SEPARATION
      AGREEMENT

     

    Without
      Prejudice

     

    THIS
      AGREEMENT
      is dated
      10 June 2008 

     

    PARTIES:

     

    
      	(1)	
              China
                Architectural Engineering Inc.
                (“the Company”) at 63/F, Bank of China Tower, 1 Garden Road, Hong
                Kong (for
                itself and on behalf of each other Group Company and each of the
                other
                Releasees); and

            


    

     

    
      	(2)	
              Xin
                Yue Jasmine Geffner
                (the “Employee”) of Flat B 14/F, Ming Kung Mansion, Tai Koo Shing, Hong
                Kong.

            


    

     

    
      	
              1.

            	
              The
                parties have agreed that the Employee’s employment with the Company will
                cease by mutual agreement with effect from close of business on
                30 June 2008 (the
                “Termination Date”).

            


    

     

    
      	
              2.

            	
              The
                Company confirms that the Employee shall receive the following:
                

            


    

     

    
      	
            	(A)	
              Salary
                

            


    

     

    Salary
      (of HK$70,000 per month) and housing allowance (of HK$60,000 per month) will
      continue to be payable in accordance with Clause 4.1 of the service agreement
      dated 12 March 2008 filed with the SEC of the United States (“the Employment
      Agreement”). The said salary and housing allowance for the month of May and June
      2008, which are unpaid and accrued, will be paid and given to the Employee
      in
      the form of a company check signed by authorized signer or signers, no later
      than 5 p.m. (Hong Kong time) on 10 June 2008. 

     

    
      	
            	(B)	
              Paid
                leave

            


    

     

    The
      Employee will take paid leave (inclusive of any untaken annual leave) from
      the
      date of signing of this Agreement up to the Termination Date. The Employee
      will
      fully comply with all provisions of the Employment Agreement during the period
      of her leave up to the Termination Date and will remain contactable during
      office hours to assist the Company where necessary.

     

    
      	
            	(C)	
              Shares

            


    

     

    On
      or
      before June 20, 2008, the Company will issue the Employee 70,000 restricted,
      unregistered shares of the common stock of the Company (“the
      Shares”) (said number of shares referenced in clause 4.2(a) of the Employment
      Agreement). However, it is understood and agreed that said shares shall and
      are
      not deemed issued and outstanding until actually issued by the Company further
      to this section 2(C).
      [The
      Company shall give all necessary approvals to enable the Shares to be publicly
      tradable pursuant to SEC Securities Act Rule 144.

     

    
      	
            	(D)	
              Separation
                payment

            


    

     

    Conditional
      on the Employee signing and returning this Agreement to the Company no later
      than 5 p.m. (Hong Kong time) on 10 June 2008, and also to her continued
      compliance with all the terms of this Agreement, a separation payment (which
      is
      inclusive of all of the entitlements of the Employee, if any, and the balance
      of
      which is made in return for the release and the post-termination restrictions
      set out in this Agreement) shall be paid in two instalments as set out in the
      attached Schedule One. These two instalments will be evidenced by a company
      check dated 30 June 2008 and a company check dated 30 September 2008. These
      two
      checks will be in the form of company checks signed by authorized signer or
      signers and will be given to the Employee no later than 5 p.m. (Hong Kong time)
      on 10 June 2008.

     


    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    


    This
      amount of HK$1,440,000 is calculated on the basis that the Employee will be
      paid
      an amount equivalent to the amount of salary (equivalent to HK$560,000) and
      housing allowance (equivalent to HK$480,000) that she would have earned had
      she
      remained in the Company’s employment between the Termination Date and the first
      anniversary of her commencement date with the Company. In addition, an amount
      of
      HK$400,000 which is equivalent to her cash bonus had she remained in employment
      has been included. 

     

    
      	
            	(E)	
              Business
                expenses

            



     

    Subject
      to the production of receipts and the Employee providing a reason for incurring
      the expense satisfactory to the Company, the Company will reimburse the Employee
      for necessary business expenses incurred in connection with the performance
      of
      the Employee’s duties up to the Termination Date. These expenses will be
      reimbursed by the Company in the form of a company check signed by authorized
      signer or signers, which will be given to the Employee no later than 5 p.m.
      (Hong Kong time) on 30 June 2008. 

     

    
      	
            	(F)	
              Directors
                & Officers Insurance

            



     

    The
      Company agrees to insure directors’ and officers’ liability on such terms as it
      deems appropriate.

     

    
      	
              3.

            	
              The
                Employee agrees that should she breach any provision of this Agreement,
                she shall forthwith on request from the Company repay amounts already
                paid
                which are not due under relevant statutory and contractual requirements,
                and the Company will be released from any obligation to pay her any
                further amounts. 

            


    

     

    
      	
              4.

            	
              Other
                benefits will be dealt with as
                follows:

            


    

     

    
      	 	
              (A)

            	
              Any
                mandatory provident fund scheme entitlements will be dealt with and
                satisfied by the scheme’s service
                provider.

            


    

     

    
      	 	
              (B)

            	
              All
                other benefits will cease after the Termination Date except that
                medical
                insurance and life insurance as currently provided to the Employee
                will
                continue until 2 March 2009 subject to the terms and conditions and
                any
                requirements imposed by the relevant insurer. For the avoidance of
                doubt,
                any out of pocket medical, dental and vision expenses (not covered
                by the
                insurance) in respect of which the Employee has already submitted
                claims
                for reimbursement will be reimbursed by the Company on 30 June 2008
                in the
                form of a company check signed by authorized signer or signers.
                

            


    

     

    
      	 	
              (C)

            	
              For
                the avoidance of doubt, save as set out in this Agreement, the Employee
                will cease to be entitled to any benefits under any equity, stock
                or share
                option scheme or any section, term, condition or provision of the
                Employment Agreement, with effect from the Termination
                Date.

            


    

     


    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    


    
      	 	
              (D)

            	
              The
                Company will reimburse the Employee in respect of relocation expenses
                incurred by the Employee and her family in moving to Hong Kong from
                the
                U.S.A. in the agreed sum of US$15,000. This sum will be reimbursed
                by the
                Company in the form of a company check signed by authorized signer
                or
                signers, which will be given to the Employee no later than 5 p.m.
                (Hong
                Kong time) on 30 June 2008. 

            


    

     

    
      	 	
              (E)

            	
              The
                Company will pay the Employee on the Termination Date tax, accounting
                and
                legal expenses in the agreed sum of US$5,000. This sum will be reimbursed
                by the Company in the form of a company check signed by authorized
                signer
                or signers, which will be given to the Employee no later than 5 p.m.
                (Hong
                Kong time) on 30 June 2008. 

            


    

     

     

    
      	
              5.

            	
              By
                signing this Agreement the Employee agrees that the payments and
                benefits
                set out in clauses 2 and 4 above are inclusive of any and all entitlements
                arising under her terms of employment with the Company and any
                entitlements that she may have under any applicable law. The Employee
                further agrees that she shall not be entitled to receive any further
                sums,
                benefits or shares from the Company or any other Group Company following
                or in connection with the cessation of her employment or on any other
                ground, except as referred to in this
                Agreement.

            


    

     

    
      	
              6.

            	
              In
                consideration for the sums set out above the Employee covenants and
                agrees:

            


    

     

    
      	 	
              (A)

            	that the arrangements set out in this Agreement
              are in
              full and final settlement of all or any claims, costs, expenses, or
              rights
              of action of any kind whatsoever or howsoever arising (whether arising
              under common law, statute or otherwise and whether arising in Hong
              Kong or
              in any other country or jurisdiction in the world) which she has or
              may
              have, whether now or at any time in the future and whether or not in
              the
              contemplation of the parties at the date of this Agreement, against
              the
              Company or any other Group Company or any directors, officers, managers,
              representatives, agents or employees of the Company or any other Group
              Company (“Releasees”) and whether arising directly or indirectly out of or
              in connection with her contract of employment, its termination or
              otherwise on any other ground (“Claims”);


    

     

    
      	 	
              (B)

            	that she hereby releases each of the Releasees from
              any
              and all Claims (except claims arising from or in respect of this
              Agreement);


    

     

    
      	 	
              (C)

            	to keep the circumstances surrounding the discussions
              leading up to and the existence, terms and conditions of this Agreement
              confidential and not to disclose the same unless required by law, or
              in
              order to take professional advice, or as ordered by a court of competent
              jurisdiction or for enforcing any provisions of this Agreement or where
              the relevant circumstances have come into public domain (other than
              as a
              result of a breach of this Clause);


    

     

    
      	 	
              (D)

            	not to use, disclose or communicate to any person
              whatsoever (unless ordered by a court of competent jurisdiction) any
              trade
              secrets or confidential information (which may include commercially
              sensitive information) important to and relating to the business of
              the
              Company or any other Group Company of which the Employee may have become
              possessed during the course of her employment with the Company or any
              other Group Company, in particular confidential information in relation
              to
              the Company’s clients and its business dealings with such clients. This
              undertaking will apply until such information comes into the public
              domain, other than by reason of any breach of this
              undertaking;


    

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (E)

            	that she will not during the period of six months
              immediately following the Termination Date in competition with the
              Company
              directly or indirectly solicit or entice away or endeavour to solicit
              or
              entice away from the Company or any other Group Company any person,
              company or entity who was a client or customer of the Company or any
              other
              Group Company during the six months prior to the Termination Date and
              with
              whom she had had business dealings during her
              employment;


    

     

    
      	 	
              (F)

            	that she will not during the period of six months
              immediately following the Termination Date directly or indirectly solicit
              or entice away or endeavour to solicit or entice away from the Company
              or
              any other Group Company any person employed by the Company or any other
              Group Company in a managerial or executive capacity at the Termination
              Date and with whom she had had business dealings during the six months
              prior to the Termination Date with a view to inducing that person to
              leave
              such employment and to act for another employer in the same or a similar
              capacity in relation to the same field of
              work;


    

     

    
      	 	
              (G)

            	to return to the Company immediately upon commencing
              her
              leave as referred to in clause 2(B) above all property belonging to
              the
              Company or any other Group Company which is in her possession, custody
              or
              power including (without limitation) computer records, credit cards,
              electrical equipment, keys, passes, mobile phone model no. Nokia
              XpressMusic, documents, correspondence and other papers and other items
              in
              her possession, custody or power by reason of her employment with the
              Company;


    

     

    
      	 	
              (H)

            	not at any time to make, directly or indirectly,
              any
              derogatory or disparaging comment about any of the Releasees provided
              that
              disclosure of any information as required by any applicable laws or
              order
              of a court of competent jurisdiction will not constitute a breach of
              this
              Clause under any circumstances.


    

     

    
      	 	
              (I)

            	
              the
                Company and Mr Ken Y. Luo undertake not at any time to make, directly
                or
                indirectly, any public derogatory or disparaging comment about the
                Employee provided that disclosure of any information as required
                by any
                applicable laws or order of a court of competent jurisdiction will
                not
                constitute a breach of this Clause under any
                circumstances.

            


    

     

    
      	
              7.

            	
              The
                Employee hereby warrants and represents that she has not and will
                not
                commence any legal or arbitration proceedings of any nature against
                the
                Company or any other Group Company or Releasee in any jurisdiction
                arising
                out of or in connection with her employment with the Company or any
                Group
                Company, the cessation of any such employment or otherwise on any
                other
                ground save for proceedings to enforce the terms of this Agreement.
                She
                will also not submit any personal data access request to the Company
                in
                relation to data held in connection with her employment. The Company
                will
                destroy all personal data of the Employee as and when such data is
                no
                longer required by any applicable law to retain such
                data.

            


    

     

    
      	
              8.

            	
              The
                Employee confirms that she is not aware of any financial irregularities
                within the Company and will not make any statements whether to persons
                within the Company or externally which is inconsistent with this.
                

            


    

     

    
      	
              9.

            	
              The
                parties have agreed to communicate the Employee’s departure from the
                Company only using the form of announcement as set out in the attached
                Schedule Two. Notwithstanding the foregoing, the Company will make
                the
                necessary public disclosures that may be required by applicable laws
                regarding this Agreement and the termination of the Employee’s employment
                with the Company. 

            


    

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    


    
      	
              10.

            	
              This
                Agreement is:

            


    

     

    
      	 	
              (A)

            	the entire agreement between the Employee, the Company
              and any other Group Company as to its subject matter and may not be
              modified or amended except by an instrument in writing signed by the
              Employee and the Company;


    

     

    
      	 	
              (B)

            	to be governed by and interpreted according to Hong
              Kong
              law and both parties submit to the non-exclusive jurisdiction of the
              Hong
              Kong courts and tribunals.


    

     

    
      	
              11.

            	
              For
                the purpose of this Agreement “Group” means the Company, any holding
                company of the Company and any subsidiary of the Company; and any
                company
                of which the Company, any such holding company or subsidiary of the
                Company, holds or controls more than 20% in nominal value of the
                equity
                share capital. The words “holding company” and “subsidiary” shall have the
                meanings given to them in section 2 of the Hong Kong Companies
                Ordinance.

            


    

     

    
      	
              12.

            	
              This
                Agreement, although marked “Without Prejudice”, will upon signature by
                both parties be treated as an open document evidencing an agreement
                binding on the parties.

            


    

     

    
       

       

      
        

      

    

    Ken
      Y. Luo       

    For
      and on behalf of the Company, 

    each
      other Group Company and each 

    of
      the other Releasees

    


    


     

     

    
      

    

    Xin
      Yue Jasmine Geffner


    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    


    Schedule
      One

    


    Payment
      of HK$1,440,000 which is inclusive of all of the entitlements of the Employee.
      The balance of this payment is made in return for the post-termination
      restrictions set out in this Agreement. This payment will be made according
      to
      the payment schedule below.

     

    These
      two
      instalments will be evidenced by a company check dated 30 June 2008 and a
      company check dated 30 September 2008. These two checks will be in the form
      of
      company checks signed by authorized signer or signers and will be given to
      the
      Employee no later than 5 p.m. (Hong Kong time) on 10 June 2008.

    


    Payment
      schedule:

    


    
      	
              30
                June 2008:

            	
              HK$720,000

            
	
              On
                or before 30 September 2008: 

            	
              HK$720,000

            


    

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    Schedule
      Two

     

    Company
      Announcement


     

    30
      June
      2008


     

    It
      is
      with regret that we announce that Xin Yue Jasmine Geffner, Chief Financial
      Officer, has decided to leave CAE for personal reasons. 

    


    It
      has
      been agreed that Jasmine’s last day as Chief Financial Officer, and as an
      employee of CAE, will be today.

    


    We
      wish
      Jasmine success in her future endeavours.

     

     

    Ken
      Y
      Luo

     

    
      
        
        

      

      
        7