Document:

BOARD
OF DIRECTORS - RETAINER AGREEMENT

       

      This agreement ("Agreement") is made
as of October 1, 2009 between China Energy Recovery, Inc., a Delaware
corporation, with its principal place of business at 7F, No. 267 Qu Yang Road,
Hongkou District, Shanghai 200081, China ("CER"), and Estelle
Lau, with an address of Estelle Lau ("Director"), whereby
Director agrees to serve as a director of CER and provide all necessary services
in connection therewith, according to the following:

       

      
        	
                I.

              	
                Services
      Provided

              

      

       

      Subject to the approval of its
stockholders, CER agrees to engage Director to serve, and Director agrees to
serve, as a member of the Board of Directors of CER (the "Board of Directors")
and to provide those services required of a director pursuant to (i) CER’s
Certificate of Incorporation and Bylaws, as each may be amended from time to
time (the "Certificate
and Bylaws"), (ii) the General Corporation Law of the State of Delaware
("DGCL"), the
federal securities laws and other state and federal laws and regulations, as
applicable, and (iii) as otherwise directed by the Board of Directors and
shareholders of CER (collectively, the "Services").

       

      
        	
                II.

              	
                Nature of
      Relationship

              

      

       

      Director is an independent contractor
and this Agreement will not create any partnership, joint venture or
employer/employee relationship for purposes of employee benefits, income tax
withholding, F.I.C.A. taxes or otherwise.  Except as specifically
provided herein, Director shall have no right, authority or power to enter into
any agreement or incur any obligation on behalf of CER or its Affiliates (as
defined below) or to bind CER or its Affiliates.  For purposes hereof,
"Affiliate"
shall mean with respect to any individual, partnership, joint venture,
corporation, limited liability company, trust, unincorporated association or
other entity (each, a "Person"): (i) any
other Person that directly or indirectly through one or more intermediaries
controls or is controlled by or is under common control with such Person; (ii)
any other Person owning or controlling 10% or more of the outstanding voting
securities of or other ownership interests in such Person; (iii) any officer,
director, member or partner of such Person; (iv) if such Person is an officer,
director, member or partner, any other Person for which such Person acts in any
such capacity; or (v) any company in which CER has and maintains an investment
through itself or any other Affiliate.

       

      CER will supply, at no cost to
Director: periodic briefings on the business, director packages for each board
and committee meeting, copies of minutes of meetings and any other materials
that are required under CER’s Certificate and Bylaws or the charter of any
committee of the board on which Director serves and any other materials which
may be necessary for performing the Services requested under this
Agreement.

       

      
        	
                III.

              	
                Director’s
      Representations and Warranties;
Covenants

              

      

       

      Director represents and warrants that
no other party has exclusive rights to his services in the specific areas
described herein and that Director is in no way compromising any rights, duties
or trust between any other party and Director.  Director further
represents, warrants and agrees that no other agreement, written or otherwise,
now exists or will be entered into that will create a conflict of interest with
this Agreement or otherwise impair Director's ability to perform his obligations
under this Agreement or otherwise with respect to CER.  Director
further covenants and agrees that he will comply with all applicable state and
federal laws and regulations, as applicable, including, but not limited to,
Director's fiduciary duties to CER set forth in the DGCL and Sections 10 and 16
of the Securities and Exchange Act of 1934, as amended.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      During the term of this Agreement and
for a period of six months thereafter (the "Non-Competition
Period"), Director shall not, without obtaining CER’s prior written
consent, directly or indirectly, as an officer, director, employee, consultant,
owner, shareholder, adviser, joint venturer or otherwise, participate in,
assist, aid, engage in, prepare to engage in or advise in any way any business
or enterprise that is in competition with the Company anywhere that the Company
is conducting business during the Non-Competition Period.

       

      
        	
                IV.

              	
                Compensation

              

      

       

      
        	
                 
      

              	
                A.

              	
                Retainer

              

      

       

      CER shall pay Director a nonrefundable
retainer of $30,000 per year during the term of this Agreement to provide the
Services.  A pro rata portion of the annual retainer shall be paid to
Director for portions of the term served by Director that are less than a full
year.  This retainer may be revised by action of the Board of
Directors from time to time.  Such revision shall be effective as of
the date specified in the resolution for payments not yet made and need not be
documented by an amendment to this Agreement.

       

      
        	
                 
      

              	
                B.

              	
                Stock
      Options

              

      

       

      On the Effective Date (as defined
below) of this Agreement, Director shall receive options to purchase 60,000
shares of CER common stock, exercisable at a price per share equal to the
current fair market value of CER's common stock on the grant date of the option
as determined by the Board of Directors.  This option grant shall be
subject to the terms of the equity incentive plan adopted by CER's Board of
Directors, and made pursuant to the terms of a separate option agreement between
CER and Director.  Twelve and one half percent (12.5%) of the total
number of options shall vest on each quarterly anniversary of the grant date;
provided, that upon the termination of Director’s service as a director of CER,
all unvested options shall be terminated and be forfeited.

       

      
        	
                 
      

              	
                C.

              	
                Payment

              

      

       

      Retainer payments shall be made
quarterly in cash in advance on the first day of each accounting quarter. 
No invoices need be submitted by Director for payment of the
retainer.

       

      
        	
                 
      

              	
                D.

              	
                Expenses

              

      

       

      CER will reimburse Director for
reasonable expenses approved in advance by CER's Chief Executive Officer, such
approval not to be unreasonably withheld.  Invoices for approved expenses,
with receipts attached, shall be submitted to and must be approved by CER’s
Chief Executive Officer as to form and completeness.

       

      
        	
                V.

              	
                Indemnification and
      Insurance

              

      

       

      CER and Director will execute an
indemnification agreement substantially in the form of the agreement attached
hereto as Exhibit
B (the "Indemnification
Agreement").  In addition, CER will use its commercial best
efforts to procure and maintain directors’ and officer’s liability insurance,
provided such insurance can be obtained on reasonable terms.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      
         

        
          	
                  VI.

                	
                  Term of
      Agreement

                

        

         

      

      The term of this Agreement shall
commence on the date that Director is formally appointed to fill a vacant
directorship by the existing Board of Directors (the "Effective Date") and
shall continue through the date that is the earlier to occur of: (i) a
termination of this Agreement in accordance with Section VII; and (ii) the two
year anniversary of the Effective Date.  Notwithstanding the foregoing
sentence, this Agreement shall be automatically renewed for successive terms
upon Director’s reelection as a member of CER’s Board of Directors for the
period of such new term, unless the Board of Directors determines not to renew
this Agreement in its sole discretion.  Any amendment to this
Agreement must be approved in a meeting or by a written action of CER’s Board of
Directors.  Amendments to Section IV regarding compensation hereof do not
require Director’s approval or consent to be effective.

       

      
        	
                VII.

              	
                Termination

              

      

       

      This Agreement shall automatically
terminate upon the earlier to occur of (i) the death of Director, (ii)
resignation or removal of the Director from, or failure to win election or
reelection to, the CER Board of Directors, or (iii) upon the approval of the
Board of Directors, in its sole discretion.

       

      In the event of the termination of this
Agreement, Director agrees to return any materials transferred to Director under
this Agreement, except as may be necessary to fulfill any outstanding
obligations hereunder.  Director agrees that CER has the right of
injunctive relief to enforce this provision.

       

      In the event of termination, Director
shall be entitled to receive the number of options which have vested in Director
as of the date of termination pursuant to Paragraph A of Section IV
above.  The unvested options as of the date of termination shall be
forfeited by Director.

       

      Termination shall not relieve either
party of its continuing obligations under this Agreement, the Indemnification
Agreement or the Confidentiality Agreement (as defined below) with respect to
confidentiality of proprietary information.

       

      
        	
                VIII.

              	
                Confidentiality

              

      

       

      Director agrees to sign and abide by
CER’s Director Proprietary Information and Inventions Agreement, a copy of which
is attached hereto as Exhibit A (the "Confidentiality
Agreement").

       

      
        	
                IX.

              	
                Resolution of
      Dispute

              

      

       

      Any dispute regarding this Agreement
(including without limitation its validity, interpretation, performance,
enforcement, termination and damages) shall be determined in accordance with the
laws of the State of Delaware and the United States of America.  Any action
under this paragraph shall not preclude any party hereto from seeking injunctive
or other legal relief to which each party may be entitled.

       

      
        	
                X.

              	
                Sole
      Agreement

              

      

       

      This Agreement (including the
Confidentiality Agreement and the Indemnification Agreement) supersedes all
prior or contemporaneous written or oral understandings or agreements, and may
not be added to, modified, or waived, in whole or in part, except by a writing
signed by the party against whom such addition, modification or waiver is sought
to be asserted.

       

      
        	
                XI.

              	
                Assignment

              

      

       

      This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns and, except as
otherwise expressly provided herein, neither this Agreement, nor any of the
rights, interests or obligations hereunder shall be assigned by either of the
parties hereto without the prior written consent of the other
party.

      

      
        
          
             

          

          
             

            
              

            

          

          
             

          

        

      

       

      
        
          	
                  XII.

                	
                  Notices

                

        

         

        Any and all notices, requests and other
communications required or permitted hereunder shall be in writing, registered
mail or by facsimile, to each of the parties at the addresses set forth above or
the numbers set forth below:

         

        
          
            
              
                
                  	
                          Director:

                        	
                          Attention:  Estelle
      Lau

                        
	 
      	
                          Telephone:
      650-529-0902

                        
	 
      	
                          Facsimile:  209-439-6649

                        
	 	 
	
                          CER:

                        	
                          Attention:
      Qinghuan Wu

                        
	 
      	
                          7F,
      No. 267 Qu Yang Road

                        
	 
      	
                          Hongkou
      District

                        
	 
      	
                          Shanghai
      200081, China

                        
	 
      	 
      
	 
      	
                          Telephone:
      86-21-65088566

                        
	 
      	
                          Facsimile:
      86-21-65082941

                        

                

              

            

          

        

         

        Any such
notice shall be deemed given when received and notice given by registered mail
shall be considered to have been given on the tenth (10th) day after having been
sent in the manner provided for above.

         

        
          	
                  XIII.

                	
                  Survival of
      Obligations

                

        

         

        Notwithstanding the expiration of
termination of this Agreement, neither party hereto shall be released hereunder
from any liability or obligation to the other which has already accrued as of
the time of such expiration or termination (including, without limitation, CER’s
obligation to make any fees and expense payments required pursuant to Section IV
hereof) or which thereafter might accrue in respect of any act or omission of
such party prior to such expiration or termination.

         

        
          	
                  XIV.

                	
                  Severability

                

        

         

        Any provision of this Agreement which
is determined to be invalid or unenforceable shall not affect the remainder of
this Agreement, which shall remain in effect as though the invalid or
unenforceable provision had not been included herein, unless the removal of the
invalid or unenforceable provision would substantially defeat the intent,
purpose or spirit of this Agreement.  Further, to the extent that any
provision of this Agreement is inconsistent with any provision in CER's
Certificate or Bylaws, such provision in the Certificate or Bylaws shall
control.

         

        *
* * * *

        
          
             

          

          
             

            
              

            

          

          
             

          

        

       

      
        IN WITNESS WHEREOF, the
parties hereto have caused this Agreement to be executed by their duly
authorized officers, as of the date first written above.

        

        
          
            
              
                
                  
                    
                      
                        	 
      	
                                DIRECTOR:

                              
	 
      	 
      
	 
      	
                                By: 

                              	
                                /s/ Estelle Lau

                              
	 
      	 
      	
                                Name:
      Estelle Lau

                              
	 	 	 
	 
      	
                                CER:

                              
	 
      	 
      	 
      
	 
      	
                                China
      Energy Recovery, Inc.

                              
	 
      	 
      
	 
      	
                                By:

                              	
                                /s/ Qinghuan Wu

                              
	 
      	 
      	
                                Name:
      Qinghuan Wu

                              
	 
      	 
      	
                                Title:  Chief
      Executive
Officer

                              

                      

                    

                  

                

              

            

          

        

        
          
             

          

          
             

            
              

            

          

          
             

          

        

       

      EXHIBIT
A

       

      BOARD
OF DIRECTORS PROPRIETARY INFORMATION

       

      AND
INVENTIONS AGREEMENT

       

      WHEREAS, Estelle Lau ("Director") and China
Energy Recovery, Inc., a Delaware corporation ("CER"), have entered
into the Board of Directors – Retainer Agreement dated as of October 1, 2009
(the "Retainer
Agreement"), whereby Director agrees to serve as a member of the board of
directors of CER;

       

      WHEREAS, the parties agree that in
connection with Director's services to CER as a director, Director will receive
certain confidential and proprietary information of CER, the disclosure of which
information by Director would be damaging to CER; and

       

      WHEREAS, the parties desire to assure
the confidential status of the information which may be disclosed by CER to
Director pursuant to the Retainer Agreement and in connection with Director's
services as a director of CER.

       

      NOW THEREFORE, in reliance upon and in
consideration of the following undertaking, the receipt and sufficiency of which
are hereby acknowledged, the parties agree as follows:

       

      1.           Director
acknowledges that pursuant to his service as a director of CER: (i) Director has
had and will have access to Proprietary Information (as defined below), all of
which has been and shall be made accessible to Director only in strict
confidence; (ii) unauthorized disclosure of the Proprietary Information will
damage CER's business; (iii) Proprietary Information would be susceptible to
immediate competitive application by a competitor of CER; (iv) CER's business is
substantially dependent on access to and the continuing secrecy of Proprietary
Information; (v) Proprietary Information is novel, unique to CER and known only
to Director, other directors, CER and certain key employees and contractors of
CER; (vi) CER shall at all times retain ownership and control of all Proprietary
Information; and (vii) the restrictions contained in this Agreement and the
Retainer Agreement are reasonable and necessary for the protection of CER's
legitimate business interests.

       

      2.           Subject
to the limitations set forth in Paragraph 3, all information of a confidential
nature disclosed by CER to Director shall be deemed to be "Proprietary
Information".  In particular, Proprietary Information shall be
deemed to include any information, process, technique, algorithm, program,
design, drawing, formula or test data relating to any research project, work in
process, future development, engineering, manufacturing, marketing, servicing,
financing or personnel matter relating to CER, its present or future products,
sales, suppliers, customers, employees, investors, or business, whether oral,
written, graphic or electronic form.

       

      3.           The
term "Proprietary
Information" shall not be deemed to include information which Director
can demonstrate by competent written proof: (i) is now, or hereafter becomes,
through no act or failure to act on the part of Director, generally known or
available; (ii) is known by Director at the time of receiving such information
as evidenced by his records; (iii) is hereafter furnished to Director by a third
party, as a matter of right and without restriction on disclosure; or (iv) is
the subject of a prior written permission to disclose provided by
CER.

       

      
        
           

        

        
          A-1

          
            

          

        

        
           

        

      

       

      4.           Director
shall maintain in trust and confidence and shall not disclose to any third party
or use for any unauthorized purpose any Proprietary Information received from
CER.  Director may use such Proprietary Information only to the extent
required to accomplish the purposes of this Agreement and the Retainer
Agreement.  Director shall not use Proprietary Information for any purpose
or in any manner which would constitute a violation of any laws or regulations,
including without limitation the export control laws of the United States. 
No other rights of licenses to trademarks, inventions, copyrights, or patents
are implied or granted under this Agreement.

       

      5.           Proprietary
Information supplied shall not be reproduced in any form except as required to
accomplish the intent of this Agreement and the Retainer Agreement.

       

      6.           Director
represents and warrants that he shall protect the Proprietary Information
received with at least the same degree of care used to protect his own
Proprietary Information from unauthorized use or disclosure.

       

      7.           All
Proprietary Information (including all copies thereof) shall remain in the
property of CER, and shall be returned to CER after Director's need for it has
expired, or upon request of CER, and in any event, upon completion or
termination of this Agreement or the Retainer Agreement.

       

      8.           Notwithstanding
any other provision of this Agreement or the Retainer Agreement, disclosure of
Proprietary Information shall not be precluded if Director has provided prior
written notice of such disclosure to CER and such disclosure:

       

      (a)           is
in response to a valid order of a court or other governmental body of the United
States or any political subdivision thereof; provided, however, that the
responding party shall first have given notice to the other party hereto and
shall have made a reasonable effort to obtain a protective order requiring that
the Proprietary Information so disclosed be used only for the purpose for which
the order was issued;

       

      (b)           is
otherwise required by law; or

       

      (c)           is
otherwise necessary to establish rights or enforced obligations under this
Agreement, but only to the extent that any such disclosure is
necessary.

       

      9.           This
Agreement shall continue in full force and effect for so long as Director
continues to receive or is in possession of Proprietary Information.  This
Agreement may be terminated at any time upon thirty (30) days written notice to
the other party.  The termination of this Agreement shall not relieve
Director of the obligations imposed by Paragraphs 4, 5, 6, 7 and 13 of this
Agreement with respect to Proprietary Information received by Director prior to
the effective date of such termination, and the provisions of these Paragraphs
shall survive the termination of this Agreement and the Retainer
Agreement.

       

      10.           Director
agrees to fully indemnify CER for any loss or damage, direct or indirect,
suffered as a result of any breach by Director of the terms of this Agreement,
including any reasonable fees incurred by CER in the collection of such
indemnity.

       

      11.           Any
dispute regarding this Agreement (including without limitation its validity,
interpretation, performance, enforcement, termination and damages) shall be
determined in accordance with the laws of the State of Delaware and the United
States of America.

       

      
        
           

        

        
          A-2

          
            

          

        

        
           

        

      

       

      12.           This
Agreement contains the final, complete and exclusive agreement of the parties
relative to the subject matter hereof and may not be changed, modified, amended
or supplemented except by a written instrument signed by both
parties.

       

      13.           Each
party hereby acknowledges and agrees that in the event of any breach of this
Agreement by Director, including, without limitation, an actual or threatened
disclosure of Proprietary Information without the prior express written consent
of CER, CER will suffer an irreparable injury, such that no remedy at law will
afford it adequate protection against, or appropriate compensation for, such
injury.  Accordingly, each party hereby agrees that CER shall be entitled
to specific performance of Director's obligations under this Agreement, as well
as such further injunctive relief as may be granted by a court of competent
jurisdiction.

       

      *
* * * *

      

      
        
          
             

          

          
            A-3

            
              

            

          

          
             

          

        

      

      

        IN WITNESS WHEREOF, the
parties hereto have executed this Agreement on and as of the day and year first
above written.

         

        
          
            	 
      	
                    CER:

                  
	 
      	 
      
	 
      	
                    China
      Energy Recovery, Inc.

                  
	 
      	
                    7F,
      No. 267, Qu Yang Road, Hongkou District

                  
	 
      	
                    Shanghai
      200081, China

                  
	 
      	 
      
	 
      	
                    By: 

                  	
                    /s/ Qinghuan Wu

                  
	 
      	
                    Name:
      Qinghuan Wu

                  
	 
      	
                    Title:   Chief
      Executive Officer

                  
	 
      	 
      
	 
      	
                    DIRECTOR:

                  
	 
      	 
      
	 
      	
                    By:

                  	
                    /s/ Estelle Lau

                  
	 
      	 
      	
                    Name:
      Estelle Lau

                  

          

        

        
          
             

          

          
            A-4

            
              

            

          

          
             

          

        

        EXHIBIT
B

         

        INDEMNITY
AGREEMENT

         

        THIS AGREEMENT is made and
entered as of October 1, 2009 by and between China Energy Recovery, Inc., a
Delaware corporation ("CER"), and Estelle
Lau ("Director").

         

        RECITALS

         

        WHEREAS, CER and Director have
entered into a Board of Directors – Retainer Agreement dated as of October 1,
2009 (the "Retainer
Agreement"), whereby Director will perform a valuable service to CER in
his capacity as a director of CER;

         

        WHEREAS, the stockholders of
CER have adopted bylaws (the "Bylaws"), which,
among other things, provide for the indemnification of the directors, officers,
employees and other agents of CER, including persons serving at the request of
CER in such capacities with other corporations or enterprises, as authorized by
the General Corporation Law of the State of Delaware, as amended (the "Code");

         

        WHEREAS, the Bylaws and the
Code, by their non-exclusive nature, permit contracts between CER and its
agents, officers, employees and other agents with respect to indemnification of
such persons; and

         

        WHEREAS, in order to induce
Director to serve as a director of CER, CER has determined and agreed that it is
in the best interest of CER to enter into this Agreement with
Director;

         

        NOW, THEREFORE, in
consideration of Director’s service as a director after the date hereof, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:

         

        AGREEMENT

         

        1.           Services to
CER.  Director will serve as a director of CER or as a
director, officer or other fiduciary of an affiliate of CER (including any
employee benefit plan of CER) faithfully and to the best of his ability so long
as he is duly elected and qualified in accordance with the provisions of the
Bylaws or other applicable charter documents of CER or such affiliate; provided, however, that
Director may at any time and for any reason resign from such position (subject
to any contractual obligation that Director may have assumed apart from this
Agreement) and that CER or any affiliate shall have no obligation under this
Agreement to continue Director in any such position.

         

        2.           Indemnity of
Director.  CER hereby agrees to hold harmless and indemnify
Director to the fullest extent authorized or permitted by the provisions of the
Bylaws and the Code, as the same may be amended from time to time (but, only to
the extent that such amendment permits CER to provide broader indemnification
rights than the Bylaws or the Code permitted prior to adoption of such
amendment).

         

        3.           Additional
Indemnity.  In addition to and not in limitation of the
indemnification otherwise provided for herein, and subject only to the
exclusions set forth in Section 4 hereof, CER hereby further agrees to hold
harmless and indemnify Director:

        
          
             

          

          
            B-1

            
              

            

          

          
             

          

        

        (a)           against
any and all expenses (including attorneys’ fees), witness fees, damages,
judgments, fines and amounts paid in settlement and any other amounts that
Director becomes legally obligated to pay because of any claim or claims in
connection with any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, arbitrational, administrative or investigative
(including an action by or in the right of CER) to which Director is, was or at
any time becomes a party, or is threatened to be made a party, by reason of the
fact that Director is, was or at any time becomes a director, officer, employee
or other agent of CER, or is or was serving or at any time serves at the request
of CER as a director, officer, employee or other agent of another corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise;
and

         

        (b)           otherwise,
to the fullest extent as may be provided to Director by CER under the
non-exclusivity provisions of the Code and the Bylaws.

         

        4.           Limitations on Additional
Indemnity.  No indemnity pursuant to Section 3 hereof shall be
paid by CER:

         

        (a)           on
account of any claim against Director solely for an accounting of profits made
from the purchase or sale by Director of securities of CER pursuant to the
provisions of Section 16(b) of the Securities Exchange Act of 1934 and
amendments thereto or similar provisions of any federal, state or local
statutory law;

         

        (b)           on
account of Director’s conduct that is established by a final judgment as
fraudulent or dishonest or that constituted willful misconduct;

         

        (c)           on
account of Director’s conduct that is established by a final judgment as
constituting a breach of Director’s duty of loyalty to CER, or which results in
any personal profit or advantage to which Director was not legally
entitled;

         

        (d)           for
which payment is actually made to Director under a valid and collectible
insurance policy or under a valid and enforceable indemnity clause, bylaw or
agreement, except in respect of any excess beyond payment under such insurance,
clause, bylaw or agreement;

         

        (e)           if
indemnification is not lawful (and, in this respect, both CER and Director have
been advised that the Securities and Exchange Commission believes that
indemnification for liabilities arising under the federal securities laws is
against public policy and is, therefore, unenforceable and that claims for
indemnification should be submitted to appropriate courts for adjudication);
or

         

        (f)           in
connection with any proceeding (or part thereof) initiated by Director, or any
proceeding by Director against CER or its directors, officers, employees or
other agents, unless (i) such indemnification is expressly required to be made
by law, (ii) the proceeding was authorized by the Board of Directors of CER,
(iii) such indemnification is provided by CER, in its sole discretion, pursuant
to the powers vested in CER under the Code, or (iv) the proceeding is initiated
pursuant to Section 9 hereof.

         

        5.           Continuation of
Indemnity.  All agreements and obligations of CER contained
herein shall continue during the period Director is a director, officer,
employee or other agent of CER (or is or was serving at the request of CER as a
director, officer, employee or other agent of another corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise) and shall
continue thereafter so long as Director shall be subject to any possible claim
or threatened, pending or completed action, suit or proceeding, whether civil,
criminal, arbitrational, administrative or investigative, by reason of the fact
that Director was serving in the capacity referred to herein.

        
          
             

          

          
            B-2

            
              

            

          

          
             

          

        

        6.           Partial
Indemnification.  Subject to the limitations on indemnity
provided in Section 4, Director shall be entitled under this Agreement to
indemnification by CER for the portion of the expenses (including attorneys’
fees), witness fees, damages, judgments, fines and amounts paid in settlement
and any other amounts to which Director is entitled and that Director becomes
legally obligated to pay in connection with any action, suit or proceeding
referred to in Section 3 hereof even if not entitled hereunder to
indemnification for the total amount thereof, and CER shall indemnify Director
for the portion thereof to which Director is entitled.

         

        7.           Notification and Defense of
Claim.  Not later than thirty (30) days after receipt by
Director of notice of the commencement of any action, suit or proceeding,
Director will, if a claim in respect thereof is to be made against CER under
this Agreement, notify CER of the commencement thereof.  With respect
to any such action, suit or proceeding as to which Director notifies CER of the
commencement thereof:

         

        (a)           CER
will be entitled to participate therein at its own expense;

         

        (b)           except
as otherwise provided below, CER may, at its option and jointly with any other
indemnifying party similarly notified and electing to assume such defense,
assume the defense thereof, with counsel reasonably satisfactory to
Director.  After notice from CER to Director of its election to assume
the defense thereof, CER will not be liable to Director under this Agreement for
any legal or other expenses subsequently incurred by Director in connection with
the defense thereof except for reasonable costs of investigation or otherwise as
provided below.  Director shall have the right to employ separate
counsel in such action, suit or proceeding but the fees and expenses of such
counsel incurred after notice from CER of its assumption of the defense thereof
shall be at the expense of Director, unless (i) the employment of counsel by
Director has been authorized by CER, (ii) Director shall have reasonably
concluded, and CER has agreed, that there is an actual conflict of interest
between CER and Director in the conduct of the defense of such action, or (iii)
CER shall not in fact have employed counsel to assume the defense of such
action, in each of which cases the fees and expenses of Director’s separate
counsel shall be at the expense of CER.  CER shall not be entitled to
assume the defense of any action, suit or proceeding brought by or on behalf of
CER or as to which Director and CER shall have made the conclusion provided for
in clause (ii) above; and

         

        (c)           CER
shall not be liable to indemnify Director under this Agreement for any amounts
paid in settlement of any action or claim effected without its written consent,
which shall not be unreasonably withheld. CER shall be permitted to settle any
action except that it shall not settle any action or claim in any manner which
would impose any penalty or limitation on Director without Director’s written
consent, which may be given or withheld in Director’s sole
discretion.

         

        8.           Expenses.  CER shall
advance, prior to the final disposition of any proceeding, promptly following
request therefor, all expenses incurred by Director in connection with such
proceeding upon receipt of an undertaking by or on behalf of Director to repay
said amounts if it shall be determined ultimately that Director is not entitled
to be indemnified under the provisions of this Agreement, the Bylaws, the Code
or otherwise.

        
          
             

          

          
            B-3

            
              

            

          

          
             

          

        

        9.           Enforcement.  Any
right to indemnification or advances granted by this Agreement to Director shall
be enforceable by or on behalf of Director in any court of competent
jurisdiction if (i) the claim for indemnification or advances is denied, in
whole or in part, or (ii) no disposition of such claim is made within ninety
(90) days of request therefor.  If Director is wholly successful in
such enforcement action, Director shall also be entitled to be paid the expense
of prosecuting his claim.  It shall be a defense to any action for
which a claim for indemnification is made under Section 3 hereof (other than an
action brought to enforce a claim for expenses pursuant to Section 8 hereof,
provided that the
required undertaking has been tendered to CER) that Director is not entitled to
indemnification because of the limitations set forth in Section 4
hereof.  Neither the failure of CER (including its Board of Directors
or its stockholders) to have made a determination prior to the commencement of
such enforcement action that indemnification of Director is proper in the
circumstances, nor an actual determination by CER (including its Board of
Directors or its stockholders) that such indemnification is improper shall be a
defense to the action or create a presumption that Director is not entitled to
indemnification under this Agreement or otherwise.

         

        10.         Subrogation.  In the
event of payment under this Agreement, CER shall be subrogated to the extent of
such payment to all of the rights of recovery of Director, who shall execute all
documents required and shall do all acts that may be necessary to secure such
rights and to enable CER effectively to bring suit to enforce such
rights.

         

        11.         Non-Exclusivity of
Rights.  The rights conferred on Director by this Agreement
shall not be exclusive of any other right which Director may have or hereafter
acquire under any statute, provision of CER’s Certificate of Incorporation or
Bylaws, agreement, vote of stockholders or directors, or otherwise, both as to
action in his official capacity and as to action in another capacity while
holding office.

         

        12.         Survival
of Rights.

         

        (a)           The
rights conferred on Director by this Agreement shall continue after Director has
ceased to be a director, officer, employee or other agent of CER or to serve at
the request of CER as a director, officer, employee or other agent of another
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise and shall inure to the benefit of Director’s heirs, executors and
administrators.

         

        (b)           CER
shall require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business or
assets of CER, expressly to assume and agree to perform this Agreement in the
same manner and to the same extent that CER would be required to perform if no
such succession had taken place.

         

        13.         Severability.  Each
of the provisions of this Agreement is a separate and distinct agreement and
independent of the others, so that if any provision hereof shall be held to be
invalid for any reason, such invalidity or unenforceability shall not affect the
validity or enforceability of the other provisions hereof. Furthermore, if this
Agreement shall be invalidated in its entirety on any ground, then CER shall
nevertheless indemnify Director to the fullest extent provided by the Bylaws,
the Code or any other applicable law.

         

        14.         Governing Law.  This
Agreement shall be interpreted and enforced in accordance with the laws of the
State of Delaware.

         

        15.         Amendment and
Termination.  No amendment, modification, termination or
cancellation of this Agreement shall be effective unless in writing signed by
both parties hereto.

         

        16.         Identical
Counterparts.  This Agreement may be executed in one or more
counterparts, each of which shall for all purposes be deemed to be an original
but all of which together shall constitute but one and the same
Agreement.  Only one such counterpart need be produced to evidence the
existence of this Agreement.

        
          
             

          

          
            B-4

            
              

            

          

          
             

          

        

        17.         Headings. The headings of the
sections of this Agreement are inserted for convenience only and shall not be
deemed to constitute part of this Agreement or to affect the construction
hereof.

         

        18.         Notices.  All
notices, requests, demands and other communications hereunder shall be in
writing and shall be deemed to have been duly given (i) upon delivery if
delivered by hand to the party to whom such communication was directed or (ii)
upon the third business day after the date on which such communication was
mailed if mailed by certified or registered mail with postage
prepaid:

         

        
          	
                   
      

                	
                  (a)

                	
                  If
      to Director, to: 

                

        

         

        
          	
                   
      

                	
                  Attention:  Estelle
      Lau

                

        

        
          	
                   
      

                	
                  Telephone:
      650-529-0902

                

        

        
          	
                   
      

                	
                  Facsimile:  209-439-6649

                

        

         

        
          	
                   
      

                	
                  (b)

                	
                  If
      to CER, to:

                

        

         

        China
Energy Recovery, Inc.

        7F, No.
267 Qu Yang Road,

        Hongkou
District, Shanghai 200081, China

        Attention:  Qinghuan
Wu

        Facsimile:  86-21-65082941

         

        or to
such other address as may have been furnished to Director by CER.

         

        *
* * * *

        
          
             

          

          
            B-5

            
              

            

          

          
             

          

        

        IN WITNESS WHEREOF, the
parties hereto have executed this Agreement on and as of the day and year first
above written.

        

        
          
            	 
      	
                    CER:

                  
	 
      	 
      
	 
      	
                    China
      Energy Recovery, Inc.

                  
	 
      	 
      	 
      
	 
      	
                    By: 

                  	
                    /s/  Qinghuan
  Wu

                  
	 
      	
                    Name:
      Qinghuan Wu

                  
	 
      	
                    Title:  Chief
      Executive Officer

                  
	 
      	 
      
	 
      	
                    DIRECTOR:

                  
	 
      	 
      
	 
      	
                    By:

                  	
                    /s/ Estelle Lau

                  
	 
      	 
      	
                    Name:
      Estelle Lau

                  
	 
      	 
      

          

        

        
          
             

          

          
            B-6Unassociated Document

    

    Network
Agreement

     

    This
agreement (the “Agreement”) is made as of June 15, 2009 (the “Effective Date”)
by and between NeoStem, Inc., a Delaware corporation with its principal place of
business located at 420 Lexington Avenue, Suite 450, New York, New
York  10170 (“NEOSTEM”), and Enhance BioMedical Holdings Limited, a
China corporation with its principal place of business located at 6565 Bo Yuan
Road, Shanghai 201804 PRC (“SERVICE PROVIDER”) (NEOSTEM and SERVICE PROVIDER
each being individually referred to as a “Party” and collectively as the
“Parties”).

     

    WHEREAS,
NEOSTEM is a leader in adult stem cell collection, processing, cryopreservation
and storage services and has rights to a range of proprietary stem cell
technologies to be used in therapeutic applications;

     

    WHEREAS,
SERVICE PROVIDER is knowledgeable and experienced in the Asian healthcare market
and wishes to obtain from NEOSTEM the exclusive rights to provide the NEOSTEM
Stem Cell Services on the terms hereinafter set forth to a network of Centers as
herein described; and

     

    WHEREAS,
NEOSTEM desires to provide to SERVICE PROVIDER the exclusive rights to provide
the NEOSTEM Stem Cell Services on the terms hereinafter set forth.

     

    NOW
THEREFORE, in consideration of the premises and the mutual covenants contained
herein, the Parties agree as follows:

     

    
      	
              Section
      1.

            	
              Definitions.

            

    

     

    The
following capitalized terms used in this Agreement shall, unless the context
otherwise requires, have the following meaning:

     

    
      	
              1.1.

            	
              “Affiliate”
      means, with respect to any entity, any other entity that, directly or
      indirectly, through one or more intermediaries, controls, is controlled
      by, or is under common control with, such entity.  The term
      “control” means the possession, directly or indirectly, of the power to
      direct or cause the direction of the management and policies of an entity,
      whether through the ownership of voting securities, by contract, or
      otherwise.  Affiliate includes with respect to NEOSTEM any WFOE
      or limited liability company of NEOSTEM relating to the conduct of the
      subject matter of this Agreement.

            

    

     

    
      	
              1.2.

            	
              “Business” means
      the NEOSTEM Stem Cell Services.

            

    

     

    
      	
              1.3.

            	
              “Center” means a
      facility or hospital constructed, furnished, equipped and staffed to
      operate and perform NEOSTEM Stem Cell Services in the
      Territory.

            

    

     

    
      	
              1.4.

            	
              “Client” means a
      person for whom NEOSTEM Stem Cell Services are
  provided.

            

    

     

    
      	
              1.5.

            	
              “Exclusivity
      Period” has the meaning set forth in Section
  6.1.

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      	
              1.6.

            	
              “Intellectual
      Property” means all know-how, trade secrets, copyrights and other
      intellectual property rights (excluding the Marks) that NEOSTEM owns or
      otherwise has the right to grant licenses under and are relevant to the
      delivery of NEOSTEM Stem Cell Collection
  Services.

            

    

     

    
      	
              1.7.

            	
              “Territory”
      means (i) Taiwan; (ii) Shanghai Municipality and the five provinces of
      Jiangsu, Zhejiang, Fujian, Anhui and Jiangxi in the People’s Republic of
      China (“PRC”); and (iii) up to 50 hospitals in selected parts of the PRC
      (subject to mutual written agreement) with which SERVICE PROVIDER has
      pre-existing relationships and such other territories as the parties may
      agree to in writing from time to
time.

            

    

     

    
      	
              1.8.

            	
              “Center
      Agreement” means a separate agreement between SERVICE PROVIDER and
      a hospital, doctors office or facility with respect to enabling them to
      offer NEOSTEM Stem Cell Services.  SERVICE PROVIDER and or its
      Affiliates agree to use language in the Center Agreement that provides the
      Center will follow protocols and standard operating procedures for NEOSTEM
      Stem Cell Services and otherwise employ reasonable care in providing such
      services and protect the IP, technology and know-how with respect to the
      delivery of NEOSTEM Stem Cell Services as well as requiring that any
      employee of a Center shall enter into NeoStem’s form of non-competition
      agreement.

            

    

     

    
      	
              1.9.

            	
              “Marks” means
      the “NEOSTEM” mark and name, and such other marks and names used by
      NEOSTEM and relating to the
Business.

            

    

     

    
      	
              1.10.

            	
              “NEOSTEM Stem Cell
      Services” means NEOSTEM’s adult stem cell collection, processing,
      cryopreservation and storage services for autologous use and therapies
      that may be provided through the use of NEOSTEM’s proprietary technologies
      as identified by NeoStem from time to
time.

            

    

     

    
      	
              1.11.

            	
              “Operating
      Entity” means each operating entity, if any, organized by SERVICE
      PROVIDER in connection with the provision of the NEOSTEM Stem Cell
      Services.

            

    

     

    
      	
              1.12.

            	
              “Stem Cell
      Collection” means that collection of human adult stem cells derived
      from peripheral blood and all related clinical
  procedures.

            

    

     

    
      	
              1.13.

            	
              “Stem Cells”
      means adult human stem cells derived from peripheral
  blood.

            

    

     

    
      	
              1.14.

            	
              “Center” means a
      facility within the Territory at which SERVICE PROVIDER desires to enable
      the use of NEOSTEM Stem Cell Services pursuant to this Agreement and with
      which SERVICE PROVIDER establishes a Center
  Agreement.

            

    

     

    
      	
              1.15.

            	
              “SERVICE
      PROVIDER” means Enhance BioMedical Holdings Limited and any
      Affiliate, including any Operating Entity and is sometimes referred to
      herein as “SERVICE PROVIDER”.

            

    

     

    
      	
              1.16.

            	
              “Gross Revenues”
      means total gross receipts of sales of NEOSTEM Stem Cell
      Services.

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      	
              Section
      2.

            	
              Term of Agreement;
      Other Agreements.

            

    

     

    2.1           Term of
Agreement.  This Agreement will commence on the Effective Date
and will expire ten (10) years after the Effective Date, unless terminated
earlier as provided in Section 4 hereof (the “Term”).

     

    2.2           Renewal
Terms.  Upon the expiration of the Term SERVICE PROVIDER shall
be entitled at its option to renew this Agreement for a subsequent ten (10) year
period; provided that (i) SERVICE PROVIDER provides written notice of its desire
to renew not less than one year prior to the end of the initial term or any
renewal term, (ii) at the time of renewal SERVICE PROVIDER executes NEOSTEM’s
then current form of agreement, which could include, among other things, higher
or additional fees, (iii) SERVICE PROVIDER has paid or otherwise satisfied all
monetary obligations to NEOSTEM, and (iv) such other reasonable requirements as
NEOSTEM may require.

     

    
      	
              Section
      3.

            	
              Training and
      Establishment of Centers.

            

    

     

    3.1           Training of SERVICE
PROVIDER.  NBS shall train or arrange training for the SERVICE
PROVIDER and other staff members of the SERVICE PROVIDER on the NEOSTEM Stem
Cell Services and SOPs. NEOSTEM will train the SERVICE PROVIDER at NEOSTEM’s
option at a NEOSTEM facility or other location located in China or the United
States.  The cost of training the SERVICE PROVIDER shall be borne by
NEOSTEM.  All other expenses relating to the training, including
salary, wages and benefits, meals, lodging, travel and similar expenses shall be
borne by the SERVICE PROVIDER.

     

    3.2           Training of
Centers.  Training of the Centers shall be conducted by SERVICE
PROVIDER but if necessary and on request of SERVICE PROVIDER subject to the
availability of NEOSTEM personnel, NEOSTEM will at the cost of SERVICE PROVIDER
(or Center if passed down to Center) assist in training Centers based on a fee
for services.  Once the needs and fees are determined the rates set
forth will be added to this Agreement as Attachment A.  Such fees
shall be invoiced to SERVICE PROVIDER on a monthly basis for services provided
in the prior month and shall be payable within thirty (30) days of receipt
thereof.

     

    3.3           Other
Assistance.  Other assistance that NEOSTEM may provide, subject
to a separate written agreement, including with respect to the fee for services,
includes:

     

    3.3.1            Set-up
Assistance.  In connection with the establishment of any
Center, NEOSTEM shall offer services with respect to constructing, equipping,
furnishing and staffing such Center.

     

    3.3.2            Marketing and
Advertising.  NEOSTEM shall provide to SERVICE PROVIDER
marketing support and medical education with respect to the delivery of the
NEOSTEM Stem Cell Services.

     

    3.3.3            Costs.  The
costs of the assistance set forth in this section 3.3 shall be on a fee for
services basis as shall be determined by the Parties.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    3.4           SERVICE PROVIDER
Responsibilities.  SERVICE PROVIDER solely shall be responsible
for (i) providing appropriate office space for any Center in the Territory, (ii)
all payroll, benefits and other employment-related matters with respect to the
personnel participating in the NEOSTEM Stem Cell Services in the Territory,
(iii) obtaining, setting up and maintaining all equipment and supplies necessary
for the provision of the NEOSTEM Stem Cell Services, and (iv) obtaining any and
all required licenses and permits, provided that if requested by SERVICE
PROVIDER, NEOSTEM will undertake on a best efforts basis to assist SERVICE
PROVIDER in the application for such licenses and permits and will
assist  SERVICE PROVIDER in training their centers and collecting fees
owed to them of which NBS is entitled.

     

    3.5           Audit and
Survey.  NEOSTEM shall have the right to audit and survey,
prior to operational commencement of the NEOSTEM Stem Cell Services, appropriate
training with respect to the delivery of the NEOSTEM Stem Cell Services at the
Center.

     

    3.6           Execution of Center
Agreement.  In order to protect the IP, proprietary technology
and techniques and provide for standardization and quality of services, SERVICE
PROVIDER shall execute a Center Agreement with each Center and agrees that it
shall contain, in addition to other appropriate provisions, language ensuring
compliance with the terms of this Agreement.

     

    3.7           No Medical
Advice.  SERVICE PROVIDER acknowledges that NEOSTEM is not a
health care provider, licensed or otherwise.  NEOSTEM will not direct
patient clinical care and treatment services or emergency patient
issues.  NEOSTEM can not and will not assume responsibility for the
direct medical care of any patient, which shall, at all times remain the
responsibility of the treating physician.

     

    3.8           Standard of
Conduct.  SERVICE PROVIDER shall ensure the NEOSTEM Stem Cell
Services are provided in compliance with:

     

    
      	
               
      

            	
              (i)

            	
              all
      applicable laws, rules and
regulations;

            

    

     

    
      	
               
      

            	
              (ii)

            	
              all
      standards of conduct, codes of ethics and other policies and guidelines
      promulgated that are reasonably applicable to the delivery of the NEOSTEM
      Stem Cell Services;

            

    

     

    
      	
               
      

            	
              (iii)

            	
              such
      operating policies and procedures as may be provided by NEOSTEM in
      connection with the training provided for in this Agreement;
      and

            

    

     

    
      	
               
      

            	
              (iv)

            	
              with
      a high level of client service.

            

    

     

    
      	
              Section
      4.

            	
              Termination of
      Agreement.

            

    

     

    4.1           Termination.  In
the event of a material breach of this Agreement by a Party, the other Party may
terminate this Agreement by giving thirty (30) days prior, written notice to the
breaching Party; provided, however, that this
Agreement will not terminate if the breaching Party has cured the breach before
the expiration of such thirty (30) day period. This Agreement is terminable
immediately without notice by a Party if the other Party: (i) voluntarily
institutes insolvency, receivership or bankruptcy proceedings, (ii) is
involuntarily made subject to any bankruptcy or insolvency proceeding and such
proceeding is not dismissed within sixty (60) days of the filing of such
proceeding; (iii) makes an assignment for the benefit of creditors, or (iv)
undergoes any dissolution or cessation of business.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    4.2           Effect of
Termination.  Upon any termination or expiration of this
Agreement:

     

    
      	
               
      

            	
              (i)

            	
              Each
      Party shall pay the other Party all amounts due and payable as of the
      effective date of termination or
expiration;

            

    

     

    
      	
               
      

            	
              (ii)

            	
              SERVICE
      PROVIDER and each Center shall immediately cease all use of NEOSTEM
      Intellectual Property and provision of NEOSTEM Stem Cell Services and all
      rights granted under this Agreement shall terminate immediately;
      and

            

    

     

    
      	
               
      

            	
              (iii)

            	
              SERVICE
      PROVIDER, at NEOSTEM’s option, will either return to NEOSTEM or provide
      NEOSTEM with written certification of the destruction of, all documents,
      computer files and other materials containing any Proprietary Information
      that are in the SERVICE PROVIDER or a Center’s possession or
      control.

            

    

     

    4.3           Survival.  The
following provisions will survive any expiration or termination of this
Agreement:  “Use of Confidential Information.”; “Exclusivity.”,
“Effect of Termination”.

     

    
      	
              Section
      5.

            	
              Use of Confidential
      Information.

            

    

     

    5.1           Proprietary
Information.  SERVICE PROVIDER agrees at all times to keep
confidential any and all Proprietary Information and will not, without the
express prior written consent of NEOSTEM, disclose directly or indirectly any
Proprietary Information to any other person or use directly or indirectly any
such Proprietary Information, for the benefit of SERVICE PROVIDER, or any third
party.  For the purposes of this Agreement, “Proprietary
Information” includes all trade secrets, know-how, show-how, technical,
operating, financial, and other business information related to NEOSTEM and its
Affiliates, the Business or the customers or suppliers of NEOSTEM, whether or
not reduced to writing or other medium and whether or not marked or labeled
confidential, proprietary or the like, specifically including, but not limited
to, information regarding procedures, methods and techniques regarding the
NEOSTEM Stem Cell Services, financial and other information regarding the
Business, the terms and conditions of this Agreement, marketing, sales and
pricing techniques, designs, inventions, products, improvements, modifications,
methodology, processes, concepts, records, files, memoranda, reports, plans,
proposals, price lists, client and supplier information, product development and
project procedures.  Proprietary Information will not include
information which (i) is or becomes generally available to the public (other
than as a result of a disclosure by the SERVICE PROVIDER or its
representatives), or (ii) becomes available on a non-confidential basis from a
source other than NEOSTEM or one of its representatives which is entitled to
disclose it.  The SERVICE PROVIDER acknowledges that the “Proprietary
Information” may include material, non-public information regarding the business
of NEOSTEM and its parent company (a publicly-traded company) and, without
limiting any of the foregoing, the SERVICE PROVIDER agrees not to use or
disclose any such information in violation of any applicable securities laws and
regulations.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    5.2           SERVICE PROVIDER Personnel
and Center Agreements.  SERVICE PROVIDER shall require all of
SERVICE PROVIDER’s employees, consultants and other personnel and all Centers
and their employees, consultants and other personnel, as a condition of their
employment or other arrangement, to execute a written agreement prohibiting
them, during the term of their employment or such other arrangement and
thereafter, from communicating, divulging, or using for the benefit of any
person, persons, agent, association, corporation or other entity any Proprietary
Information which may be acquired as a result of their employment or other
arrangement with SERVICE PROVIDER.  Each such agreement shall be in a
form that has been approved by NEOSTEM in writing and shall expressly provide
that NEOSTEM is a third party beneficiary thereof.

     

    5.3           Non-Disparagement.  Neither
Party will at any time disparage the business reputation of the other Party or
any of the other Party’s employees, officers, directors, agents and/or
clients.

     

    
      	
              Section
      6.

            	
              Exclusivity.

            

    

     

    6.1           During
the Term or any Renewal Term and for a period of two (2) years thereafter (the
“Exclusivity Period”) SERVICE PROVIDER shall not directly or indirectly, whether
itself or through a subsidiary, successor or affiliate, engage in (i) providing
any adult stem cell services inside or outside the Territory other than the
NEOSTEM Stem Cell Services being provided within the Territory pursuant to the
terms of this Agreement; or (ii) engaging in activities that are related,
incidental or incremental to the NEOSTEM Stem Cell Services inside the Territory
without the prior explicit written consent of NEOSTEM and the entering into of
such additional agreements as may be requested by NEOSTEM in connection with the
joint pursuit.  During the Term or any Renewal Term, NEOSTEM shall not
(i) enable any party (including NEOSTEM) other than SERVICE PROVIDER to provide
the NEOSTEM Stem Cell Services in the Territory; or (ii) provide knowledge,
technology and operating procedures in relation to the NEOSTEM Stem Cell
Services, directly or indirectly, to any party other than SERVICE PROVIDER in
the Territory.  The Parties acknowledges that the restrictions
contained in this Section 6 are
reasonable and necessary to protect the legitimate proprietary interests of the
Parties and that any breach by a Party of any provision hereof will result in
irreparable injury to the other Party.  The Parties acknowledges that,
in addition to all remedies available at law, each party will be entitled to
equitable relief, including injunctive relief and an equitable accounting of all
earnings, profits or other benefits arising from such breach and will be
entitled to receive such other damages, direct or consequential, as may be
appropriate.  NEOSTEM shall be released from its obligations contained
in this Section 6 to the extent SERVICE PROVIDER fails to comply with its
obligations contained in Section 7.

     

    
      	
              Section
      7.

            	
              Technical Assistance
      Fee and Royalties.

            

    

     

    7.1           Technical Assistance
Fee.  SERVICE PROVIDER agrees to pay NEOSTEM US$250,000 as
Service Fee as follows:

     

    
      	
               
      

            	
              (i)

            	
              $80,000
      upon the signing of this Agreement;

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              (ii)

            	
              $80,000
      upon the commencement of the training of SERVICE PROVIDER staff by NEOSTEM
      pursuant to Section 3.1 hereof;

            

    

     

    
      	
               
      

            	
              (iii)

            	
              $90,000
      upon the satisfactory review by SERVICE PROVIDER (which review must be
      completed by no later than December 31, 2009) of the necessary knowledge,
      technology and operating procedures (See Attachment B) in relation to the
      NEOSTEM Stem Cell Services to be provided by SERVICE PROVIDER in the
      Territory.  NEOSTEM will deliver the necessary knowledge,
      technology and operating procedures to SERVICE PROVIDER in order that they
      may provide the NEOSTEM Stem Cell Services and enable SERVICE PROVIDER and
      its affiliates in the methods of treatment using all of NEOSTEM
      technologies created and licensed to date and in the
    future.

            

    

     

    7.2           Royalties.

     

    7.2.1            SERVICE
PROVIDER agrees to pay to NEOSTEM a Royalty equal to 20% of Gross Revenues of
NEOSTEM Stem Cell Services in the Territory.  SERVICE PROVIDER agrees
to pay the Royalty within 30 days of receipt of Gross Revenues, provided such
Royalties will only become payable from the Gross Revenues of any NEOSTEM Stem
Cell Services.

     

    If annual Royalty paying to NEOSTEM do
not reach the following minimum payment during the Term, SERVICE PROVIDER may
pay NEOSTEM the difference:

     

    
      	
               
      

            	
              (i)

            	
              $200,000
      on May 15, 2011 (“Year One”);

            

    

     

    
      	
               
      

            	
              (ii)

            	
              $200,000
      on May 15, 2012 (“Year Two”);

            

    

     

    
      	
               
      

            	
              (iii)

            	
              $200,000
      on May 15, 2013 (“Year Three”);

            

    

     

    
      	
               
      

            	
              (iv)

            	
              $1,000,000
      on May 15, 2014 and each one year anniversary thereafter for the remainder
      of the Term; provided that in lieu of paying the $1,000,000 minimum
      payment SERVICE PROVIDER may terminate this
  Agreement.

            

    

     

    7.2.2            SERVICE
PROVIDER will be exempt from the payment of Royalties for any Royalty Period
during which NEOSTEM is in breach of the provisions set forth in Section 6 of
this Agreement.

     

    7.2.3            SERVICE
PROVIDER shall deliver to NEOSTEM un-audited monthly and quarterly financial
statements and audited annual statements as well as such other information as
may be reasonably requested.  Such reports shall be in sufficient
detail to enable NEOSTEM to verify the amount of Royalties payable
hereunder.

     

    7.3           Tax.  Any
tax that may be levied on such Royalty and other payments set forth in this
Agreement will be borne by NEOSTEM.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    7.4           Interest.  The
Royalty and other payments set forth in this Agreement shall, if overdue, bear
interest until payment at the quarterly rate of 5%.  This penalty
would not begin until 30 days after which time  the payment was
due.

     

    7.5           Inspection.  SERVICE
PROVIDER shall allow NEOSTEM or its authorized representatives to visit and
inspect the properties of SERVICE PROVIDER and/or Holdco including their
corporate and financial records and to discuss their business and finances with
officers and other employees of SERVICE PROVIDER during normal business hours
following reasonable notice and as often as may be reasonably
requested.

     

    
      	
              Section
      8.

            	
              Option in SERVICE
      PROVIDER.

            

    

     

    SERVICE PROVIDER will grant NEOSTEM for
a period of 5 years from the effective date of this Agreement the right to
acquire up to a 20% fully diluted equity interest in SERVICE PROVIDER based on
the fair market value of SERVICE PROVIDER as shall be determined by an
independent third party designated by the parties.  SERVICE PROVIDER
may not provide the NEOSTEM Stem Cell Services through any entity other than
SERVICE PROVIDER.

     

    
      	
              Section
      9.

            	
              Compliance with
      Government Regulations; Indemnification; Insurance and
      Liability.

            

    

     

    9.1           Compliance with Government
Regulations.  The parties agree to comply with all applicable
regulations and safety standards of government agencies, including without
limitation the Chinese Ministry of Health.

     

    9.2           Indemnification.  SERVICE
PROVIDER shall defend, indemnify and hold harmless NEOSTEM, and its trustees,
officers, employees and agents and their respective successors, heirs and
assigns (“Indemnitees”), against any and all liability, claims, demands, damage,
loss or expense (including reasonable attorneys’ fees and expenses of
litigation) resulting from, or alleged to have resulted from, or in connection
with SERVICE PROVIDER’s providing the NEOSTEM Stem Cell Services or that may be
incurred by or imposed upon the Indemnitees, or any of them, in connection with
any Third Party claim, suit, demand, action or judgment arising from this
Agreement.

     

    9.3           Insurance.  SERVICE
PROVIDER shall procure and maintain in full force and effect during the Term, at
SERVICE PROVIDER’s expense, an insurance policy or policies protecting SERVICE
PROVIDER and NEOSTEM and their officers, directors, agents and employees,
against any loss, liability or expense whatsoever relating to the conduct
provision of NEOSTEM Stem Cell Services.

     

    
      	
              Section
      10.

            	
              Liability.

            

    

     

    10.1           Liability
Exclusion.  EXCEPT IN CONNECTION WITH CLAIMS ARISING FROM THE
UNAUTHORIZED USE OR DISCLOSURE OF PROPRIETARY INFORMATION OR THE GROSS
NEGLIGENCE. FRAUD OR WILLFUL MISCONDUCT OF A PARTY, NO PARTY WILL BE LIABLE TO
THE OTHER PARTY (NOR TO ANY PERSON CLAIMING RIGHTS DERIVED FROM SUCH OTHER
PARTY’S RIGHTS) FOR CONSEQUENTIAL, PUNITIVE OR EXEMPLARY DAMAGES OF ANY KIND
(INCLUDING WITHOUT LIMITATION LOST REVENUES OR PROFITS OR LOSS OF BUSINESS) WITH
RESPECT TO ANY CLAIMS BASED ON CONTRACT, TORT OR OTHERWISE (INCLUDING NEGLIGENCE
AND STRICT LIABILITY) ARISING OUT OF THIS AGREEMENT, REGARDLESS OF WHETHER THE
PARTY LIABLE OR ALLEGEDLY LIABLE WAS ADVISED, HAD OTHER REASON TO KNOW, OR IN
FACT KNEW OF THE POSSIBILITY THEREOF.  For the purposes of clarity,
the exclusion set forth in this Section 10.1 shall
not be construed to limit SERVICE PROVIDER’s indemnity obligations under Section
9.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    10.2           Limitation of
Damages.  EXCEPT IN CONNECTION WITH (I) CLAIMS ARISING FROM THE
UNAUTHORIZED USE OR DISCLOSURE OF PROPRIETARY INFORMATION OR THE GROSS
NEGLIGENCE, FRAUD OR WILLFUL MISCONDUCT OF A PARTY AND (II) SERVICE PROVIDER’S
INDEMNITY OBLIGATIONS UNDER SECTION 9, EACH
PARTY’S MAXIMUM LIABILITY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY
SERVICES PROVIDED HEREUNDER, REGARDLESS OF THE CAUSE OF ACTION (WHETHER IN
CONTRACT, TORT, BREACH OF WARRANTY OR OTHERWISE), WILL NOT EXCEED ONE HUNDRED
FIFTY THOUSAND DOLLARS ($150,000.00), PLUS ANY FEES PAYABLE BUT UNPAID BY SUCH
PARTY.

     

    
      	
              Section
      11.

            	
              Miscellaneous
      Provisions.

            

    

     

    11.1           Separate
Entities.  The Parties acknowledge that they are separate legal
persons and are not joint venturers, joint employers or agents of each other in
any sense whatsoever.  Nothing contained herein will be construed to
mean that the Parties are joint venturers, joint employers or agents of each
other or to create a membership association or organization.  No Party
has the right to bind or make commitments for the other Parties.  No
Party will be liable for any obligations or duties of the other
Parties.

     

    11.2           Publicity.  SERVICE
PROVIDER will not refer to NEOSTEM, or use NEOSTEM’s logo or trademarks, in any
press releases, marketing materials or other internal or external written
communication without NEOSTEM’s prior, written approval, which approval may be
granted or withheld in NEOSTEM’s sole and absolute discretion.

     

    11.3           Law Governing;
Jurisdiction.  This Agreement and any and all matters arising
directly or indirectly herefrom will be governed by and construed and enforced
in accordance with the laws of the State of New York applicable to agreements
made and to be performed entirely in such state, without giving effect to the
conflict of law principles thereof.

     

    11.4           Entire
Agreement.  This Agreement (including the Schedule hereto)
contains, and is intended to be, a complete statement of all the terms of the
arrangements between or among the Parties with respect to the matters set forth
herein, and supersedes any previous agreements, understandings and discussions
between the Parties with respect to those matters.  There are no
promises, representations, warranties, covenants or undertakings other than
those set forth herein.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    11.5           No Waiver;
Modification.  No course of dealing and no delay on the part of
any Party in exercising any right, power or remedy conferred by this Agreement
will operate as a waiver thereof or otherwise prejudice such Party’s rights,
powers and remedies conferred by this Agreement or will preclude any other or
further exercise of any other right, power and remedy.  No term or
provision of this Agreement may be amended, altered, modified, rescinded,
supplemented, or terminated except by a writing signed by the Party against whom
enforcement is sought.

     

    11.6           Notices.  All
notices and other communications required or permitted to be given pursuant to
this Agreement will be in writing signed by the sender, and will be deemed duly
given (i) on the date delivered if personally delivered, or (ii) on the third
business day after being sent by Federal Express or another recognized overnight
mail service which utilizes a written form of receipt for third business day
delivery in the PRC, in each case addressed to the applicable party at the
address set forth below; provided that a Party may change its address for
receiving notice by the proper giving of notice hereunder:

     

    If to
NEOSTEM:

    

    NeoStem,
Inc.

    420
Lexington Avenue

    Suite
450

    NY, NY
10170

    Attention:  General
Counsel

    

    If to the
SERVICE PROVIDER:

    

    6565 Bo
Yuan Road

    Shanghai
201804 PRC

    Attention:  _______________

    

    11.7           Severability.  Any
provision of this Agreement that is prohibited or unenforceable in any
jurisdiction will, as to such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions
hereof, and any such prohibition or unenforceability in any jurisdiction will
not invalidate or render unenforceable such provision in any other
jurisdiction.  To the fullest extent permitted by applicable law, the
Parties hereby waive any provision of law which renders any provisions hereof
prohibited or unenforceable in any respect.  If it is ever held that
any restriction hereunder is too broad to permit enforcement of such restriction
to its fullest extent, such restriction will be enforced to the maximum extent
permitted by applicable law.

     

    11.8           Headings;
Counterparts.  The Section headings contained in this Agreement
are solely for the purpose of reference, are not part of the agreement of the
Parties and will not in any way affect the meaning or interpretation of this
Agreement.  This Agreement may be executed in any number of
counterparts, each of which will be an original, but all of which together will
constitute one instrument.  This Agreement may also be executed via
facsimile, which will be deemed an original.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    11.9           Assignment.  This
Agreement may not be assigned by either Party without first obtaining the
written consent of the other Party, which consent shall not be unreasonably
withheld.  Any purported assignment without the written consent of the
other Party shall be null and of no effect.  Notwithstanding the
foregoing, NEOSTEM may assign this Agreement without the consent of SERVICE
PROVIDER to a (i) an Affiliate, or (ii) the purchaser of all or substantially
all of NEOSTEM’s assets or business (or that portion thereof to which this
Agreement relates), or (iii) the surviving entity in a merger or other business
consolidation.

     

    IN
WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed,
under seal, by their duly authorized representatives as of the day and year
first above written.

     

    

    

    
      	
              NeoStem,
      Inc.

            	 
      	
              SERVICE
      PROVIDER

            
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	
              Signature

            	 
      	
              Signature

            
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	
              Name
      of signer

            	 
      	
              Name
      of signer

            
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	
              Title

            	 
      	
              Title

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