balance over 15 years and taking into account interest at the
discount rate or rates established by the Plan Administrator.  Using a
standard discount rate, Early Termination and Disability benefits are shown for
illustrative purposes only.  The Early Termination and Disability
benefits shown assume the Executive’s Separation from Service occurs more than
six months before the Executive’s Normal Retirement Age and that the Early
Termination benefit and the Disability benefit therefore become payable
beginning in the month after the Executive attains the Normal Retirement
Age.

    
      
         

      

      
        16

        
          

        

      

      
         

      

    

    

    The Executive is entitled to no Early
Termination benefit unless (x) the Executive has attained
age 55 when Separation from Service occurs and (y) the Executive has at least
ten consecutive years of continuous employment with the Bank when Separation
from Service occurs.  For purposes of illustration only, this Schedule
A assumes the Executive has had ten consecutive years of continuous employment
with the Bank when the Executive attains age 55.  The Executive’s
service with the Bank actually began on June 2, 2008.  Accordingly,
the Executive is entitled to no Early Termination benefit unless Separation from
Service occurs ten or more years after that date.

    

    (3)           The
Change-in-Control benefit is the Accrual Balance when Separation from Service
occurs if (x)
Separation from Service occurs within 24 months after a Change in Control and
(y) Separation from
Service is an involuntary termination without Cause or a Voluntary termination
with Good Reason.  Shown for illustrative purposes only, the
Change-in-Control benefit assumes the Executive’s Separation from Service occurs
on the day after the plan year end.

    

    (4)           The
Executive’s date of birth is June 1, 1962.  The Executive attains
Normal Retirement Age on June 1, 2027.

    

    If there is a contradiction between the
terms of the Agreement and Schedule A concerning the actual amount of a
particular benefit amount due the Executive under sections 2.1, 2.2, 2.3, or 2.4
of the Agreement, the actual amount of the benefit determined under the
Agreement shall control.  If the Plan Administrator changes the
discount rate employed for purposes of calculating the Accrual Balance, the Plan
Administrator shall prepare or cause to be prepared a revised Schedule A, which
shall supersede and replace any and all Schedules A previously prepared under or
attached to the Agreement.

     

    
      
         

      

      
        17Unassociated Document

     

    
      SHENGKAI
INNOVATIONS, INC.

      2010
INCENTIVE STOCK PLAN

      
        

      

      
        

        

      

      

      This
Shengkai Innovations, Inc. 2010
Incentive Stock Plan (the "Plan") is designed to retain
directors, executives and selected employees and consultants and reward them for
making major contributions to the success of the Company.  These
objectives are accomplished by making long-term incentive awards under the Plan
thereby providing Participants with a proprietary interest in the growth and
performance of the Company.

      

      
        	
                1.  

              	
                Definitions.

              

      

      

      
        	
                (a)  

              	
                "Board" - The Board of
      Directors of the Company.

              

      

      

      
        	
                (b)  

              	
                "Code" - The Internal
      Revenue Code of 1986, as amended from time to
  time.

              

      

      

      
        	
                (c)  

              	
                "Committee" - The
      Compensation Committee of the Company's Board, or such other committee of
      the Board that is designated by the Board to administer the Plan, composed
      of not less than two members of the Board all of whom are disinterested
      persons, as contemplated by Rule 16b-3 ("Rule 16b-3") promulgated
      under the Securities Exchange Act of 1934, as amended (the "Exchange
      Act").

              

      

      

      
        	
                (d)  

              	
                "Company" – Shengkai
      Innovations, Inc. and its subsidiaries, including subsidiaries of
      subsidiaries.

              

      

      

      
        	
                (e)  

              	
                "Exchange Act" - The Securities
      Exchange Act of 1934, as amended from time to
  time.

              

      

      

      
        	
                (f)  

              	
                "Fair Market Value" - The
      fair market value of the Company's issued and outstanding Stock as
      determined in good faith by the Board or
  Committee.

              

      

      

      
        	
                (g)  

              	
                "Florida
      Securities
      Rules" – Florida Business Corporation
  Act.

              

      

      

      
        	
                (h)  

              	
                "Grant" - The grant of
      any form of stock option, stock award, or stock purchase offer, whether
      granted singly, in combination or in tandem, to a Participant pursuant to
      such terms, conditions and limitations as the Committee may establish in
      order to fulfill the objectives of the
Plan.

              

      

      

      
        	
                (i)  

              	
                "Grant Agreement" - An
      agreement between the Company and a Participant that sets forth the terms,
      conditions and limitations applicable to a
  Grant.

              

      

      

      
        	
                (j)  

              	
                "Option" - Either an
      Incentive Stock Option, in accordance with Section 422 of the Code, or a
      Nonstatutory Option, to purchase the Company's Stock that may be awarded
      to a Participant under the Plan. A Participant who receives an award of an
      Option shall be referred to as an "Optionee."

              

      

      

      
        	
                (k)  

              	
                "Participant" - A
      director, officer, employee or consultant of the Company to whom an Award
      has been made under the Plan.

              

      

      

      
        	
                (l)  

              	
                "Restricted Stock Purchase
      Offer" - A Grant of the right to purchase a specified number of
      shares of Stock pursuant to a written agreement issued under the
      Plan.

              

      

      

      
        	
                (m)  

              	
                "Securities Act" - The
      Securities Act of 1933, as amended from time to
  time.

              

      

      

      
        	
                (n)  

              	
                "Stock" - Authorized and
      issued or unissued shares of common stock of the
  Company.

              

      

      

      
        	
                (o)  

              	
                "Stock Award" - A Grant
      made under the Plan in stock or denominated in units of stock for which
      the Participant is not obligated to pay additional
      consideration.

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      
        	
                2.  

              	
                Administration.

              

      

      

            The
Plan shall be administered by the Board, provided however, that the Board may
delegate such administration to the Committee. Subject to the provisions of the
Plan, the Board and/or the Committee shall have authority to (a) grant, in its
discretion, Incentive Stock Options in accordance with Section 422 of the Code,
or Nonstatutory Options, Stock Awards or Restricted Stock Purchase Offers; (b)
determine in good faith the fair market value of the Stock covered by any Grant;
(c) determine which eligible persons shall receive Grants and the number of
shares, restrictions, terms and conditions to be included in such Grants; (d)
construe and interpret the Plan; (e) promulgate, amend and
rescind  rules and regulations relating to its administration, and
correct defects, omissions and inconsistencies in the Plan or any Grant; (f)
consistent with the Plan and with the consent of the Participant, as
appropriate, amend any outstanding Grant or amend the exercise date or dates
thereof; (g) determine the duration and purpose of leaves of absence which may
be granted to Participants without constituting termination of their employment
for the purpose of the Plan or any Grant; and (h) make all other determinations
necessary or advisable for the Plan's administration. The interpretation and
construction by the Board of any provisions of the Plan or selection of
Participants shall be conclusive and final. No member of the Board or the
Committee shall be liable for any action or determination made in good faith
with respect to the Plan or any Grant made thereunder.

      

      
        	
                3.  

              	
                Eligibility.

              

      

      

      
        	
                (a)  

              	
                General:  The
      persons who shall be eligible to receive Grants shall be directors,
      officers, employees or consultants to the Company. The term consultant
      shall mean any person, other than an employee, who is engaged by the
      Company to render services and is compensated for such services. An
      Optionee may hold more than one Option. Any issuance of a Grant to an
      officer or director of the Company subsequent to the first registration of
      any of the securities of the Company under the Exchange Act shall comply
      with the requirements of Rule
16b-3.

              

      

      

      
        	
                (b)  

              	
                Incentive Stock
      Options:  Incentive Stock Options may only be issued to
      employees of the Company. Incentive Stock Options may be granted to
      officers or directors, provided they are also employees of the Company.
      Payment of a director's fee shall not be sufficient to constitute
      employment by the Company.

              

      

      

            The
Company shall not grant an Incentive Stock Option under the Plan to any employee
if such Grant would result in such employee holding the right to exercise for
the first time in any one calendar year, under all Incentive Stock Options
granted under the Plan or any other plan maintained by the Company, with respect
to shares of Stock having an aggregate Fair Market Value, determined as of the
date of the Option is granted, in excess of $100,000. Should it be determined
that an Incentive Stock Option granted under the Plan exceeds such maximum for
any reason other than a failure in good faith to value the Stock subject to such
option, the excess portion of such option shall be considered a Nonstatutory
Option. To the extent the employee holds two (2) or more such Options which
become exercisable for the first time in the same calendar year, the foregoing
limitation on the exercisability of such Option as Incentive Stock Options under
the Federal tax laws shall be applied on the basis of the order in which such
Options are granted. If, for any reason, an entire Option does not qualify as an
Incentive Stock Option by reason of exceeding such maximum, such Option shall be
considered a Nonstatutory Option.

      

      
        	
                (c)  

              	
                Nonstatutory
      Option: The provisions of the foregoing Section 3(b) shall not
      apply to any Option designated as a "Nonstatutory Option" or
      which sets forth the intention of the parties that the Option be a
      Nonstatutory Option.

              

      

      

      
        	
                (d)  

              	
                Stock Awards and
      Restricted Stock Purchase Offers:  The provisions of this
      Section 3 shall not apply to any Stock Award or Restricted Stock Purchase
      Offer under the Plan.

              

      

      

      
        	
                4.  

              	
                Stock.

              

      

      

      
        	
                (a)  

              	
                Authorized
      Stock: Stock subject to Grants may be either unissued or reacquired
      Stock.

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      
        	
                (b)  

              	
                Number of
      Shares:  Subject to adjustment as provided in Section
      5(i) of the Plan, the total number of shares of Stock which may be
      purchased or granted directly by Options, Stock Awards or Restricted Stock
      Purchase Offers, or purchased indirectly through exercise of Options
      granted under the Plan shall not exceed Two Million Two Hundred Thousand
      Two Hundred Fifty (2,211,250). If any Grant shall for any reason terminate
      or expire, any shares allocated thereto but remaining unpurchased upon
      such expiration or termination shall again be available for Grants with
      respect thereto under the Plan as though no Grant had previously occurred
      with respect to such shares. Any shares of Stock issued pursuant to a
      Grant and repurchased pursuant to the terms thereof shall be available for
      future Grants as though not previously covered by a
  Grant.

              

      

      

      
        	
                (c)  

              	
                Reservation of
      Shares:  The Company shall reserve and keep available at
      all times during the term of the Plan such number of shares as shall be
      sufficient to satisfy the requirements of the Plan. If, after reasonable
      efforts, which efforts shall not include the registration of the Plan or
      Grants under the Securities Act, the Company is unable to obtain authority
      from any applicable regulatory body, which authorization is deemed
      necessary by legal counsel for the Company for the lawful issuance of
      shares hereunder, the Company shall be relieved of any liability with
      respect to its failure to issue and sell the shares for which such
      requisite authority was so deemed necessary unless and until such
      authority is obtained.

              

      

      

      
        	
                (d)  

              	
                Application of
      Funds: The proceeds received by the Company from the sale of Stock
      pursuant to the exercise of Options or rights under Stock Purchase
      Agreements will be used for general corporate
  purposes.

              

      

      

      
        	
                (e)  

              	
                No Obligation to
      Exercise: The issuance of a Grant shall impose no obligation upon
      the Participant to exercise any rights under such
  Grant.

              

      

      

      
        	
                5.  

              	
                Terms
      and Conditions of Options.

              

      

      

      
        	 	
                      Options
      granted hereunder shall be evidenced by agreements between the Company and
      the respective Optionees, in such form and substance as the Board or
      Committee shall from time to time approve. The form of Incentive Stock
      Option Agreement attached hereto as Exhibit A and
      the three forms of a Nonstatutory Stock Option Agreement for employees,
      for directors and for consultants, attached hereto as Exhibit B-1,
      Exhibit
      B-2 and
      Exhibit B-3, respectively, shall be deemed to be approved by the
      Board. Option agreements need not be identical, and in each case may
      include such provisions as the Board or Committee may determine, but all
      such agreements shall be subject to and limited by the following terms and
      conditions:

              

      

      

      
        	
                (a)  

              	
                Number of
      Shares: Each Option shall state the number of shares to which it
      pertains.

              

      

      

      
        	
                (b)  

              	
                Exercise Price:
      Each Option shall state the exercise price, which shall be determined as
      follows:

              

      

      

      
        	
                (i)  

              	
                Any
      Incentive Stock Option granted to a person who at the time the Option is
      granted owns (or is deemed to own pursuant to Section 424(d) of the Code)
      stock possessing more than ten percent (10%) of the total combined voting
      power or value of all classes of stock of the Company ("Ten Percent Holder")
      shall have an exercise price of no less than 110% of Fair Market Value as
      of the date of grant; and

              

      

      

      
        	
                (ii)  

              	
                Incentive
      Stock Options granted to a person who at the time the Option is granted is
      not a Ten Percent Holder shall have an exercise price of no less than 100%
      of Fair Market Value as of the date of
grant.

              

      

      

            For
the purposes of this Section 5(b), the Fair Market Value shall be as determined
by the Board in good faith, which determination shall be conclusive and binding;
provided however, that if there is a public market for such Stock, the Fair
Market Value per share shall be the average of the bid and asked prices (or the
closing price if such stock is listed on the NASDAQ National Market System or
Small Cap Issue Market) on the date of grant of the Option, or if listed on a
stock exchange, the closing price on such exchange on such date of
grant.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      
        	
                (c)  

              	
                Medium and Time of
      Payment:  The exercise price shall become immediately due
      upon exercise of the Option and shall be paid in cash or check made
      payable to the Company. Should the Company's outstanding Stock be
      registered under Section 12(g) of the Exchange Act at the time the Option
      is exercised, then the exercise price may also be paid as
      follows:

              

      

      

      
        	
                (i)  

              	
                in
      shares of Stock held by the Optionee for the requisite period necessary to
      avoid a charge to the Company's earnings for financial reporting purposes
      and valued at Fair Market Value on the exercise date,
  or

              

      

      

      
        	
                (ii)  

              	
                through
      a special sale and remittance procedure pursuant to which the Optionee
      shall concurrently provide irrevocable written instructions (a) to a
      Company designated brokerage firm to effect the immediate sale of the
      purchased shares and remit to the Company, out of the sale proceeds
      available on the settlement date, sufficient funds to cover the aggregate
      exercise price payable for the purchased shares plus all applicable
      Federal, state and local income and employment taxes required to be
      withheld by the Company by reason of such purchase and (b) to the Company
      to deliver the certificates for the purchased shares directly to such
      brokerage firm in order to complete the sale
  transaction.

              

      

      

            At
the discretion of the Board, exercisable either at the time of Option grant or
of Option exercise, the exercise price may also be paid (i) by Optionee's
delivery of a promissory note in form and substance satisfactory to the Company
and permissible under the Securities Rules of the State of Florida and bearing
interest at a rate determined by the Board in its sole discretion, but in no
event less than the minimum rate of interest required to avoid the imputation of
compensation income to the Optionee under the Federal tax laws, or (ii) in such
other form of consideration permitted by the Florida corporations law as may be
acceptable to the Board.

      

      
        	
                (d)  

              	
                Term and Exercise of
      Options:

              

      

      

      
        	
                 
      

              	
                      Any
      Option granted to an employee, consultant or director of the Company shall
      become exercisable over a period of no longer than ten (10) years. Unless
      otherwise specified by the Board or the Committee in the resolution
      authorizing such Option, the date of grant of an Option shall be deemed to
      be the date upon which the Board or the Committee authorizes the granting
      of such Option. Each Option shall be exercisable to the nearest whole
      share, in installments or otherwise, as the respective Option agreements
      may provide. During the lifetime of an Optionee, the Option shall be
      exercisable only by the Optionee and shall not be assignable or
      transferable by the Optionee, and no other person shall acquire any rights
      therein. To the extent not exercised, installments (if more than one)
      shall accumulate, but shall be exercisable, in whole or in part, only
      during the period for exercise as stated in the Option agreement, whether
      or not other installments are then
exercisable.

              

      

      

      
        	
                (e)  

              	
                Termination of Status
      as Employee, Consultant or Director:  If Optionee's
      status as an employee shall terminate for any reason other than Optionee's
      disability or death, then Optionee (or if the Optionee shall die after
      such termination, but prior to exercise, Optionee's personal
      representative or the person entitled to succeed to the Option) shall have
      the right to exercise the portions of any of Optionee's Incentive Stock
      Options which were exercisable as of the date of such termination, in
      whole or in part, not less than 30 days nor more than three (3) months
      after such termination (or, in the event of "termination for good
      cause" as that term is defined in Florida case law related thereto,
      or by the terms of the Plan or the Option Agreement or an employment
      agreement, the Option shall automatically terminate as of the termination
      of employment as to all shares covered by the
  Option).

              

      

      

            With
respect to Nonstatutory Options granted to employees, directors or consultants,
the Board may specify such period for exercise, not less than 30 days after such
termination (except that in the case of "termination for cause" or
removal of a director, the Option shall automatically terminate as of the
termination of employment or services as to shares covered by the Option,
following termination of employment or services as the Board deems reasonable
and appropriate. The Option may be exercised only with respect to installments
that the Optionee could have exercised at the date of termination of employment
or services. Nothing contained herein or in any Option granted pursuant hereto
shall be construed to affect or restrict in any way the right of the Company to
terminate the employment or services of an Optionee with or without
cause.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      
        	
                (f)  

              	
                Disability of
      Optionee:  If an Optionee is disabled (within the meaning
      of Section 22(e)(3) of the Code) at the time of termination, the three (3)
      month period set forth in Section 5(e) shall be a period, as determined by
      the Board and set forth in the Option, of not less than six months nor
      more than one year after such
termination.

              

      

      

      
        	
                (g)  

              	
                Death of
      Optionee:  If an Optionee dies while employed by, engaged
      as a consultant to, or serving as a Director of the Company, the portion
      of such Optionee's Option which was exercisable at the date of death may
      be exercised, in whole or in part, by the estate of the decedent or by a
      person succeeding to the right to exercise such Option at any time within
      (i) a period, as determined by the Board and set forth in the Option, of
      not less than six (6) months nor more than one (1) year after Optionee's
      death, which period shall not be more, in the case of a Nonstatutory
      Option, than the period for exercise following termination of employment
      or services, or (ii) during the remaining term of the Option, whichever is
      the lesser. The Option may be so exercised only with respect to
      installments exercisable at the time of Optionee's death and not
      previously exercised by the
Optionee.

              

      

      

      
        	
                (h)  

              	
                Nontransferability of
      Option:  No Option shall be transferable by the Optionee,
      except by will or by the laws of descent and
  distribution.

              

      

      

      
        	
                (i)  

              	
                Recapitalization:  Subject
      to any required action of shareholders, the number of shares of Stock
      covered by each outstanding Option, and the exercise price per share
      thereof set forth in each such Option, shall be proportionately adjusted
      for any increase or decrease in the number of issued shares of Stock of
      the Company resulting from a stock split, stock dividend, combination,
      subdivision or reclassification of shares, or the payment of a stock
      dividend, or any other increase or decrease in the number of such shares
      affected without receipt of consideration by the Company; provided,
      however, the conversion of any convertible securities of the Company shall
      not be deemed to have been "effected without receipt of
      consideration" by the
Company.

              

      

      

            In
the event of a proposed dissolution or liquidation of the Company, a merger or
consolidation in which the Company is not the surviving entity, or a sale of all
or substantially all of the assets or capital stock of the Company
(collectively, a "Reorganization"), unless
otherwise provided by the Board, this Option shall terminate immediately prior
to such date as is determined by the Board, which date shall be no later than
the consummation of such Reorganization.  In such event, if the entity
which shall be the surviving entity does not tender to Optionee an offer, for
which it has no obligation to do so, to substitute for any unexercised Option a
stock option or capital stock of such surviving of such surviving entity, as
applicable, which on an equitable basis shall provide the Optionee with
substantially the same economic benefit as such unexercised Option, then the
Board may grant to such Optionee, in its sole and absolute discretion and
without obligation, the right for a period commencing thirty (30) days prior to
and ending immediately prior to the date determined by the Board pursuant hereto
for termination of the Option or during the remaining term of the Option,
whichever is the lesser, to exercise any unexpired Option or Options without
regard to the installment provisions of Paragraph 6(d) of the Plan; provided,
that any such right granted shall be granted to all Optionees not receiving an
offer to receive substitute options on a consistent basis, and provided further,
that any such exercise shall be subject to the consummation of such
Reorganization.

      

            Subject
to any required action of shareholders, if the Company shall be the surviving
entity in any merger or consolidation, each outstanding Option thereafter shall
pertain to and apply to the securities to which a holder of shares of Stock
equal to the shares subject to the Option would have been entitled by reason of
such merger or consolidation.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

            In
the event of a change in the Stock of the Company as presently constituted,
which is limited to a change of all of its authorized shares without par value
into the same number of shares with a par value, the shares resulting from any
such change shall be deemed to be the Stock within the meaning of the
Plan.

      

            To
the extent that the foregoing adjustments relate to stock or securities of the
Company, such adjustments shall be made by the Board, whose determination in
that respect shall be final, binding and conclusive. Except as expressly
provided in this Section 5(i), the Optionee shall have no rights by reason of
any subdivision or consolidation of shares of stock of any class or the payment
of any stock dividend or any other increase or decrease in the number of shares
of stock of any class, and the number or price of shares of Stock subject to any
Option shall not be affected by, and no adjustment shall be made by reason of,
any dissolution, liquidation, merger, consolidation or sale of assets or capital
stock, or any issue by the Company of shares of stock of any class or securities
convertible into shares of stock of any class.

      

            The
Grant of an Option pursuant to the Plan shall not affect in any way the right or
power of the Company to make any adjustments, reclassifications, reorganizations
or changes in its capital or business structure or to merge, consolidate,
dissolve, or liquidate or to sell or transfer all or any part of its business or
assets.

      

      
        	
                (j)  

              	
                Rights as a
      Shareholder:  An Optionee shall have no rights as a
      shareholder with respect to any shares covered by an Option until the
      effective date of the issuance of the shares following exercise of such
      Option by Optionee. No adjustment shall be made for dividends (ordinary or
      extraordinary, whether in cash, securities or other property) or
      distributions or other rights for which the record date is prior to the
      date such stock certificate is issued, except as expressly provided in
      Section 5(i) hereof.

              

      

      

      
        	
                (k)  

              	
                Modification,
      Acceleration, Extension, and Renewal of Options:  Subject
      to the terms and conditions and within the limitations of the Plan, the
      Board may modify an Option, or, once an Option is exercisable, accelerate
      the rate at which it may be exercised, and may extend or renew outstanding
      Options granted under the Plan or accept the surrender of outstanding
      Options (to the extent not theretofore exercised) and authorize the
      granting of new Options in substitution for such Options, provided such
      action is permissible under Section 422 of the Code and the Florida
      Securities Rules. Notwithstanding the provisions of this Section 5(k),
      however, no modification of an Option shall, without the consent of the
      Optionee, alter to the Optionee's detriment or impair any rights or
      obligations under any Option theretofore granted under the
      Plan.

              

      

      

      
        	
                (l)  

              	
                Exercise Before
      Exercise Date:  At the discretion of the Board, the
      Option may, but need not, include a provision whereby the Optionee may
      elect to exercise all or any portion of the Option prior to the stated
      exercise date of the Option or any installment thereof. Any shares so
      purchased prior to the stated exercise date shall be subject to repurchase
      by the Company upon termination of Optionee's employment as contemplated
      by Section 5(n) hereof prior to the exercise date stated in the Option and
      such other restrictions and conditions as the Board or Committee may deem
      advisable.

              

      

      

      
        	
                (m)  

              	
                Other
      Provisions:  The Option agreements authorized under the
      Plan shall contain such other provisions, including, without limitation,
      restrictions upon the exercise of the Options, as the Board or the
      Committee shall deem advisable. Shares shall not be issued pursuant to the
      exercise of an Option, if the exercise of such Option or the issuance of
      shares thereunder would violate, in the opinion of legal counsel for the
      Company, the provisions of any applicable law or the rules or regulations
      of any applicable governmental or administrative agency or body, such as
      the Code, the Securities Act, the Exchange Act, the Florida Securities
      Rules, Florida corporation law, and the rules promulgated under the
      foregoing or the rules and regulations of any exchange upon which the
      shares of the Company are listed. Without limiting the generality of the
      foregoing, the exercise of each Option shall be subject to the condition
      that if at any time the Company shall determine that (i) the satisfaction
      of withholding tax or other similar liabilities, or (ii) the listing,
      registration or qualification of any shares covered by such exercise upon
      any securities exchange or under any state or federal law, or (iii) the
      consent or approval of any regulatory body, or (iv) the perfection of any
      exemption from any such withholding, listing, registration, qualification,
      consent or approval is necessary or desirable in connection with such
      exercise or the issuance of shares thereunder, then in any such event,
      such exercise shall not be effective unless such withholding, listing
      registration, qualification, consent, approval or exemption shall have
      been effected, obtained or perfected free of any conditions not acceptable
      to the Company.

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      
        	
                (n)  

              	
                Repurchase
      Agreement:  The Board may, in its discretion, require as
      a condition to the Grant of an Option hereunder, that an Optionee execute
      an agreement with the Company, in form and substance satisfactory to the
      Board in its discretion ("Repurchase Agreement"),
      (i) restricting the Optionee's right to transfer shares purchased under
      such Option without first offering such shares to the Company or another
      shareholder of the Company upon the same terms and conditions as provided
      therein; and (ii) providing that upon termination of Optionee's employment
      with the Company, for any reason, the Company (or another shareholder of
      the Company, as provided in the Repurchase Agreement) shall have the right
      at its discretion (or the discretion of such other shareholders) to
      purchase and/or redeem all such shares owned by the Optionee on the date
      of termination of his or her employment at a price equal to: (A) the fair
      value of such shares as of such date of termination; or (B) if such
      repurchase right lapses at 20% of the number of shares per year, the
      original purchase price of such shares, and upon terms of payment
      permissible under the Florida Securities Rules; provided that in the case
      of Options or Stock Awards granted to officers, directors, consultants or
      affiliates of the Company, such repurchase provisions may be subject to
      additional or greater restrictions as determined by the Board or
      Committee.

              

      

      

      
        	
                6.  

              	
                Stock
      Awards and Restricted Stock Purchase
Offers.

              

      

      

      
        	
                (a)  

              	
                Types of
      Grants.

              

      

      

      
        	
                (i)  

              	
                Stock
      Award.  All or part of any Stock Award under the Plan may
      be subject to conditions established by the Board or the Committee, and
      set forth in the Stock Award Agreement, which may include, but are not
      limited to, continuous service with the Company, achievement of specific
      business objectives, increases in specified indices, attaining growth
      rates and other comparable measurements of Company performance. Such
      Awards may be based on Fair Market Value or other specified valuation. All
      Stock Awards will be made pursuant to the execution of a Stock Award
      Agreement substantially in the form attached hereto as Exhibit
      C.

              

      

      

      
        	
                (ii)  

              	
                Restricted Stock
      Purchase Offer.  A Grant of a Restricted Stock Purchase
      Offer under the Plan shall be subject to such (i) vesting contingencies
      related to the Participant's continued association with the Company for a
      specified time and (ii) other specified conditions as the Board or
      Committee shall determine, in their sole discretion, consistent with the
      provisions of the Plan. All Restricted Stock Purchase Offers shall be made
      pursuant to a Restricted Stock Purchase Offer substantially in the form
      attached hereto as Exhibit
      D.

              

      

      

      
        	
                (b)  

              	
                Conditions and
      Restrictions.  Shares of Stock which Participants may
      receive as a Stock Award under a Stock Award Agreement or Restricted Stock
      Purchase Offer under a Restricted Stock Purchase Offer may include such
      restrictions as the Board or Committee, as applicable, shall determine,
      including restrictions on transfer, repurchase rights, right of first
      refusal, and forfeiture provisions. When transfer of Stock is so
      restricted or subject to forfeiture provisions it is referred to as "Restricted Stock".
      Further, with Board or Committee approval, Stock Awards or Restricted
      Stock Purchase Offers may be deferred, either in the form of installments
      or a future lump sum distribution. The Board or Committee may permit
      selected Participants to elect to defer distributions of Stock Awards or
      Restricted Stock Purchase Offers in accordance with procedures established
      by the Board or Committee to assure that such deferrals comply with
      applicable requirements of the Code including, at the choice of
      Participants, the capability to make further deferrals for distribution
      after retirement. Any deferred distribution, whether elected by the
      Participant or specified by the Stock Award Agreement, Restricted Stock
      Purchase Offers or by the Board or Committee, may require the payment be
      forfeited in accordance with the provisions of Section 6(c). Dividends or
      dividend equivalent rights may be extended to and made part of any Stock
      Award or Restricted Stock Purchase Offers denominated in Stock or units of
      Stock, subject to such terms, conditions and restrictions as the Board or
      Committee may establish.

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      
        	
                (c)  

              	
                Cancellation and
      Rescission of Grants.  Unless the Stock Award Agreement
      or Restricted Stock Purchase Offer specifies otherwise, the Board or
      Committee, as applicable, may cancel any unexpired, unpaid, or deferred
      Grants at any time if the Participant is not in compliance with all other
      applicable provisions of the Stock Award Agreement or Restricted Stock
      Purchase Offer, the Plan and with the following
  conditions:

              

      

      

      
        	
                (i)  

              	
                A
      Participant shall not render services for any organization or engage
      directly or indirectly in any business which, in the judgment of the chief
      executive officer of the Company or other senior officer designated by the
      Board or Committee, is or becomes competitive with the Company, or which
      organization or business, or the rendering of services to such
      organization or business, is or becomes otherwise prejudicial to or in
      conflict with the interests of the Company. For Participants whose
      employment has terminated, the judgment of the chief executive officer
      shall be based on the Participant's position and responsibilities while
      employed by the Company, the Participant's post-employment
      responsibilities and position with the other organization or business, the
      extent of past, current and potential competition or conflict between the
      Company and the other organization or business, the effect on the
      Company's customers, suppliers and competitors and such other
      considerations as are deemed relevant given the applicable facts and
      circumstances.  A Participant who has retired shall be free,
      however, to purchase as an investment or otherwise, stock or other
      securities of such organization or business so long as they are listed
      upon a recognized securities exchange or traded over-the-counter, and such
      investment does not represent a substantial investment to the Participant
      or a greater than ten percent (10%) equity interest in the organization or
      business.

              

      

      

      
        	
                (ii)  

              	
                A
      Participant shall not, without prior written authorization from the
      Company, disclose to anyone outside the Company, or use in other than the
      Company's business, any confidential information or material, as defined
      in the Company's Proprietary Information and Invention Agreement or
      similar agreement regarding confidential information and intellectual
      property, relating to the business of the Company, acquired by the
      Participant either during or after employment with the
      Company.

              

      

      

      
        	
                (iii)  

              	
                A
      Participant, pursuant to the Company's Proprietary Information and
      Invention Agreement, shall disclose promptly and assign to the Company all
      right, title and interest in any invention or idea, patentable or not,
      made or conceived by the Participant during employment by the Company,
      relating in any manner to the actual or anticipated business, research or
      development work of the Company and shall do anything reasonably necessary
      to enable the Company to secure a patent where appropriate in the United
      States and in foreign countries.

              

      

      

      
        	
                (iv)  

              	
                Upon
      exercise, payment or delivery pursuant to a Grant, the Participant shall
      certify on a form acceptable to the Committee that he or she is in
      compliance with the terms and conditions of the Plan. Failure to comply
      with all of the provisions of this Section 6(c) prior to, or during the
      six months after, any exercise, payment or delivery pursuant to a Grant
      shall cause such exercise, payment or delivery to be rescinded. The
      Company shall notify the Participant in writing of any such rescission
      within two years after such exercise, payment or delivery. Within ten days
      after receiving such a notice from the Company, the Participant shall pay
      to the Company the amount of any gain realized or payment received as a
      result of the rescinded exercise, payment or delivery pursuant to a Grant.
      Such payment shall be made either in cash or by returning to the Company
      the number of shares of Stock that the Participant received in connection
      with the rescinded exercise, payment or
  delivery.

              

      

      

      
        	
                (d)  

              	
                Nonassignability.

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      
        	
                (i)  

              	
                Except
      pursuant to Section 6(e)(iii) and except as set forth in Section 6(d)(ii),
      no Grant or any other benefit under the Plan shall be assignable or
      transferable, or payable to or exercisable by, anyone other than the
      Participant to whom it was granted.

              

      

      

      
        	
                (ii)  

              	
                Where
      a Participant terminates employment and retains a Grant pursuant to
      Section 6(e)(ii) in order to assume a position with a governmental,
      charitable or educational institution, the Board or Committee, in its
      discretion and to the extent permitted by law, may authorize a third party
      (including but not limited to the trustee of a "blind" trust), acceptable
      to the applicable governmental or institutional authorities, the
      Participant and the Board or Committee, to act on behalf of the
      Participant with regard to such
Awards.

              

      

      

      
        	
                (e)  

              	
                Termination of
      Employment.  If the employment or service to the Company
      of a Participant terminates, other than pursuant to any of the following
      provisions under this Section 6(e), all unexercised, deferred and unpaid
      Stock Awards or Restricted Stock Purchase Offers shall be cancelled
      immediately, unless the Stock Award Agreement or Restricted Stock Purchase
      Offer provides otherwise:

              

      

      

      
        	
                (i)  

              	
                Retirement Under a
      Company Retirement Plan.  When a Participant's employment
      terminates as a result of retirement in accordance with the terms of a
      Company retirement plan, the Board or Committee may permit Stock Awards or
      Restricted Stock Purchase Offers to continue in effect beyond the date of
      retirement in accordance with the applicable Grant Agreement and the
      exercisability and vesting of any such Grants may be
      accelerated.

              

      

      

      
        	
                (ii)  

              	
                Rights in the Best
      Interests of the Company.  When a Participant resigns
      from the Company and, in the judgment of the Board or Committee, the
      acceleration and/or continuation of outstanding Stock Awards or Restricted
      Stock Purchase Offers would be in the best interests of the Company, the
      Board or Committee may (i) authorize, where appropriate, the acceleration
      and/or continuation of all or any part of Grants issued prior to such
      termination and (ii) permit the exercise, vesting and payment of such
      Grants for such period as may be set forth in the applicable Grant
      Agreement, subject to earlier cancellation pursuant to Section 9 or at
      such time as the Board or Committee shall deem the continuation of all or
      any part of the Participant's Grants are not in the Company's best
      interest.

              

      

      

      
        	
                (iii)  

              	
                Death or Disability of
      a Participant.

              

      

      

      
        	
                (1)  

              	
                In
      the event of a Participant's death, the Participant's estate or
      beneficiaries shall have a period up to the expiration date specified in
      the Grant Agreement within which to receive or exercise any outstanding
      Grant held by the Participant under such terms as may be specified in the
      applicable Grant Agreement. Rights to any such outstanding Grants shall
      pass by will or the laws of descent and distribution in the following
      order: (a) to beneficiaries so designated by the Participant; if none,
      then (b) to a legal representative of the Participant; if none, then (c)
      to the persons entitled thereto as determined by a court of competent
      jurisdiction. Grants so passing shall be made at such times and in such
      manner as if the Participant were
living.

              

      

      

      
        	
                (2)  

              	
                In
      the event a Participant is deemed by the Board or Committee to be unable
      to perform his or her usual duties by reason of mental disorder or medical
      condition which does not result from facts which would be grounds for
      termination for cause, Grants and rights to any such Grants may be paid to
      or exercised by the Participant, if legally competent, or a committee or
      other legally designated guardian or representative if the Participant is
      legally incompetent by virtue of such
  disability.

              

      

      

      
        	
                (3)  

              	
                After
      the death or disability of a Participant, the Board or Committee may in
      its sole discretion at any time (1) terminate restrictions in Grant
      Agreements; (2) accelerate any or all installments and rights; and (3)
      instruct the Company to pay the total of any accelerated payments in a
      lump sum to the Participant, the Participant's estate, beneficiaries or
      representative; notwithstanding that, in the absence of such termination
      of restrictions or acceleration of payments, any or all of the payments
      due under the Grant might ultimately have become payable to other
      beneficiaries.

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      
        	
                (4)  

              	
                In
      the event of uncertainty as to interpretation of or controversies
      concerning this Section 6, the determinations of the Board or Committee,
      as applicable, shall be binding and
conclusive.

              

      

      

      
        	
                7.  

              	
                Investment
      Intent.

              

      

      

      All Grants under the Plan are intended
to be exempt from registration under the Securities Act provided by Section 4(2)
thereunder. Unless and until the granting of Options or sale and issuance of
Stock subject to the Plan are registered under the Securities Act or shall be
exempt pursuant to the rules promulgated thereunder, each Grant under the Plan
shall provide that the purchases or other acquisitions of Stock thereunder shall
be for investment purposes and not with a view to, or for resale in connection
with, any distribution thereof. Further, unless the issuance and sale of the
Stock have been registered under the Securities Act, each Grant shall provide
that no shares shall be purchased upon the exercise of the rights under such
Grant unless and until (i) all then applicable requirements of state and federal
laws and regulatory agencies shall have been fully complied with to the
satisfaction of the Company and its counsel, and (ii) if requested to do so by
the Company, the person exercising the rights under the Grant shall (i) give
written assurances as to knowledge and experience of such person (or a
representative employed by such person) in financial and business matters and
the ability of such person (or representative) to evaluate the merits and risks
of exercising the Option, and (ii) execute and deliver to the Company a letter
of investment intent and/or such other form related to applicable exemptions
from registration, all in such form and substance as the Company may require. If
shares are issued upon exercise of any rights under a Grant without registration
under the Securities Act, subsequent registration of such shares shall relieve
the purchaser thereof of any investment restrictions or representations made
upon the exercise of such rights.

      

      
        	
                8.  

              	
                Amendment,
      Modification, Suspension or Discontinuance of the
  Plan.

              

      

      

      
        	
                 
      

              	
                The
      Board may, insofar as permitted by law, from time to time, with respect to
      any shares at the time not subject to outstanding Grants, suspend or
      terminate the Plan or revise or amend it in any respect whatsoever, except
      that without the approval of the shareholders of the Company, no such
      revision or amendment shall (i) increase the number of shares subject to
      the Plan, (ii) decrease the price at which Grants may be granted, (iii)
      materially increase the benefits to Participants, or (iv) change the class
      of persons eligible to receive Grants under the Plan; provided, however,
      no such action shall alter or impair the rights and obligations under any
      Option, or Stock Award, or Restricted Stock Purchase Offer outstanding as
      of the date thereof without the written consent of the Participant
      thereunder. No Grant may be issued while the Plan is suspended or after it
      is terminated, but the rights and obligations under any Grant issued while
      the Plan is in effect shall not be impaired by suspension or termination
      of the Plan.

              

      

      

      In the event of any change in the
outstanding Stock by reason of a stock split, stock dividend, combination or
reclassification of shares, recapitalization, merger, or similar event, the
Board or the Committee may adjust proportionally (a) the number of shares of
Stock (i) reserved under the Plan, (ii) available for Incentive Stock Options
and Nonstatutory Options and (iii) covered by outstanding Stock Awards or
Restricted Stock Purchase Offers; (b) the Stock prices related to outstanding
Grants; and (c) the appropriate Fair Market Value and other price determinations
for such Grants. In the event of any other change affecting the Stock or any
distribution (other than normal cash dividends) to holders of Stock, such
adjustments as may be deemed equitable by the Board or the Committee, including
adjustments to avoid fractional shares, shall be made to give proper effect to
such event. In the event of a corporate merger, consolidation, acquisition of
property or stock, separation, reorganization or liquidation, the Board or the
Committee shall be authorized to issue or assume stock options, whether or not
in a transaction to which Section 424(a) of the Code applies, and other Grants
by means of substitution of new Grant Agreements for previously issued Grants or
an assumption of previously issued Grants.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      
        	
                9.  

              	
                Tax
      Withholding.

              

      

      

      The Company shall have the right to
deduct applicable taxes from any Grant payment and withhold, at the time of
delivery or exercise of Options, Stock Awards or Restricted Stock Purchase
Offers or vesting of shares under such Grants, an appropriate number of shares
for payment of taxes required by law or to take such other action as may be
necessary in the opinion of the Company to satisfy all obligations for
withholding of such taxes. If Stock is used to satisfy tax withholding, such
stock shall be valued based on the Fair Market Value when the tax withholding is
required to be made.

      

      
        	
                10.  

              	
                Availability
      of Information.

              

      

      

      
        	
                 
      

              	
                During
      the term of the Plan and any additional period during which a Grant
      granted pursuant to the Plan shall be exercisable, the Company shall make
      available, not later than one hundred and twenty (120) days following the
      close of each of its fiscal years, such financial and other information
      regarding the Company as is required by the bylaws of the Company and
      applicable law to be furnished in an annual report to the shareholders of
      the Company.

              

      

      

      
        	
                11.  

              	
                Notice.

              

      

      

      
        	
                 
      

              	
                Any
      written notice to the Company required by any of the provisions of the
      Plan shall be addressed to the chief personnel officer or to the chief
      executive officer of the Company, and shall become effective when it is
      received by the office of the chief personnel officer or the chief
      executive officer.

              

      

      

      
        	
                12.  

              	
                Indemnification
      of Board.

              

      

      

      In addition to such other rights or
indemnifications as they may have as directors or otherwise, and to the extent
allowed by applicable law, the members of the Board and the Committee shall be
indemnified by the Company against the reasonable expenses, including attorneys'
fees, actually and necessarily incurred in connection with the defense of any
claim, action, suit or proceeding, or in connection with any appeal thereof, to
which they or any of them may be a party by reason of any action taken, or
failure to act, under or in connection with the Plan or any Grant granted
thereunder, and against all amounts paid by them in settlement thereof (provided
such settlement is approved by independent legal counsel selected by the
Company) or paid by them in satisfaction of a judgment in any such claim,
action, suit or proceeding, except in any case in relation to matters as to
which it shall be adjudged in such claim, action, suit or proceeding that such
Board or Committee member is liable for negligence or misconduct in the
performance of his or her duties; provided that within sixty (60) days after
institution of any such action, suit or Board proceeding the member involved
shall offer the Company, in writing, the opportunity, at its own expense, to
handle and defend the same.

      

      
        	
                13.  

              	
                Governing
      Law.

              

      

      

      
        	
                 
      

              	
                The
      Plan and all determinations made and actions taken pursuant hereto, to the
      extent not  otherwise governed by the Code or the securities
      laws of the United States, shall be governed by the law of the State of
      Florida and construed accordingly.

              

      

      

      
        	
                14.  

              	
                Effective
      and Termination Dates.

              

      

      

      The Plan shall become effective on the
date it is approved by the holders of a majority of the shares of Stock then
outstanding. The Plan shall terminate ten (10) years later, subject to earlier
termination by the Board pursuant to Section 8.

      

      [SIGNATURE
PAGE TO FOLLOW]

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

            The
foregoing 2010 Incentive Stock Plan was duly adopted and approved by the Board
of Directors and the majority of shareholders on February 8, 2010.

       

      
        
          	 	

                  SHENGKAI
      INNOVATIONS, INC.

                  a
      Florida corporation

                	 
	 	 	 	 
	
                   

                	
                  By:
      

                	/s/ 
      Wang Chen	 
	 	 	Name:
      Wang Chen	 
	 	 	Title:   Chairman
      and Chief Executive Officer	 
	 	 	 	 

        

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      EXHIBIT
A

      

      SHENGKAI
INNOVATIONS, INC.

      INCENTIVE
STOCK OPTION AGREEMENT

       

      
        

        

      

       

      This
Incentive Stock Option Agreement ("Agreement") is made and
entered into as of the date set forth below, by and between SHENGKAI
INNOVATIONS, INC., a Florida corporation (the "Company"), and the employee of
the Company named in Section 1(b). ("Optionee"):

      

      In consideration of the covenants
herein set forth, the parties hereto agree as follows:

      

      1.  Option
Information.

      
      

       

      

        	
              	
                (a)

              	
                

                  Date
      of Option:

                

              	  	  
	 	 	 	 

      

      
        	
                 
      

              	
                (b)

              	
                Optionee:

              	  	 

      

      

      
        	
                 
      

              	
                (c)

              	
                Number
      of Shares:

              	  	 

      

      

      
        	
                 
      

              	
                (d)

              	
                Exercise
      Price:

              	   	 

      

      

      2.  Acknowledgements.

      

      
          
 (a)
Optionee
is an employee of the Company.

      

      

      
        (b)
The Board
of Directors (the "Board" which term shall
include an authorized committee of the Board of Directors) and shareholders of
the Company have heretofore adopted a 2010 Incentive Stock Plan (the "Plan"), pursuant to which this
Option is being granted.

      

      

      
        (c)
The Board
has authorized the granting to Optionee of an incentive stock option ("Option") as defined in Section
422 of the Internal Revenue Code of 1986, as amended, (the "Code") to purchase shares of
common stock of the Company ("Stock") upon the terms and
conditions hereinafter stated and pursuant to an exemption from registration
under the Securities Act of 1933, as amended (the "Securities Act") provided by
Section 4(2) thereunder.

      

      

      3.  Shares;
Price.  The Company hereby grants to Optionee the right to
purchase, upon and subject to the terms and conditions herein stated, the number
of shares of Stock set forth in Section 1(c) above (the "Shares") for cash (or other
consideration as is authorized under the Plan and acceptable to the Board, in
their sole and absolute discretion) at the price per Share set forth in Section
1(d) above (the "Exercise
Price"), such price being not less than the fair market value per share
of the Shares covered by this Option as of the date hereof (unless Optionee is
the owner of Stock possessing ten percent or more of the total voting power or
value of all outstanding Stock of the Company, in which case the Exercise Price
shall be no less than 110% of the fair market value of such Stock).

      

      4.  Term of Option; Continuation
of Employment.  This Option shall expire, and all rights
hereunder to purchase the Shares shall terminate ­____ (___) years from the
date hereof. This Option shall earlier terminate subject to Sections 7 and 8
hereof upon, and as of the date of, the termination of Optionee's employment if
such termination occurs prior to the end of such ____ (___) year period. Nothing
contained herein shall confer upon Optionee the right to the continuation of his
or her employment by the Company or to interfere with the right of the Company
to terminate such employment or to increase or decrease the compensation of
Optionee from the rate in existence at the date hereof.

      

      5.  Vesting of Option.
Subject to the provisions of Sections 7 and 8 hereof, this Option shall become
exercisable during the term of Optionee's employment in ______ equal annual
installments of _______ percent of the Shares covered by this Option, the first
installment to be exercisable on _______ anniversary of the date of this Option
(the "Initial Vesting Date"), with an additional _____ percent of such Shares
becoming exercisable on each of the successive periods following the Initial
Vesting Date. The installments shall be cumulative (i.e., this option may be
exercised, as to any or all Shares covered by an installment, at any time or
times after an installment becomes exercisable and until expiration or
termination of this option).

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      6.  Exercise.  This
Option shall be exercised as follows:

      

      
        	
                (i)  

              	
                by
      delivery to the Company of (a) written notice of exercise stating the
      number of Shares being purchased (in whole shares only) and such other
      information set forth on the form of Notice of Exercise attached hereto as
      Appendix A, (b) a check or cash in the amount of the Exercise Price of the
      Shares covered by the notice (or such other consideration as has been
      approved by the Board of Directors consistent with the Plan) and (c) a
      written investment representation as provided for in Section 13 hereof,,
      or

              

      

      

      
        	
                (ii)  

              	
                through
      a special sale and remittance procedure pursuant to which the Optionee
      shall concurrently provide irrevocable written instructions (a) to a
      Company designated brokerage firm to effect the immediate sale of the
      purchased shares and remit to the Company, out of the sale proceeds
      available on the settlement date, sufficient funds to cover the aggregate
      exercise price payable for the purchased shares plus all applicable
      Federal, state and local income and employment taxes required to be
      withheld by the Company by reason of such purchase and (b) to the Company
      to deliver the certificates for the purchased shares directly to such
      brokerage firm in order to complete the sale
  transaction.

              

      

      

      This
Option shall not be assignable or transferable, except by will or by the laws of
descent and distribution, and shall be exercisable only by Optionee during his
or her lifetime, except as provided in Section 8 hereof.

      

      

      7.  Termination of
Employment.  If Optionee shall cease to be employed by the
Company for any reason, whether voluntarily or involuntarily, other than by his
or her death, Optionee (or if the Optionee shall die after such termination, but
prior to such exercise date, Optionee's personal representative or the person
entitled to succeed to the Option) shall have the right at any time within three
(3) months following such termination of employment or the remaining term of
this Option, whichever is the lesser, to exercise in whole or in part this
Option to the extent, but only to the extent, that this Option was exercisable
as of the date of termination of employment and had not previously been
exercised; provided, however: (i) if Optionee is permanently disabled (within
the meaning of Section 22(e)(3) of the Code) at the time of termination, the
foregoing three (3) month period shall be extended to six (6) months; or (ii) if
Optionee is terminated "for
cause", as that term is defined, or by the terms of the Plan or this
Option Agreement or by any employment agreement between the Optionee and the
Company, this Option shall automatically terminate as to all Shares covered by
this Option not exercised prior to termination. Unless earlier terminated, all
rights under this Option shall terminate in any event on the expiration date of
this Option as defined in Section 4 hereof.

      

      8.  Death of
Optionee.  If the Optionee shall die while in the employ of the
Company, Optionee's personal representative or the person entitled to Optionee's
rights hereunder may at any time within six (6) months after the date of
Optionee's death, or during the remaining term of this Option, whichever is the
lesser, exercise this Option and purchase Shares to the extent, but only to the
extent, that Optionee could have exercised this Option as of the date of
Optionee's death; provided, in any case, that this Option may be so exercised
only to the extent that this Option has not previously been exercised by
Optionee.

      

      9.  No Rights as
Shareholder.  Optionee shall have no rights as a shareholder
with respect to the Shares covered by any installment of this Option until the
effective date of issuance of Shares following exercise of this Option, and no
adjustment will be made for dividends or other rights for which the record date
is prior to the date such stock certificate or certificates are issued except as
provided in Section 10 hereof.

      

      10.  Recapitalization.  Subject
to any required action by the shareholders of the Company, the number of Shares
covered by this Option, and the Exercise Price thereof, shall be proportionately
adjusted for any increase or decrease in the number of issued shares resulting
from a subdivision or consolidation of shares or the payment of a stock
dividend, or any other increase or decrease in the number of such shares
effected without receipt of consideration by the Company; provided however that
the conversion of any convertible securities of the Company shall not be deemed
having been "effected without
receipt of consideration by the Company".

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      In the event of a proposed dissolution
or liquidation of the Company, a merger or consolidation in which the Company is
not the surviving entity, or a sale of all or substantially all of the assets or
capital stock of the Company (collectively, a "Reorganization"), unless
otherwise provided by the Board, this Option shall terminate immediately prior
to such date as is determined by the Board, which date shall be no later than
the consummation of such Reorganization. In such event, if the entity which
shall be the surviving entity does not tender to Optionee an offer, for which it
has no obligation to do so, to substitute for any unexercised Option a stock
option or capital stock of such surviving of such surviving entity, as
applicable, which on an equitable basis shall provide the Optionee with
substantially the same economic benefit as such unexercised Option, then the
Board may grant to such Optionee, in its sole and absolute discretion and
without obligation, the right for a period commencing thirty (30) days prior to
and ending immediately prior to the date determined by the Board pursuant hereto
for termination of the Option or during the remaining term of the Option,
whichever is the lesser, to exercise any unexpired Option or Options without
regard to the installment provisions of Section 5; provided, however, that such
exercise shall be subject to the consummation of such
Reorganization.

      

      Subject to any required action by the
shareholders of the Company, if the Company shall be the surviving entity in any
merger or consolidation, this Option thereafter shall pertain to and apply to
the securities to which a holder of Shares equal to the Shares subject to this
Option would have been entitled by reason of such merger or consolidation, and
the installment provisions of Section 5 shall continue to apply.

      

      In the event of a change in the shares
of the Company as presently constituted, which is limited to a change of all of
its authorized Stock without par value into the same number of shares of Stock
with a par value, the shares resulting from any such change shall be deemed to
be the Shares within the meaning of this Option.

      

      To the extent that the foregoing
adjustments relate to shares or securities of the Company, such adjustments
shall be made by the Board, whose determination in that respect shall be final,
binding and conclusive. Except as hereinbefore expressly provided, Optionee
shall have no rights by reason of any subdivision or consolidation of shares of
Stock of any class or the payment of any stock dividend or any other increase or
decrease in the number of shares of stock of any class, and the number and price
of Shares subject to this Option shall not be affected by, and no adjustments
shall be made by reason of, any dissolution, liquidation, merger, consolidation
or sale of assets or capital stock, or any issue by the Company of shares of
stock of any class or securities convertible into shares of stock of any
class.

      

      The grant of this Option shall not
affect in any way the right or power of the Company to make adjustments,
reclassifications, reorganizations or changes in its capital or business
structure or to merge, consolidate, dissolve or liquidate or to sell or transfer
all or any part of its business or assets.

      

      11.  Additional
Consideration.  Should the Internal Revenue Service determine
that the Exercise Price established by the Board as the fair market value per
Share is less than the fair market value per Share as of the date of Option
grant, Optionee hereby agrees to tender such additional consideration, or agrees
to tender upon exercise of all or a portion of this Option, such fair market
value per Share as is determined by the Internal Revenue Service.

      

      12. Modifications, Extension and
Renewal of Options.  The Board or Committee, as described in
the Plan, may modify, extend or renew this Option or accept the surrender
thereof (to the extent not theretofore exercised) and authorize the granting of
a new option in substitution therefor (to the extent not theretofore exercised),
subject at all times to the Plan, and Section 422 of the Code. Notwithstanding
the foregoing provisions of this Section 12, no modification shall, without the
consent of the Optionee, alter to the Optionee's detriment or impair any rights
of Optionee hereunder.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      13.  Investment Intent;
Restrictions on Transfer.

      

      
        	
                 
      

              	
                (a)
      Optionee represents and agrees that if Optionee exercises this Option in
      whole or in part, Optionee will in each case acquire the Shares upon such
      exercise for the purpose of investment and not with a view to, or for
      resale in connection with, any distribution thereof; and that upon such
      exercise of this Option in whole or in part, Optionee (or any person or
      persons entitled to exercise this Option under the provisions of Sections
      7 and 8 hereof) shall furnish to the Company a written statement to such
      effect, satisfactory to the Company in form and substance. If the Shares
      represented by this Option are registered under the Securities Act, either
      before or after the exercise of this Option in whole or in part, the
      Optionee shall be relieved of the foregoing investment representation and
      agreement and shall not be required to furnish the Company with the
      foregoing written statement.

              

      

      

      
        	
                 
      

              	
                (b)
      Optionee further represents that Optionee has had access to the financial
      statements or books and records of the Company, has had the opportunity to
      ask questions of the Company concerning its business, operations and
      financial condition, and to obtain additional information reasonably
      necessary to verify the accuracy of such
  information.

              

      

      

      
        	
                 
      

              	
                (c)
      Unless and until the Shares represented by this Option are registered
      under the Securities Act, all certificates representing the Shares and any
      certificates subsequently issued in substitution therefor and any
      certificate for any securities issued pursuant to any stock split, share
      reclassification, stock dividend or other similar capital event shall bear
      legends in substantially the following
form:

              

      

      

      
        	
                 
      

              	
                THESE
      SECURITIES HAVE NOT BEEN REGISTERED OR OTHERWISE QUALIFIED UNDER THE
      SECURITIES ACT OF 1933 (THE 'SECURITIES ACT') OR UNDER THE APPLICABLE OR
      SECURITIES LAWS OF ANY STATE. NEITHER THESE SECURITIES NOR ANY INTEREST
      THEREIN MAY BE SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF IN THE
      ABSENCE OF REGISTRATION UNDER THE SECURITIES ACT OR ANY APPLICABLE
      SECURITIES LAWS OF ANY STATE, UNLESS PURSUANT TO EXEMPTIONS
      THEREFROM.

              

      

      

      
        	
                 
      

              	
                THE
      SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED PURSUANT TO THAT
      CERTAIN INCENTIVE STOCK OPTION AGREEMENT DATED ____________ BETWEEN THE
      COMPANY AND THE ISSUEE WHICH RESTRICTS THE TRANSFER OF THESE SHARES WHICH
      ARE SUBJECT TO REPURCHASE BY THE COMPANY UNDER CERTAIN
      CONDITIONS.

              

      

      

      such
other legend or legends as the Company and its counsel deem necessary or
appropriate. Appropriate stop transfer instructions with respect to the Shares
have been placed with the Company's transfer agent.

      

      14.  Effects of Early
Disposition.  Optionee understands that if an Optionee disposes
of shares acquired hereunder within two (2) years after the date of this Option
or within one (1) year after the date of issuance of such shares to Optionee,
such Optionee will be treated for income tax purposes as having received
ordinary income at the time of such disposition of an amount generally measured
by the difference between the purchase price and the fair market value of such
stock on the date of exercise, subject to adjustment for any tax previously
paid, in addition to any tax on the difference between the sales price and
Optionee's adjusted cost basis in such shares. The foregoing amount may be
measured differently if Optionee is an officer, director or ten percent holder
of the Company. Optionee agrees to notify the Company within ten (10) working
days of any such disposition.

      

      15.  Stand-off
Agreement.  Optionee agrees that in connection with any
registration of the Company's securities under the Securities Act, and upon the
request of the Company or any underwriter managing an underwritten offering of
the Company's securities, Optionee shall not sell, short any sale of, loan,
grant an option for, or otherwise dispose of any of the Shares (other than
Shares included in the offering) without the prior written consent of the
Company or such managing underwriter, as applicable, for a period of at least
one year following the effective date of registration of such
offering.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      16.  Restriction upon
Transfer.  The Shares may not be sold, transferred or otherwise
disposed of and shall not be pledged or otherwise hypothecated by the Optionee
except as hereinafter provided.

      

      
        	
                 
      

              	
                (a)
      Repurchase Right
      on Termination Other Than for Cause. For the purposes of this
      Section, a "Repurchase
      Event" shall mean an occurrence of one of (i) termination of
      Optionee's employment by the Company, voluntary or involuntary and with or
      without cause; (ii) retirement or death of Optionee; (iii) bankruptcy of
      Optionee, which shall be deemed to have occurred as of the date on which a
      voluntary or involuntary petition in bankruptcy is filed with a court of
      competent jurisdiction; (iv) dissolution of the marriage of Optionee, to
      the extent that any of the Shares are allocated as the sole and separate
      property of Optionee's spouse pursuant thereto (in which case this Section
      shall only apply to the Shares so affected); or (v) any attempted transfer
      by the Optionee of Shares, or any interest therein, in violation of this
      Agreement. Upon the occurrence of a Repurchase Event, the Company shall
      have the right (but not an obligation) to repurchase all or any portion of
      the Shares of Optionee at a price equal to the fair value of the Shares as
      of the date of the Repurchase
Event.

              

      

      

      
        	
                 
      

              	
                (b)
      Repurchase Right
      on Termination for Cause.  In the event Optionee's
      employment is terminated by the Company "for cause", then the
      Company shall have the right (but not an obligation) to repurchase Shares
      of Optionee at a price equal to the Exercise Price. Such right of the
      Company to repurchase Shares shall apply to 100% of the Shares for one (1)
      year from the date of this Agreement; and shall thereafter lapse at the
      rate of twenty percent (20%) of the Shares on each anniversary of the date
      of this Agreement. In addition, the Company shall have the right, in the
      sole discretion of the Board and without obligation, to repurchase upon
      termination for cause all or any portion of the Shares of Optionee, at a
      price equal to the fair value of the Shares as of the date of termination,
      which right is not subject to the foregoing lapsing of rights. In the
      event the Company elects to repurchase the Shares, the stock certificates
      representing the same shall forthwith be returned to the Company for
      cancellation.

              

      

      

      
        	
                 
      

              	
                (c)  Exercise of Repurchase
      Right.  Any Repurchase Right under Paragraphs 16(a) or
      16(b) shall be exercised by giving notice of exercise as provided herein
      to Optionee or the estate of Optionee, as applicable. Such right shall be
      exercised, and the repurchase price thereunder shall be paid, by the
      Company within a ninety (90) day period beginning on the date of notice to
      the Company of the occurrence of such Repurchase Event (except in the case
      of termination of employment or retirement, where such option period shall
      begin upon the occurrence of the Repurchase Event). Such repurchase price
      shall be payable only in the form of cash (including a check drafted on
      immediately available funds) or cancellation of purchase money
      indebtedness of the Optionee for the Shares. If the Company can not
      purchase all such Shares because it is unable to meet the financial tests
      set forth in Florida and/or Florida corporation law, the Company shall
      have the right to purchase as many Shares as it is permitted to purchase
      under such sections. Any Shares not purchased by the Company hereunder
      shall no longer be subject to the provisions of this Section
      16.

              

      

      

      
        	
                 
      

              	
                (d)  Right of First
      Refusal.  In the event Optionee desires to transfer any
      Shares during his or her lifetime, Optionee shall first offer to sell such
      Shares to the Company. Optionee shall deliver to the Company written
      notice of the intended sale, such notice to specify the number of Shares
      to be sold, the proposed purchase price and terms of payment, and grant
      the Company an option for a period of thirty days following receipt of
      such notice to purchase the offered Shares upon the same terms and
      conditions. To exercise such option, the Company shall give notice of that
      fact to Optionee within the thirty (30) day notice period and agree to pay
      the purchase price in the manner provided in the notice. If the Company
      does not purchase all of the Shares so offered during foregoing option
      period, Optionee shall be under no obligation to sell any of the offered
      Shares to the Company, but may dispose of such Shares in any lawful manner
      during a period of one hundred and eighty (180) days following the end of
      such notice period, except that Optionee shall not sell any such Shares to
      any other person at a lower price or upon more favorable terms than those
      offered to the Company.

              

      

      

      
        	
                 
      

              	
                (e)  Acceptance of
      Restrictions.  Acceptance of the Shares shall constitute
      the Optionee's agreement to such restrictions and the legending of his
      certificates with respect thereto. Notwithstanding such restrictions,
      however, so long as the Optionee is the holder of the Shares, or any
      portion thereof, he shall be entitled to receive all dividends declared on
      and to vote the Shares and to all other rights of a shareholder with
      respect thereto.

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
 

      
        	
                 
      

              	
                (f)  Permitted
      Transfers.  Notwithstanding any provisions in this
      Section 16 to the contrary, the Optionee may transfer Shares subject to
      this Agreement to his or her parents, spouse, children, or grandchildren,
      or a trust for the benefit of the Optionee or any such transferee(s);
      provided, that such permitted transferee(s) shall hold the Shares subject
      to all the provisions of this Agreement (all references to the Optionee
      herein shall in such cases refer mutatis mutandis to the permitted
      transferee, except in the case of clause (iv) of Section 16(a) wherein the
      permitted transfer shall be deemed to be rescinded); and provided further,
      that notwithstanding any other provisions in this Agreement, a permitted
      transferee may not, in turn, make permitted transfers without the written
      consent of the Optionee and the
Company.

              

      

      

      
        	
                 
      

              	
                (g)  Release of
      Restrictions on Shares.  All rights and restrictions
      under this Section 16 shall terminate [__] (___) years following the date
      of this Agreement, or when the Company's securities are publicly traded,
      whichever occurs earlier.

              

      

      

      17.  Notices.  Any
notice required to be given pursuant to this Option or the Plan shall be in
writing and shall be deemed to be delivered upon receipt or, in the case of
notices by the Company, five (5) days after deposit in the U.S. mail, postage
prepaid, addressed to Optionee at the address last provided to the Company by
Optionee for his or her employee records.

      

      18.  Agreement Subject to Plan;
Applicable Law.  This Option is made pursuant to the Plan and
shall be interpreted to comply therewith. A copy of such Plan is available to
Optionee, at no charge, at the principal office of the Company. Any provision of
this Option inconsistent with the Plan shall be considered void and replaced
with the applicable provision of the Plan. This Option has been granted,
executed and delivered in the State of Florida, and the interpretation and
enforcement shall be governed by the laws thereof and subject to the exclusive
jurisdiction of the courts therein.

      

      [SIGNATURE
PAGE TO FOLLOW]

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      In Witness
Whereof, the parties hereto have executed this Option as of the date
first above written.

       

      
        
          	 	

                  SHENGKAI
      INNOVATIONS, INC.

                  a
      Florida corporation

                	 
	

                  COMPANY:

                	 	 	 
	
                   

                	
                  By:
      

                	   	 
	 	 	Name:
      Wang Chen	 
	 	 	

                  Title: Chairman
      and Chief Executive Officer

                	 
	 	 	 	 

        

      

       

      
        
          	

                  OPTIONEE:

                	
                	 
	 	 	 	 
	
                	
                  By:
      

                	    	 
	 	 	
                  (signature)

                	 
	 	 	
                	 
	 	Name: 	  
      	 

        

      

       

      (one of the following, as appropriate,
shall be signed)

      

      
        	
                I
      certify that as of the date hereof I am unmarried

              	 
      	
                By
      his or her signature, the spouse of Optionee hereby agrees to be bound by
      the provisions of the foregoing INCENTIVE STOCK OPTION
      AGREEMENT

                 

              
	   
      	 
      	   
      
	
                Optionee

              	 
      	
                Spouse
      of Optionee

              

      

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      Appendix
A

      

      NOTICE OF
EXERCISE

      

      SHENGKAI
INNOVATIONS, INC.

      

      Re: Incentive Stock Option

      

      Notice is hereby given pursuant to
Section 6 of my Incentive Stock Option Agreement that I elect to purchase the
number of shares set forth below at the exercise price set forth in my option
agreement:

      

      Incentive Stock Option Agreement dated:
____________

      

      Number of shares being purchased:
____________

      

      Exercise Price:
$____________

      

      A check in the amount of the aggregate
price of the shares being purchased is attached.

      

      I hereby confirm that such shares are
being acquired by me for my own account for investment purposes, and not with a
view to, or for resale in connection with, any distribution thereof. I will not
sell or dispose of my Shares in violation of the Securities Act of 1933, as
amended, or any applicable federal or state securities laws. Further, I
understand that the exemption from taxable income at the time of exercise is
dependent upon my holding such stock for a period of at least one year from the
date of exercise and two years from the date of grant of the
Option.

      

      I agree to provide to the Company such
additional documents or information as may be required pursuant to the Company's
2010 Incentive Stock Plan.

       

      
        
          	 	
                	 
	 	 	 	 
	
                   

                	
                  By:
      

                	 	 
	 	 	(signature)	 
	 	 	 	 
	 	Name:       	  
      	 

        

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      EXHIBIT
B-1

      

      SHENGKAI
INNOVATIONS, INC.

      EMPLOYEE
NONSTATUTORY STOCK OPTION AGREEMENT

       

      
        

        

      

      

      This
Employee Nonstatutory Stock Option Agreement ("Agreement") is made and
entered into as of the date set forth below, by and between SHENGKAI
INNOVATIONS, INC., a Florida corporation (the "Company"), and the following
employee of the Company ("Optionee"):

      

      In consideration of the covenants
herein set forth, the parties hereto agree as follows:

      

      1.  Option
Information.

      

      
        	
                 
      

              	
                (a)

              	
                Date
      of Option:

              	   	 

      

      

      
        	
                 
      

              	
                (b)

              	
                Optionee:

              	   	 

      

       

      
        	
              	
                (c)

              	
                

                  Number
      of Shares:

                

              	   	 

      

      
      

      

      
        	
                 
      

              	
                (d)

              	
                Exercise
      Price:

              	   	 

      

      

      2.  Acknowledgements.

      

      (a) Optionee is an employee of the
Company.

      

      
        	
                 
      

              	
                (b)
      The Board of Directors (the "Board" which term shall
      include an authorized committee of the Board of Directors) and
      shareholders of the Company have heretofore adopted a 2010 Incentive Stock
      Plan (the "Plan"),
      pursuant to which this Option is being granted;
  and

              

      

      

      
        	
                 
      

              	
                (c)
      The Board has authorized the granting to Optionee of a nonstatutory stock
      option ("Option")
      to purchase shares of common stock of the Company ("Stock") upon the terms
      and conditions hereinafter stated and pursuant to an exemption from
      registration under the Securities Act of 1933, as amended (the "Securities Act")
      provided by Section 4(2)
thereunder.

              

      

      

      3.  Shares;
Price.  Company hereby grants to Optionee the right to
purchase, upon and subject to the terms and conditions herein stated, the number
of shares of Stock set forth in Section 1(c) above (the "Shares") for cash (or other
consideration as is authorized under the Plan and acceptable to the Board of
Directors of the Company, in their sole and absolute discretion) at the price
per Share set forth in Section 1(d) above (the "Exercise Price"), such price
being not less than eighty-five percent (85%) of the fair market value per share
of the Shares covered by this Option as of the date hereof.

      

      4.  Term of Option; Continuation
of Service.  This Option shall expire, and all rights hereunder
to purchase the Shares shall terminate, ___ (__) years from the date hereof.
This Option shall earlier terminate subject to Sections 7 and 8 hereof upon, and
as of the date of, the termination of Optionee's employment if such termination
occurs prior to the end of such ___ (__) year period. Nothing contained herein
shall confer upon Optionee the right to the continuation of his or her
employment by the Company or to interfere with the right of the Company to
terminate such employment or to increase or decrease the compensation of
Optionee from the rate in existence at the date hereof.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      5.  Vesting of
Option.

      

      Subject to the provisions of Sections 7
and 8 hereof, this Option shall become vested and exercisable during the term of
Optionee's employment in Six (6) equal annual installments of [___] percent
([__]%) of the Shares covered by this Option, the first installment to be
exercisable on the first anniversary of the date of this Option.

      

      6.  Exercise.  This
Option shall be exercised as follows:

      

      
        	
                (i)  

              	
                by
      delivery to the Company of (a) written notice of exercise stating the
      number of Shares being purchased (in whole shares only) and such other
      information set forth on the form of Notice of Exercise attached hereto as
      Appendix
      A, (b) a check or cash in the amount of the Exercise Price of the
      Shares covered by the notice (or such other consideration as has been
      approved by the Board of Directors consistent with the Plan) and (c) a
      written investment representation as provided for in Section 13 hereof,
      or

              

      

      

      
        	
                (ii)  

              	
                through
      a special sale and remittance procedure pursuant to which the Optionee
      shall concurrently provide irrevocable written instructions (a) to a
      Company designated brokerage firm to effect the immediate sale of the
      purchased shares and remit to the Company, out of the sale proceeds
      available on the settlement date, sufficient funds to cover the aggregate
      exercise price payable for the purchased shares plus all applicable
      Federal, state and local income and employment taxes required to be
      withheld by the Company by reason of such purchase and (b) to the Company
      to deliver the certificates for the purchased shares directly to such
      brokerage firm in order to complete the sale
  transaction.

              

      

      

      This
Option shall not be assignable or transferable, except by will or by the laws of
descent and distribution, and shall be exercisable only by Optionee during his
or her lifetime, except as provided in Section 8 hereof.

      

      7.  Termination of
Employment.  If Optionee shall cease to be employed by the
Company for any reason, whether voluntarily or involuntarily, other than by his
or her death, Optionee (or if the Optionee shall die after such termination, but
prior to such exercise date, Optionee's personal representative or the person
entitled to succeed to the Option) shall have the right at any time within three
(3) months following such termination of employment or the remaining term of
this Option, whichever is the lesser, to exercise in whole or in part this
Option to the extent, but only to the extent, that this Option was exercisable
as of the date of termination of employment and had not previously been
exercised; provided, however: (i) if Optionee is permanently disabled (within
the meaning of Section 22(e)(3) of the Code) at the time of termination, the
foregoing three (3) month period shall be extended to six (6) months; or (ii) if
Optionee is terminated "for cause" as that term is defined under the Florida
Securities Rules and case law related thereto, or by the terms of the Plan or
this Option Agreement or by any employment agreement between the Optionee and
the Company, this Option shall automatically terminate as to all Shares covered
by this Option not exercised prior to termination.

      

      Unless earlier terminated, all rights
under this Option shall terminate in any event on the expiration date of this
Option as defined in Section 4 hereof.

      

      8.  Death of
Optionee.  If the Optionee shall die while in the employ of the
Company, Optionee's personal representative or the person entitled to Optionee's
rights hereunder may at any time within six (6) months after the date of
Optionee's death, or during the remaining term of this Option, whichever is the
lesser, exercise this Option and purchase Shares to the extent, but only to the
extent, that Optionee could have exercised this Option as of the date of
Optionee's death; provided, in any case, that this Option may be so exercised
only to the extent that this Option has not previously been exercised by
Optionee.

      

      9.  No Rights as
Shareholder.  Optionee shall have no rights as a shareholder
with respect to the Shares covered by any installment of this Option until the
effective date of issuance of the Shares following exercise of this Option, and
no adjustment will be made for dividends or other rights for which the record
date is prior to the date such stock certificate or certificates are issued
except as provided in Section 10 hereof.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      10.  Recapitalization.  Subject
to any required action by the shareholders of the Company, the number of Shares
covered by this Option, and the Exercise Price thereof, shall be proportionately
adjusted for any increase or decrease in the number of issued shares resulting
from a subdivision or consolidation of shares or the payment of a stock
dividend, or any other increase or decrease in the number of such shares
effected without receipt of consideration by the Company; provided however that
the conversion of any convertible securities of the Company shall not be deemed
having been "effected without receipt of consideration by the
Company".

      

      In the event of a proposed dissolution
or liquidation of the Company, a merger or consolidation in which the Company is
not the surviving entity, or a sale of all or substantially all of the assets or
capital stock of the Company (collectively, a "Reorganization"), unless
otherwise provided by the Board, this Option shall terminate immediately prior
to such date as is determined by the Board, which date shall be no later than
the consummation of such Reorganization. In such event, if the entity which
shall be the surviving entity does not tender to Optionee an offer, for which it
has no obligation to do so, to substitute for any unexercised Option a stock
option or capital stock of such surviving of such surviving entity, as
applicable, which on an equitable basis shall provide the Optionee with
substantially the same economic benefit as such unexercised Option, then the
Board may grant to such Optionee, in its sole and absolute discretion and
without obligation, the right for a period commencing thirty (30) days prior to
and ending immediately prior to the date determined by the Board pursuant hereto
for termination of the Option or during the remaining term of the Option,
whichever is the lesser, to exercise any unexpired Option or Options without
regard to the installment provisions of Section 5; provided, however, that such
exercise shall be subject to the consummation of such
Reorganization.

      

      Subject to any required action by the
shareholders of the Company, if the Company shall be the surviving entity in any
merger or consolidation, this Option thereafter shall pertain to and apply to
the securities to which a holder of Shares equal to the Shares subject to this
Option would have been entitled by reason of such merger or consolidation, and
the installment provisions of Section 5 shall continue to apply.

      

      In the event of a change in the shares
of the Company as presently constituted, which is limited to a change of all of
its authorized Stock without par value into the same number of shares of Stock
with a par value, the shares resulting from any such change shall be deemed to
be the Shares within the meaning of this Option.

      

      To the extent that the foregoing
adjustments relate to shares or securities of the Company, such adjustments
shall be made by the Board, whose determination in that respect shall be final,
binding and conclusive. Except as hereinbefore expressly provided, Optionee
shall have no rights by reason of any subdivision or consolidation of shares of
Stock of any class or the payment of any stock dividend or any other increase or
decrease in the number of shares of stock of any class, and the number and price
of Shares subject to this Option shall not be affected by, and no adjustments
shall be made by reason of, any dissolution, liquidation, merger, consolidation
or sale of assets or capital stock, or any issue by the Company of shares of
stock of any class or securities convertible into shares of stock of any
class.

      

      The grant of this Option shall not
affect in any way the right or power of the Company to make adjustments,
reclassifications, reorganizations or changes in its capital or business
structure or to merge, consolidate, dissolve or liquidate or to sell or transfer
all or any part of its business or assets.

      

      11.  Taxation upon Exercise of
Option.  Optionee understands that, upon exercise of this
Option, Optionee will recognize income, for Federal and state income tax
purposes, in an amount equal to the amount by which the fair market value of the
Shares, determined as of the date of exercise, exceeds the Exercise Price. The
acceptance of the Shares by Optionee shall constitute an agreement by Optionee
to report such income in accordance with then applicable law and to cooperate
with Company in establishing the amount of such income and corresponding
deduction to the Company for its income tax purposes. Withholding for federal or
state income and employment tax purposes will be made, if and as required by
law, from Optionee's then current compensation, or, if such current compensation
is insufficient to satisfy withholding tax liability, the Company may require
Optionee to make a cash payment to cover such liability as a condition of the
exercise of this Option.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      12.  Modification, Extension and
Renewal of Options.  The Board or Committee, as described in
the Plan, may modify, extend or renew this Option or accept the surrender
thereof (to the extent not theretofore exercised) and authorize the granting of
a new option in substitution therefor (to the extent not theretofore exercised),
subject at all times to the Plan, the Code and the Florida Securities Rules.
Notwithstanding the foregoing provisions of this Section 12, no modification
shall, without the consent of the Optionee, alter to the Optionee's detriment or
impair any rights of Optionee hereunder.

      

      13.  Investment Intent;
Restrictions on Transfer.

      

      
        	
                 
      

              	
                (a)  Optionee
      represents and agrees that if Optionee exercises this Option in whole or
      in part, Optionee will in each case acquire the Shares upon such exercise
      for the purpose of investment and not with a view to, or for resale in
      connection with, any distribution thereof; and that upon such exercise of
      this Option in whole or in part, Optionee (or any person or persons
      entitled to exercise this Option under the provisions of Sections 7 and 8
      hereof) shall furnish to the Company a written statement to such effect,
      satisfactory to the Company in form and substance. If the Shares
      represented by this Option are registered under the Securities Act, either
      before or after the exercise of this Option in whole or in part, the
      Optionee shall be relieved of the foregoing investment representation and
      agreement and shall not be required to furnish the Company with the
      foregoing written statement.

              

      

      

      
        	
                 
      

              	
                (b)  Optionee
      further represents that Optionee has had access to the financial
      statements or books and records of the Company, has had the opportunity to
      ask questions of the Company concerning its business, operations and
      financial condition, and to obtain additional information reasonably
      necessary to verify the accuracy of such
  information

              

      

      

      
        	
                 
      

              	
                (c)  Unless
      and until the Shares represented by this Option are registered under the
      Securities Act, all certificates representing the Shares and any
      certificates subsequently issued in substitution therefor and any
      certificate for any securities issued pursuant to any stock split, share
      reclassification, stock dividend or other similar capital event shall bear
      legends in substantially the following
form:

              

      

      

      
        	
                 
      

              	
                THESE
      SECURITIES HAVE NOT BEEN REGISTERED OR OTHERWISE QUALIFIED UNDER THE
      SECURITIES ACT OF 1933 (THE 'SECURITIES ACT') OR UNDER THE APPLICABLE OR
      SECURITIES LAWS OF ANY STATE. NEITHER THESE SECURITIES NOR ANY INTEREST
      THEREIN MAY BE SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF IN THE
      ABSENCE OF REGISTRATION UNDER THE SECURITIES ACT OR ANY APPLICABLE
      SECURITIES LAWS OF ANY STATE, UNLESS PURSUANT TO EXEMPTIONS
      THEREFROM.

              

      

      

      
        	
                 
      

              	
                THE
      SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED PURSUANT TO THAT
      CERTAIN NONSTATUTORY STOCK OPTION AGREEMENT DATED ____________ BETWEEN THE
      COMPANY AND THE ISSUEE WHICH RESTRICTS THE TRANSFER OF THESE SHARES WHICH
      ARE SUBJECT TO REPURCHASE BY THE COMPANY UNDER CERTAIN
      CONDITIONS.

              

      

      

      and/or
such other legend or legends as the Company and its counsel deem necessary or
appropriate. Appropriate stop transfer instructions with respect to the Shares
have been placed with the Company's transfer agent.

      

      14.  Stand-off
Agreement.  Optionee agrees that, in connection with any
registration of the Company's securities under the Securities Act, and upon the
request of the Company or any underwriter managing an underwritten offering of
the Company's securities, Optionee shall not sell, short any sale of, loan,
grant an option for, or otherwise dispose of any of the Shares (other than
Shares included in the offering) without the prior written consent of the
Company or such managing underwriter, as applicable, for a period of at least
one year following the effective date of registration of such
offering.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      15.  Restriction Upon
Transfer.  The Shares may not be sold, transferred or otherwise
disposed of and shall not be pledged or otherwise hypothecated by the Optionee
except as hereinafter provided.

      

      
        	
                 
      

              	
                (a)
      Repurchase Right on Termination Other Than for Cause. For the purposes of
      this Section, a "Repurchase Event" shall
      mean an occurrence of one of (i) termination of Optionee's employment by
      the Company, voluntary or involuntary and with or without cause; (ii)
      retirement or death of Optionee; (iii) bankruptcy of Optionee, which shall
      be deemed to have occurred as of the date on which a voluntary or
      involuntary petition in bankruptcy is filed with a court of competent
      jurisdiction; (iv) dissolution of the marriage of Optionee, to the extent
      that any of the Shares are allocated as the sole and separate property of
      Optionee's spouse pursuant thereto (in which case, this Section shall only
      apply to the Shares so affected); or (v) any attempted transfer by the
      Optionee of Shares, or any interest therein, in violation of this
      Agreement. Upon the occurrence of a Repurchase Event, the Company shall
      have the right (but not an obligation) to repurchase all or any portion of
      the Shares of Optionee at a price equal to the fair value of the Shares as
      of the date of the Repurchase
Event.

              

      

      

      
        	
                 
      

              	
                (b)
      Repurchase Right on Termination for Cause. In the event Optionee's
      employment is terminated by the Company "for cause", then the Company
      shall have the right (but not an obligation) to repurchase Shares of
      Optionee at a price equal to the Exercise Price. Such right of the Company
      to repurchase Shares shall apply to 100% of the Shares for one (1) year
      from the date of this Agreement; and shall thereafter lapse at the rate of
      twenty percent (20%) of the Shares on each anniversary of the date of this
      Agreement. In addition, the Company shall have the right, in the sole
      discretion of the Board and without obligation, to repurchase upon
      termination for cause all or any portion of the Shares of Optionee, at a
      price equal to the fair value of the Shares as of the date of termination,
      which right is not subject to the foregoing lapsing of rights. In the
      event the Company elects to repurchase the Shares, the stock certificates
      representing the same shall forthwith be returned to the Company for
      cancellation.

              

      

      

      
        	
                 
      

              	
                (c)
      Exercise of Repurchase Right. Any Repurchase Right under Paragraphs 15(a)
      or 15(b) shall be exercised by giving notice of exercise as provided
      herein to Optionee or the estate of Optionee, as applicable. Such right
      shall be exercised, and the repurchase price thereunder shall be paid, by
      the Company within a ninety (90) day period beginning on the date of
      notice to the Company of the occurrence of such Repurchase Event (except
      in the case of termination of employment or retirement, where such option
      period shall begin upon the occurrence of the Repurchase Event). Such
      repurchase price shall be payable only in the form of cash (including a
      check drafted on immediately available funds) or cancellation of purchase
      money indebtedness of the Optionee for the Shares. If the Company can not
      purchase all such Shares because it is unable to meet the financial tests
      set forth in the Florida and/or Florida corporation law, the Company shall
      have the right to purchase as many Shares as it is permitted to purchase
      under such sections. Any Shares not purchased by the Company hereunder
      shall no longer be subject to the provisions of this Section
      15.

              

      

      

      
        	
                 
      

              	
                (d)
      Right of First Refusal. In the event Optionee desires to transfer any
      Shares during his or her lifetime, Optionee shall first offer to sell such
      Shares to the Company. Optionee shall deliver to the Company written
      notice of the intended sale, such notice to specify the number of Shares
      to be sold, the proposed purchase price and terms of payment, and grant
      the Company an option for a period of thirty days following receipt of
      such notice to purchase the offered Shares upon the same terms and
      conditions. To exercise such option, the Company shall give notice of that
      fact to Optionee within the thirty (30) day notice period and agree to pay
      the purchase price in the manner provided in the notice. If the Company
      does not purchase all of the Shares so offered during foregoing option
      period, Optionee shall be under no obligation to sell any of the offered
      Shares to the Company, but may dispose of such Shares in any lawful manner
      during a period of one hundred and eighty (180) days following the end of
      such notice period, except that Optionee shall not sell any such Shares to
      any other person at a lower price or upon more favorable terms than those
      offered to the Company.

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      
        	
                 
      

              	
                (e)
      Acceptance of Restrictions. Acceptance of the Shares shall constitute the
      Optionee's agreement to such restrictions and the legending of his
      certificates with respect thereto. Notwithstanding such restrictions,
      however, so long as the Optionee is the holder of the Shares, or any
      portion thereof, he shall be entitled to receive all dividends declared on
      and to vote the Shares and to all other rights of a shareholder with
      respect thereto.

              

      

      

      
        	
                 
      

              	
                (f)
      Permitted Transfers. Notwithstanding any provisions in this Section 15 to
      the contrary, the Optionee may transfer Shares subject to this Agreement
      to his or her parents, spouse, children, or grandchildren, or a trust for
      the benefit of the Optionee or any such transferee(s); provided, that such
      permitted transferee(s) shall hold the Shares subject to all the
      provisions of this Agreement (all references to the Optionee herein shall
      in such cases refer mutatis mutandis to the permitted transferee, except
      in the case of clause (iv) of Section 15(a) wherein the permitted transfer
      shall be deemed to be rescinded); and provided further, that
      notwithstanding any other provisions in this Agreement, a permitted
      transferee may not, in turn, make permitted transfers without the written
      consent of the Optionee and the
Company.

              

      

      

      
        	
                 
      

              	
                (g)
      Release of Restrictions on Shares. All other restrictions under this
      Section 15 shall terminate ____ (___) years following the date of this
      Agreement, or when the Company's securities are publicly traded, whichever
      occurs earlier.

              

      

      

      16.  Notices.  Any
notice required to be given pursuant to this Option or the Plan shall be in
writing and shall be deemed to be delivered upon receipt or, in the case of
notices by the Company, five (5) days after deposit in the U.S. mail, postage
prepaid, addressed to Optionee at the address last provided by Optionee for his
or her employee records.

      

      17.  Agreement Subject to Plan;
Applicable Law.  This Option is made pursuant to the Plan and
shall be interpreted to comply therewith. A copy of such Plan is available to
Optionee, at no charge, at the principal office of the Company. Any provision of
this Option inconsistent with the Plan shall be considered void and replaced
with the applicable provision of the Plan. This Option has been granted,
executed and delivered in the State of Florida, and the interpretation and
enforcement shall be governed by the laws thereof and subject to the exclusive
jurisdiction of the courts therein.

      

      [SIGNATURE
PAGE TO FOLLOW]

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

       

      In Witness
Whereof, the parties hereto have executed this Option as of the date
first above written.

       

      
        
          	

                  COMPANY:

                	

                  SHENGKAI
      INNOVATIONS, INC.

                  a
      Florida corporation

                	 
	 	 	 	 
	
                   

                	
                  By:
      

                	 	 
	 	 	Name:
      Wang Chen	 
	 	 	Title:   Chairman
      and Chief Executive Officer	 
	 	 	 	 

        

      

       

      
        
          	

                  OPTIONEE:

                	 	 
	 	 	 	 
	
                   

                	
                  By:
      

                	 	 
	 	 	
                  (signature)

                	 
	 	 	 	 
	 	Name: 	  
      	 

        

      

       

      (one of the following, as appropriate,
shall be signed)

      

      
        	
                I
      certify that as of the date hereof I am unmarried

              	 
      	
                By
      his or her signature, the spouse of Optionee hereby agrees to be bound by
      the provisions of the foregoing INCENTIVE STOCK OPTION
      AGREEMENT

                 

              
	   
      	 
      	   
      
	
                Optionee

              	 
      	
                Spouse
      of Optionee

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      Appendix
A

      

      NOTICE
OF EXERCISE

      

      SHENGKAI
INNOVATIONS, INC.

      

      Re: Nonstatutory Stock
Option

      

      Notice is hereby given pursuant to
Section 6 of my Nonstatutory Stock Option Agreement that I elect to purchase the
number of shares set forth below at the exercise price set forth in my option
agreement:

      

      Nonstatutory Stock Option Agreement
dated: ____________

      

      Number of shares being purchased:
____________

      

      Exercise Price:
$____________

      

      A check in the amount of the aggregate
price of the shares being purchased is attached.

      

      I hereby confirm that such shares are
being acquired by me for my own account for investment purposes, and not with a
view to, or for resale in connection with, any distribution thereof. I will not
sell or dispose of my Shares in violation of the Securities Act of 1933, as
amended, or any applicable federal or state securities laws.

      

      I agree to provide to the Company such
additional documents or information as may be required pursuant to the Company's
2010 Incentive Stock Plan.

       

      
        
          	 	 	 
	 	 	 	 
	
                	
                  By:
      

                	 	 
	 	 	
                  (signature)

                	 
	 	 	 	 
	 	 Name:  	 	 

        

      

      
 

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      EXHIBIT
B-2

      

      SHENGKAI
INNOVATIONS, INC.

      NONSTATUTORY
STOCK OPTION AGREEMENT

       

      
        
          

          

        

        This
Nonstatutory Stock Option Agreement ("Agreement") is made and
entered into as of the date set forth below, by and between Shengkai
Innovations, Inc., a Florida corporation (the "Company"), and the following
Director of the Company ("Optionee"):

      

      

      In consideration of the covenants
herein set forth, the parties hereto agree as follows:

      

      1.  Option
Information.

      

      
        	
                 
      

              	
                (a)

              	
                Date
      of Option:

              	 	 

      

      

      
        	
                 
      

              	
                (b)

              	
                Optionee:

              	 	 

      

       

      
        	
              	
                (c)

              	
                

                  Number
      of Shares:

                

              	 	 

      

      
      

      

      
        	
                 
      

              	
                (d)

              	
                Exercise
      Price:

              	 	 

      

      

      2.  Acknowledgements.

      

      (a)  Optionee is a member of
the Board of Directors of the Company.

      

      
        	
                 
      

              	
                (b)  The
      Board of Directors (the "Board" which term shall
      include an authorized committee of the Board of Directors) and
      shareholders of the Company have heretofore adopted a 2010 Incentive Stock
      Plan (the "Plan"),
      pursuant to which this Option is being granted;
  and

              

      

      

      
        	
                 
      

              	
                (c)  The
      Board has authorized the granting to Optionee of a nonstatutory stock
      option ("Option")
      to purchase shares of common stock of the Company ("Stock") upon the terms
      and conditions hereinafter stated and pursuant to an exemption from
      registration under the Securities Act of 1933, as amended (the "Securities Act")
      provided by Section 4(2)
thereunder.

              

      

      

      3.  Shares;
Price.  Company hereby grants to Optionee the right to
purchase, upon and subject to the terms and conditions herein stated, the number
of shares of Stock set forth in Section 1(c) above (the "Shares") for cash (or other
consideration as is authorized under the Plan and acceptable to the Board of
Directors of the Company, in their sole and absolute discretion) at the price
per Share set forth in Section 1(d) above (the "Exercise Price"), such price
being not less than eighty-five percent (85%) of the fair market value per share
of the Shares covered by this Option as of the date hereof.

      

      4.  Term of Option; Continuation
of Service.  This Option shall expire, and all rights hereunder
to purchase the Shares shall terminate, _____ (__) years from the date hereof.
This Option shall earlier terminate subject to Sections 7 and 8 hereof upon, and
as of the date of, the termination of Optionee's employment if such termination
occurs prior to the end of such _____ (__) year period. Nothing contained herein
shall confer upon Optionee the right to the continuation of his or her
employment by the Company or to interfere with the right of the Company to
terminate such employment or to increase or decrease the compensation of
Optionee from the rate in existence at the date hereof.

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      5.  Vesting of
Option.

      

      Subject to the provisions of Sections 7
and 8 hereof, this Option shall become vested and exercisable during the term of
Optionee's employment in Six (6) equal annual installments of
[    ] percent([    ]%) of the Shares
covered by this Option, the first installment to be exercisable on the first
anniversary of the date of this Option.

      

      6.  Exercise.  This
Option shall be exercised as follows:

      

      
        	
                (i)  

              	
                by
      delivery to the Company of (a) written notice of exercise stating the
      number of Shares being purchased (in whole shares only) and such other
      information set forth on the form of Notice of Exercise attached hereto as
      Appendix
      A, (b) a check or cash in the amount of the Exercise Price of the
      Shares covered by the notice (or such other consideration as has been
      approved by the Board of Directors consistent with the Plan) and (c) a
      written investment representation as provided for in Section 13 hereof,
      or

              

      

      

      
        	
                (ii)  

              	
                through
      a special sale and remittance procedure pursuant to which the Optionee
      shall concurrently provide irrevocable written instructions (a) to a
      Company designated brokerage firm to effect the immediate sale of the
      purchased shares and remit to the Company, out of the sale proceeds
      available on the settlement date, sufficient funds to cover the aggregate
      exercise price payable for the purchased shares plus all applicable
      Federal, state and local income and employment taxes required to be
      withheld by the Company by reason of such purchase and (b) to the Company
      to deliver the certificates for the purchased shares directly to such
      brokerage firm in order to complete the sale
  transaction.

              

      

      

      This
Option shall not be assignable or transferable, except by will or by the laws of
descent and distribution, and shall be exercisable only by Optionee during his
or her lifetime, except as provided in Section 8 hereof.

      

      7.  Termination of
Service.  If Optionee shall cease to serve as a Director of the
Company for any reason, no further installments shall vest pursuant to Section
5, and the maximum number of Shares that Optionee may purchase pursuant hereto
shall be limited to the number of Shares that were vested as of the date
Optionee ceases to be a Director (to the nearest whole Share). Thereupon,
Optionee shall have the right to exercise this Option, at any time during the
remaining term hereof, to the extent, but only to the extent, that this Option
was exercisable as of the date Optionee ceases to be a Director; provided,
however, if Optionee is removed as a Director pursuant to the Florida
corporation law, the foregoing right to exercise shall automatically terminate
on the date Optionee ceases to be a Director as to all Shares covered by this
Option not exercised prior to termination. Unless earlier terminated, all rights
under this Option shall terminate in any event on the expiration date of this
Option as defined in Section 4 hereof.

      

      8.  Death of
Optionee.  If the Optionee shall die while in the employ of the
Company, Optionee's personal representative or the person entitled to Optionee's
rights hereunder may at any time within six (6) months after the date of
Optionee's death, or during the remaining term of this Option, whichever is the
lesser, exercise this Option and purchase Shares to the extent, but only to the
extent, that Optionee could have exercised this Option as of the date of
Optionee's death; provided, in any case, that this Option may be so exercised
only to the extent that this Option has not previously been exercised by
Optionee.

      

      9.  No Rights as
Shareholder.  Optionee shall have no rights as a shareholder
with respect to the Shares covered by any installment of this Option until the
effective date of issuance of the Shares following exercise of this Option, and
no adjustment will be made for dividends or other rights for which the record
date is prior to the date such stock certificate or certificates are issued
except as provided in Section 10 hereof.

      

      10.  Recapitalization.  Subject
to any required action by the shareholders of the Company, the number of Shares
covered by this Option, and the Exercise Price thereof, shall be proportionately
adjusted for any increase or decrease in the number of issued shares resulting
from a subdivision or consolidation of shares or the payment of a stock
dividend, or any other increase or decrease in the number of such shares
effected without receipt of consideration by the Company; provided however that
the conversion of any convertible securities of the Company shall not be deemed
having been "effected without receipt of consideration by the
Company".

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      In the event of a proposed dissolution
or liquidation of the Company, a merger or consolidation in which the Company is
not the surviving entity, or a sale of all or substantially all of the assets or
capital stock of the Company (collectively, a "Reorganization"), unless
otherwise provided by the Board, this Option shall terminate immediately prior
to such date as is determined by the Board, which date shall be no later than
the consummation of such Reorganization. In such event, if the entity which
shall be the surviving entity does not tender to Optionee an offer, for which it
has no obligation to do so, to substitute for any unexercised Option a stock
option or capital stock of such surviving of such surviving entity, as
applicable, which on an equitable basis shall provide the Optionee with
substantially the same economic benefit as such unexercised Option, then the
Board may grant to such Optionee, in its sole and absolute discretion and
without obligation, the right for a period commencing thirty (30) days prior to
and ending immediately prior to the date determined by the Board pursuant hereto
for termination of the Option or during the remaining term of the Option,
whichever is the lesser, to exercise any unexpired Option or Options without
regard to the installment provisions of Section 5; provided, however, that such
exercise shall be subject to the consummation of such
Reorganization.

      

      Subject to any required action by the
shareholders of the Company, if the Company shall be the surviving entity in any
merger or consolidation, this Option thereafter shall pertain to and apply to
the securities to which a holder of Shares equal to the Shares subject to this
Option would have been entitled by reason of such merger or consolidation, and
the installment provisions of Section 5 shall continue to apply.

      

      In the event of a change in the shares
of the Company as presently constituted, which is limited to a change of all of
its authorized Stock without par value into the same number of shares of Stock
with a par value, the shares resulting from any such change shall be deemed to
be the Shares within the meaning of this Option.

      

      To the extent that the foregoing
adjustments relate to shares or securities of the Company, such adjustments
shall be made by the Board, whose determination in that respect shall be final,
binding and conclusive. Except as hereinbefore expressly provided, Optionee
shall have no rights by reason of any subdivision or consolidation of shares of
Stock of any class or the payment of any stock dividend or any other increase or
decrease in the number of shares of stock of any class, and the number and price
of Shares subject to this Option shall not be affected by, and no adjustments
shall be made by reason of, any dissolution, liquidation, merger, consolidation
or sale of assets or capital stock, or any issue by the Company of shares of
stock of any class or securities convertible into shares of stock of any
class.

      

      The grant of this Option shall not
affect in any way the right or power of the Company to make adjustments,
reclassifications, reorganizations or changes in its capital or business
structure or to merge, consolidate, dissolve or liquidate or to sell or transfer
all or any part of its business or assets.

      

      11.  Taxation upon Exercise of
Option.  Optionee understands that, upon exercise of this
Option, Optionee will recognize income, for Federal and state income tax
purposes, in an amount equal to the amount by which the fair market value of the
Shares, determined as of the date of exercise, exceeds the Exercise Price. The
acceptance of the Shares by Optionee shall constitute an agreement by Optionee
to report such income in accordance with then applicable law and to cooperate
with Company in establishing the amount of such income and corresponding
deduction to the Company for its income tax purposes. Withholding for federal or
state income and employment tax purposes will be made, if and as required by
law, from Optionee's then current compensation, or, if such current compensation
is insufficient to satisfy withholding tax liability, the Company may require
Optionee to make a cash payment to cover such liability as a condition of the
exercise of this Option.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      12.  Modification, Extension and
Renewal of Options.  The Board or Committee, as described in
the Plan, may modify, extend or renew this Option or accept the surrender
thereof (to the extent not theretofore exercised) and authorize the granting of
a new option in substitution therefore (to the extent not theretofore
exercised), subject at all times to the Plan, the Code and the Florida
Securities Rules.  Notwithstanding the foregoing provisions of this
Section 12, no modification shall, without the consent of the Optionee, alter to
the Optionee's detriment or impair any rights of Optionee
hereunder.

      

      13.  Investment Intent;
Restrictions on Transfer.

      

      
        	
                 
      

              	
                (a)  Optionee
      represents and agrees that if Optionee exercises this Option in whole or
      in part, Optionee will in each case acquire the Shares upon such exercise
      for the purpose of investment and not with a view to, or for resale in
      connection with, any distribution thereof; and that upon such exercise of
      this Option in whole or in part, Optionee (or any person or persons
      entitled to exercise this Option under the provisions of Sections 7 and 8
      hereof) shall furnish to the Company a written statement to such effect,
      satisfactory to the Company in form and substance. If the Shares
      represented by this Option are registered under the Securities Act, either
      before or after the exercise of this Option in whole or in part, the
      Optionee shall be relieved of the foregoing investment representation and
      agreement and shall not be required to furnish the Company with the
      foregoing written statement.

              

      

      

      
        	
                 
      

              	
                (b)  Optionee
      further represents that Optionee has had access to the financial
      statements or books and records of the Company, has had the opportunity to
      ask questions of the Company concerning its business, operations and
      financial condition, and to obtain additional information reasonably
      necessary to verify the accuracy of such
  information

              

      

      

      
        	
                 
      

              	
                (c)
      Unless and until the Shares represented by this Option are registered
      under the Securities Act, all certificates representing the Shares and any
      certificates subsequently issued in substitution therefor and any
      certificate for any securities issued pursuant to any stock split, share
      reclassification, stock dividend or other similar capital event shall bear
      legends in substantially the following
form:

              

      

      

      
        	
                 
      

              	
                THESE
      SECURITIES HAVE NOT BEEN REGISTERED OR OTHERWISE QUALIFIED UNDER THE
      SECURITIES ACT OF 1933 (THE 'SECURITIES ACT') OR UNDER THE APPLICABLE OR
      SECURITIES LAWS OF ANY STATE. NEITHER THESE SECURITIES NOR ANY INTEREST
      THEREIN MAY BE SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF IN THE
      ABSENCE OF REGISTRATION UNDER THE SECURITIES ACT OR ANY APPLICABLE
      SECURITIES LAWS OF ANY STATE, UNLESS PURSUANT TO EXEMPTIONS
      THEREFROM.

              

      

      

      
        	
                 
      

              	
                THE
      SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED PURSUANT TO THAT
      CERTAIN NONSTATUTORY STOCK OPTION AGREEMENT DATED ____________ BETWEEN THE
      COMPANY AND THE ISSUEE WHICH RESTRICTS THE TRANSFER OF THESE SHARES WHICH
      ARE SUBJECT TO REPURCHASE BY THE COMPANY UNDER CERTAIN
      CONDITIONS.

              

      

      

      and/or
such other legend or legends as the Company and its counsel deem necessary or
appropriate. Appropriate stop transfer instructions with respect to the Shares
have been placed with the Company's transfer agent.

      

      14.  Stand-off
Agreement.  Optionee agrees that, in connection with any
registration of the Company's securities under the Securities Act, and upon the
request of the Company or any underwriter managing an underwritten offering of
the Company's securities, Optionee shall not sell, short any sale of, loan,
grant an option for, or otherwise dispose of any of the Shares (other than
Shares included in the offering) without the prior written consent of the
Company or such managing underwriter, as applicable, for a period of at least
one year following the effective date of registration of such
offering.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      15.  Restriction Upon
Transfer.  The Shares may not be sold, transferred or otherwise
disposed of and shall not be pledged or otherwise hypothecated by the Optionee
except as hereinafter provided.

      

      
        	
                 
      

              	
                (a)  Repurchase Right on
      Termination Other Than by Removal.  For the purposes of
      this Section, a "Repurchase Event" shall
      mean an occurrence of one of (i) termination of Optionee's service as a
      director; (ii) death of Optionee; (iii) bankruptcy of Optionee, which
      shall be deemed to have occurred as of the date on which a voluntary or
      involuntary petition in bankruptcy is filed with a court of competent
      jurisdiction; (iv) dissolution of the marriage of Optionee, to the extent
      that any of the Shares are allocated as the sole and separate property of
      Optionee's spouse pursuant thereto (in which case, this Section shall only
      apply to the Shares so affected); or (v) any attempted transfer by the
      Optionee of Shares, or any interest therein, in violation of this
      Agreement. Upon the occurrence of a Repurchase Event, and upon mutual
      agreement of the Company and Optionee, the Company may repurchase all or
      any portion of the Shares of Optionee at a price equal to the fair value
      of the Shares as of the date of the Repurchase
  Event.

              

      

      

      
        	
                 
      

              	
                (b)  Repurchase Right on
      Removal.  In the event Optionee is removed as a director
      pursuant to the Florida Securities Rules, or Optionee voluntarily resigns
      as a director prior to the date upon which the last installment of Shares
      becomes exercisable pursuant to Section 5, then the Company shall have the
      right (but not an obligation) to repurchase Shares of Optionee at a price
      equal to the Exercise Price. Such right of the Company to repurchase
      Shares shall apply to 100% of the Shares for one (1) year from the date of
      this Agreement; and shall thereafter lapse ratably in equal annual
      increments on each anniversary of the date of this Agreement over the term
      of this Option specified in Section 4. In addition, the Company shall have
      the right, in the sole discretion of the Board and without obligation, to
      repurchase upon removal or resignation all or any portion of the Shares of
      Optionee, at a price equal to the fair value of the Shares as of the date
      of such removal or resignation, which right is not subject to the
      foregoing lapsing of rights. In the event the Company elects to repurchase
      the Shares, the stock certificates representing the same shall forthwith
      be returned to the Company for
cancellation.

              

      

      

      
        	
                 
      

              	
                (c)  Exercise of Repurchase
      Right.  Any Repurchase Right under Paragraphs 15(a) or
      15(b) shall be exercised by giving notice of exercise as provided herein
      to Optionee or the estate of Optionee, as applicable. Such right shall be
      exercised, and the repurchase price thereunder shall be paid, by the
      Company within a ninety (90) day period beginning on the date of notice to
      the Company of the occurrence of such Repurchase Event (except in the case
      of termination or cessation of services as director, where such option
      period shall begin upon the occurrence of the Repurchase Event). Such
      repurchase price shall be payable only in the form of cash (including a
      check drafted on immediately available funds) or cancellation of purchase
      money indebtedness of the Optionee for the Shares. If the Company can not
      purchase all such Shares because it is unable to meet the financial tests
      set forth in the Florida corporation law, the Company shall have the right
      to purchase as many Shares as it is permitted to purchase under such
      sections. Any Shares not purchased by the Company hereunder shall no
      longer be subject to the provisions of this Section
  15.

              

      

      

      
        	
                 
      

              	
                (d)  Right
      of First Refusal. In the event Optionee desires to transfer any Shares
      during his or her lifetime, Optionee shall first offer to sell such Shares
      to the Company. Optionee shall deliver to the Company written notice of
      the intended sale, such notice to specify the number of Shares to be sold,
      the proposed purchase price and terms of payment, and grant the Company an
      option for a period of thirty days following receipt of such notice to
      purchase the offered Shares upon the same terms and conditions. To
      exercise such option, the Company shall give notice of that fact to
      Optionee within the thirty (30) day notice period and agree to pay the
      purchase price in the manner provided in the notice. If the Company does
      not purchase all of the Shares so offered during foregoing option period,
      Optionee shall be under no obligation to sell any of the offered Shares to
      the Company, but may dispose of such Shares in any lawful manner during a
      period of one hundred and eighty (180) days following the end of such
      notice period, except that Optionee shall not sell any such Shares to any
      other person at a lower price or upon more favorable terms than those
      offered to the Company.

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      
        	
                 
      

              	
                (e)  Acceptance
      of Restrictions. Acceptance of the Shares shall constitute the Optionee's
      agreement to such restrictions and the legending of his certificates with
      respect thereto. Notwithstanding such restrictions, however, so long as
      the Optionee is the holder of the Shares, or any portion thereof, he shall
      be entitled to receive all dividends declared on and to vote the Shares
      and to all other rights of a shareholder with respect
    thereto.

              

      

      

      
        	
                 
      

              	
                (f)  Permitted
      Transfers. Notwithstanding any provisions in this Section 15 to the
      contrary, the Optionee may transfer Shares subject to this Agreement to
      his or her parents, spouse, children, or grandchildren, or a trust for the
      benefit of the Optionee or any such transferee(s); provided, that such
      permitted transferee(s) shall hold the Shares subject to all the
      provisions of this Agreement (all references to the Optionee herein shall
      in such cases refer mutatis mutandis to the permitted transferee, except
      in the case of clause (iv) of Section 15(a) wherein the permitted transfer
      shall be deemed to be rescinded); and provided further, that
      notwithstanding any other provisions in this Agreement, a permitted
      transferee may not, in turn, make permitted transfers without the written
      consent of the Optionee and the
Company.

              

      

      

      
        	
                 
      

              	
                (g)  Release
      of Restrictions on Shares. All other restrictions under this Section 15
      shall terminate ____ (__) years following the date of this Agreement, or
      when the Company's securities are publicly traded, whichever occurs
      earlier.

              

      

      

      16.  Notices.  Any
notice required to be given pursuant to this Option or the Plan shall be in
writing and shall be deemed to be delivered upon receipt or, in the case of
notices by the Company, five (5) days after deposit in the U.S. mail, postage
prepaid, addressed to Optionee at the address last provided by Optionee for use
in Company records related to Optionee.

      

      17.  Agreement Subject to Plan;
Applicable Law.  This Option is made pursuant to the Plan and
shall be interpreted to comply therewith. A copy of such Plan is available to
Optionee, at no charge, at the principal office of the Company. Any provision of
this Option inconsistent with the Plan shall be considered void and replaced
with the applicable provision of the Plan. This Option has been granted,
executed and delivered in the State of Florida, and the interpretation and
enforcement shall be governed by the laws thereof and subject to the exclusive
jurisdiction of the courts therein.

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      [SIGNATURE
PAGE TO FOLLOW]

       

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

       

      
        
          	

                  COMPANY:

                	

                  SHENGKAI
      INNOVATIONS, INC.

                  a
      Florida corporation

                	 
	 	 	 	 
	
                   

                	
                  By:
      

                	 	 
	 	 	Name:
      Wang Chen	 
	 	 	Title:   Chairman
      and Chief Executive Officer	 
	 	 	 	 

        

      

       

      
        
          	

                  OPTIONEE:

                	 	 
	 	 	 	 
	
                   

                	
                  By:
      

                	 	 
	 	 	
                  (signature)

                	 
	 	 	 	 
	 	Name: 	  
      	 

        

      

      

      (one of the following, as appropriate,
shall be signed)

      

      
        	
                I
      certify that as of the date hereof I am unmarried

              	 
      	
                By
      his or her signature, the spouse of Optionee hereby agrees to be bound by
      the provisions of the foregoing INCENTIVE STOCK OPTION
      AGREEMENT

                 

              
	   
      	 
      	   
      
	
                Optionee

              	 
      	
                Spouse
      of Optionee

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      Appendix A

      NOTICE OF
EXERCISE

      

      SHENGKAI
INNOVATIONS, INC.

      

                     Re:
Nonstatutory Stock Option

      

      Notice is hereby given pursuant to
Section 6 of my Nonstatutory Stock Option Agreement that I elect to purchase the
number of shares set forth below at the exercise price set forth in my option
agreement:

      

      Nonstatutory Stock Option Agreement
dated: ____________

      

      Number of shares being purchased:
____________

      

      Exercise Price:
$____________

      

      A check in the amount of the aggregate
price of the shares being purchased is attached.

      

      I hereby confirm that such shares are
being acquired by me for my own account for investment purposes, and not with a
view to, or for resale in connection with, any distribution thereof. I will not
sell or dispose of my Shares in violation of the Securities Act of 1933, as
amended, or any applicable federal or state securities laws.

      

      I agree to provide to the Company such
additional documents or information as may be required pursuant to the Company's
2010 Incentive Stock Plan.

       

      
        
          	 	
                	 
	 	 	 	 
	
                	
                  By:
      

                	
                	 
	 	 	

                  (signature)

                	 
	 	 	 	 
	 	Name: 	 	 

        

      

      
 

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      EXHIBIT
B-3

      

      SHENGKAI
INNOVATIONS, INC.

      CONSULTANT
NONSTATUTORY STOCK OPTION AGREEMENT

      
        

      

      
        

        

      

      

      This
Consultant Nonstatutory Stock Option Agreement ("Agreement") is made and
entered into as of the date set forth below, by and between Shengkai
Innovations, Inc., a Florida corporation (the "Company"), and the following
consultant to the Company (herein, the "Optionee"):

      

      In consideration of the covenants
herein set forth, the parties hereto agree as follows:

      

      1.  Option
Information.

      

      
        	
                 
      

              	
                (a)

              	
                Date
      of Option:

              	 	 

      

      

      
        	
                 
      

              	
                (b)

              	
                Optionee:

              	 	 

      

       

      	
            	
              (c)

            	
              

                Number
      of Shares:

              

            	 	 

       

      
        	
                 
      

              	
                (d)

              	
                Exercise
      Price:

              	 	 

      

      

      2.  Acknowledgements.

      

      
        	
                 
      

              	
                (a)  Optionee
      is an independent consultant to the Company, not an
    employee;

              

      

      

      
        	
                 
      

              	
                (b)  The
      Board of Directors (the "Board" which term shall
      include an authorized committee of the Board of Directors) and
      shareholders of the Company have heretofore adopted a 2010 Incentive Stock
      Plan (the "Plan"),
      pursuant to which this Option is being granted;
  and

              

      

      

      
        	
                 
      

              	
                (c)  The
      Board has authorized the granting to Optionee of a nonstatutory stock
      option ("Option")
      to purchase shares of common stock of the Company ("Stock") upon the terms
      and conditions hereinafter stated and pursuant to an exemption from
      registration under the Securities Act of 1933, as amended (the "Securities Act")
      provided by Section 4(2)
thereunder.

              

      

      

      3.  Shares;
Price.  The Company hereby grants to Optionee the right to
purchase, upon and subject to the terms and conditions herein stated, the number
of shares of Stock set forth in Section 1(c) above (the "Shares") for cash (or other
consideration as is authorized under the Plan and acceptable to the Board, in
their sole and absolute discretion) at the price per Share set forth in Section
1(d) above (the "Exercise
Price"), such price being not less than eighty-five 85% of the fair
market value per share of the Shares covered by this Option as of the date
hereof.

      

      4.  Term of
Option.  This Option shall expire, and all rights hereunder to
purchase the Shares, shall terminate ____ (___) years from the date hereof.
Nothing contained herein shall be construed to interfere in any way with the
right of the Company to terminate Optionee as a consultant to the Company, or to
increase or decrease the compensation paid to Optionee from the rate in effect
as of the date hereof.

      

      5.  Vesting of Option.
Subject to the provisions of Sections 7 and 8 hereof, this Option shall become
exercisable during the term of Optionee's employment in ______ equal annual
installments of _______ percent of the Shares covered by this Option, the first
installment to be exercisable on _______ anniversary of the date of this Option
(the "Initial Vesting Date"), with an additional _____ percent of such Shares
becoming exercisable on each of the successive periods following the Initial
Vesting Date. The installments shall be cumulative (i.e., this option may be
exercised, as to any or all Shares covered by an installment, at any time or
times after an installment becomes exercisable and until expiration or
termination of this option).

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      6.  Exercise.  This
Option shall be exercised by delivery to the Company of (a) written notice of
exercise stating the number of Shares being purchased (in whole shares only) and
such other information set forth on the form of Notice of Exercise attached
hereto as Appendix
A, (b) a check or cash in the amount of the Exercise Price of the Shares
covered by the notice (or such other consideration as has been approved by the
Board of Directors consistent with the Plan) and (c) a written investment
representation as provided for in Section 13 hereof. This Option shall not be
assignable or transferable, except by will or by the laws of descent and
distribution, and shall be exercisable only by Optionee during his or her
lifetime.

      

      7.  Termination of
Service.  If Optionee's service as a consultant to the Company
terminates for any reason, no further installments shall vest pursuant to
Section 5, and Optionee shall have the right at any time within thirty (30) days
following such termination of services or the remaining term of this Option,
whichever is the lesser, to exercise in whole or in part this Option to the
extent, but only to the extent, that this Option was exercisable as of the date
Optionee ceased to be a consultant to the Company; provided, however, if
Optionee is terminated for reasons that would justify a termination of
employment "for cause,"
as that term is defined by the terms of the Plan or this Option Agreement or by
any employment agreement between the Optionee and the Company, the foregoing
right to exercise shall automatically terminate on the date Optionee ceases to
be a consultant to the Company as to all Shares covered by this Option not
exercised prior to termination. Unless earlier terminated, all rights under this
Option shall terminate in any event on the expiration date of this Option as
defined in Section 4 hereof.

      

      8.  Death of
Optionee.  If the Optionee shall die while serving as a
consultant to the Company, Optionee's personal representative or the person
entitled to Optionee's rights hereunder may at any time within ninety (90) days
after the date of Optionee's death, or during the remaining term of this Option,
whichever is the lesser, exercise this Option and purchase Shares to the extent,
but only to the extent, that Optionee could have exercised this Option as of the
date of Optionee's death; provided, in any case, that this Option may be so
exercised only to the extent that this Option has not previously been exercised
by Optionee.

      

      9.  No Rights as
Shareholder.  Optionee shall have no rights as a shareholder
with respect to the Shares covered by any installment of this Option until the
effective date of the issuance of shares following exercise of this to Option,
and no adjustment will be made for dividends or other rights for which the
record date is prior to the date such stock certificate or certificates are
issued except as provided in Section 10 hereof.

      

      10.  Recapitalization.  Subject
to any required action by the shareholders of the Company, the number of Shares
covered by this Option, and the Exercise Price thereof, shall be proportionately
adjusted for any increase or decrease in the number of issued shares resulting
from a subdivision or consolidation of shares or the payment of a stock
dividend, or any other increase or decrease in the number of such shares
effected without receipt of consideration by the Company; provided however that
the conversion of any convertible securities of the Company shall not be deemed
having been "effected without receipt of consideration by the
Company."

      

      In the event of a proposed dissolution
or liquidation of the Company, a merger or consolidation in which the Company is
not the surviving entity, or a sale of all or substantially all of the assets or
capital stock of the Company (collectively, a "Reorganization"), this Option
shall terminate immediately prior to the consummation of such proposed action,
unless otherwise provided by the Board; provided, however, if Optionee shall be
a consultant at the time such Reorganization is approved by the stockholders,
Optionee shall have the right to exercise this Option as to all or any part of
the Shares, without regard to the installment provisions of Section 5, for a
period beginning 30 days prior to the consummation of such Reorganization and
ending as of the Reorganization or the expiration of this Option, whichever is
earlier, subject to the consummation of the Reorganization. In any event, the
Company shall notify Optionee, at least 30 days prior to the consummation of
such Reorganization, of his exercise rights, if any, and that the Option shall
terminate upon the consummation of the Reorganization.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      Subject to any required action by the
shareholders of the Company, if the Company shall be the surviving entity in any
merger or consolidation, this Option thereafter shall pertain to and apply to
the securities to which a holder of Shares equal to the Shares subject to this
Option would have been entitled by reason of such merger or consolidation, and
the installment provisions of Section 5 shall continue to apply.

      

      In the event of a change in the shares
of the Company as presently constituted, which is limited to a change of all of
its authorized Stock without par value into the same number of shares of Stock
with a par value, the shares resulting from any such change shall be deemed to
be the Shares within the meaning of this Option.

      

      To the extent that the foregoing
adjustments relate to shares or securities of the Company, such adjustments
shall be made by the Board, whose determination in that respect shall be final,
binding and conclusive. Except as hereinbefore expressly provided, Optionee
shall have no rights by reason of any subdivision or consolidation of shares of
Stock of any class or the payment of any stock dividend or any other increase or
decrease in the number of shares of stock of any class, and the number and price
of Shares subject to this Option shall not be affected by, and no adjustments
shall be made by reason of, any dissolution, liquidation, merger, consolidation
or sale of assets or capital stock, or any issue by the Company of shares of
stock of any class or securities convertible into shares of stock of any
class.

      

      The grant of this Option shall not
affect in any way the right or power of the Company to make adjustments,
reclassifications, reorganizations or changes in its capital or business
structure or to merge, consolidate, dissolve or liquidate or to sell or transfer
all or any part of its business or assets.

      

      11.  Taxation upon Exercise of
Option.  Optionee understands that, upon exercise of this
Option, Optionee will recognize income, for Federal and state income tax
purposes, in an amount equal to the amount by which the fair market value of the
Shares, determined as of the date of exercise, exceeds the Exercise Price. The
acceptance of the Shares by Optionee shall constitute an agreement by Optionee
to report such income in accordance with then applicable law and to cooperate
with Company in establishing the amount of such income and corresponding
deduction to the Company for its income tax purposes. Withholding for federal or
state income and employment tax purposes will be made, if and as required by
law, from Optionee's then current compensation, or, if such current compensation
is insufficient to satisfy withholding tax liability, the Company may require
Optionee to make a cash payment to cover such liability as a condition of the
exercise of this Option.

      

      12.  Modification, Extension and
Renewal of Options.  The Board or Committee, as described in
the Plan, may modify, extend or renew this Option or accept the surrender
thereof (to the extent not theretofore exercised) and authorize the granting of
a new option in substitution therefore (to the extent not theretofore
exercised), subject at all times to the Plan, the Code. Notwithstanding the
foregoing provisions of this Section 12, no modification shall, without the
consent of the Optionee, alter to the Optionee's detriment or impair any rights
of Optionee hereunder.

      

      13.  Investment Intent;
Restrictions on Transfer.

      

      
        	
                 
      

              	
                (a)  Optionee
      represents and agrees that if Optionee exercises this Option in whole or
      in part, Optionee will in each case acquire the Shares upon such exercise
      for the purpose of investment and not with a view to, or for resale in
      connection with, any distribution thereof; and that upon such exercise of
      this Option in whole or in part, Optionee (or any person or persons
      entitled to exercise this Option under the provisions of Sections 7 and 8
      hereof) shall furnish to the Company a written statement to such effect,
      satisfactory to the Company in form and substance. If the Shares
      represented by this Option are registered under the Securities Act, either
      before or after the exercise of this Option in whole or in part, the
      Optionee shall be relieved of the foregoing investment representation and
      agreement and shall not be required to furnish the Company with the
      foregoing written statement.

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
 

      
        	
                 
      

              	
                (b)  Optionee
      further represents that Optionee has had access to the financial
      statements or books and records of the Company, has had the opportunity to
      ask questions of the Company concerning its business, operations and
      financial condition, and to obtain additional information reasonably
      necessary to verify the accuracy of such
  information.

              

      

      

      
        	
                 
      

              	
                (c)  Unless
      and until the Shares represented by this Option are registered under the
      Securities Act, all certificates representing the Shares and any
      certificates subsequently issued in substitution therefor and any
      certificate for any securities issued pursuant to any stock split, share
      reclassification, stock dividend or other similar capital event shall bear
      legends in substantially the following
form:

              

      

      

      
        	
                 
      

              	
                THESE
      SECURITIES HAVE NOT BEEN REGISTERED OR OTHERWISE QUALIFIED UNDER THE
      SECURITIES ACT OF 1933 (THE 'SECURITIES ACT') OR UNDER THE APPLICABLE OR
      SECURITIES LAWS OF ANY STATE. NEITHER THESE SECURITIES NOR ANY INTEREST
      THEREIN MAY BE SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF IN THE
      ABSENCE OF REGISTRATION UNDER THE SECURITIES ACT OR ANY APPLICABLE
      SECURITIES LAWS OF ANY STATE, UNLESS PURSUANT TO EXEMPTIONS
      THEREFROM.

              

      

      

      
        	
                 
      

              	
                THE
      SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED PURSUANT TO THAT
      CERTAIN NONSTATUTORY STOCK OPTION AGREEMENT DATED ___________ BETWEEN THE
      COMPANY AND THE ISSUEE WHICH RESTRICTS THE TRANSFER OF THESE SHARES WHICH
      ARE SUBJECT TO REPURCHASE BY THE COMPANY UNDER CERTAIN
      CONDITIONS.

              

      

      

      and/or
such other legend or legends as the Company and its counsel deem necessary or
appropriate. Appropriate stop transfer instructions with respect to the Shares
have been placed with the Company's transfer agent.

      

      14.  Stand-off
Agreement.  Optionee agrees that, in connection with any
registration of the Company's securities under the Securities Act, and upon the
request of the Company or any underwriter managing an underwritten offering of
the Company's securities, Optionee shall not sell, short any sale of, loan,
grant an option for, or otherwise dispose of any of the Shares (other than
Shares included in the offering) without the prior written consent of the
Company or such managing underwriter, as applicable, for a period of up to one
year following the effective date of registration of such offering.

      

      15.  Restriction Upon
Transfer.  The Shares may not be sold, transferred or otherwise
disposed of and shall not be pledged or otherwise hypothecated by the Optionee
except as hereinafter provided.

      

      
        	
                 
      

              	
                (a)  Repurchase Right on
      Termination Other Than for Cause.  For the purposes of
      this Section, a "Repurchase Event" shall
      mean an occurrence of one of (i) termination of Optionee's service as a
      consultant, voluntary or involuntary and with or without cause; (ii)
      retirement or death of Optionee; (iii) bankruptcy of Optionee, which shall
      be deemed to have occurred as of the date on which a voluntary or
      involuntary petition in bankruptcy is filed with a court of competent
      jurisdiction; (iv) dissolution of the marriage of Optionee, to the extent
      that any of the Shares are allocated as the sole and separate property of
      Optionee's spouse pursuant thereto (in which case, this Section shall only
      apply to the Shares so affected); or (v) any attempted transfer by the
      Optionee of Shares, or any interest therein, in violation of this
      Agreement. Upon the occurrence of a Repurchase Event, the Company shall
      have the right (but not an obligation) to repurchase all or any portion of
      the Shares of Optionee at a price equal to the fair value of the Shares as
      of the date of the Repurchase
Event.

              

      

      

      
        	
                 
      

              	
                (b)  Repurchase Right on
      Termination for Cause.  In the event Optionee's service
      as a consultant is terminated by the Company "for cause" (as contemplated
      by Section 7), then the Company shall have the right (but not an
      obligation) to repurchase Shares of Optionee at a price equal to the
      Exercise Price. Such right of the Company to repurchase Shares shall apply
      to 100% of the Shares for one (1) year from the date of this Agreement;
      and shall thereafter lapse ratably in equal annual increments on each
      anniversary of the date of this Agreement over the term of this Option
      specified in Section 4. In addition, the Company shall have the right, in
      the sole discretion of the Board and without obligation, to repurchase
      upon any such termination of service for cause all or any portion of the
      Shares of Optionee, at a price equal to the fair value of the Shares as of
      the date of termination, which right is not subject to the foregoing
      lapsing of rights. In the event the Company elects to repurchase the
      Shares, the stock certificates representing the same shall forthwith be
      returned to the Company for
cancellation.

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
 

      
        	
                 
      

              	
                (c)  Exercise of Repurchase
      Right.  Any repurchase right under Paragraphs 15(a) or
      15(b) shall be exercised by giving notice of exercise as provided herein
      to Optionee or the estate of Optionee, as applicable. Such right shall be
      exercised, and the repurchase price thereunder shall be paid, by the
      Company within a ninety (90) day period beginning on the date of notice to
      the Company of the occurrence of such Repurchase Event (except in the case
      of termination of employment or retirement, where such option period shall
      begin upon the occurrence of the Repurchase Event). Such repurchase price
      shall be payable only in the form of cash (including a check drafted on
      immediately available funds) or cancellation of purchase money
      indebtedness of the Optionee for the Shares. If the Company can not
      purchase all such Shares because it is unable to meet the financial tests
      set forth in the Florida and/or Florida corporation law, the Company shall
      have the right to purchase as many Shares as it is permitted to purchase
      under such sections. Any Shares not purchased by the Company hereunder
      shall no longer be subject to the provisions of this Section
      15.

              

      

      

      
        	
                 
      

              	
                (d)  Right of First
      Refusal.  In the event Optionee desires to transfer any
      Shares during his or her lifetime, Optionee shall first offer to sell such
      Shares to the Company. Optionee shall deliver to the Company written
      notice of the intended sale, such notice to specify the number of Shares
      to be sold, the proposed purchase price and terms of payment, and grant
      the Company an option for a period of thirty days following receipt of
      such notice to purchase the offered Shares upon the same terms and
      conditions. To exercise such option, the Company shall give notice of that
      fact to Optionee within the thirty (30) day notice period and agree to pay
      the purchase price in the manner provided in the notice. If the Company
      does not purchase all of the Shares so offered during foregoing option
      period, Optionee shall be under no obligation to sell any of the offered
      Shares to the Company, but may dispose of such Shares in any lawful manner
      during a period of one hundred and eighty (180) days following the end of
      such notice period, except that Optionee shall not sell any such Shares to
      any other person at a lower price or upon more favorable terms than those
      offered to the Company.

              

      

      

      
        	
                 
      

              	
                (e)  Acceptance of
      Restrictions.  Acceptance of the Shares shall constitute
      the Optionee's agreement to such restrictions and the legending of his
      certificates with respect thereto. Notwithstanding such restrictions,
      however, so long as the Optionee is the holder of the Shares, or any
      portion thereof, he shall be entitled to receive all dividends declared on
      and to vote the Shares and to all other rights of a shareholder with
      respect thereto.

              

      

      

      
        	
                 
      

              	
                (f)  Permitted
      Transfers.  Notwithstanding any provisions in this
      Section 15 to the contrary, the Optionee may transfer Shares subject to
      this Agreement to his or her parents, spouse, children, or grandchildren,
      or a trust for the benefit of the Optionee or any such transferee(s);
      provided, that such permitted transferee(s) shall hold the Shares subject
      to all the provisions of this Agreement (all references to the Optionee
      herein shall in such cases refer mutatis mutandis to the permitted
      transferee, except in the case of clause (iv) of Section 15(a) wherein the
      permitted transfer shall be deemed to be rescinded); and provided further,
      that notwithstanding any other provisions in this Agreement, a permitted
      transferee may not, in turn, make permitted transfers without the written
      consent of the Optionee and the
Company.

              

      

      

      
        	
                 
      

              	
                (g)  Release of
      Restrictions on Shares.  All rights and restrictions
      under this Section 15 shall terminate ___(_) years following the date of
      this Agreement, or when the Company's securities are publicly traded,
      whichever occurs earlier.

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      16.  Notices.  Any
notice required to be given pursuant to this Option or the Plan shall be in
writing and shall be deemed to be delivered upon receipt or, in the case of
notices by the Company, five (5) days after deposit in the U.S. mail, postage
prepaid, addressed to Optionee at the address last provided by Optionee for use
in Company records related to Optionee.

      

      17.  Agreement Subject to Plan;
Applicable Law.  This Option is made pursuant to the Plan and
shall be interpreted to comply therewith. A copy of such Plan is available to
Optionee, at no charge, at the principal office of the Company. Any provision of
this Option inconsistent with the Plan shall be considered void and replaced
with the applicable provision of the Plan. This Option has been granted,
executed and delivered in the State of Florida, and the interpretation and
enforcement shall be governed by the laws thereof and subject to the exclusive
jurisdiction of the courts therein.

      

      [SIGNATURE
PAGE TO FOLLOW]

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      In Witness
Whereof, the parties hereto have executed this Option as of the date
first above written.

      

      
         

        
          
            	

                    COMPANY:

                  	

                    SHENGKAI
      INNOVATIONS, INC.

                    a
      Florida corporation

                  	 
	 	 	 	 
	
                     

                  	
                    By:
      

                  	 	 
	 	 	Name:
      Wang Chen	 
	 	 	Title:   Chairman
      and Chief Executive Officer	 
	 	 	 	 

          

        

         

        
          
            	

                    OPTIONEE:

                  	 	 
	 	 	 	 
	
                     

                  	
                    By:
      

                  	 	 
	 	 	
                    (signature)

                  	 
	 	 	 	 
	 	Name: 	  
      	 

          

        

         

      

      (one of the following, as appropriate,
shall be signed)

      

      
        	
                I
      certify that as of the date hereof I am unmarried

              	 
      	
                By
      his or her signature, the spouse of Optionee hereby agrees to be bound by
      the provisions of the foregoing INCENTIVE STOCK OPTION
      AGREEMENT

                 

              
	   
      	 
      	   
      
	
                Optionee

              	 
      	
                Spouse
      of Optionee

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      Appendix
A

      

      NOTICE OF
EXERCISE

      

      SHENGKAI
INNOVATIONS, INC.

      

      Re:  Nonstatutory Stock
Option

      

      Notice is hereby given pursuant to
Section 6 of my Nonstatutory Stock Option Agreement that I elect to purchase the
number of shares set forth below at the exercise price set forth in my option
agreement:

      

      Nonstatutory Stock Option Agreement
dated: ____________

      

      Number of shares being purchased:
____________

      

      Exercise Price:
$____________

      

      A check in the amount of the aggregate
price of the shares being purchased is attached.

      

      I hereby confirm that such shares are
being acquired by me for my own account for investment purposes, and not with a
view to, or for resale in connection with, any distribution thereof. I will not
sell or dispose of my Shares in violation of the Securities Act of 1933, as
amended, or any applicable federal or state securities laws.

      

      I agree to provide to the Company such
additional documents or information as may be required pursuant to the Company's
2010 Incentive Stock Plan.

       

       

      
        
          	 	
                	 
	 	 	 	 
	
                	
                  By:
      

                	    	 
	 	 	

                  (signature)

                	 
	 	 	 	 
	 	Name: 	  
       	 

        

      

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      EXHIBIT
C

      

      SHENGKAI
INNOVATIONS, INC.

      STOCK
AWARD AGREEMENT

       

      
        
          

          

        

      

      This Stock
Award Agreement ("Agreement") is made and
entered into as of the date set forth below, by and between SHENGKAI
INNOVATIONS, INC., a Florida corporation (the "Company"), and the employee,
director or consultant of the Company named in Section 1(b). ("Grantee"):

      

      In consideration of the covenants
herein set forth, the parties hereto agree as follows:

      

      1.  Stock Award
Information.

      

      
        	
                 
      

              	
                (a)

              	
                Date
      of Award:

              	   	 

      

      

      
        	
                 
      

              	
                (b)

              	
                Grantee:

              	   	 

      

       

      	
            	
              (c)

            	
              

                Number
      of Shares:

              

            	   	 

       

      
        	
                 
      

              	
                (d)

              	
                Original
      Value:

              	   	 

      

      

      
        	
                2.  

              	
                Acknowledgements.

              

      

      

      
        	
                (a)  

              	
                Grantee
      is an employee/director/consultant
      of the Company.

              

      

      

      
        	
                 
      

              	
                (b)  The
      Company has adopted a 2010 Incentive Stock Plan (the "Plan") under which the
      Company's common stock ("Stock") may be offered
      to directors, officers, employees and consultants pursuant to an exemption
      from registration under the Securities Act of 1933, as amended (the "Securities Act")
      provided by Section 4(2)
thereunder.

              

      

      

      3.  Shares;
Value.  The Company hereby grants to Grantee, upon and subject
to the terms and conditions herein stated, the number of shares of Stock set
forth in Section 1(c) (the "Shares"), which Shares have a
fair value per share ("Original
Value") equal to the amount set forth in Section 1(d). For the purpose of
this Agreement, the terms "Share" or "Shares" shall include the
original Shares plus any shares derived therefrom, regardless of the fact that
the number, attributes or par value of such Shares may have been altered by
reason of any recapitalization, subdivision, consolidation, stock dividend or
amendment of the corporate charter of the Company. The number of Shares covered
by this Agreement and the Original Value thereof shall be proportionately
adjusted for any increase or decrease in the number of issued shares resulting
from a recapitalization, subdivision or consolidation of shares or the payment
of a stock dividend, or any other increase or decrease in the number of such
shares effected without receipt of consideration by the Company.

      

      4.  Investment
Intent.  Grantee represents and agrees that Grantee is
accepting the Shares for the purpose of investment and not with a view to, or
for resale in connection with, any distribution thereof; and that, if requested,
Grantee shall furnish to the Company a written statement to such effect,
satisfactory to the Company in form and substance. If the Shares are registered
under the Securities Act, Grantee shall be relieved of the foregoing investment
representation and agreement and shall not be required to furnish the Company
with the foregoing written statement.

      

      5.  Restriction upon
Transfer.  The Shares may not be sold, transferred or otherwise
disposed of and shall not be pledged or otherwise hypothecated by the Grantee
except as hereinafter provided.

      

      
        	
                 
      

              	
                (a)  Repurchase Right on
      Termination Other Than for Cause.  For the purposes of
      this Section, a "Repurchase Event" shall
      mean an occurrence of one of (i) termination of Grantee's employment or service as a
      director/consultant by the Company, voluntary or involuntary and
      with or without cause; (ii) retirement or death of Grantee; (iii)
      bankruptcy of Grantee, which shall be deemed to have occurred as of the
      date on which a voluntary or involuntary petition in bankruptcy is filed
      with a court of competent jurisdiction; (iv) dissolution of the marriage
      of Grantee, to the extent that any of the Shares are allocated as the sole
      and separate property of Grantee's spouse pursuant thereto (in which case,
      this Section shall only apply to the Shares so affected); or (v) any
      attempted transfer by the Grantee of Shares, or any interest therein, in
      violation of this Agreement. Upon the occurrence of a Repurchase Event,
      the Company shall have the right (but not an
      obligation) to purchase all or any portion of the Shares of Grantee, at a
      price equal to the fair value of the Shares as of the date of the
      Repurchase Event.

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
 

      
        	
                 
      

              	
                (b)  Repurchase Right on
      Termination for Cause. In the event Grantee's employment or service as a
      director/consultant is terminated by the Company "for cause" (as defined
      below), then the Company shall have the right (but not an obligation) to
      purchase Shares of Grantee at a price equal to the Original Value. Such
      right of the Company to purchase Shares shall apply to 100% of the Shares
      for one (1) year from the date of this Agreement; and shall thereafter
      lapse at the rate of twenty percent (20%) of the Shares on each
      anniversary of the date of this Agreement. In addition, the Company shall
      have the right, in the sole discretion of the Board and without
      obligation, to repurchase upon termination for cause all or any portion of
      the Shares of Grantee, at a price equal to the fair value of the Shares as
      of the date of termination, which right is not subject to the foregoing
      lapsing of rights. Termination of employment or service as a
      director/consultant "for cause" means (i) as
      to employees or consultants, termination for cause as defined in the Plan,
      this Agreement or in any employment or consulting agreement
      between the Company and Grantee, or (ii) as to directors, removal pursuant
      to the Florida corporation law. In the event the Company elects to
      purchase the Shares, the stock certificates representing the same shall
      forthwith be returned to the Company for
  cancellation.

              

      

      

      
        	
                 
      

              	
                (c)  Exercise of Repurchase
      Right.  Any Repurchase Right under Paragraphs 4(a) or
      4(b) shall be exercised by giving notice of exercise as provided herein to
      Grantee or the estate of Grantee, as applicable. Such right shall be
      exercised, and the repurchase price thereunder shall be paid, by the
      Company within a ninety (90) day period beginning on the date of notice to
      the Company of the occurrence of such Repurchase Event (except in the case
      of termination or cessation of services as director, where such option
      period shall begin upon the occurrence of the Repurchase Event). Such
      repurchase price shall be payable only in the form of cash (including a
      check drafted on immediately available funds) or cancellation of purchase
      money indebtedness of the Grantee for the Shares. If the Company can not
      purchase all such Shares because it is unable to meet the financial tests
      set forth in the Florida corporation law, the Company shall have the right
      to purchase as many Shares as it is permitted to purchase under such
      sections. Any Shares not purchased by the Company hereunder shall no
      longer be subject to the provisions of this Section
  5.

              

      

      

      
        	
                 
      

              	
                (d)  Right of First
      Refusal.  In the event Grantee desires to transfer any
      Shares during his or her lifetime, Grantee shall first offer to sell such
      Shares to the Company. Grantee shall deliver to the Company written notice
      of the intended sale, such notice to specify the number of Shares to be
      sold, the proposed purchase price and terms of payment, and grant the
      Company an option for a period of thirty days following receipt of such
      notice to purchase the offered Shares upon the same terms and conditions.
      To exercise such option, the Company shall give notice of that fact to
      Grantee within the thirty (30) day notice period and agree to pay the
      purchase price in the manner provided in the notice. If the Company does
      not purchase all of the Shares so offered during foregoing option period,
      Grantee shall be under no obligation to sell any of the offered Shares to
      the Company, but may dispose of such Shares in any lawful manner during a
      period of one hundred and eighty (180) days following the end of such
      notice period, except that Grantee shall not sell any such Shares to any
      other person at a lower price or upon more favorable terms than those
      offered to the Company.

              

      

      

      
        	
                 
      

              	
                (e)  Acceptance of
      Restrictions.  Acceptance of the Shares shall constitute
      the Grantee's agreement to such restrictions and the legending of his
      certificates with respect thereto. Notwithstanding such restrictions,
      however, so long as the Grantee is the holder of the Shares, or any
      portion thereof, he shall be entitled to receive all dividends declared on
      and to vote the Shares and to all other rights of a shareholder with
      respect thereto.

              

      

      

      
        	
                 
      

              	
                (f)  Permitted
      Transfers.  Notwithstanding any provisions in this
      Section 5 to the contrary, the Grantee may transfer Shares subject to this
      Agreement to his or her parents, spouse, children, or grandchildren, or a
      trust for the benefit of the Grantee or any such transferee(s); provided,
      that such permitted transferee(s) shall hold the Shares subject to all the
      provisions of this Agreement (all references to the Grantee herein shall
      in such cases refer mutatis mutandis to the permitted transferee, except
      in the case of clause (iv) of Section 5(a) wherein the permitted transfer
      shall be deemed to be rescinded); and provided further, that
      notwithstanding any other provisions in this Agreement, a permitted
      transferee may not, in turn, make permitted transfers without the written
      consent of the Grantee and the
Company.

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      (g)  Release of Restrictions on
Shares.  All rights and restrictions under this Section 15
shall terminate [__] (___) years following the date of this Agreement, or when
the Company's securities are publicly traded, whichever occurs
earlier.

      

      6.  Representations and
Warranties of the Grantee.  This Agreement and the issuance and
grant of the Shares hereunder is made by the Company in reliance upon the
express representations and warranties of the Grantee, which by acceptance
hereof the Grantee confirms that:

      

      
        	
                 
      

              	
                (a)  The
      Shares granted to him pursuant to this Agreement are being acquired by him
      for his own account, for investment purposes, and not with a view to, or
      for sale in connection with, any distribution of the
    Shares.

              

      

      

      
        	
                 
      

              	
                (b)  The
      Shares must be held by him indefinitely unless they are subsequently
      registered under the Act and any applicable state securities laws, or an
      exemption from such registration is available. The Company is under no
      obligation to register the Shares or to make available any such exemption;
      and

              

      

      

      
        	
                 
      

              	
                (c)  Grantee
      further represents that Grantee has had access to the financial statements
      or books and records of the Company, has had the opportunity to ask
      questions of the Company concerning its business, operations and financial
      condition and to obtain additional information reasonably necessary to
      verify the accuracy of such
information,

              

      

      

      
        	
                 
      

              	
                (d)  Unless
      and until the Shares represented by this Grant are registered under the
      Securities Act, all certificates representing the Shares and any
      certificates subsequently issued in substitution therefor and any
      certificate for any securities issued pursuant to any stock split, share
      reclassification, stock dividend or other similar capital event shall bear
      legends in substantially the following
form:

              

      

      

      
        	
                 
      

              	
                THESE
      SECURITIES HAVE NOT BEEN REGISTERED OR OTHERWISE QUALIFIED UNDER THE
      SECURITIES ACT OF 1933 (THE 'SECURITIES ACT') OR UNDER THE APPLICABLE OR
      SECURITIES LAWS OF ANY STATE. NEITHER THESE SECURITIES NOR ANY INTEREST
      THEREIN MAY BE SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF IN THE
      ABSENCE OF REGISTRATION UNDER THE SECURITIES ACT OR ANY APPLICABLE
      SECURITIES LAWS OF ANY STATE, UNLESS PURSUANT TO EXEMPTIONS
      THEREFROM.

              

      

      

      
        	
                 
      

              	
                THE
      SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED PURSUANT TO THAT
      CERTAIN STOCK AWARD AGREEMENT DATED ____________ BETWEEN THE COMPANY AND
      THE ISSUEE WHICH RESTRICTS THE TRANSFER OF THESE SHARES WHICH ARE SUBJECT
      TO REPURCHASE BY THE COMPANY UNDER CERTAIN
  CONDITIONS.

              

      

      

      
        	
                 
      

              	
                and/or
      such other legend or legends as the Company and its counsel deem necessary
      or appropriate. Appropriate stop transfer instructions with respect to the
      Shares have been placed with the Company's transfer
  agent.

              

      

      

      
        	
                 
      

              	
                (e)  Grantee
      understands that he or she will recognize income, for Federal and state
      income tax purposes, in an amount equal to the amount by which the fair
      market value of the Shares, as of the date of grant, exceeds the price
      paid by Grantee, if any. The acceptance of the Shares by Grantee shall
      constitute an agreement by Grantee to report such income in accordance
      with then applicable law. Withholding for federal or state income and
      employment tax purposes will be made, if and as required by law, from
      Grantee's then current compensation, or, if such current compensation is
      insufficient to satisfy withholding tax liability, the Company may require
      Grantee to make a cash payment to cover such
  liability.

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      7.  Stand-off
Agreement.  Grantee agrees that, in connection with any
registration of the Company's securities under the Securities Act, and upon the
request of the Company or any underwriter managing an underwritten offering of
the Company's securities, Grantee shall not sell, short any sale of, loan, grant
an option for, or otherwise dispose of any of the Shares (other than Shares
included in the offering) without the prior written consent of the Company or
such managing underwriter, as applicable, for a period of at least one year
following the effective date of registration of such offering. This Section 8
shall survive any termination of this Agreement.

      

      8.  Termination of
Agreement.  This Agreement shall terminate on the occurrence of
any one of the following events: (a) written agreement of all parties to that
effect; (b) a proposed dissolution or liquidation of the Company, a merger or
consolidation in which the Company is not the surviving entity, or a sale of all
or substantially all of the assets of the Company; (c) the closing of any public
offering of common stock of the Company pursuant to an effective registration
statement under the Securities Act; or (d) dissolution, bankruptcy, or
insolvency of the Company.

      

      9.  Agreement Subject to Plan;
Applicable Law.  This Grant is made pursuant to the Plan and
shall be interpreted to comply therewith. A copy of such Plan is available to
Grantee, at no charge, at the principal office of the Company. Any provision of
this Agreement inconsistent with the Plan shall be considered void and replaced
with the applicable provision of the Plan. This Grant shall be governed by the
laws of the State of Florida and subject to the exclusive jurisdiction of the
courts therein.

      

      10.  Miscellaneous.

      

      
        	
                 
      

              	
                (a)  Notices.  Any
      notice required to be given pursuant to this Agreement or the Plan shall
      be in writing and shall be deemed to have been duly delivered upon receipt
      or, in the case of notices by the Company, five (5) days after deposit in
      the U.S. mail, postage prepaid, addressed to Grantee at the last address
      provided by Grantee for use in the Company's
  records.

              

      

      

      
        	
                 
      

              	
                (b)  Entire
      Agreement.  This instrument constitutes the sole
      agreement of the parties hereto with respect to the Shares. Any prior
      agreements, promises or representations concerning the Shares not included
      or reference herein shall be of no force or effect. This Agreement shall
      be binding on, and shall inure to the benefit of, the Parties hereto and
      their respective transferees, heirs, legal representatives, successors,
      and assigns.

              

      

      

      
        	
                 
      

              	
                (c)  Enforcement.  This
      Agreement shall be construed in accordance with, and governed by, the laws
      of the State of Florida and subject to the exclusive jurisdiction of the
      courts located in Tallahassee, State of Florida. If Grantee attempts to
      transfer any of the Shares subject to this Agreement, or any interest in
      them in violation of the terms of this Agreement, the Company may apply to
      any court for an injunctive order prohibiting such proposed transaction,
      and the Company may institute and maintain proceedings against Grantee to
      compel specific performance of this Agreement without the necessity of
      proving the existence or extent of any damages to the Company. Any such
      attempted transaction shares in violation of this Agreement shall be null
      and void.

              

      

      

      
        	
                 
      

              	
                (d)  Validity of
      Agreement.  The provisions of this Agreement may be
      waived, altered, amended, or repealed, in whole or in part, only on the
      written consent of all parties hereto. It is intended that each Section of
      this Agreement shall be viewed as separate and divisible, and in the event
      that any Section shall be held to be invalid, the remaining Sections shall
      continue to be in full force and
effect.

              

      

      

      [SIGNATURE
PAGE TO FOLLOW]

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

       

      In Witness
Whereof, the parties have executed this Agreement as of the date first
above written.

       

      
        
          
            
              	

                      COMPANY:

                    	

                      SHENGKAI
      INNOVATIONS, INC.

                      a
      Florida corporation

                    	 
	 	 	 	 
	
                       

                    	
                      By:
      

                    	 	 
	 	 	Name:
      Wang Chen	 
	 	 	Title:   Chairman
      and Chief Executive Officer	 
	 	 	 	 

            

          

           

          
            
              	

                            
                        GRANTEE:

                      

                    	 	 
	 	 	 	 
	
                       

                    	
                      By:
      

                    	 	 
	 	 	
                      (signature)

                    	 
	 	 	 	 
	 	Name: 	  
      	 

            

          

           

        

      

      (one of the following, as appropriate,
shall be signed)

      

      
        	
                I
      certify that as of the date hereof I am unmarried

              	 
      	
                By
      his or her signature, the spouse of Grantee hereby agrees to be bound by
      the provisions of the foregoing STOCK AWARD AGREEMENT

                 

              
	   
      	 
      	   
      
	
                Grantee

              	 
      	
                Spouse
      of Grantee

              

      

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      EXHIBIT
D

      

      SHENGKAI
INNOVATIONS, INC.

      RESTRICTED
STOCK PURCHASE AGREEMENT

       

      
        
          

          

        

      

      

      This
Restricted Stock Purchase Agreement ("Agreement") is made and
entered into as of the date set forth below, by and between SHENGKAI
INNOVATIONS, INC., a Florida corporation (the "Company"), and the employee,
director or consultant of the Company named in Section 1(b). ("Grantee"):

      

      In consideration of the covenants
herein set forth, the parties hereto agree as follows:

      

      1.  Stock Purchase
Information.

      

      
        	
                 
      

              	
                (a)

              	
                Date
      of Agreement:

              	 	 

      

       

      
        	
              	
                (b)

              	
                

                  Grantee:

                

              	 	 

         

      

      
        	
                 
      

              	
                (c)

              	
                Number
      of Shares:

              	 	 

      

       

      	
            	
              (d)

            	
              

                Purchase
      Price:

              

            	 	 

       

      2.  Acknowledgements.

      

      
        	
                 
      

              	
                (a)  Grantee
      is an employee/director/consultant
      of the Company.

              

      

      

      
        	
                 
      

              	
                (b)  The
      Company has adopted a 2010 Incentive Stock Plan (the "Plan") under which the
      Company's common stock ("Stock") may be offered
      to officers, employees, directors and consultants pursuant to an exemption
      from registration under the Securities Act of 1933, as amended (the "Securities Act")
      provided by Section 4(2)
thereunder.

              

      

      

      
        	
                 
      

              	
                (c)  The
      Grantee desires to purchase shares of the Company's common stock on the
      terms and conditions set forth
herein.

              

      

      

      3.  Purchase of Shares.
The Company hereby agrees to sell and Grantee hereby agrees to purchase, upon
and subject to the terms and conditions herein stated, the number of shares of
Stock set forth in Section 1(c) (the "Shares"), at the price per
Share set forth in Section 1(d) (the "Price"). For the purpose of
this Agreement, the terms "Share" or "Shares" shall include the
original Shares plus any shares derived therefrom, regardless of the fact that
the number, attributes or par value of such Shares may have been altered by
reason of any recapitalization, subdivision, consolidation, stock dividend or
amendment of the corporate charter of the Company.  The number of
Shares covered by this Agreement shall be proportionately adjusted for any
increase or decrease in the number of issued shares resulting from a
recapitalization, subdivision or consolidation of shares or the payment of a
stock dividend, or any other increase or decrease in the number of such shares
effected without receipt of consideration by the Company.

      

      4.  Investment Intent.
Grantee represents and agrees that Grantee is accepting the Shares for the
purpose of investment and not with a view to, or for resale in connection with,
any distribution thereof; and that, if requested, Grantee shall furnish to the
Company a written statement to such effect, satisfactory to the Company in form
and substance. If the Shares are registered under the Securities Act, Grantee
shall be relieved of the foregoing investment representation and agreement and
shall not be required to furnish the Company with the foregoing written
statement.

      

      5.  Restriction upon
Transfer.  The Shares may not be sold, transferred or otherwise
disposed of and shall not be pledged or otherwise hypothecated by the Grantee
except as hereinafter provided.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      
        	
                 
      

              	
                (a)  Repurchase
      Right on Termination Other Than for Cause. For the purposes of this
      Section, a "Repurchase
      Event" shall mean an occurrence of one of (i) termination of
      Grantee's employment or
      service as a director/consultant by the Company, voluntary or
      involuntary and with or without cause; (ii) retirement or death of
      Grantee; (iii) bankruptcy of Grantee, which shall be deemed to have
      occurred as of the date on which a voluntary or involuntary petition in
      bankruptcy is filed with a court of competent jurisdiction; (iv)
      dissolution of the marriage of Grantee, to the extent that any of the
      Shares are allocated as the sole and separate property of Grantee's spouse
      pursuant thereto (in which case, this Section shall only apply to the
      Shares so affected); or (v) any attempted transfer by the Grantee of
      Shares, or any interest therein, in violation of this Agreement. Upon the
      occurrence of a Repurchase Event, the Company shall have the right (but
      not an obligation) to repurchase all or any portion of the Shares of
      Grantee at a price equal to the fair value of the Shares as of the date of
      the Repurchase Event.

              

      

      

      
        	
                 
      

              	
                (b)
      Repurchase Right on Termination for Cause. In the event Grantee's
      employment or service as
      a director/consultant is terminated by the Company "for cause" (as defined
      below), then the Company shall have the right (but not an obligation) to
      repurchase Shares of Grantee at a price equal to the Price. Such right of
      the Company to repurchase Shares shall apply to 100% of the Shares for one
      (1) year from the date of this Agreement; and shall thereafter lapse at
      the rate of twenty percent (20%) of the Shares on each anniversary of the
      date of this Agreement. In addition, the Company shall have the right, in
      the sole discretion of the Board and without obligation, to repurchase
      upon termination for cause all or any portion of the Shares of Grantee, at
      a price equal to the fair value of the Shares as of the date of
      termination, which right is not subject to the foregoing lapsing of
      rights. Termination of employment or service as a
      director/consultant "for cause" means (i) as
      to employees and consultants, termination for cause as defined in the
      Plan, this Agreement or in any employment or consulting agreement
      between the Company and Grantee, or (ii) as to directors, removal pursuant
      to the Florida corporation law.  In the event the Company elects
      to repurchase the Shares, the stock certificates representing the same
      shall forthwith be returned to the Company for
    cancellation.

              

      

      

      
        	
                 
      

              	
                (c)
      Exercise of
      Repurchase Right.  Any Repurchase Right under Paragraphs
      4(a) or 4(b) shall be exercised by giving notice of exercise as provided
      herein to Grantee or the estate of Grantee, as applicable. Such right
      shall be exercised, and the repurchase price thereunder shall be paid, by
      the Company within a ninety (90) day period beginning on the date of
      notice to the Company of the occurrence of such Repurchase Event (except
      in the case of termination of employment or retirement, where such option
      period shall begin upon the occurrence of the Repurchase Event). Such
      repurchase price shall be payable only in the form of cash (including a
      check drafted on immediately available funds) or cancellation of purchase
      money indebtedness of the Grantee for the Shares. If the Company can not
      purchase all such Shares because it is unable to meet the financial tests
      set forth in the Florida corporation law, the Company shall have the right
      to purchase as many Shares as it is permitted to purchase under such
      sections. Any Shares not purchased by the Company hereunder shall no
      longer be subject to the provisions of this Section
  5.

              

      

      

      
        	
                 
      

              	
                (d)  Right of First
      Refusal. In the event Grantee desires to transfer any Shares during
      his or her lifetime, Grantee shall first offer to sell such Shares to the
      Company. Grantee shall deliver to the Company written notice of the
      intended sale, such notice to specify the number of Shares to be sold, the
      proposed purchase price and terms of payment, and grant the Company an
      option for a period of thirty days following receipt of such notice to
      purchase the offered Shares upon the same terms and conditions. To
      exercise such option, the Company shall give notice of that fact to
      Grantee within the thirty (30) day notice period and agree to pay the
      purchase price in the manner provided in the notice. If the Company does
      not purchase all of the Shares so offered during foregoing option period,
      Grantee shall be under no obligation to sell any of the offered Shares to
      the Company, but may dispose of such Shares in any lawful manner during a
      period of one hundred and eighty (180) days following the end of such
      notice period, except that Grantee shall not sell any such Shares to any
      other person at a lower price or upon more favorable terms than those
      offered to the Company.

              

      

      

      
        	
                 
      

              	
                (e)  Acceptance of
      Restrictions. Acceptance of the Shares shall constitute the
      Grantee's agreement to such restrictions and the legending of his
      certificates with respect thereto. Notwithstanding such restrictions,
      however, so long as the Grantee is the holder of the Shares, or any
      portion thereof, he shall be entitled to receive all dividends declared on
      and to vote the Shares and to all other rights of a shareholder with
      respect thereto.

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      
        	
                 
      

              	
                (f)  Permitted
      Transfers. Notwithstanding any provisions in this Section 5 to the
      contrary, the Grantee may transfer Shares subject to this Agreement to his
      or her parents, spouse, children, or grandchildren, or a trust for the
      benefit of the Grantee or any such transferee(s); provided, that such
      permitted transferee(s) shall hold the Shares subject to all the
      provisions of this Agreement (all references to the Grantee herein shall
      in such cases refer mutatis mutandis to the permitted transferee, except
      in the case of clause (iv) of Section 5(a) wherein the permitted transfer
      shall be deemed to be rescinded); and provided further, that
      notwithstanding any other provisions in this Agreement, a permitted
      transferee may not, in turn, make permitted transfers without the written
      consent of the Grantee and the
Company.

              

      

      

      
        	
                 
      

              	
                (g)  Release of
      Restrictions on Shares. All rights and restrictions under this
      Section 5 shall terminate ___ (_) years following the date upon which the
      Company receives the full Price as set forth in Section 3, or when the
      Company's securities are publicly traded, whichever occurs
      earlier.

              

      

      

      5.  Representations and
Warranties of the Grantee. This Agreement and the issuance and grant of
the Shares hereunder is made by the Company in reliance upon the express
representations and warranties of the Grantee, which by acceptance hereof the
Grantee confirms that:

      

      
        	
                 
      

              	
                (a)  The
      Shares granted to him pursuant to this Agreement are being acquired by him
      for his own account, for investment purposes, and not with a view to, or
      for sale in connection with, any distribution of the Shares. It is
      understood that the Shares have not been registered under the Act by
      reason of a specific exemption from the registration provisions of the Act
      which depends, among other things, upon the bona fide nature of his
      representations as expressed
herein;

              

      

      

      
        	
                 
      

              	
                (b)  The
      Shares must be held by him indefinitely unless they are subsequently
      registered under the Act and any applicable state securities laws, or an
      exemption from such registration is available. The Company is under no
      obligation to register the Shares or to make available any such exemption;
      and

              

      

      

      
        	
                 
      

              	
                (c)  Grantee
      further represents that Grantee has had access to the financial statements
      or books and records of the Company, has had the opportunity to ask
      questions of the Company concerning its business, operations and financial
      condition and to obtain additional information reasonably necessary to
      verify the accuracy of such
information;

              

      

      

      
        	
                 
      

              	
                (d)  Unless
      and until the Shares represented by this Grant are registered under the
      Securities Act, all certificates representing the Shares and any
      certificates subsequently issued in substitution therefor and any
      certificate for any securities issued pursuant to any stock split, share
      reclassification, stock dividend or other similar capital event shall bear
      legends in substantially the following
form:

              

      

      

      
        	
                 
      

              	
                THESE
      SECURITIES HAVE NOT BEEN REGISTERED OR OTHERWISE QUALIFIED UNDER THE
      SECURITIES ACT OF 1933 (THE 'SECURITIES ACT') OR UNDER THE APPLICABLE OR
      SECURITIES LAWS OF ANY STATE. NEITHER THESE SECURITIES NOR ANY INTEREST
      THEREIN MAY BE SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF IN THE
      ABSENCE OF REGISTRATION UNDER THE SECURITIES ACT OR ANY APPLICABLE
      SECURITIES LAWS OF ANY STATE, UNLESS PURSUANT TO EXEMPTIONS
      THEREFROM.

              

      

      

      
        	
                 
      

              	
                THE
      SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED PURSUANT TO THAT
      CERTAIN RESTRICTED STOCK PURCHASE AGREEMENT DATED ____________ BETWEEN THE
      COMPANY AND THE ISSUEE WHICH RESTRICTS THE TRANSFER OF THESE SHARES WHICH
      ARE SUBJECT TO REPURCHASE BY THE COMPANY UNDER CERTAIN
      CONDITIONS.

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      
        	
                 
      

              	
                and/or
      such other legend or legends as the Company and its counsel deem necessary
      or appropriate. Appropriate stop transfer instructions with respect to the
      Shares have been placed with the Company's transfer
  agent.

              

      

      

      
        	
                 
      

              	
                (e)  Grantee
      understands that he or she will recognize income, for Federal and state
      income tax purposes, in an amount equal to the amount by which the fair
      market value of the Shares, as of the date of Grant, exceeds the price
      paid by Grantee. The acceptance of the Shares by Grantee shall constitute
      an agreement by Grantee to report such income in accordance with then
      applicable law. Withholding for federal or state income and employment tax
      purposes will be made, if and as required by law, from Grantee's then
      current compensation, or, if such current compensation is insufficient to
      satisfy withholding tax liability, the Company may require Grantee to make
      a cash payment to cover such
liability.

              

      

      

      7.  Stand-off Agreement.
Grantee agrees that, in connection with any registration of the Company's
securities under the Securities Act, and upon the request of the Company or any
underwriter managing an underwritten offering of the Company's securities,
Grantee shall not sell, short any sale of, loan, grant an option for, or
otherwise dispose of any of the Shares (other than Shares included in the
offering) without the prior written consent of the Company or such managing
underwriter, as applicable, for a period of at least one year following the
effective date of registration of such offering. This Section 8 shall survive
any termination of this Agreement.

      

      8.  Termination of
Agreement. This Agreement shall terminate on the occurrence of any one of
the following events: (a) written agreement of all parties to that effect; (b) a
proposed dissolution or liquidation of the Company, a merger or consolidation in
which the Company is not the surviving entity, or a sale of all or substantially
all of the assets of the Company; (c) the closing of any public offering of
common stock of the Company pursuant to an effective registration statement
under the Act; or (d) dissolution, bankruptcy, or insolvency of the
Company.

      

      9.  Agreement Subject to Plan;
Applicable Law. This Grant is made pursuant to the Plan and shall be
interpreted to comply therewith. A copy of such Plan is available to Grantee, at
no charge, at the principal office of the Company. Any provision of this
Agreement inconsistent with the Plan shall be considered void and replaced with
the applicable provision of the Plan.  This Grant shall be governed by
the laws of the State of Florida and subject to the exclusive jurisdiction of
the courts therein.

      

      10.  Miscellaneous.

      

      
        	
                 
      

              	
                (a)  Notices.  Any
      notice required to be given pursuant to this Agreement or the Plan shall
      be in writing and shall be deemed to have been duly delivered upon receipt
      or, in the case of notices by the Company, five (5) days after deposit in
      the U.S. mail, postage prepaid, addressed to Grantee at the last address
      provided by Grantee for use in the Company's
  records.

              

      

      

      
        	
                 
      

              	
                (b)  Entire
      Agreement.  This instrument constitutes the sole
      agreement of the parties hereto with respect to the Shares. Any prior
      agreements, promises or representations concerning the Shares not included
      or reference herein shall be of no force or effect. This Agreement shall
      be binding on, and shall inure to the benefit of, the Parties hereto and
      their respective transferees, heirs, legal representatives, successors,
      and assigns.

              

      

      

      
        	
                 
      

              	
                (c)  Enforcement.  This
      Agreement shall be construed in accordance with, and governed by, the laws
      of the State of Florida and subject to the exclusive jurisdiction of the
      courts located in Tallahassee, State of Florida. If Grantee attempts to
      transfer any of the Shares subject to this Agreement, or any interest in
      them in violation of the terms of this Agreement, the Company may apply to
      any court for an injunctive order prohibiting such proposed transaction,
      and the Company may institute and maintain proceedings against Grantee to
      compel specific performance of this Agreement without the necessity of
      proving the existence or extent of any damages to the Company. Any such
      attempted transaction shares in violation of this Agreement shall be null
      and void.

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      
        	
                 
      

              	
                (d)  Validity of
      Agreement. The provisions of this Agreement may be waived, altered,
      amended, or repealed, in whole or in part, only on the written consent of
      all parties hereto. It is intended that each Section of this Agreement
      shall be viewed as separate and divisible, and in the event that any
      Section shall be held to be invalid, the remaining Sections shall continue
      to be in full force and effect.

              

      

      

      [SIGNATURE
PAGE TO FOLLOW]

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

         

      

      In Witness
Whereof, the parties have executed this Agreement as of the date first
above written.

      
         

        
          
            
              
                	

                        COMPANY:

                      	

                        SHENGKAI
      INNOVATIONS, INC.

                        a
      Florida corporation

                      	 
	 	 	 	 
	
                         

                      	
                        By:
      

                      	 	 
	 	 	Name:
      Wang Chen	 
	 	 	Title:   Chairman
      and Chief Executive Officer	 
	 	 	 	 

              

            

             

            
              
                	

                              
                          GRANTEE:

                        

                      	 	 
	 	 	 	 
	
                         

                      	
                        By:
      

                      	 	 
	 	 	
                        (signature)

                      	 
	 	 	 	 
	 	Name:

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