Loan Conversion Agreement dated as of April 15, 2008 between RMK Emerging Markets, LLC, Shanghai Hai Lu Kun Lun Hi-tech Engineering Co. Ltd. and China Energy Recovery, Inc

1.

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

2.

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

3.

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

4.

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

5.

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

6.

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

7.

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

8.

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