Document:

LOAN
      CONVERSION AGREEMENT

     

    THIS
      LOAN CONVERSION AGREEMENT
      (this
      "Agreement")
      is
      made and entered into as of the 15 day of April, 2008 (the "Effective
      Date")
      by and
      between RMK Emerging Markets, LLC, a Delaware limited liability company
      ("RMK"),
      Shanghai Hai Lu Kun Lun Hi-Tech Engineering Co., Ltd., a company incorporated
      in
      the People's Republic of China ("HAIE"),
      and
      China Energy Recovery, Inc., a Nevada corporation ("CER").

     

    RECITALS

     

    WHEREAS,
      on December 18, 2007, RMK and HAIE entered into a Loan and Transaction
      Expenses Agreement (the “Loan
      Agreement”)
      pursuant to which RMK agreed to loan HAIE $600,000; 

     

    WHEREAS,
      notwithstanding the Loan Agreement, RMK loaned to HAIE and HAIE borrowed from
      RMK $725,000 (the “Loan”);

     

    WHEREAS,
      pursuant to the Loan Agreement, HAIE is required to repay the Loan at 1.75x
      the
      principal amount thereof (or $1,268,750) upon the earlier to occur of HAIE’s
      sale, next financing or going public event of at least $5 million as long as
      such sale, financing or going public event involves a party that is not a 100%
      domestic company in China; 

     

    WHEREAS,
      the
      parent company of HAIE, Poise Profit International, Ltd., a British Virgin
      Islands corporation (“Poise”),
      and
      the shareholders of Poise have entered into a Share Exchange Agreement (the
      “Share
      Exchange Agreement”)
      with
      CER pursuant to which CER will acquire all of the issued and outstanding shares
      of Poise’s common stock in exchange for the issuance of 41,514,179 shares of
      CER’s common stock to the shareholders of Poise;

     

    WHEREAS,
      upon
      the closing of the Share Exchange Agreement, Poise will become a wholly-owned
      subsidiary of CER and HAIE will become an indirect wholly-owned subsidiary
      of
      CER;

     

    WHEREAS,
      a
      condition to the closing of the Share Exchange Agreement is that CER must
      complete an equity financing (the “Financing”)
      by
      issuing Series A preferred stock at a price of $1.08 per share and warrants
      to purchase CER’s common stock at an exercise price of $1.29 per share;

     

    WHEREAS,
      pursuant to the terms of the Loan Agreement, the full amount of the Loan,
      including all outstanding principal and interest thereunder in the aggregate
      amount of $1,268,750, will become due and payable to RMK upon the closing of
      the
      Financing; and

    

    WHEREAS, upon
      the
      closing of the Financing, HAIE,
      CER
      and RMK have agreed to convert the Loan into the securities to be issued by
      CER
      in the Financing as repayment in full of the Loan. 

     

    AGREEMENT

     

    NOW,
      THEREFORE,
      in
      consideration of the foregoing, and for other good and valuable consideration,
      the receipt and sufficiency of which are hereby acknowledged, the parties hereto
      hereby agree as follows:

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
       

      
        	 	
                1.

              	
                The
                  Recitals set forth above are hereby incorporated by reference into
                  this
                  Agreement and made a part hereof. 

              

      

       

      
        	 	
                2.

              	
                At
                  the closing of the Financing, (i) CER shall issue to RMK 1,174,769
                  shares
                  of Series A Convertible Preferred Stock of CER and warrants to
                  purchase
                  587,384 shares of CER common stock at $1.29 per share (collectively,
                  the
                  “Securities”)
                  in full satisfaction of the repayment and conversion of the Loan,
                  (ii) RMK
                  will execute and deliver to CER the subscription agreements required
                  to be
                  delivered to CER by the other investors in the Financing in order
                  to
                  subscribe for the Securities, and (iii) the Loan Agreement shall
                  be deemed
                  paid in full and cancelled. The parties acknowledge and agree that
                  the
                  issuance of the Securities to RMK as repayment and conversion of
                  the Loan
                  pursuant to the terms of this Agreement shall be credited towards
                  satisfying the minimum amount of the Financing required under the
                  Share
                  Exchange Agreement.

              

      

       

      
        	 	
                3.

              	
                This
                  Agreement shall be governed by and construed in accordance with
                  the
                  domestic laws of the State of California without giving effect
                  to any
                  choice of law or conflict of law provision or rule (whether of
                  the State
                  of California or any other jurisdiction) that would cause the application
                  of the laws of any jurisdiction other than the State of California.
                  

              

      

       

      
        	 	
                4.

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

              

      

       

      
        	 	
                5.

              	
                In
                  the event that any signature is delivered by facsimile transmission,
                  such
                  signature shall create a valid and binding obligation of the party
                  executing (or on whose behalf such signature is executed) with
                  the same
                  force and effect as if such facsimile signature page were an original
                  thereof. 

              

      

       

      
        	 	
                6.

              	
                If
                  one or more provisions of this Agreement are held to be unenforceable
                  under applicable law, such provision(s) shall be excluded from
                  this
                  Agreement and the balance of the Agreement shall be interpreted
                  as if such
                  provision(s) were so excluded and shall be enforceable in accordance
                  with
                  its terms. 

              

      

       

      
        	 	
                7.

              	
                This
                  Agreement constitutes the entire agreement and understanding of
                  the
                  parties with respect to the subject matter hereof and supersedes
                  any and
                  all prior negotiations, correspondence, agreements, understandings
                  duties
                  or obligations between the parties with respect to the subject
                  matter
                  hereof. From and after the date of this Agreement, upon the request
                  of
                  CER, RMK or HAIE, the other parties to this Agreement shall execute
                  and
                  deliver such instruments, documents or other writings as may be
                  reasonably
                  necessary or desirable to confirm and carry out and to effectuate
                  fully
                  the intent and purposes of this Agreement.

              

      

       

      
        	 	
                8.

              	
                This
                  Agreement is the result of the joint efforts of CER, RMK and HAIE,
                  and
                  each provision hereof has been subject to the mutual consultation,
                  negotiation and agreement of the parties and there shall be no
                  construction against any party based on any presumption of that
                  party's
                  involvement in the drafting
                  thereof.

              

      

       

    

    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK]

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
      Effective Date.

     

    
      	 	
              RMK
                Emerging Markets, LLC

            
	 	 	 
	 	
              By:

            	
              /s/
                Adam M. Roseman

            
	 	 	
              Adam
                M. Roseman

            
	 	 	
              Chief
                Executive Officer

            
	 	 	 
	 	
              Shanghai
                Hai Lu Kun Lun Hi-Tech Engineering Co., Ltd.

            
	 	 	 
	 	
              By:

            	
              /s/
                Wu Qinghuan

            
	 	 	
              Wu
                Qinghuan

            
	 	 	
              Executive
                Director and President

            
	 	 	 
	 	
              China
                Energy Recovery, Inc.

            
	 	 	 
	 	
              By:

            	
              /s/
                Michael Kurdziel

            
	 	 	
              Michael
                Kurdziel

            
	 	 	
              Chief
                Executive Officer

            

    

    

    
      
        
        

      

      
        3Unofficial
        Translation

      

      Leasing
        and Operation Agreement

      

      WHEREAS 

      
        	
                1.

              	
                the
                  Subsidiary of Shanghai Si Fang Boiler Factory, Shanghai Si Fang
                  Boiler
                  Factory Container Branch Factory (“Container Factory”) possesses the
                  trademark “Sifang”, Permission of Class III Pressure Vessel and the
                  advantages in processing, while Shanghai Hai Lu Kun Lun Hi-tech
                  Engineering Co., Ltd has its advantages in technologies, services
                  and
                  market shares of the products in Petroleum & Chemical and Metal
                  Industry.

              
	 	 
	
                2.

              	
                Shanghai
                  Si Fang Boiler Factory Container Branch Factory suffered a long-term
                  loss
                  which can only be solved by speeding up the re-structure adjustment
                  and
                  arrangement;

              
	 	 
	
                3.

              	
                Shanghai
                  Hai Lu Kun Lun Hi-tech Engineering Co., Ltd is willing to participate
                  in
                  the revolutionary adjustment in respect of Shanghai Si Fang Boiler
                  Factory
                  Container Branch Factory and has entered into primary agreement
                  with
                  Shanghai Si Fang Boiler Factory.

              
	 	 

      

      NOW,
        THEREFORE,
        after
        negotiation, the parties, intending to be legally bound, hereby agree to
        enter
        into Leasing and Operation Agreement (the “Agreement”) with clauses as
        follows:

      

      Article
        One General Principal

      
        	
                1.1

              	
                Executing
                  Parties

              
	
                Leasee:
                  Shanghai Si Fang Boiler Factory (hereinafter referred as “Party
                  A”)

              
	
                Leaser:
                  Shanghai Hai Lu Kun Lun Hi-tech Engineering Co., Ltd (hereinafter
                  referred
                  as “Party B”)

              
	 	 
	
                1.2

              	
                General
                  Description of the Enterprise to be leased

              
	
                1.2.1

              	
                Property:

              
	
                1)

              	
                Fixed
                  Assets, to be received and administrated by Party B based on actual
                  delivery. Please see exhibit 1

              
	
                2)

              	
                The
                  usable materials such as raw materials, semi-final products(clear
                  after
                  completion of the products)and related inventories will be purchased
                  by
                  Party B. Please see exhibit 2(Party B will pay Party A according
                  to
                  payment agreement)

              
	
                3)

              	
                Special
                  materials such as stainless steel, forging model and filler rods
                  will be
                  custody and administrated by Party B based on actual delivery and
                  to be
                  used with priority and clear by actual consumption. Please see
                  exhibit
                  3

              
	
                4)

              	
                Scale
                  tools, material with low consumption and stationary will be received
                  and
                  administrated by actual delivery (to be solved after consultation).
                  See
                  exhibit 4

              
	
                1.2.2
                  

              	
                Employees      
                  see exhibit 2

              

      

      

      Article
        Two Leasing Period and Rent

      

      2.1
        Term

      The
        Leasing Period is 8 months, commencing on May 1, 2004 until December 31,
        2004.

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      2.2
        Rent

      The
        annual rent for leasing is RMB 2,100,000 payable Quarterly, which is RMB
        525,000
        per Quarter.

      

      Article
        Three the Rights and Obligations of Party B

      

      
        	
                3.1

              	
                Rights

              
	
                3.1.1

              	
                The
                  legal representative of Party B may exercise any right granted
                  by the
                  legal representative of Container Factory.

              
	
                3.1.2

              	
                Party
                  B is entitled to use all tangible and intangible assets including
                  without
                  limitation the property of Container Factory, trademark “Sifang” (the
                  scope of licensing will be decided by Party A), Permission of Pressure
                  Vessel, and other equipments, stationary and
                  facilities.

              
	
                3.1.3

              	
                Party
                  B is entitled to operate independently (based on the scope granted
                  by
                  Party A)

              
	
                3.1.4

              	
                Party
                  B has following rights for administration and operation of Container
                  Factory

              
	
                3.1.4.1

              	
                Rights
                  of establishment of organization (filed with Party A for
                  records)

              
	
                3.1.4.2

              	
                Rights
                  of the administration of Human Resource (except the position required
                  to
                  be consent by Party A)

              
	
                3.1.4.3

              	
                Rights
                  of appointment of professionals or technicians (filed with Party
                  A for
                  records) 

              
	
                3.1.4.4

              	
                Recruitment
                  and dismissal of the employees (Party A’s employees
                  exclusive)

              
	
                3.1.4.5

              	
                Definition
                  of the salary standard and distribution of bonus independently
                  (no less
                  than salary standard upon the date of this Agreement and stipulated
                  by
                  relevant authorities, continuing execution of the bonus to the
                  technicians
                  of Container Factory)

              
	
                3.1.5

              	
                Any
                  Investment rendered by Party B shall be owned by it, which could
                  be
                  disposed of freely by Party B upon the termination of lease.
                  

              
	
                3.1.6

              	
                The
                  profit after tax shall be enjoyed or disposed of by the Party
                  B.

              
	 	 
	
                3.2

              	
                Obligations

              
	
                3.2.1

              	
                Party
                  B shall pay rent on time in the first month of each Quarter. This
                  lease
                  can not be sub-leased or transferred to any third
                  party.

              
	
                3.2.2

              	
                Party
                  B shall pay the salary and social welfares(house purchasing reserve,
                  pension insurance, medical insurance and un-employment issuance)
                  monthly
                  for the employees, where the amount of social welfares of factory
                  employees shall be delivered to Party A for contribution and the
                  social
                  welfares of farmer employees shall be paid to such employee in
                  January
                  annually.

              
	
                3.2.3

              	
                Party
                  B must lawfully operate the business, secure the benefits of the
                  employees
                  and improve the work conditions and welfares based on the improvement
                  of
                  business efficiency.

              
	
                3.2.4

              	
                Party
                  B shall maintain and repair the leased factory hall, office buildings
                  and
                  equipments to remain the leased fixed assets in good
                  condition.

              
	
                3.2.5

              	
                Party
                  B shall strictly maintain the system of after-sale services and
                  is obliged
                  to maintain the after-sale service for the products made Container
                  Factory
                  before this Agreement.

              
	
                3.2.6

              	
                In
                  the course of Party B’s operation, Party B can not damage Party B’s
                  goodwill and benefits. Otherwise, the Party B may terminate this
                  Agreement
                  and claim the breach of the Agreement.

              
	
                3.2.7

              	
                In
                  the course of Party B’s operation, Party B shall strictly maintain the
                  Safe Production, Environmental Hygiene System, Security and Stability
                  and
                  be responsible for the internal and external economic obligations
                  and
                  corporation duties.

              
	
                3.2.8

              	
                In
                  the course of Party B’s operation, Party B shall be subject to the
                  administration, instrument and supervision of local authority and
                  liable
                  for any of relevant economic obligations and
                  duties.

              

      

      

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

      Article
        Four the Rights and Obligations of Party A

      

      4.1
        Rights

      4.1.1
        Party A has right to supervise the qualities of the Container Factory’s
        products.

      4.1.2
        Party A has right to check if the leased property remains intact. 

      4.1.3.
        Party A is entitled to access to the information in respect of business
        operation of Container Factory and request Party B to solve existing
        problems.

      4.1.4
        Party A has rights to supervise Party B’s Safe Production, Environmental
        Protection, Security and Stability. Party A shall assist Party B to complete
        relevant aforesaid work.

      

      4.2
        Obligations

      4.2.1
        Party A shall maintain the trademark, permission and quality check system
        of
        boiler and pressure vessel produced within Container Factory.

      4.2.2
        Party A shall provide necessary assistance in respect of the operation,
        production, staffs and advertising.

      4.2.3
        Party B is responsible for provision of all materials for boilers’ quality check
        system and training (Party B shall pay the fees for training)

      4.2.4
        Party A shall issue power of attorney in respect of trademark and boiler
        manufacture permission.

      4.2.5
        When the products of boilers and pressure vessels are manufactured and inspected
        within Container Factor according to quality check procedure, Party A shall
        issue Qualification Certificate after all materials are arranged according
        to
        quality check system and submitted to Party A.(Party B shall pay inspection
        fees
        to boiler check authority for the products manufactured in Container Factory
        )

      4.2.6
        After the raw materials purchased by Party B for boiler manufacture is restored
        in the warehouse of Container Factory, Party A shall issue re-examination
        report
        when the Party B get sample for Party A’s re-examination according to
        requirement for boiler quality check system. (Party B shall pay Party A relevant
        fees according to payment rules of Container Factory before this
        Agreement).

      4.2.7
        Party A may not violate this Agreement, intervene the Party B’s operation and
        move any Container Factory’s equipment and material confirmation which is
        confirmed after sort and check without Party B’s consent.

      

      Article
        Five Amendment, Discharge and Termination of the contract

      

      5.1
        Upon
        the effectiveness, each of the parties is bound by this Agreement which can
        not
        be amended, discharged or terminated unless a three month prior notification
        is
        given.

      

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

      5.2
        If
        the Party B is unable to continue operating or enjoy lawful income due to
        Party
        A’s breach or intervention of Party B’s operation, the Party B is entitled to
        discharge the Agreement and claim all damages incurred.

      

      5.3
        If
        the Agreement is not able to be performed due to
        force majeure,
        the
        parties may amend or discharge the Agreement after consultation.

      

      5.4
        Both
        parties may agree to renew the lease period in 3 months before the expiration
        of
        lease. Otherwise the lease will be terminated upon the expiration of leasing
        period.

      

      Article
        Six Liabilities in Breach 

      

      6.1
        Both
        parties shall perform this agreement completely. Non-performance and partial
        performance constitute a breach. The breaching party shall be liable any
        loss or
        damage caused by such breach.

      

      6.2
        Any
        dispute between both parties shall be solved by consultation and meditation
        based on the principal of mutual understanding.

      

      Article
        Seven Others

      

      7.1
        The
        bank account of Container Factory for clearing-up used before this agreement
        will be used by Party B. Party B, however, shall be complied with relevant
        laws
        and regulations and may not lend this bank account (The creation of new bank
        account shall be filed with Party A for records)

      

      7.2
        all
        the financial statements and materials from the operation of new bank account
        under the name of Container Factory shall be delivered to Party A for financial
        administration.

      

      7.3
        The
        business license, tax registration certificate, permission for opening bank
        account, company seal and other legal certificate of the Container Factory
        shall
        be under the custody of legal representative and can not be provided for
        investment, security, pledge or alike.

      

      7.4
        Any
        dismissal and penalty for the employees of the Container Factory before this
        Agreement shall be agreed by Party A.

      

      7.5
        The
        bank loan of RMB 2,800,000 borrowed by Container Factory before this Agreement
        shall be born by both Party B and Container Factory. Party B shall assist
        to
        assign such bank loan and keep necessary cash flow.

      

      7.6
        Any
        unfinished products of Container Factory shall be completed by Party B. After
        the sale of products, Party A will pay Party B fees according to the working
        hours expensed.

      

      7.7
        All
        uncompleted contract entered by Container Factory before this Agreement will
        be
        assigned to Party B who will be liable for further performance.

      

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

      7.8
        In
        the course of leasing period, any information concerning about products and
        contracts shall be delivered to Party B. Party A is entitled to service fees
        proportionately.

      

      7.9
        In
        the course of leasing period, both parties shall use the best efforts to
        re-structure the Container Factory. Once the Container Factory is satisfied
        with
        condition for re-structure, the Party B has pre-emptive right to participate
        in
        such re-structure.

      

      7.10.
        Both Parties may enter into additional agreement for leasing the real estate,
        equipments and management agreements.

      

      7.11
        To
        speed up the process of cooperation, both parties agreed to conduct relevant
        auditing, evaluation, filing and other legal procedure after two months
        following the commence of leasing period to establish a new Joint Venture
        Company within leasing period.

      

      Article
        Eight Effectiveness of the Agreement

      

      8.
        1 This
        Agreement is effective on execution of both parties.

      

      8.2
        The
        exhibits of this Agreement is a part of this Agreement, 

      

      8.3
        Both
        parties may enter into supplemental agreements to deal with unsolved matters.
        Upon the agreement of both parties, the supplemental agreements shall constitute
        a part of this Agreement, equal effective as this Agreement.

      

      8.5
        The
        late agreement will prevail when there is any conflict among the several
        agreements.

      

      8.6
        This
        Agreement is executed in four counterparts. Each party holds two
        counterparts.

       

      
        	
                Shanghai Si Fang Boiler Factory (Seal)

              	
                /s/ BAI Zhaoxing

              	
                Shanghai Hai Lu Kun Lun Hi-tech Engineering Co., Ltd

              	
                /s/ WU Qinghuan

              
	
                Representative: BAI Zhaoxing

              	
                (Signature)

              	
                Representative
                  WU Qinghuan

              	
                (Signature)

              
	
                Date: April 22, 2004

              	 	
                Date: April 22, 2004

              	 

      

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

      Cooperative
        supplementary agreement with Shanghai HAIE Hi-Tech Engineering Co.
        Ltd.

      

      Vessel
        branch of Shanghai Sifang Boiler plant (hereinafter called Party A) and
Shanghai
        HAIE Hi-Tech Engineering Co. Ltd. (hereinafter
        called Party B) signed a cooperative agreement on December 15, 2004. With
        the
        favorable factors made by the two parties during one year cooperation, the
        company runs very well. Regarding to the application report from party A,
        party
        B decides to perform the original agreement with the spirit of friendly
        cooperation. But, with the consideration of the situations which are the
        transformation and reform of party A, the pessimistic sales situation of
        party B
        in next year, the following supplementary provisions are made by friendly
        consultation:

      

      
        	
                1.

              	
                There
                  is one more year of validity of the agreement. But the agreement
                  will be
                  unconditioned terminated if the following situations
                  happen:

              

      

      
        	 	
                (1)

              	
                If
                  the transformation or the joint venture is successful, the cooperation
                  approach needs to be rearranged.

              

      

      
        	 	
                (2)

              	
                If
                  the rent place (Jiangqiao) of vessel branch has to be relocated,
                  the
                  cooperation approach needs to be
                  rearranged.

              

      

      

      
        	
                2.

              	
                Party
                  A should take consideration of the job (project) taken by party
                  B during
                  the cooperation. To guarantee the client’s benefit, party A will inform
                  party B to stop the cooperation in 3 months advanced. If the job
                  (project)
                  is not finished before the termination of the cooperation, the
                  job (only
                  refers to product) should be transferred to party A or the third
                  party
                  until it is finished.

              

      

      

      
        	
                3.

              	
                With
                  regard to the production cost going up and the macro-control effectiveness
                  on sales situation next year, both agree to reduce the trademark
                  fee to
                  800,000 per year. Other fees and payment remains
                  unchanged.

              

      

      

      
        	
                4.

              	
                The
                  supplementary provisions cover the related provisions in the original
                  agreement; other affairs will be further
                  negotiated.

              

      

      

      
        	
                5.

              	
                There
                  are 5 copies of this supplementary agreement (both party A and
                  party B
                  have two copies, the Vessel branch has one
                  copy).

              

      

       

      
        	
                /s/ BAI Zhaoxing

              	
                /s/ WU Qinghuan

              
	
                Party
                  A: Shanghai
                  Sifang Boiler Plant

              	
                Party
                  B: Shanghai HAIE Hi-Tech Engineering Co. Ltd.

              
	
                Director:
                  BAI Zhaoxing

              	
                General
                  Manager: WU Qinghuan

              

      

       

      Sign
        date: November 21, 2005

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

      Cooperative
        re-supplementary
        agreement with Shanghai HAIE Hi-Tech Engineering Co. Ltd.

      

      Shanghai
        Sifang Boiler plant (hereinafter called Party A) and Shanghai
        HAIE Hi-Tech Engineering Co. Ltd. (hereinafter
        called Party B) signed rent agreement of Vessel branch and cooperative agreement
        with its supplementary agreement. With the favorable factors made by the
        two
        parties during three years and eight months’ cooperation, the company runs very
        well. Regarding to the application report from party A, party B decides to
        perform the original agreement with the spirit of friendly cooperation. But,
        with the consideration of the situations which are the transformation and
        reform
        of party A, the pessimistic sales situation of party B in next year, the
        following re-supplementary provisions are made by friendly
        consultation:

      

      
        	
                1.

              	
                There
                  is one more year of validity of the agreement (from January 1,
                  2007 to
                  December 31, 2007). But the agreement will be unconditioned terminated
                  if
                  the one of the following situation
                  happens:

              

      

      
        	 	
                (1)

              	
                If
                  the transformation or the joint venture is successful and its business
                  changed.

              

      

      
        	 	
                (2)

              	
                If
                  the rent agreement between party A and Shanghai Jiangqiao Assets
                  Management Ltd. relieves or rent place (Jiangqiao) of vessel branch
                  has to
                  be relocated.

              

      

      

      
        	
                2.

              	
                Party
                  A should take consideration of the job (project) taken by party
                  B during
                  the cooperation. To guarantee the client’s benefit, party A will inform
                  party B to stop the cooperation in 3 months advanced if the above
                  situation happens. If the job (project) is not finished before
                  the
                  termination of the cooperation, the job (only refers to product)
                  should be
                  transferred to party A until it is
                  finished.

              

      

      

      
        	
                3.

              	
                Party
                  A is now actively negotiating the rent fee (from 2004 till now)
                  with
                  Shanghai Jiangqiao Assets Management Ltd. once the price is settled,
                  party
                  B should pay the rent fee to party A by seasons according to fee
                  in 2007,
                  meantime, party B should pay the balance from 2004 to 2006 one-off.
                  

              

      

      

      
        	
                4.

              	
                As
                  the vessel industry recovering, party B should pay party A integrated
                  management fee (equipment rent, quality guarantee, trademark, etc.)
                  by
                  seasons, that is 900,000 per year. 

              

      

      

      
        	
                5.

              	
                The
                  vessel branch has been put into the 2007 transformation plan; both
                  parties
                  should take full consideration of the transformation work of the
                  vessel
                  branch. Meantime, party B is liable for the products sent after
                  May, 2003,
                  including debtor-creditor relationship.

              

      

      

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

      
        	
                6.

              	
                The
                  original provisions which are not involved in this supplementary
                  agreement
                  will go on into effect; other affairs will be further
                  negotiated.

              

      

      

      
        	
                7.

              	
                To
                  meet three press vessel certification changing, party B should
                  follow the
                  provisions of the rent agreement and cooperative agreement for
                  running the
                  company to guarantee everything works well. Attached is the management
                  measures made by party A aiming at the weakness appeared during
                  the past 3
                  years, party B should follow it
                  strictly.

              

      

      

      
        	
                8.

              	
                There
                  are 5 copies of this supplementary agreement (both party A and
                  party B
                  have two copies, the Vessel branch has one
                  copy).

              

      

      

      
        	
                /s/ BAI Zhaoxing

              	
                /s/ WU Qinghuan

              
	
                
                  Party
                    A: Shanghai Sifang Boiler Plant

                

              	
                
                  Party
                    B: Shanghai HAIE Hi-Tech Engineering Co. Ltd.

                

              
	
                Director: BAI Zhaoxing

              	
                General
                  Manager: WU Qinghuan

              

      

       

      Sign
        date: December 28, 2006

      

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

      Agreement
        on
        two
        more years’ cooperation with Shanghai HAIE Hi-Tech Engineering Co.
        Ltd.

      

      Shanghai
        Sifang Boiler plant (hereinafter called Party A) and Shanghai
        HAIE Hi-Tech Engineering Co. Ltd. (hereinafter
        called Party B) have been cooperated for four years and had beneficial economic
        cycle. With the recovery of vessel industry, the business starts to get busy.
        The production capacity, related production process and key equipments have
        become unsuitable for the production. So, party B plans to invest fund to
        reform
        and buy related equipments. Considering about the investment payback period
        and
        the mutual benefit of both parties, the agreement on two more years’ cooperation
        is signed after friendly negotiation. The provisions are as
        follows:

      

      
        	
                1.

              	
                Cooperation
                  period

              

      

      With
        the
        confirmation from Shanghai Electricity and Gas Asset Management Ltd. III
        department and the consideration about the validity and continuity of class
        3
        stress vessel design certification of Shanghai Sifang Boiler plant, the
        agreement sets forth 2 more years’ cooperation, which is from January 1, 2008 to
        December 31, 2009. Any important reformation or location changing happens
        during
        this period, the cooperation period will be changed again.

      

      
        	
                2.

              	
                With
                  confirmation from Shanghai Electricity and Gas Asset Management
                  Ltd. on
                  two more years’ cooperation, party A requires charge more integrated
                  management fee to protect Sifang trademark and trade name. Therefore,
                  1,200,000 RMB will be charged as integrated management fee per
                  year, in
                  which 200,000 RMB will be used on tax fee left by vessel branch,
                  loan,
                  loan interest and daily expenses to reduce the production cost.
                  Party B
                  should pay 100,000 RMB cash check every year on January 1, and
                  July 1 to
                  party A, other should be paid by seasons.

              

      

      

      
        	
                3.

              	
                Rent
                  fee

              

      

      Once
        the
        rent fee is settled with Shanghai Hongqiao Asset Management Ltd., party B
        should
        pay to party A. Shanghai Hongqiao Asset Management Ltd. sets forth tax
        territorial jurisdiction with consideration of firming the rent fee. Therefore,
        party A sets forth about 50% of gross sales as proportion of the tax of
        cooperative enterprise, and increase with year.  

      

      
        	
                4.

              	
                taking
                  care of related goods

              

      

      with
        regard to used or unused goods like stainless steel forgeable piece, welding
        rod, measure, low priced and easily worn articles, office staffs, etc. which
        are
        involved in the original agreement, part B should pay one-off to party A
        according to the settled price. 

      

      
        	
                5.

              	
                The
                  original provisions which are not involved in this supplementary
                  agreement
                  will go on into effect; other affairs will be further
                  negotiated.

              

      

       

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

      
        	
                6.

              	
                There
                  are 5 copies of this supplementary agreement (both party A and
                  party B
                  have two copies, the Vessel branch has one
                  copy).

              

      

       

      
        	
                /s/
                  Bai Zhaoxing

              	
                /s/
                  Wu Qinghuan

              
	 	 
	
                Party
                  A: Shanghai Sifang Boiler Plant

              	
                Party
                  B: Shanghai HAIE Hi-Tech Engineering Co. Ltd.

              
	
                Director:
                  BAI Zhaoxing

              	
                General
                  Manager: Mr. WU 

              

      

       

      Sign
        date: June 25, 2007

      

      
        
          
          

        

        
          10

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