Document:

The
      Agreement Concerning Increasing the Integrated Management Fee and Enhancing
      Administration with Shanghai Hai Lu Kun Lun Hi-tech Engineering Co.,
      Ltd.

    

    The
      cooperation between Shanghai Si Fang Boiler Factory (hereinunder referred to
      as
      Party A) and Shanghai Hai Lu Kun Lun Hi-tech Engineering Co., Ltd. (hereinunder
      referred to as Party B) has been in effect for several years and has had certain
      good results. For the mutual benefits in cooperative manufacturing activities
      and in order to continue execution of the original agreement, upon mutual
      consultation, it is agreed by the parties to increase the integrated management
      fee and enhance administration of the cooperative manufacturing.

    

    NOW,
      THEREFORE, it is agreed:

    

    I. Integrated
      Management Fee

    

    In
      order
      to enhance the reputation and creditability of Si Fang's trademark and
      tradename, on top of the original integrated management fee, it is to add
      additional integrated management fee of 600,000 RMB (including, 300,000 RMB
      per
      year for 2008, and 300,000 RMB per year for 2009). The payment method should
      follow the agreement dated June 25, 2007.

    

    II. Enhancing
      the Administration

    

    1. The
      administration rules for the cooperative manufacturing set forth in the appendix
      to the agreement dated December 28, 2006 shall remain unchanged.

    

    2. Supplemental
      Administration Rules

    

    (1) The
      sales
      contracts and manufactured products by the cooperative manufacturing enterprise
      must be signed by the legal representative of the cooperative manufacturing
      enterprise for acknowledgement (including the tri-party contracts for the boiler
      products orders for which Party B obtains by itself).

    

    (2) In
      order
      to control the product quality, the cooperative manufacturing enterprise must
      select suppliers and contractors who have qualifications and satisfy the
      requirements of Party A for material purchase, outsourcing, etc. Consent and
      confirmation from the legal representative of the cooperative manufacturing
      enterprise should be obtained in relation thereto. Further, the personnel of
      the
      outsourcing entities who need to work inside must have entrance documentation
      and the special workers such as welders should show their qualifications to
      work.

    

    (3) When
      the
      cooperative manufacturing enterprise bids for projects, it should do so in
      the
      name of Party A, apply to Party A in writing and obtain the confirmation from
      the legal representative of the cooperative manufacturing enterprise and the
      vice president in charge of sales of Party A. Upon confirmation by the president
      of the cooperative manufacturing enterprise, the company chop of Party A should
      be applied on the bidding documentation.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

       

    

    (4) When
      Party B needs Party A to issue manufacturer authorization for bidding purpose,
      it should apply in writing and obtain the confirmation from the legal
      representative of the cooperative manufacturing enterprise and the vice
      president in charge of sales of Party A. Upon confirmation by the president
      of
      the cooperative manufacturing enterprise, the company chop of Party A should
      be
      applied on the bidding documentation.

    

    (5) When
      the
      cooperative manufacturing enterprise needs assistance from Party A for commodity
      inspection, customs declaration for its exported products, it should apply
      in
      writing and obtain the confirmation from the legal representative of the
      cooperative manufacturing enterprise and the vice president in charge of sales
      of Party A. Upon confirmation by the president of the cooperative manufacturing
      enterprise, the import and export department of Party A should assist in
      processing.

    

    (6) When
      the
      technical documents, drawings, etc. of the cooperative manufacturing enterprise
      need to be reviewed by Party A, it should apply in writing and obtain the
      confirmation from the legal representative of the cooperative manufacturing
      enterprise and the vice president in charge of technology of Party A.
      Thereafter, the general office of Party A should assist in
      processing.

    

    (7) When
      the
      cooperative manufacturing enterprise needs Party A to issue the product quality
      certification for its products, it should apply in writing and obtain the
      confirmation from the legal representative of the cooperative manufacturing
      enterprise and the management reprehensive of Party A. Upon the confirmation
      by
      the president of the cooperative manufacturing enterprise, the quality warranty
      department of Party A should assist in processing.

    

    III. The
      clauses in the original leasing and cooperative manufacturing agreement that
      are
      not affected by the amendments herein should remain in full effect. Both parties
      will consult with each other for any future matters.

    

    IV. This
      agreement is in five copies (Each of Party A and Party B should hold two copies
      and the legal representative of the cooperative manufacturing enterprise should
      hold one copy).

    

    

    
      	
              Party
                A: Shanghai Si Fang Boiler Factory

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

            
	
              /s/
                President

            	
              /s/
                Chairman of the Board

            

    

    

    Date:
      August 20, 2008

    

    
      
         

      

      
        2FIRST
      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

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