sc13d

-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JpJbnaLCwLeCEfXSWd3SrvzIXIwMg3K19wZ/pHoy9BCYQwuCrLsui2quF65tGXtg m/6u4qABa2Yy1TYIYfWDqw== 0000950123-11-007791.txt : 20110201 0000950123-11-007791.hdr.sgml : 20110201 20110201135011 ACCESSION NUMBER: 0000950123-11-007791 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 20110201 DATE AS OF CHANGE: 20110201 GROUP MEMBERS: CHINA CINDA ASSET MANAGEMENT CO LTD GROUP MEMBERS: CHINA JINGU INTERNATIONAL TRUST CO LTD GROUP MEMBERS: WELL KENT INTERNATIONAL ENTERPRISES (SHENZHEN) CO LTD SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: CHINA RECYCLING ENERGY CORP CENTRAL INDEX KEY: 0000721693 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-BUSINESS SERVICES, NEC [7389] IRS NUMBER: 900093373 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-35537 FILM NUMBER: 11562423 BUSINESS ADDRESS: STREET 1: 12TH FLOOR, TOWER A, CHANG AN INTL BLDG STREET 2: NO. 88 NAN GUAN ZHENG XIE CITY: XI AN CITY, SHAN XI PROVINCE STATE: F4 ZIP: 710068 BUSINESS PHONE: 86-29-8765-1097 MAIL ADDRESS: STREET 1: 12TH FLOOR, TOWER A, CHANG AN INTL BLDG STREET 2: NO. 88 NAN GUAN ZHENG XIE CITY: XI AN CITY, SHAN XI PROVINCE STATE: F4 ZIP: 710068 FORMER COMPANY: FORMER CONFORMED NAME: CHINA DIGITAL WIRELESS INC DATE OF NAME CHANGE: 20040810 FORMER COMPANY: FORMER CONFORMED NAME: BOULDER ACQUISITIONS INC DATE OF NAME CHANGE: 20020430 FORMER COMPANY: FORMER CONFORMED NAME: BOULDER BREWING CO DATE OF NAME CHANGE: 19920703 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: China Cinda(HK) Asset Management Co. Ltd. CENTRAL INDEX KEY: 0001507596 IRS NUMBER: 000000000 STATE OF INCORPORATION: K3 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: ROOM 1101, 11TH FLOOR, TOWER 1 STREET 2: ADMIRALTY CENTER, 18 HARCOURT ROAD CITY: HONG KONG STATE: K3 ZIP: 100100 BUSINESS PHONE: (852)25276686 MAIL ADDRESS: STREET 1: ROOM 1101, 11TH FLOOR, TOWER 1 STREET 2: ADMIRALTY CENTER, 18 HARCOURT ROAD CITY: HONG KONG STATE: K3 ZIP: 100100 SC 13D 1 u10526sc13d.htm SC 13D sc13d

SCHEDULE 13D
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 13D

Under the Securities Exchange Act of 1934

CHINA RECYCLING ENERGY CORPORATION

(Name of Issuer)

Common Stock, par value $0.001 per share

(Title of Class of Securities)

16891 3101

(CUSIP Number)

Ku Guohua
China Recycling Energy Corporation
429 Guangdong Road
Shanghai 200001
People’s Republic of China
Tel: (86-21) 6336-8686

(Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications)

February 1, 2011

(Date of Event which Requires Filing of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box o.

Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See §240.13d-7 for other parties to whom copies are to be sent.

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).


CUSIP No.


1	NAMES OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
	China Cinda Asset Management Co., Ltd.

2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
	(a) o
	(b) þ

3	SEC USE ONLY



4	SOURCE OF FUNDS

	00

5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)

	o

6	CITIZENSHIP OR PLACE OF ORGANIZATION

	People’s Republic of China

		7	SOLE VOTING POWER

NUMBER OF			-0-

SHARES		8	SHARED VOTING POWER
BENEFICIALLY
OWNED BY			6,124,724 (1)

EACH		9	SOLE DISPOSITIVE POWER
REPORTING
PERSON			-0-

WITH		10	SHARED DISPOSITIVE POWER

			6,124,724 (1)

11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON

	6,124,724 (1)

12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES

	o

13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)

	13.6%(2)

14	TYPE OF REPORTING PERSON

	IA


(1)		Includes a maximum amount of (i) 3,062,362 shares of the Company’s Common Stock into which the secured convertible Note, dated December 28, 2010 (excluding interest convertible into Common Stock) may be converted by China Cinda (HK) Asset Management Co., Ltd., a subsidiary of China Cinda Asset Management Co., Ltd., assuming the conversion price is not adjusted, and (ii) 1,531,181 shares for which the Loan referred to herein may be exchanged by Well Kent International Enterprises (Shenzhen) Company Limited and 1,531,181 shares for which such Loan may be exchanged by China Jingu International Trust Co., Ltd., each of which is a subsidiary of China Cinda Asset Management Co., Ltd. The conversion/ exchange price of $2.46 per share is subject to adjustment based upon the Company’s earnings per share for the year ended December 31, 2010. The exchange price is further subject to adjustment based upon changes in the RMB to U.S. dollar exchange rate.


(2)		The percentage of class specified is calculated on the basis of 38,778,035 shares of Common Stock issued and outstanding as reported in the Company’s quarterly report on Form 10-Q, filed with the Securities and Exchange Commission (the “Commission”) on November 16, 2010, increased by the aggregate number of shares of Common Stock issuable upon the conversion of the principal amount of the secured convertible Note, dated December 28, 2010 and/or the exchange of the principal amount of the Loan.


CUSIP No.


1	NAMES OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
	China Cinda (HK) Asset Management Co., Ltd.

2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
	(a) o
	(b) þ

3	SEC USE ONLY



4	SOURCE OF FUNDS

	WC

5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)

	o

6	CITIZENSHIP OR PLACE OF ORGANIZATION

	Hong Kong

		7	SOLE VOTING POWER

NUMBER OF			-0-

SHARES		8	SHARED VOTING POWER
BENEFICIALLY
OWNED BY			3,062,362 (1)

EACH		9	SOLE DISPOSITIVE POWER
REPORTING
PERSON			-0-

WITH		10	SHARED DISPOSITIVE POWER

			3,062,362 (1)

11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON

	3,062,362 (1)

12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES

	o

13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)

	7.3%(2)

14	TYPE OF REPORTING PERSON

	IA


(1)		Includes a maximum amount of 3,062,362 shares of the Company’s Common Stock into which China Cinda (HK) Asset Management Co. Ltd. has the right to convert the secured convertible Note, dated December 28, 2010 (excluding interest convertible into Common Stock) assuming the conversion price is not adjusted. The conversion price of $2.46 per share is subject to adjustment based upon the Company’s earnings per share for the year ended December 31, 2010.


(2)		The percentage of class specified is calculated on the basis of 38,778,035 shares of Common Stock issued and outstanding as reported in the Company’s quarterly report on Form 10-Q, filed with the Securities and Exchange Commission (the “Commission”) on November 16, 2010, increased by the aggregate number of shares of Common Stock issuable upon the conversion of the principal amount of the secured convertible Note, dated December 28, 2010.


CUSIP No.


1	NAMES OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
	Well Kent International Enterprises (Shenzhen) Company Limited.

2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
	(a) o
	(b) þ

3	SEC USE ONLY



4	SOURCE OF FUNDS

	WC

5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)

	o

6	CITIZENSHIP OR PLACE OF ORGANIZATION

	People’s Republic of China

		7	SOLE VOTING POWER

NUMBER OF			-0-

SHARES		8	SHARED VOTING POWER
BENEFICIALLY
OWNED BY			1,531,181 (1)

EACH		9	SOLE DISPOSITIVE POWER
REPORTING
PERSON			-0-

WITH		10	SHARED DISPOSITIVE POWER

			1,531,181 (1)

11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON

	1,531,181 (1)

12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES

	o

13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)

	3.8%(2)

14	TYPE OF REPORTING PERSON

	IA


(1)		Includes a maximum amount of 1,531,181 shares of the Company’s Common Stock into which Well Kent International Enterprises (Shenzhen) Company Limited can exchange the outstanding principal loan amount per the Exchange Rights Agreement, dated August 18, 2010, assuming an RMB to U.S. dollar exchange rate of RMB 6.63709 = U.S.$1.00, and assuming the exchange price is not adjusted. The exchange price of $2.46 per share is subject to adjustment based upon the Company’s earnings per share for the year ended December 31, 2010 and changes in the RMB to U.S. dollar exchange rate.


(2)		The percentage of class specified is calculated on the basis of 38,778,035 shares of Common Stock issued and outstanding as reported in the Company’s quarterly report on Form 10-Q, filed with the Securities and Exchange Commission (the “Commission”) on November 16, 2010, increased by the aggregate number of shares of Common Stock issuable upon the exchange of the principal loan amount beneficially owned per the Exchange Rights Agreement dated August 18, 2010.


CUSIP No.


1	NAMES OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
	China Jingu International Trust Co., Ltd.

2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
	(a) o
	(b) þ

3	SEC USE ONLY



4	SOURCE OF FUNDS

	WC

5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)

	o

6	CITIZENSHIP OR PLACE OF ORGANIZATION

	People’s Republic of China

		7	SOLE VOTING POWER

NUMBER OF			-0-

SHARES		8	SHARED VOTING POWER
BENEFICIALLY
OWNED BY			1,531,181 (1)

EACH		9	SOLE DISPOSITIVE POWER
REPORTING
PERSON			-0-

WITH		10	SHARED DISPOSITIVE POWER

			1,531,181 (1)

11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON

	1,531,181 (1)

12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES

	o

13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)

	3.8%(2)

14	TYPE OF REPORTING PERSON

	IA


(1)		Includes a maximum amount of 1,531,181 shares of the Company’s Common Stock into which China Jingu International Trust Co., Ltd. can exchange the outstanding principal loan amount per the Exchange Rights Agreement, dated August 18, 2010), assuming an RMB to U.S. dollar exchange rate of RMB 6.63709 = U.S.$1.00, and assuming the exchange price is not adjusted. The exchange price of $2.46 per share is subject to adjustment based upon the Company’s earnings per share for the year ended December 31, 2010 and changes in the RMB to U.S. dollar exchange rate.


(2)		The percentage of class specified is calculated on the basis of 38,778,035 shares of Common Stock issued and outstanding as reported in the Company’s quarterly report on Form 10-Q, filed with the Securities and Exchange Commission (the “Commission”) on November 16, 2010, increased by the aggregate number of shares of Common Stock issuable upon the exchange of the principal loan amount per the Exchange Rights Agreement dated August 18, 2010.

Item 1. Security and Issuer.

This Statement relates to the Common Stock, par value $0.001 per share (the “Common Stock”) of China Recycling Energy Corporation (the “Company”). The Company’s principal executive offices are located at 429 Guangdong Road, Shanghai 200001, People’s Republic of China.

Item 2. Identity and Background.

		(a) This Statement is filed on behalf of each of the following persons pursuant to Rule 13d-1(k) promulgated by the Securities and Exchange Commission pursuant to Section 13 of the Act: (i) China Cinda Asset Management Co. and China Cinda (HK) Asset Management Co., Ltd. (“Cinda HK”), (ii) Well Kent International Enterprises (Shenzhen) Company Limited (“Well Kent”) and (iii) China Jingu International Trust Co., Ltd. (“China Jingu”) (collectively, the “Reporting Persons”).

		(b) The principal business and principal office of each of the Reporting Persons is located at c/o Room 1101, 11/F., Tower 1 Admiralty Centre, 18 Harcourt Road, Hong Kong.

		(c) The principal business of the Reporting Persons is the acquiring, holding, managing, supervising and disposing of investments in various businesses.

		(d) None of the Reporting Persons has, during the last five years, been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors).

		(e) None of the Reporting Persons has, during the last five years, been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws.

Item 3. Source and Amount of Funds or Other Consideration.

The securities being reported in this statement were acquired beneficially by the Reporting Persons pursuant to (i) a Notes Purchase Agreement (“Purchase Agreement) dated August 18, 2010 by and among the Company and its wholly-owned direct and indirect subsidiaries, on the one hand, and Cinda HK (also referred to as in the “Investor”), on the other, (ii) a capital trust loan contract (“Onshore Loan Agreement”) dated August 18, 2010 by and among the Company, Well Kent International Enterprises (Shenzhen) Company Limited, China Jingu International Trust Co., Ltd. (the latter two entities being “Lenders”), and Xi’an TCH Energy Technology Co., Ltd. (“Xi’an TCH”), as borrower (the “Borrower”) and (iii) an exchange rights agreement (“Exchange Rights Agreement”) also dated August 18, 2010 by and among the Company, the Lenders, Cinda HK and Xi’an TCH.

Under the terms of the Purchase Agreement, the Company sold to the Investor, on December 28, 2010, a secured convertible note in the principal amount of $7,533,411, the US dollar equivalent of RMB 50 million (the “Note”). Pursuant to the Purchase Agreement, the Company, upon 45 days notice to the Investor, may require the Investor to purchase an additional convertible note (“Additional Note”) in the principal amount of the US dollar equivalent of RMB 50 million. The Note bears interest at a variable rate and matures on December 28, 2013. The principal face amount of the Note, together with any interest thereon, is convertible, at the option of the Investor, at any time on or after the date on which the audited consolidated financial statements of the Company for the fiscal year ending December 31, 2010 are available, and prior to the maturity of the Notes, into shares of Common Stock at a conversion price determined per the terms of the Note. The Additional Note, if and when issued, will be convertible into shares of Common Stock on similar terms.

Under the terms of the Onshore Loan Agreement the Lenders made a loan in the amount of RMB 50 million on January 30, 2011 (the “Loan”). The Loan matures on January 30, 2014. The Onshore Loan Agreement provides that the Lenders may be required to extend an additional Loan in the amount of RMB 50 million upon request of the Borrower (the “Additional Loan”). Pursuant to the terms of the Exchange Rights Agreement, which makes reference to the Onshore Loan Agreement, the Lenders have the option at any time after the date on which the audited consolidated financial statements of the Company for the fiscal year ended December 31, 2010 are available, and prior to the maturity date of the Loan, to exchange the entire Loan amount for shares of Common Stock at an exchange price determined per the terms of the Exchange Rights Agreement. The Additional Loan, if made, will be exchangeable, per the Exchange Rights Agreement, for shares of Common Stock upon similar terms.

Assuming that the conversion/exchange price is not adjusted, the number of shares of Common Stock issuable to the Investor upon conversion of the maximum possible amount of the Note and to the Lenders pursuant to exchange of the Loan as per the Exchange Rights Agreement, would be 6,124,724 with cash payment to the Investor and the Lenders in lieu of any fractional shares. The shares of Common Stock issuable upon conversion of the Note and exchange per the Exchange Rights Agreement are the only reportable shares of Common Stock beneficially held by the Reporting Persons. The conversion/exchange price for the Note is subject to adjustment based upon the Company’s earnings per share for the year ended December 31, 2010. The exchange price for the Loan is further subject to adjustment based upon changes in the exchange rate between the U.S. dollar and the RMB.

Assuming the Additional Note is issued and the Additional Loan is made, the maximum number of shares of Common Stock issuable upon conversion of the Note and the Additional Note, together with the maximum number of shares issuable upon exchange of the Loan and the Additional Loan would be 12,249,448, assuming no change in the U.S. dollar to RMB exchange rate.

The Note contains customary affirmative and negative covenants and events of default. If an event of default were to occur, the principal amount and accrued and unpaid interest and all other amounts payable under the Note would become immediately due and payable, upon demand. The obligations of the Company under the Note rank pari passu to all other secured debt of the Company.

The source of the purchase price for the Note, and the lending amount under the Onshore Loan Agreement contemplated by the Exchange Rights Agreement, was the self-owned operating funds of the Reporting Persons.

Item 4. Purpose of Transaction.

The Reporting Persons are acquiring the rights to acquire shares of Common Stock through conversion of the Note and exchange of the Loan per the Exchange Rights Agreement for investment purposes. The Reporting Persons may, from time to time, depending upon market conditions and other factors deemed relevant by the Reporting Persons, acquire other promissory notes, warrants or rights to acquire shares of Common Stock outside of those contemplated by the Purchase Agreement or the Exchange Rights Agreement. The Reporting Persons reserve the right to, and may in the future choose to, change their purpose with respect to the investment and take such actions as they deem appropriate in light of the circumstances including, without limitation, to dispose of, in the open market, in a private transaction, by gift, or otherwise, all or a portion of the Notes, Loan or shares of Common Stock which they now own or may hereafter acquire from the Company.

Except as described above or elsewhere herein, at the date of this Statement, the Reporting Persons do not have plans or proposals which would result in:

(a) The acquisition by any person of additional securities of the Company, or the disposition of securities of the Company;

(b) An extraordinary corporate transaction involving the Company or any of its subsidiaries;

(d) Any change in the present board of directors or management of the Company, including any plans or proposals to change the number or term of directors or to fill any existing vacancies on the board;

(e) Any material change in the present capitalization or dividend policy of the Company;

(f) Any other material change in the Company’s business or corporate structure, including but not limited to, if the Company is a registered closed-end investment company, any plans or proposals to make any changes in its investment policy for which a vote is required by section 13 of the Investment Company Act of 1940;

(g) Except as set forth below changes in the Company’s charter, bylaws or instruments corresponding thereto or other actions which may impede the acquisition of control of the Company by any person;

(h) Causing a class of securities of the Company to be delisted from a national securities exchange or to cease to be authorized to be quoted in an inter-dealer quotation system of a registered national securities association;

(i) A class of equity securities of the Company becoming eligible for termination of registration pursuant to Section 12(g)(4) of the Act; or

(j) Any action similar to any of those actions enumerated above.

In connection with the Purchase Agreement and the Exchange Rights Agreement, the Company, the Investor, on behalf of itself and the Lenders and certain of the Company’s other major shareholders entered into an Amended and Restated Shareholders Agreement, dated as of August 18, 2010 (the “Shareholders Agreement”). The Shareholders Agreement entitles the Investor to nominate two representatives to the Company’s Board of Directors, which Board of Directors, pursuant to the terms of the Shareholders Agreement, shall have no more than seven (7) members. The Investor has not presently nominated any members to the Company’s Board of Directors, although the Investor reserves the right to do so at its sole discretion, pursuant to the terms of the Shareholders Agreement.

Under the terms of the Shareholders Agreement, the Investor has certain rights with respect to all subsequent transactions to directly or indirectly, sell, assign, transfer or otherwise dispose of Common Stock undertaken or proposed to be undertaken by the principal shareholder of the Company party to the Shareholders Agreement. By exercising these rights, the Investor could impede the acquisition of control of the Company by other persons.

Item 5. Interest in Securities of the Company.

(a) See items 11 and 13 of the cover pages to this Statement for the aggregate number of shares and percentage of issued and outstanding Common Shares beneficially owned by the Reporting Persons. The percentage of class specified is calculated on the basis of 38,778,035 shares of Common Stock issued and outstanding as reported in the Company’s quarterly report on Form 10-Q, filed with the Securities and Exchange Commission (the “Commission”) on November 16, 2010, increased by the aggregate number of shares of Common Stock issuable upon the conversion of the principal amount of the secured convertible Note and/or exchange of the Loan pursuant to the Exchange Rights agreement, as the case may be.

		(b) See items 7 through 10 of the cover pages to this Statement for the number of shares of Common Stock beneficially owned by the Reporting Persons as to which there is sole power to vote or to direct the vote, shared power to vote or to direct the vote and sole or shared power to dispose or to direct the disposition. Cinda HK and China Cinda Asset Management Co., Ltd. (“Cinda PRC”), the former as subsidiary and the latter as parent company, have the shared power to vote or direct the vote and to dispose or direct the disposition of 3,062,362 shares of Common Stock. Well Kent International Enterprises (Shenzhen) Company Limited and China Jingu International Trust Co., Ltd. share with Cinda HK and Cinda PRC the power to vote or direct the vote and to dispose or direct the disposition of 3,062,362 shares of Common Stock.

		(c) Not applicable.

		(d) Not applicable.

		(e) Not applicable.

Item 6. Contracts, Arrangements, Understandings or Relationships With Respect to Securities of the Company.

Notes Purchase Agreement. Under the terms of the Purchase Agreement, the Company sold to the Investor a secured convertible Note in the principal amount of $7,533,411 equal to the US dollar equivalent of RMB 50 million. Pursuant to the Purchase Agreement, the Company, upon 45 days notice to the Investor, may require the Investor to purchase an additional Note in the principal amount equal to the USD equivalent of RMB 50 million (“Additional Note”). The Note bears interest at a variable rate and matures on December 28, 2013. The principal face amount of the Note, together with any interest thereon, may be converted, at the option of the Investor, at any time on or after the date on which the audited consolidated financial statements of the Company for the fiscal year ending December 31, 2010 are

available and on or prior to maturity, into shares of Common Stock at the initial conversion price determined by the terms of the Note.

Onshore Loan Agreement. Under the terms of the Onshore Loan Agreement the Lenders made a loan in the amount of RMB 50 million on January 30, 2011 (the “Loan”). The Loan matures on January 30, 2014. The Onshore Loan Agreement provides that the Lenders may be required to extend an additional Loan in the amount of RMB 50 million upon request of the Borrower (the “Additional Loan”). Pursuant to the terms of the Exchange Rights Agreement, which makes reference to the Onshore Loan Agreement, the Lenders have the option at any time after the date on which the audited consolidated financial statements of the Company for the fiscal year ended December 31, 2010 are available, and prior to the maturity date of the Loan, to exchange the entire Loan amount for shares of Common Stock at an exchange price determined per the terms of the Exchange Rights Agreement.

The shares of Common Stock issuable upon conversion of the Note and the shares of the Common Stock that may be issued per the Exchange Rights Agreement are the only reportable shares of Common Stock beneficially held by the Reporting Persons.

Amended and Restated Shareholders Agreement. In connection with the purchase of the Note under the terms of the Purchase Agreement, and making the Loan under the Onshore Loan Agreement, the Investor for itself and on behalf of the Reporting Persons entered into the Amended and Restated Shareholders Agreement, dated as of August 18, 2010, with the Company and certain of its other major shareholders.

The Shareholders Agreement includes a variety of covenants, including, among others:

	•		The Investor is entitled to nominate two representatives to the Company’s Board of Directors and a deputy general manager to the Company, as described in Item 4 above;

	•		without the Investor’s consent, the Company may not declare or pay any dividends on the Common Stock, redeem or repurchase any Common Stock; and

	•		the Investor must consent to the Company’s annual budgets, as well as any business venture not contemplated by the Company’s business plan.

The totality of the rights and obligations set out in the Shareholders Agreement shall terminate upon the earlier of (a) the date the Investors (as defined therein) or any of their Affiliates (including any successor to the rights and obligations of the Investors) cease to hold any Investor Shares (as defined therein) and the Company’s obligations under the Notes have been fully and indefeasibly paid and performed or otherwise satisfied; (b) the Principal Shareholder (as defined therein, including any successor to the rights and obligations of the Principal Shareholder) ceases to hold any securities; and (c) by mutual agreement by all parties involved.

Share Pledge Agreement. As collateral for the Note, Mr. Ku Guohua, a major shareholder of Company, pledged 23.85% shares of Common Stock held by him to secure the Note.

Intercreditor Agreement. Under the terms of the Intercreditor Agreement, various parties to the Notes Purchase Agreement, the Onshore Loan Agreement and Exchange Rights Agreement, and the Share Pledge Agreement, appoint Cinda HK as Security Agent to act as their agent and trustee in connection with the various security documents (the Share Pledge Agreement, the Guarantee Agreement, and the Intercreditor Agreement itself), and further authorizes Cinda HK to take such action and to execute and carry out all discretions, authorities, rights, powers and duties as are specifically conferred upon it in those agreements.

Guarantee Agreement. Under the terms of the Guarantee Agreement dated August 18, 2010, the guarantor unconditionally and irrevocably guarantees payment and performance of all debts and obligations owed the Company to the Investor under the Note.

Registration Rights Agreement. On August 18, 2010, the Company (for itself and as agent for its subsidiary) and the Investor entered into a Registration Rights Agreement, pursuant to which the Company

is required to file a registration statement covering the shares of Common Stock owned by the Investors or that may be acquired by the Investors upon the conversion of any convertible security, including the Notes, or the exercise of any warrant, option or other right owned by it, within one hundred and twenty (120) days from the Closing Date(s) under the Purchase Agreement.

Item 7. Material to be Filed as Exhibits.


Exhibit No.		Description
1		Joint Filing Agreement, dated as of January 28, 2011 by and among the Reporting Persons*.

2		Form of Notes Purchase Agreement (incorporated by reference to exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed with the Commission on November 16, 2010.

3		Capital Trust Loan Contract (incorporated by reference to exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed with the Commission on November 16, 2010.

4.		Form of Amended and Restated Shareholders Agreement (incorporated by reference to exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q filed with the Commission on November 16, 2010.

5		Form of Secured Convertible Note/ incorporated by reference to exhibit 10.5 to the Company’s quarterly report on Form 10-Q filed with the Commission on November 16, 2010.

6.		Form of Exchange Rights Agreement*.


*		filed herewith

SIGNATURE

After reasonable inquiry and to the best of our knowledge and belief, we certify that the information set forth in this Statement is true, complete and correct.

Dated: January 28, 2011


China Cinda Asset Management Co. Ltd.
By:	/s/ Jiang Hang Hou
	Name:	Jiang Hang Hou
	Title:	CEO

China Cinda (HK) Asset Management Co. Ltd.
By:	/s/ Ma YiLin
	Name:	Ma YiLin
	Title:	Director

Well Kent International Enterprises (Shenzhen) Company Limited.
By:	/s/ Gao ZiHan
	Name:	Gao ZiHan
	Title:	Managing Director

China Jingu International Trust Co., Ltd.
By:	/s/ Yu Wei
	Name:	Yu Wei
	Title:	Director

EX-99.1 2 u10526exv99w1.htm EX-99.1 exv99w1

Exhibit 1

EXHIBIT 1: Joint Filing Agreement

In accordance with Rule 13d-1(k) promulgated under the Securities Exchange Act of 1934, as amended, the undersigned hereby agree to the joint filing with all other Reporting Persons (as such term is defined in the Schedule 13D referred to below) on behalf of each of them of a statement on Schedule 13D (including amendments thereto) with respect to the Ordinary Shares, par value $0.001 per share, of China Recycling Energy Corporation, Ltd., a Nevada corporation, and that this Agreement may be included as an Exhibit to such joint filing. This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument.

[Remainder of this page has been left intentionally blank.]

SIGNATURE

Dated: January 28, 2011


China Cinda Asset Management Co. Ltd.
By:	/s/ Jiang Hang Hou
	Name:	Jiang Hang Hou
	Title:	CEO

China Cinda (HK) Asset Management Co. Ltd.
By:	/s/ Ma YiLin
	Name:	Ma YiLin
	Title:	Director

Well Kent International Enterprises (Shenzhen) Company Limited.
By:	/s/ Gao ZiHan
	Name:	Gao ZiHan
	Title:	Managing Director

China Jingu International Trust Co., Ltd.
By:	/s/ Yu Wei
	Name:	Yu Wei
	Title:	Director

EX-99.2 3 u10526exv99w2.htm EX-99.2 exv99w2

Exhibit 2

EXECUTION COPY

EXCHANGE RIGHTS AGREEMENT

DATED AUGUST 18, 2010

among

CHINA RECYCLING ENERGY CORPORATION

WELL KENT INTERNATIONAL ENTERPRISES (SHENZHEN) COMPANY LIMITED

CHINA JINGU INTERNATIONAL TRUST & INVESTMENT CORPORATION

CHINA CINDA (HK) ASSET MANAGEMENT CO., LIMITED

AND

XI’AN TCH ENERGY TECHNOLOGY CO., LTD.

Table of Content


		Page
1.	DEFINITIONS		3
2.	BENEFIT OF ADDITIONAL AGREEMENTS		4
3.	EXCHANGE RIGHTS		5
3.1	Exchange Right and Exchange Price ; Mechanics of Exchange		5
3.2	Limitations on Exchange Rights		5
3.3	Adjustment Events		6
3.4	Reservation		7
4.	REPRESENTATIONS AND WARRANTIES OF THE ONSHORE LENDERS		7
4.1	Purchase for Own Account		8
4.3	Regulation S		8
4.4	Restricted Securities		8
4.5	Legends		9
5.	MISCELLANEOUS		9
5.1	Successors and Assigns		9
5.2	Indemnity		9
5.3	Governing Law		10
5.4	Dispute Resolution		10
5.6	Notices		11
5.7	Severability		12
5.8	Amendments and Waivers		12
5.9	Entire Agreement		12

Exhibit

Exhibit A Notice of Exchange

EXCHANGE RIGHTS AGREEMENT

This Exchange Rights Agreement (the “Agreement”) is entered into as of August 18, 2010, between:

(i)		China Recycling Energy Corporation, a company incorporated and existing under the laws of the State of Nevada (the “Company”);

(ii)		Well Kent International Enterprises (Shenzhen) Company Limited and China Jingu International Trust & Investment Corporation, both are companies organised under the laws of the People’s Republic of China, as lenders (the “Onshore Lenders”) pursuant to the Onshore Loan Agreement (as defined below);

(iii)		Xi’an TCH Energy Technology Co., Ltd. a company organised under the laws of the People’s Republic of China, as borrower (the “Onshore Borrower”) under the Onshore Loan Agreement; and

(iv)		China Cinda (HK) Asset Management Co., Limited, as investor (the “Investor”) pursuant to the Notes Purchase Agreement (defined below), and as agent for the Onshore Lenders for purposes of this Agreement (herein referred to as the “Agent”).

RECITALS

WHEREAS, the Onshore Lenders and the Onshore Borrower have entered into that certain loan agreement, dated as of August 18, 2010 (the “Onshore Loan Agreement”), pursuant to which the Onshore Lenders will, subject to the terms and conditions therein, make loans (each, a “Loan” and, together, the “Loans”) to the Onshore Borrower in an aggregate amount of up to RMB 100 million;

WHEREAS, each of the Onshore Lenders will have the right at any time after the making of a Loan, at its option, pursuant to the terms and conditions of the Onshore Loan Agreement, to exchange, and thereupon cancel, all or any part, from time to time, of the outstanding principal amount of the Loan for shares of Common Stock of the Company, as more fully provided for herein,

NOW THEREFORE, the parties hereto agree as follows:

1. Definitions

“Agent” has the meaning provided in the preamble hereto.

“Agreement” has the meaning provided in the preamble hereto.

“Business Day” shall mean any day that is not a Saturday, Sunday, legal holiday or other day on which commercial banks are required or authorized by law to be closed in Hong Kong, the People’s Republic of China or New York.

“Common Stock” means the shares of Common Stock, par value US $0.001, of the Company.

“Company” has the meaning provided in the preamble hereto.

“Consolidated Earnings” means for any period the consolidated net income of the Company as reported on its consolidated financial statements prepared in accordance with U.S. GAAP, plus:

(a) the amortised cost for the value of employee stock options, as determined pursuant to U.S. GAAP;

(b) the amortised cost of the difference between the conversion price applicable to outstanding convertible debt instruments and the full value of the shares of Common Stock issuable on conversion; and

“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended.

“GAAP” means generally accepted accounting principles in the United States, applied on a consistent basis.

“Investor” has the meaning provided in the preamble hereto.

“Onshore Borrower” has the meaning provided in the preamble hereto.

“Onshore Lenders” has the meaning provided in the preamble hereto.

“Maturity Date” means the earlier of (a) the third anniversary of the First Closing under the Notes Purchase Agreement; and (b) date on which the Loans become due and payable in full.

“Outstanding Principal Amount” means the original principal amount of the Loan or Loans, as the case may be, less any portion of the principal amount thereof previously exchanged for shares of Common Stock in accordance with the Onshore Loan Agreement and this Agreement.

“Securities” means the shares of Common Stock of the Company issuable upon exchange of the Loans.

“Securities Act” means the U.S. Securities Act of 1933, as amended.

“Transaction Documents” means this Agreement and the other agreements referred to in Section 2 hereof.

2. Benefit of Additional Agreements

The Parties to this Agreement also benefit from, and this Agreement should be read in conjunction with:

(a) the Registration Rights Agreement dated as of August 18, 2010, by and between the Company and the Investor;

(b) the Amended and Restated Shareholders’ Agreement dated as of August 18, by and among the Company, the Investor and certain other shareholders of the Company or the other parties thereto;

(d) a Share Pledge Agreement dated as of August 18, 2010 by and among Mr. Ku Guohua, the Security Agent (as defined therein) or other parties listed therein;

(e) the Intercreditor Agreement dated as of August 18, 2010 by and among the Onshore Lenders, the Security Agent, the Onshore Borrower, the Company, the Investor and Mr. Ku Guohua ; and

(f) the Onshore Loan Agreement.

3. Exchange Rights

3.1 Exchange Right and Exchange Price ; Mechanics of Exchange

(a) Each of the Onshore Lenders have the right, but not the obligation to exchange all or any part of the aggregate Outstanding Principal Amount of the Loans, together with accrued and unpaid interest, if any, in a one-time exchange or, from time to time, in multiple exchanges (each, an “Exchange”), for shares of Common Stock, at any time prior to the Maturity Date, subject to the terms and conditions set forth in this Section 3.

(b) The exchange price per share of Common Stock for each Exchange on an Exchange Date (as defined below) shall be equal to the lower of (i) $2.46 U.S. Dollars, and (ii) an amount equal to the Company’s Earnings Per Share multiplied by 7 (each of (i) and (ii) a potential “Exchange Price” as the same may be adjusted from time to time in accordance with this Agreement).

(c) On any Exchange Date, the Earnings Per Share shall be the Consolidated Earnings of the Company for 2010 derived from its audited consolidated financial statements for such fiscal year, divided by the then total number of shares of Common Stock outstanding on a weighted average fully-diluted basis (including the shares of Common Stock that may be issued upon exchange of the Loan and the Note or Notes issued and outstanding pursuant to the Notes Purchase Agreement (using for these purposes the USD/RMB exchange rate equal to the average USD/RMB exchange rate as published by the People’s Bank of China on the second business day prior to the Exchange Date) but excluding any new shares issued, regardless whether issued in connection with current existing warrants or convertible notes, or prior commitments or under Management Incentive Plans, after the First Closing as defined in the Purchase Agreement.

(d) The number of shares of Common Stock to be issued upon each Exchange of the Loans pursuant to this Agreement shall be determined by dividing the then applicable Exchange Price by the Outstanding Principal Amount and any accrued and unpaid interest to be exchanged.

(e) After giving effect to the foregoing, in lieu of the Company issuing any fractional shares to the Agent upon exchange of the Loan, the Company shall make an adjustment and make payment in cash to the Agent.

(f) In the event that either of the Onshore Lenders elects to exchange all or any part of a Loan for shares of Common Stock, the Agent, acting on behalf of the Onshore Lenders, shall give notice of such election by delivering an executed and completed notice of exchange (a “Notice of Exchange”) to the Onshore Borrower, the Company and the other Onshore Lender which Notice of Exchange shall provide a breakdown in reasonable detail of the Outstanding Principal Amount, accrued interest and amounts being exchanged. The date specified in the Notice of Exchange, or if no date is specified, then the 15^th day after date of the delivery of the Notice of Exchange, shall be referred to as the “Exchange Date”. A form of Notice of Exchange to be employed by the Agent is annexed hereto as Exhibit A.

(g) Pursuant to the terms of the Notice of Exchange, the Onshore Borrower or the Company shall deliver, or cause to be delivered, such number of Exchange Shares as determined pursuant to this Agreement via, at the Agent’s election, (i) physical certificates, or (ii) in the event such shares are not “restricted securities” under the Securities Act, electronically through the Depository Trust Company or other established clearing corporation performing similar functions. In the case of the exercise of the exchange rights set forth herein, the exchange privilege shall be deemed to have been exercised and the Exchange Shares issuable upon such exchange shall be deemed to have been issued upon the Exchange Date. The Onshore Lenders shall be treated for all purposes as the beneficial holder of such shares of Common Stock, unless the Agent provides the Onshore Borrower, the Company and the Onshore Lenders written instructions to the contrary.

3.2 Limitations on Exchange Rights

Notwithstanding the foregoing and other than by reason of (i) any failure of Mr. Ku Guohua to exercise his rights to subscribe for, purchase or receive shares of Common Stock or (ii) any other action or inaction of Mr. Ku Guohua leading to any reduction of his shareholding in the Company, the Agent undertakes that it will not exercise any Exchange Right if, on a weighted average fully-diluted basis:

(a) the Onshore Lenders, together with their Affiliates, would thereupon become the largest shareholder of the Company, or

(b) the Onshore Lenders, together with their Affiliates, would thereupon have a total equity interest in the Company that is greater than an amount that is 5% less than the shareholdings of Mr. Ku Guohua at such time.

Notwithstanding the foregoing, this Section 3.2 may be, in whole or in part, waived by Mr. Ku Guohua through his written consent.

3.3 Adjustment Events

The Exchange Price and number and kind of shares or other securities to be issued upon exchange shall be subject to adjustment from time to time upon the happening of certain events while this exchange right remains outstanding, as follows:

(a) Merger, Sale of Assets, etc. If (A) the Company effects any merger or consolidation of the Company with or into another entity, (B) the Company effects any sale of all or substantially all of its assets in one or a series of related transactions, (C) any tender offer or exchange offer (whether by the Company or another entity) is completed pursuant to which holders of Common Stock are permitted to tender or exchange their shares for other securities, cash or property, (D) the Company consummates a stock purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with one or more persons or entities whereby such other persons or entities acquire more than the 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by such other persons or entities making or party to, or associated or affiliated with the other persons or entities making or party to, such stock purchase agreement or other business combination), or (E) any “person” or “group” (as these terms are used for purposes of Sections 13(d) and 14(d) of the Exchange Act) is or shall become the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of 50% of the aggregate Common Stock of the Company (in any such case, a “Fundamental Transaction”), the Loan, as to the Outstanding Principal Amount thereof and accrued interest thereon, shall thereafter be deemed to evidence the right to exchange into such proportionate number and kind of shares or other securities and property as would have been issuable or distributable on account of such Fundamental Transaction, upon or with respect to the securities subject to the exchange right immediately prior to such Fundamental Transaction. The foregoing provision shall similarly apply to successive Fundamental Transactions of a similar nature by any such successor or purchaser. Without limiting the generality of the foregoing, the provisions of this Section shall apply to such securities of such successor or purchaser after any such Fundamental Transaction.

(b) Reclassification, etc. If the Company at any time shall, by reclassification or otherwise, change the Common Stock into the same or a different number of securities of any class or classes, the Loan, as to the Outstanding Principal Amount thereof and accrued interest hereon, shall thereafter be deemed to evidence the right to exchange for a proportionally adjusted number of such securities and kind of securities as would have been issuable as the result of such change with respect to the Common Stock immediately prior to such reclassification or other change.

(c) Stock Splits, Combinations and Dividends. If the shares of Common Stock are subdivided or combined into a greater or smaller number of shares of Common Stock, or if a dividend is paid on the Common Stock in shares of Common Stock, the Exchange Price shall be proportionately reduced in case of subdivision of shares or stock dividend or proportionately increased in the case of combination of shares, in each such case by the ratio which the total number of shares of

Common Stock outstanding immediately after such event bears to the total number of shares of Common Stock outstanding immediately prior to such event.

(d) Share Issuance.

	1.		So long as the Loan is outstanding, if the Company or any of its affiliates shall issue any public or private shares, convertible bonds, preference shares or other equity instruments, except for shares of Common Stock issued pursuant to its Management Incentive Plans or shares of Common Stock subject to a prior commitment by the Borrower before the effective date of this Note as described in the Disclosure Schedule (“New Shares”), prior to the conversion or payment of the Loan, for a consideration-per-share less than the Exchange Price that would be in effect at the time of such issue, then, and thereafter successively upon each such issuance, the Exchange Price shall be reduced to such other lower issue price.

	2.		So long as the Loan is outstanding, if the Company or any of its affiliates shall issue any public or private shares, convertible bonds, preference shares, or other equity instruments, except for shares of Common Stock issued pursuant to its Management Incentive Plans or shares of Common Stock subject to a prior commitment by the Borrower before the effective date of this Note as described in the Disclosure Schedule, prior to the conversion or payment of the Loan, for a consideration-per-share more than the Exchange Price that would be in effect at the time of such issue, then, and thereafter successively upon each such issuance, any of the Onshore Lenders shall have a preferential right to subscribe all or part of the New Shares.

	3.		For purposes of this adjustment, the issuance of any security or debt instrument of the Company carrying the right to convert into New Shares, or the issuance of any warrant, right or option to purchase Common Stock shall result in an adjustment to the Exchange Price upon the issuance of the above-described security, debt instrument, warrant, right, or option and again upon the issuance of shares of Common Stock upon exercise of such conversion or purchase rights.

(e) If the Company at any time or from time to time, prior to the full exchange of the Loan, shall take any action affecting its Common Stock or share capital similar to or having an effect similar to any of the actions described in this Section 3.3, then, and in each such case, the Exchange Price shall be adjusted in such manner as would be equitable under such circumstances.

(f) Whenever the Exchange Price is adjusted pursuant to this Section 3.3, the Company shall promptly mail to the Onshore Lenders a notice setting forth the Exchange Price after such adjustment and setting forth a statement of the facts requiring such adjustment.

3.4 Reservation

The Company covenants that it will at all times reserve and keep available out of its authorized and unissued shares of Common Stock for the sole purpose of issuance upon exchange of the Loan, free from all Liens, preemptive rights or any other actual contingent purchase rights of Persons other than any of the Onshore Lenders, not less than one hundred and seventy-five percent (175%) of the aggregate number of shares of the Common Stock as shall be issuable (taking into account the adjustments and restrictions of Section 3.4 upon the exchange of the Loan. The Company covenants that all shares of Common Stock that shall be so issuable shall, upon issue, be duly authorized, validly issued, fully paid and nonassessable and, pursuant to the Registration Rights Agreement, shall be registered for public sale in accordance therewith.

4. Representations and Warranties of the Onshore Lenders

Each of the Onshore Lenders hereby represents and warrants to the Company, that, with respect to such Onshore Lender:

4.1 Purchase for Own Account

The Securities to be received by the Agent, if any, upon Exchange of the Loans will be acquired for investment purposes for such Onshore Lender’s own account or the account of one or more of the Onshore Lender’s Affiliates, not as a nominee or agent, and not with a view to the resale or distribution of any part thereof, and the Investor does not have any present intention of selling, granting any participation in, or otherwise distributing the same.

4.2 Disclosure of Information

The Onshore Lenders and the Agent have received all the information they consider necessary or appropriate for deciding whether to purchase the Securities. The Onshore Lenders and the Agent and their advisors have been afforded the opportunity to ask questions of and receive answers from representatives of the Company regarding the terms and conditions of the issuance of Securities and relating to the business, finances and operations of the members of the Company. Notwithstanding the foregoing, each Party acknowledges and agrees that the foregoing shall not in any way limit, reduce or affect the representations and warranties provided by the Company in this Agreement or the right of the Onshore Lenders and the Agent to rely thereon.

4.3 Regulation S

(a) Neither the Onshore Lenders nor the Agent is a “U.S. Person” (as defined in Rule 902 of Regulation S under the Securities Act) and the Onshore Lenders are not acquiring the Securities for the account or benefit of any U.S. persons. It understands that no action has been or will be taken in any jurisdiction by the Company that would permit a public offering of the Securities in any country or jurisdiction where action for that purpose is required.

(b) Each of the Onshore Lenders and the Agent agrees that it will not offer, sell or otherwise transfer any of the Securities nor, unless in compliance with the Securities Act, engage in hedging transactions involving such Purchased Securities on or prior to the date which is the minimum period of time as permitted under Rule 144 after the later of the date of this Agreement and the date of the applicable Closing and such later date, if any, as may be required by applicable law. Thereafter each of the Onshore Lenders and the Agent agrees that it will not offer, sell or otherwise transfer any of the Securities, except (A) to the Company, (B) pursuant to a registration statement that has been declared effective under the Securities Act, (C) for so long as any Security is eligible for resale pursuant to Rule 144A under the Securities Act, to a person it reasonably believes is a “qualified institutional buyer” as defined in Rule 144A that purchases for its own account or for the account of another qualified institutional buyer to whom notice is given that the transfer is being made in reliance on Rule 144A, (D) pursuant to offers and sales to Persons who are not “U.S. Persons” (within the meaning of Regulation S) that occur outside the United States within the meaning of Regulation S, or (E) pursuant to Rule 144 or any other available exemption from the registration requirements of the Securities Act. The Onshore Lenders agree that it will give to each Person to whom a Security is transferred a notice substantially to the effect of this paragraph.

(c) No form of “directed selling efforts” (as defined in Rule 902 of Regulation S under the Securities Act), general solicitation or general advertising in violation of the Securities Act has been or will be used nor will any offers by means of any directed selling efforts in the United States be made by the Onshore Lenders or the Agent or any of their representatives in connection with the offer and sale of any of the Securities.

4.4 Restricted Securities

Each of the Onshore Lenders and the Agent understands that the Securities are characterized as “restricted securities” under Rule 905 of Regulation S under the U.S. federal securities Laws and that under such Laws and applicable regulations such securities may be resold without registration under the Securities Act only in certain limited circumstances. Each of the Onshore Lenders and the Agent understands that the Securities have not been qualified or registered under the Laws of any other jurisdiction and therefore may be viewed as restricted securities under any or all of such other applicable securities Laws.

4.5 Legends

Each of the Onshore Lenders and the Agent understands that the certificates evidencing the Securities issued pursuant to this Agreement may bear the following legend:

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE (A) ABSENCE OF (I) A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER THE SECURITIES ACT OR (II) AN OPINION OF COUNSEL TO THE HOLDER THAT SUCH REGISTRATION IS NOT REQUIRED OR (B) UNLESS SOLD PURSUANT TO REGULATION S, RULE 144A, OR RULE 144 OF THE SECURITIES ACT. THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES”.

5. Miscellaneous

5.1 Successors and Assigns

Except as otherwise provided herein, the terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and assigns of the Parties hereto whose rights or obligations hereunder are affected by such terms and conditions. This Agreement, and the rights and obligations hereunder, shall not be assigned without the mutual written consent of the Parties hereto, provided that each of (i) the Onshore Lenders, and the Agent (with the written consent of the Onshore Lenders) may assign its rights and obligations to any of its Affiliates without consent of the other Parties under this Agreement. Nothing in this Agreement, express or implied, is intended to confer upon any Party other than the Parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.

5.2 Indemnity

(a) The Company hereby agrees to indemnify and hold harmless each of the Onshore Lenders and the Agent, and its employees, Affiliates, agents and assigns, from and against any and all Indemnifiable Losses suffered by it, or its employees, Affiliates, agents and assigns, directly or indirectly, as a result of, or based upon or arising from any inaccuracy in or breach or nonperformance of any of the representations, warranties, covenants or agreements made by the members of the Company in or pursuant to this Agreement or any of the other Transaction Documents.

(b) Any Party seeking indemnification with respect to any Indemnifiable Loss (an “Indemnified Party”) shall give written notice to the party required to provide indemnity hereunder (the “Indemnifying Party”).

(c) If any claim, demand or Liability is asserted by any third party against any Indemnified Party, the Indemnifying Party shall upon the written request of the Indemnified Party, defend any actions or proceedings brought against the Indemnified Party in respect of matters embraced by the indemnity under this Section 5.2. If, after a request to defend any action or proceeding, the Indemnifying Party neglects to defend the Indemnified Party, a recovery against the Indemnified Party suffered by it in good faith shall be conclusive in its favor against the Indemnifying Party, provided, however, that, if the Indemnifying Party has not received reasonable notice of the action or proceeding against the Indemnified Party or is not allowed to control its defense, judgment against the Indemnified Party shall only constitute presumptive evidence against the Indemnifying Party.

(d) This Section 5.2 shall not be deemed to preclude or otherwise limit in any way the exercise of any other rights or pursuit of other remedies for the breach of this Agreement or with respect to any misrepresentation.

5.3 Governing Law

This Agreement shall be governed by and construed under the Laws of the State of New York, without regard to principles of conflicts of law thereunder.

5.4 Dispute Resolution

(a) Any dispute, controversy or claim (each, a “Dispute”) arising out of or relating to this Agreement, or the interpretation, breach, termination or validity hereof, shall be resolved at the first instance through consultation between the parties to such Dispute. Such consultation shall begin immediately after any party has delivered written notice to any other party to the Dispute requesting such consultation.

(b) If the Dispute is not resolved within sixty (60) days following the date on which such notice is given, the Dispute shall be submitted to arbitration upon the request of any party to the Dispute with notice to each other party to the Dispute (the “Arbitration Notice”).

(c) The arbitration shall be conducted in Hong Kong and shall be administered by the Hong Kong International Arbitration Centre (“HKIAC”) in accordance with the HKIAC Procedures for the Administration of International Arbitration in force at the time of the commencement of the arbitration. There shall be one (1) arbitrator selected by the Company and the Investor. If the arbitrator has not been appointed within thirty (30) days after the Arbitration Notice is given, the relevant appointment shall be made by the Secretary General of the Centre.

(d) The arbitration proceedings shall be conducted in English. The arbitration tribunal shall apply the Arbitration Rules of the United Nations Commission on International Trade Law, as in effect at the time of the commencement of the arbitration. However, if such rules are in conflict with the provisions of this Section 5.4, including the provisions concerning the appointment of arbitrators, the provisions of this Section 5.4 shall prevail.

(e) Each party to the arbitration shall cooperate with each other party to the arbitration in making full disclosure of and providing complete access to all information and documents requested by such other party in connection with such arbitration proceedings, subject only to any confidentiality obligations binding on such party.

(f) The arbitrators shall decide any dispute submitted by the parties to the arbitration tribunal strictly in accordance with the substantive law of New York and shall not apply any other substantive law.

(g) Any party to the Dispute shall be entitled to seek preliminary injunctive relief, if possible, from any court of competent jurisdiction pending the constitution of the arbitration tribunal.

(h) During the course of the arbitration tribunal’s adjudication of the dispute, this Agreement shall continue to be performed except with respect to the part in dispute and under adjudication.

(i) The award of the arbitration tribunal shall be final and binding upon the parties, and the prevailing party may apply to a court of competent jurisdiction for enforcement of such award.

5.6 Notices

Any notice required or permitted pursuant to this Agreement shall be given in writing and shall be given either personally or by sending it by next-day or second-day courier service, fax, electronic mail or similar means to the address as shown below (or at such other address as such Party may designate by fifteen (15) days’ advance written notice to the other Parties to this Agreement given in accordance with this Section 5.6:

If to the Company, to:

12/F, Tower A
Chang’an International Building
No. 88 Nanguanzheng Street
Xi’an 710068, China
Attention: Mr. Ku Guohua, Chief Executive Officer
Tel: +86 (29) 8765-1096
Fax: +86 (29) 8765-1099

If to the Onshore Lenders, to:

Well Kent International Enterprises (Shenzhen) Company Limited

26/F., Center Commerce Building
No. 88 First Fuhua Road
Futian District, Shenzhen 518026, China
Attention: Mr. Lei Kai
Tel: +86 (755) 8203-1229
Fax: +86 (755) 8203-1408

China Jingu International Trust & Investment Corporation

No. 33, Finance Street
Xicheng District, Beijing 100140, China
Attention: Mr. Li Peng
Tel: +86 (10) 8808-8487
Fax: +86(755) 8808-6546

If to the Agent, to:

Room 1101, 11/F.,Tower 1
Admiralty Centre, 18 Harcourt Road
Hong Kong

Attn: Mr. Ma Yilin, Managing Director
Tel: +852 2527-6686
Fax: +852 2804-2135

Where a notice is sent by next-day or second-day courier service, service of the notice shall be deemed to be effected by properly addressing, pre-paying and sending by next-day or second-day service through an internationally-recognized courier a letter containing the notice, with a confirmation of delivery, and to have been effected at the expiration of two (2) days after the letter containing the same is sent as aforesaid. Where a notice is sent by fax or electronic mail, service of the notice shall be deemed to be effected by properly addressing, and sending such notice through a transmitting organization, with a written confirmation of delivery, and to have been effected on the day the same is sent as aforesaid.

5.7 Severability

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

5.8 Amendments and Waivers

Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and the Onshore Lenders. Any amendment or waiver effected in accordance with this paragraph shall be binding upon each of the Parties hereto.

5.9 Entire Agreement

This Agreement and the Transaction Documents, together with all schedules and exhibits hereto and thereto, constitute the entire agreement among the Parties with respect to the subject matter hereof and thereof, and no Party shall be liable or bound to any other Party in any manner by any warranties, representations, or covenants except as specifically set forth herein or therein. For the avoidance of doubt, this Agreement shall be deemed to terminate and supersede the provisions of any term sheet, letter of intent, memorandum of understanding, confidentiality and nondisclosure agreement, or other agreement executed between any Investor and the Company prior to the date of this Agreement, none of which agreements shall continue.

The remainder of this page has been left intentionally blank

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.


	CHINA RECYCLING ENERGY CORPORATION
	By:
		Name:
		Title:

	WELL KENT INTERNATIONAL ENTERPRISES (SHENZHEN) COMPANY LIMITED
	By:
		Name:
		Title:

	CHINA JINGU INTERNATIONAL TRUST & INVESTMENT CORPORATION
	By:
		Name:
		Title:

	CHINA CINDA (HK) ASSET MANAGEMENT CO., LIMITED
	By:
		Name:
		Title:

	XI’AN TCH ENERGY TECHNOLOGY CO., LTD.
	By:
		Name:
		Title:

Exhibit A

NOTICE OF EXCHANGE

The undersigned hereby elects to exchange principal of the Loan of CHINA RECYCLING ENERGY CORPORATION, a Nevada corporation (the “Company”), into shares of Common Stock according to the conditions hereof, as of the date written below. No fee will be charged to the holder for any conversion.

Exchange calculation:

Date to Effect Exchange:

Number of shares of Common Stock to be issued:



Agent:
	(Print Name of Agent)



	By:
		Name:
		Title:

-----END PRIVACY-ENHANCED MESSAGE-----