FIRST
      AMENDMENT TO

    CONSULTING
      AGREEMENT

     

    This
      First Amendment (this "Amendment")
      to
      Consulting Agreement is made and entered into on August 11, 2008, between China
      Energy Recovery, Inc., a Delaware corporation (the "Company"),
      and
      ARC China, Inc., a Delaware corporation ("Consultant").

     

    RECITALS:

     

    A. On
      June
      20, 2008, the Company and Consultant entered into a Consulting Agreement
      pursuant to which the Company agreed to retain Consultant's services and
      Consultant agreed to render services to the Company (the "Agreement").

     

    B. Pursuant
      to the terms of the Agreement, the Company issued Consultant a Common Stock
      Purchase Warrant (the "Warrant").

     

    C. The
      Company and Consultant desire to amend the Agreement to reduce the aggregate
      number of shares of common stock of the Company which may be purchased by
      Consultant upon exercise of the Warrant from 750,000 shares to 250,000 shares,
      all of which shares were immediately vested and exercisable upon issuance of
      the
      Warrant and all of which shares have previously been purchased by Consultant
      on
      a cashless basis.

     

    NOW,
      THEREFORE, in consideration of the foregoing recitals and the mutual promises
      and covenants contained in the Agreement and this Amendment, and for other
      good
      and valuable consideration, the receipt and sufficiency of which are hereby
      acknowledged, the parties hereby agree as follows: 

     

    AGREEMENT:

     

    1. Recitals.
      The
      above recitals are incorporated into this Amendment as substantive provisions
      of
      this Amendment.

     

    2. Defined
      Terms.
      Except
      as otherwise defined herein, all capitalized terms herein shall have the
      meanings set forth in the Agreement.

     

    3. Amendments
      to the Agreement.
      

     

    (a) Section
      3.1 of the Agreement is hereby amended to replace the number "750,000" with
      the
      number "250,000."

     

    (b) Sections
      3.2(b) and 3.2(c) of the Agreement are hereby deleted in their
      entirety.

     

    4. Cancellation
      of the Warrant.
      Since
      Consultant previously exercised the full amount of the vested and exercisable
      portion of the Warrant and since the remaining portion of the Warrant is void
      due to the amendments set forth in Section 3 of this Amendment, the Warrant
      is
      hereby cancelled and shall be immediately returned to the Company by Consultant.
      

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    5. Full
      Force and Effect and Ratification.
      Except
      as
      expressly set forth herein, all of the terms and provisions of the Agreement
      shall remain unchanged, unmodified and in full force and effect, and the
      Agreement shall be read together and construed with this Amendment. In the
      event
      of a conflict between the Agreement and this Amendment, the terms of this
      Amendment shall control. All of the terms and provisions of the Agreement,
      as
      herein modified, are hereby ratified and reaffirmed.

     

    6. Counterparts;
      Facsimile Signatures.
      This
      Amendment may be executed in several counterparts, and each counterpart shall
      be
      binding on all parties hereto, notwithstanding that all of the parties are
      not
      signatory to an original or same counterpart. This Amendment may be executed
      by
      facsimile signature.

    


    IN
      WITNESS WHEREOF,
      the
      undersigned have duly executed this Amendment as of the date first above
      written.

    


    
      	
              CHINA
                ENERGY RECOVERY, INC.

            	 	
              ARC
                CHINA, INC.

            
	 	 	 
	 	 	 
	/s/
              Qinghuan Wu	 	/s/
              Adam Roseman    
	Qinghuan
              Wu	 	Adam
              Roseman
	Chief
              Executive Officer	 	Chief
              Executive Officer