BOARDOF DIRECTORS- RETAINER AGREEMENT

 

VI.	Term of Agreement

 

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:

 

 

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.

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

 

 

 

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").

 

 

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:

 

 

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:

(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.

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.

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.

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 ###-###-####

Facsimile:   ###-###-####

 

(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.

 

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