EMPLOYMENT
      AGREEMENT

     

    This
      Employment Agreement (the “Agreement”) is made as of the 9th day of January,
      2008, by and between, China Clean Energy Inc., a company organized under the
      laws of the State of Delaware (the “Company”), and Yun He (the “Executive”).


     

    In
      consideration of the mutual covenants contained herein and other good and
      valuable consideration, the receipt and sufficiency of which are hereby
      acknowledged, the Company and Executive, intending to be legally bound, hereby
      agree as follows: 

     

    1. Employment
      and Duties.
      The
      Company hereby agrees to employ Executive as the Vice President of Sales of
      the
      Company (the “VP”), and Executive hereby accepts such employment, on the terms
      and conditions hereinafter set forth. During the Term (as defined below),
      Executive shall serve as VP and shall report to the Board of Directors of the
      Company (the “Board”). Executive shall have those powers and duties customarily
      associated with the position of VP of entities comparable to the Company and
      such other powers and duties as may be prescribed by the Board. Executive shall
      devote all of his working time, attention and energies to the performance of
      his
      duties for the Company.

     

    2. Term.
      The
      term of Executive’s employment hereunder, unless sooner terminated as provided
      herein (the “Initial Term”), shall be for a period of two (2) years commencing
      on the date hereof (the “Commencement Date”). The term of this Agreement shall
      automatically be extended for additional terms of one (1) year each (each a
      “Renewal Term”), unless either party gives prior written notice of non-renewal
      to the other party no later than ninety (90) days prior to the expiration of
      the
      Initial Term (“Non-Renewal Notice”), or the then current Renewal Term, as the
      case may be. For purposes of this Agreement, the Initial Term and any Renewal
      Term are hereinafter collectively referred to as the “Term.”

     

    3. Compensation,
      Benefits and Equity Awards.

     

    (a) Base
      Salary.
      During
      the Term, Executive shall receive a base salary of RMB 12,000 per month payable
      on a monthly basis, which amount may be increased no less than 10% at the
      discretion of the Board following the one year anniversary of the date hereof.
      Should Executive remain employed by the Company after two years, his base salary
      will be subject to good faith negotiations with the Board. Executive’s base
      salary shall be paid in accordance with the Company’s regular payroll practices,
      including all usual and customary federal, state, and local tax withholdings.
      

     

    (b) Expenses.
      The
      Company shall reimburse Executive for all reasonable business expenses upon
      the
      presentation of itemized statements of such expenses in accordance with Company
      policies and procedures as may be in effect from time to time.

     

    (c) Vacation.
      During
      the Term, Executive shall be entitled to at least three (3) weeks of paid
      vacation per calendar year to be used and accrued in accordance with the
      Company’s policies as may be in effect from time to time. In addition to
      vacation, Executive shall be entitled to the number of sick days, personal
      days
      and national holidays per year as to which other Executives of the Company
      may
      be entitled.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (d) Other
      Benefit Plans.
      During
      the Term, Executive shall be entitled to participate in such employee benefit
      plans and insurance programs offered by the Company, or which may be in effect
      from time to time, in accordance with any eligibility requirements for
      participation therein.

     

    (e) Equity
      Awards.

     

    Executive
      will receive the following equity awards:

    


    (i) Stock
      Options.
      The
      Company shall grant Executive options to purchase an aggregate of 100,000 shares
      of common stock (“Options”), pursuant to the Company’s 2008 Equity Incentive
      Plan (the “Incentive Plan”). Such grant shall be evidenced by an Option
      Agreement, as contemplated by the Incentive Plan. The per share exercise price
      of the Options shall be $2.50 and $3.00 respectively as defined in the Option
      Agreement. The term of the Option shall be three years from the Commencement
      Date. One-twelfth (1/12) of the Options shall become exercisable each quarter
      that Executive remains employed by the Company.

     

    (ii) Future
      Grants.
      Executive shall be eligible for grants of Options, Restricted Stock and other
      permissible awards under the Incentive Plan, as the Board or Compensation
      Committee of the Company shall, in its absolute and sole discretion,
      determine.

     

    4. Termination.
      Executive’s employment by the Company shall terminate under the following
      circumstances:

     

    (a) Death.
      If
      Executive dies, Executive’s employment shall be terminated effective as of the
      end of the calendar month during which Executive died.

     

    (b) Disability.
      In the
      event Executive, by reason of physical or mental incapacity, shall be
      substantially unable to perform his duties hereunder for a period of three
      (3)
      consecutive months, or for a cumulative period of six (6) months within any
      12
      month period (such incapacity deemed to be “Disability”), the Company shall have
      an option, at any time thereafter, to terminate Executive’s employment hereunder
      as a result of such Disability. Such termination will be effective ten (10)
      days
      after the Board gives written notice of such termination to Executive, unless
      Executive shall have returned to the full performance of his duties prior to
      the
      effective date of the notice. Upon such termination, Executive shall be entitled
      to any benefits as to which he and his dependents are entitled by law, and
      except as otherwise expressly provided herein, all obligations of the Company
      hereunder shall cease upon the effectiveness of such termination other than
      payment of salary earned through the date of Disability, provided that such
      termination shall not affect or impair any rights Executive may have under
      any
      policy of long term disability insurance or benefits then maintained on his
      behalf by the Company. Executive’s base salary shall continue to be paid during
      any period of incapacity prior to and including the date on which Executive’s
      employment is terminated for Disability.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    (c) Cause.
      The
      Company shall have the right to terminate Executive's employment for “Cause.”
For purposes of this Agreement, “Cause” shall mean: 

     

    (i) the
      willful or continued failure by Executive to substantially perform his duties,
      including, but not limited to, acts of fraud, willful misconduct, gross
      negligence or other act of dishonesty;

     

    (ii) a
      material violation or material breach of this Agreement which is not cured
      within 10 days written notice to Executive;

     

    (iii) misappropriation
      of funds, properties or assets of the Company by Executive or any action which
      has a materially adverse effect on the Company or its business; 

     

    (iv) the
      conviction of, or plea of guilty or no contest to, a felony or any other crime
      involving moral turpitude, fraud, theft, embezzlement or dishonesty; or


     

    (v) abuse
      of
      drugs or alcohol which impairs the Executive’s ability to perform his duties as
      VP. 

     

    (d) Good
      Reason.
      Executive may terminate his employment for “Good Reason.” For purposes of this
      Agreement, “Good Reason” shall mean: (i) a material diminution of Executive’s
      authority or duties with the Company (other than as a result of Executive’s
      incapacity or disability); or (ii) a greater than 10% reduction in Executive’s
      base salary. Prior to the Executive terminating his employment with the Company
      for “Good Reason,” Executive must provide written notice to the Company that
      such “Good Reason” exists and setting forth, in detail, the grounds Executive
      believes constitutes such “Good Reason.” If the Company does not cure the
      grounds upon which Executive believes “Good Reason” exists within thirty (30)
      days after being provided with notice by the Executive, then Executive’s
      employment shall be deemed terminated. 

     

    (e) Without
      Cause.
      The
      Company shall have the right to terminate Executive’s employment hereunder
      without cause at any time by providing Executive with written notice of such
      termination, which termination shall take effect 10 days after the date such
      notice is provided. 

     

    (f) Voluntary
      Resignation.
      Executive shall have the right to terminate his employment hereunder by
      providing the Company with a written notice of resignation. Such notice must
      be
      provided 60 days prior to the date upon which Executive wishes such resignation
      to be effective. Upon receipt of such resignation, the Company shall have the
      option to accelerate the resignation to a date prior to the expiration of the
      60
      day period.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    5. Payments
      Due Upon Termination.
      In the
      event Executive’s employment is terminated pursuant to Section 5(d) or (e)
      above, then any unvested Options held by Executive shall immediately vest and
      the Company shall continue pay to Executive his base salary as in effect on
      the
      date of termination for a period of twelve (12) months and reimburse Executive
      for the costs of obtaining comparable medical benefits for twelve (12) months,
      unless the Executive obtains other employment which provides for comparable
      medical benefits as Executive received while employed by the Company. In the
      event Executive’s employment is terminated for any other reason, then Executive
      shall be entitled to receive his base salary though the effective date of
      termination and the Company shall reimburse Executive for any reasonable
      expenses previously incurred for which Executive had not been reimbursed prior
      to the termination of employment. Executive acknowledges and agrees that prior
      to receiving any payments under this Section, and as a material condition
      thereof, Executive shall, if requested by the Company, sign and agree to be
      bound by a general release of claims against the Company related to Executive’s
      employment (and termination of employment) with the Company in such form as
      the
      Company may deem appropriate. Upon Executive’s termination of employment for any
      reason, upon the request of the Board, he shall resign any memberships or
      positions that he then holds with the Company. 

     

    6. Executive’s
      Representations.
      Executive hereby represents and warrants to the Company that: (i) his execution
      and performance of duties under this Agreement does not and shall not conflict
      with, breach, violate or cause a default under any contract, agreement,
      arrangement, understanding, order, judgment or decree as to which Executive
      is a
      party or by which he is bound; (ii) Executive is not a party to or bound by
      any
      employment agreement, non-compete agreement, confidentiality agreement or any
      similar agreement or arrangement with any other person or entity which effects
      or impacts his ability to be employed by the Company pursuant to the terms
      of
      this Agreement; and (iii) upon the execution and delivery of this Agreement
      by
      the Company, this Agreement shall constitute a valid and binding obligation
      of
      Executive, enforceable in accordance with its terms. In addition, Executive
      acknowledges that the Company has relied on such representations and warranties
      in employing Executive, that he has not entered into, and will not enter into,
      any agreement, either oral or written, in conflict with this Agreement. If
      it is
      determined that Executive is in breach or has breached any of the
      representations set forth herein, the Company shall have the right to
      immediately terminate the Executive’s employment with the company and that such
      termination shall be deemed a termination with Cause. Executive hereby
      acknowledges and represents that he has consulted with independent legal counsel
      regarding his rights and obligations under this Agreement and that he fully
      understands the terms and conditions contained herein.

     

    7. Successors.
      The
      rights and benefits of Executive hereunder shall not be assignable, whether
      by
      voluntary or involuntary assignment or transfer by Executive. This Agreement
      shall be binding upon, and inure to the benefit of, the successors and assigns
      of the Company, and the heirs, executors and administrators of the Executive,
      and shall be assignable by the Company to any entity acquiring substantially
      all
      of the assets of the Company, whether by merger, consolidation, sale of assets
      or similar transactions.

     

    8. Notice.
      For the
      purposes of this Agreement, notices, demands and all other communications
      provided for in this Agreement shall be in writing and shall be delivered (i)
      personally, (ii) by first class mail, certified, return receipt requested,
      postage prepaid, (iii) by overnight courier, with acknowledged receipt, or
      (iv)
      by facsimile transmission followed by delivery by first class mail or by
      overnight courier, in the manner provided for in this Section, and properly
      addressed as follows:

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    
      	
              If
                to the Company, to: China Clean Energy Inc. Fulong Industrial Park,
                Longtian, Fuqing City, Fujian Province, People’s Republic of
                China

            
	 
	
              If
                to Executive to: No.
                105 Longfei Road, Longtian Town, Fuqing City, Fujian Province,
                People’s Republic of China

            


    

    


    or
      to
      such other address as the Company or Executive may later indicate in
      writing.

     

    9. Governing
      Law and Dispute Resolution.
      This
      Agreement is governed by, and is to be construed and enforced in accordance
      with, the laws of the State of Delaware, without regard to principles of
      conflicts of laws. If, under such law, any portion of this Agreement is at
      any
      time deemed to be in conflict with any applicable statute, rule, regulation
      or
      ordinance, such portion shall be deemed to be modified or altered to conform
      thereto or, if that is not possible, to be omitted from this Agreement, and
      the
      invalidity of any such portion shall not affect the force, effect and validity
      of the remaining portion hereof. 

     

    10. Amendment.
      No
      provisions of this Agreement may be amended, modified, or waived unless such
      amendment or modification is agreed to in writing signed by Executive and by
      a
      duly authorized officer of the Company. No waiver by either party hereto at
      any
      time of any breach by the other party hereto of any condition or provision
      of
      this Agreement to be performed by such other party shall be deemed a waiver
      of
      similar or dissimilar provisions or conditions at the same or at any prior
      or
      subsequent time.

     

    11. Entire
      Agreement.
      This
      Agreement sets forth the entire agreement of the parties hereto in respect
      of
      the subject matter contained herein and supersedes any and all prior agreements,
      promises, covenants, arrangements, understandings, communications,
      representations or warranties, whether oral or written, by any officer, employee
      or representative of any party hereto. Any prior agreement by the parties hereto
      with respect to the subject matter of this Agreement is hereby terminated and
      canceled as of the date hereof.

     

    12. Severability.
      The
      covenants of this Agreement shall be construed as covenants independent of
      one
      another and as obligations distinct from any other agreement between the
      parties. Should any provision herein be held to be void or unenforceable, the
      remaining provisions shall remain in full force and effect, to be read and
      construed as if the void or unenforceable provisions were originally
      deleted.

     

    13. Counterparts.
      This
      Agreement may be executed in counterparts, each of which shall be deemed to
      be
      an original but all of which together will constitute one and the same
      instrument.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS HEREOF,
      the
      parties hereby enter into this Agreement and affix their signatures as of the
      date first above written.

     

    
      


       

      
         

        
          	CHINA
                  CLEAN ENERGY
                  INC.	 	 	 
	 	 	 	 	 
	By:	/s/ Taiming
                  Ou	 	 	 
	 	
                  

                  Name:
                    Taiming Ou

                  Title:
                    Chief Executive Officer

                	 	 	
                
	 	 	 	 	 
	 	 	 	 	 
	/s/ Yun He	 	 	 
	
                  
                    

                  

                  Yun He

                	 	 	 




      

    

    
      
        
        

      

      
        6