<SEC-DOCUMENT>0001144204-13-053991.txt : 20131004
<SEC-HEADER>0001144204-13-053991.hdr.sgml : 20131004
<ACCEPTANCE-DATETIME>20131004140259
ACCESSION NUMBER:		0001144204-13-053991
CONFORMED SUBMISSION TYPE:	8-K
PUBLIC DOCUMENT COUNT:		1
CONFORMED PERIOD OF REPORT:	20130718
ITEM INFORMATION:		Entry into a Material Definitive Agreement
ITEM INFORMATION:		Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant
FILED AS OF DATE:		20131004
DATE AS OF CHANGE:		20131004

FILER:

	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:		8-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-34625
		FILM NUMBER:		131136255

	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
</SEC-HEADER>
<DOCUMENT>
<TYPE>8-K
<SEQUENCE>1
<FILENAME>v356770_8k.htm
<DESCRIPTION>FORM 8-K
<TEXT>
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<P STYLE="margin: 0">&nbsp;</P>

<P STYLE="margin: 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 12pt"><B>UNITED
STATES </B></FONT><B><BR>
<FONT STYLE="font-size: 12pt">SECURITIES AND EXCHANGE COMMISSION</FONT><FONT STYLE="font-size: 18pt"> </FONT><BR>
<FONT STYLE="font-size: 10pt">Washington, DC 20549 </FONT></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>FORM 8-K<BR>
<BR>
</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>CURRENT REPORT </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Pursuant to Section&nbsp;13 or 15(d)
of The Securities Exchange Act of 1934<BR>
Date of Report (Date of earliest event reported):</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>July 18, 2013</B>&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-size: 12pt"><B>CHINA RECYCLING
ENERGY CORPORATION</B></FONT><B><FONT STYLE="font-size: 18pt"> </FONT><BR>
<FONT STYLE="font-size: 10pt">(Exact name of registrant as specified in its charter) </FONT></B></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 30%; padding-right: 0.1in; padding-left: 0.1in">&nbsp;</TD>
    <TD STYLE="width: 5%; padding-right: 0.1in; padding-left: 0.1in">&nbsp;</TD>
    <TD STYLE="width: 30%; padding-right: 0.1in; padding-left: 0.1in">&nbsp;</TD>
    <TD STYLE="width: 5%; padding-right: 0.1in; padding-left: 0.1in">&nbsp;</TD>
    <TD STYLE="width: 30%; padding-right: 0.1in; padding-left: 0.1in">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 0.1in; padding-left: 0.1in; text-align: center"><FONT STYLE="font-size: 10pt; color: black"><B>Nevada</B></FONT></TD>
    <TD STYLE="padding-right: 0.1in; padding-left: 0.1in">&nbsp;</TD>
    <TD STYLE="padding-right: 0.1in; padding-left: 0.1in; text-align: center"><FONT STYLE="font-size: 10pt; color: black"><B>000-12536</B></FONT></TD>
    <TD STYLE="padding-right: 0.1in; padding-left: 0.1in">&nbsp;</TD>
    <TD STYLE="padding-right: 0.1in; padding-left: 0.1in; text-align: center"><FONT STYLE="font-size: 10pt; color: black"><B>90-0093373</B></FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 0.1in; padding-left: 0.1in; text-align: center"><FONT STYLE="font-size: 10pt; color: black">(State or other jurisdiction of incorporation)</FONT></TD>
    <TD STYLE="padding-right: 0.1in; padding-left: 0.1in">&nbsp;</TD>
    <TD STYLE="padding-right: 0.1in; padding-left: 0.1in; text-align: center"><FONT STYLE="font-size: 10pt; color: black">(Commission File Number)</FONT></TD>
    <TD STYLE="padding-right: 0.1in; padding-left: 0.1in">&nbsp;</TD>
    <TD STYLE="padding-right: 0.1in; padding-left: 0.1in; text-align: center"><FONT STYLE="font-size: 10pt; color: black">(IRS Employer Identification No.)</FONT></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">12/F, Tower A</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">Chang An International Building</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">No. 88 Nan Guan Zheng Jie</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">Xi An City, Shaanxi Province</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">China 710068<BR>
<FONT STYLE="color: black"><B>&nbsp;(Address of principal executive offices, including zip code) </B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">(86-29) 8769-1097<BR>
<FONT STYLE="color: black"><B>(Registrant&rsquo;s telephone number, including area code) </B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="color: black">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">Not Applicable<BR>
<B>(Former name or former address, if changed since last report.) </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Check the appropriate box below if the Form 8-K filing is intended
to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction
A.2. below):</P>

<P STYLE="margin-top: 0; margin-bottom: 0">&nbsp;</P>

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<TD STYLE="width: 0in"></TD><TD STYLE="width: 0.25in; text-align: left"><FONT STYLE="font-family: Wingdings 2">&pound;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">Written communications
pursuant to Rule 425 under the Securities Act (17 CFR 230.425)</FONT></TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0in"></TD><TD STYLE="width: 0.25in; text-align: left"><FONT STYLE="font-family: Wingdings 2">&pound;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">Soliciting material pursuant
to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)</FONT></TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0in"></TD><TD STYLE="width: 0.25in; text-align: left"><FONT STYLE="font-family: Wingdings 2">&pound;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">Pre-commencement communications
pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))</FONT></TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0in"></TD><TD STYLE="width: 0.25in; text-align: left"><FONT STYLE="font-family: Wingdings 2">&pound;</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">Pre-commencement communications
pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))</FONT></TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;<B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Item 1.01 Entry into a Material Definitive Agreement.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><U>The Establishment of the Fund For
Investment in Project Company</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On July 18, 2013, Beijing Hongyuan Recycling
Energy Investment Center, LLP (the &quot;Fund&rdquo;) was established as a limited liability partnership in Beijing. Pursuant to
the Partnership Agreement, the Fund has a general partner, Hongyuan Recycling Energy Investment Management Beijing Co., Ltd. (the &ldquo;Fund Management Company&rdquo;), which made an initial capital contribution of RMB 5 million (approximately $833,333)
to the Fund. The Fund has three limited partners: (1) China Orient Asset Management Co., Ltd., which made an initial capital contribution
of RMB 280 million (approximately $46,666,666) to the Fund and is a preferred limited partner, (2) Hongyuan Huifu Venture Capital
Co. Ltd. (&quot;HHVC&quot;), which made an initial capital contribution of RMB 100 million (approximately $16,666,666) to the Fund
and is an ordinary limited partner and (3) the Company's wholly-owned subsidiary, Xi&rsquo;an TCH Energy Technology Co., Ltd. (&quot;Xian
TCH&quot;), which made an initial capital contribution of RMB 75 million (approximately $12.5 million) to the Fund and is a secondary
limited partner. The Fund Management Company was jointly formed by Xi&rsquo;an TCH and HHVC. Xi&rsquo;an TCH made an initial contribution
of RMB 4 million ($0.65 million) and owns 40% of the Fund Management Company.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The total size of the Fund is RMB 460 million (approximately
$76.66 million). The purpose of the Fund is to invest in Xi&rsquo;an Zhonghong New Energy Technology Co., Ltd. (the &quot;Project
Company&quot;), a subsidiary of Xi&rsquo;an TCH. Investments by the Fund in the Project Company will be in the form of equity,
debt and / or other forms approved by applicable laws. The Fund invested RMB 3 million (approximately $500,000) as an equity investment
and RMB 457 million (approximately $76 million) as a debt investment in the Project Company and, in return for such investments,
the Fund will receive an interest payment from the Project Company for the Fund's debt investment. The interest payment will be
distributed as investment return, in the priority described below, to all of the partners in the Fund.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Unless all of the partners (except for Xi'an TCH) approve,
the purpose of the Fund shall not be amended. None of the partners shall be required to make additional capital contributions
to the Fund. The amounts advanced by the Fund will be used by the Project Company for the construction and operation of two
coke dry quenching (&ldquo;CDQ&rdquo;) waste heat power generation stations with Jiangsu Tianyu Energy and Chemical Group
Co., Ltd. (&quot;Tianyu&quot;) and one CDQ waste heat power generation station with Boxing County Chengli Gas Supply Co.,
Ltd. (&quot;Chengli&quot;).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><U>Term of the Fund</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The term of the Fund's partnership is 6 years from the date
of its establishment, July 18, 2013. The term for the preferred limited partner is 3 years from the date of its contribution and
for the ordinary limited partner is 4 years from the date of its contribution. Unless approved by the general partner (the Fund
Management Company) otherwise, upon the expiration of their respective terms, each partner shall exit from the partnership automatically.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><U>Management and Contributions to Capitalization of the
Fund</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The limited partners made their respective capital contributions
to the Fund based upon the satisfaction of the following conditions:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.3in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>Tianyu and Chengli signing agreements with the Project Company and making commitments for power purchases;</TD></TR></TABLE>

<P STYLE="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.3in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>Xi'an TCH completing the pledge to Industrial Bank Xi'an Branch (the &quot;Bank&quot; which will provide the loan on behalf
of the Fund and also act as Supervising Bank for the loan) of accounts receivable of its Shenqiu biomass project phase I and phase
II power generation systems;</TD></TR></TABLE>

<P STYLE="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.3in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>Xi'an TCH completing the pledge to the Bank of the fixed assets of its Shenqiu project phase I and phase II power generation
system;</TD></TR></TABLE>

<P STYLE="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.3in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>Xi'an TCH providing an unlimited joint liability (with the Project Company) guarantee to the Bank;</TD></TR></TABLE>

<P STYLE="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.3in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>Mr. Guohua Ku providing an unlimited joint liability (with the Project Company) guarantee to the Bank;</TD></TR></TABLE>

<P STYLE="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.3in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>Xi'an TCH issuing a promissory letter to the Fund providing that in the event that the Project Company is unable to pay the
interest due on time, Xi'an TCH will pay the unpaid amount;</TD></TR></TABLE>

<P STYLE="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.3in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>the Fund, the Project Company and Supervising Bank signing a capital supervision agreement.</TD></TR></TABLE>

<P STYLE="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Fund Management Company shall have the authority to manage
the day-to-day affairs of the Fund and sign agreements with third parties on behalf of the Fund. The limited partners shall not
have the right to manage the affairs of the Fund and shall not have the authority to act on behalf of the partnership with outside
third parties.&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><U>Income to the Fund and Distribution of Profits to the
Fund</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Fund will receive its income from the interest payments
made by the Project Company to the Fund. Within 3 working days upon receipt of each interest payment from the Project Company on
the 20th of the month after each quarter, the distribution of the income (after deduction of necessary operating costs of the partnership)
shall be as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">First, distribute to the preferred limited partner until it
has reached its cap amount (its capital contribution &times; 13% &divide;4) ; however, for the first income distribution--i.e.
the first interest payment by the Project Company to the Fund. The cap should be: its capital contribution &times; 13%&nbsp; &times;
the number of days from the actual capital contribution to the interest payment &divide;360;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Thereafter, distribute to the ordinary limited partner until
it has reached its cap amount (its capital contribution &times; 13% &divide;4); however, for the first income distribution--i.e.
the first interest payment by the Project Company to the Fund--the cap should be: its capital contribution &times; 13%&nbsp; &times;
the number of days from the actual capital contribution to the interest payment &divide;360;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Thereafter, distribute to the general partner until it has reached
its cap amount (its capital contribution &times; 13% &divide;4); however, for the first income distribution-- i.e. the first interest
payment by the Project Company to the Fund--the cap should be: its capital contribution &times; 13%&nbsp; &times; the number of
days from the actual capital contribution to the interest payment &divide;360;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Any remainder will belong to the partnership.&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Xi'an TCH will not be entitled to participate in any distributions
until the Project Company fully repays all principal and interest owed to the Fund.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">For other income (other than interest income from the Project
Company), if it needs to be distributed, the distribution method shall be decided by the general partner, preferred limited partner
and ordinary limited partner.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">If there is a real or potential risk that the Project Company
is unable to repay the principal and/or interest of the loan when they are due, the Fund has the right to dispose of the assets
of the Project Company, transfer its ownership or liquidate the Project Company to repay principal and/or interest of the loan.
The Project Company shall not pay any dividends before it fully repays the loan.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><U>Distribution of Non-Cash Distributable Assets</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">For the distribution of non-cash assets: if it is prior to the
liquidation of the partnership, then Xi'an TCH has the obligation to purchase such non-cash distributable assets of the Fund at
fair market value and the general partner shall also use its best efforts to try to sell such assets to avoid the distribution
of non-cash assets.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><U>Exit From Partnership</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The general partner shall not charge a management fee to the
Fund. If a partner exits the Fund due to the expiration of its term, the exiting partner shall settle the payment with the other
partners. All parties agree that the fair value for the exiting partner will be: its capital contribution &times;(1 + the number
of years of the term of its partnership &times; 13%). After deducting the payments already received from the Fund, the exiting
partner shall be paid at the fair value for any unpaid portion.&nbsp; If a partner exits before the expiration of its term but
with unanimous consent of the other partners, fair value for the exiting partner is: (x) its capital contribution &times; (1+ the
number of the completed full years that it stayed in the partnership &times; 13%) + (y) its capital contribution &times; (the additional
number of days that it stayed in the partnership for the uncompleted final year &divide;360)&times; 13%.&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><U>Dissolution of the Fund </U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Fund shall be dissolved when one of the following situations
occurs:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.3in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>It does not receive their contributions from the limited partners within 12 months of the Fund's establishment;</TD></TR></TABLE>

<P STYLE="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.3in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>Expiration of the term of the Fund;</TD></TR></TABLE>

<P STYLE="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.3in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>A partnership meeting determines to dissolve the Fund;</TD></TR></TABLE>

<P STYLE="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.3in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>The events of termination of the general partner have occurred and parties can not reach an agreement as to the replacement
general partner;</TD></TR></TABLE>

<P STYLE="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.3in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>The Fund loses its business license or is ordered to close or terminate by a government agency with the authority to so order;</TD></TR></TABLE>

<P STYLE="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.3in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>Any other dissolution event pursuant to the Partnership Enterprise Law of China or the partnership agreement.&nbsp;</TD></TR></TABLE>

<P STYLE="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Upon dissolution, the assets of the Fund shall go through the
liquidation process to pay the liquidation cost, employee salaries and social security, tax owed and debt and then shall be distributed
to the partners in the following sequence:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.3in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>To the preferred limited partner until it receives its full contribution amount;</TD></TR></TABLE>

<P STYLE="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.3in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>To the ordinary limited partner until it receives its full contribution amount;</TD></TR></TABLE>

<P STYLE="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.3in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>To the preferred limited partner until its annual investment return for its contribution reaches its annual return cap of 13%
a year;</TD></TR></TABLE>

<P STYLE="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.3in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>To the ordinary limited partner until its annual investment return for its contribution reaches its annual return cap of 13%
a year;</TD></TR></TABLE>

<P STYLE="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.3in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>If there are any assets remaining after the proceeding four steps, they shall be distributed to the secondary limited partner
and the general partner according to their percentage capital contribution.</TD></TR></TABLE>

<P STYLE="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><U>Governing Law</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The partnership agreement is subject to Chinese law and any
dispute that cannot be solved by negotiation must be submitted to the court in Beijing.&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><U>Transfers of Equity in Project Company</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-size: 10pt">Upon the 5th year anniversary
for the Fund as the shareholder of the Project Company or when the Fund plans to sell all its equity in the Project Company, HHVC
or its affiliate shall have the</FONT><FONT STYLE="color: #0070C0"> </FONT><FONT STYLE="font-size: 10pt">first refusal right to
purchase the equity of the Fund in the Project Company</FONT><FONT STYLE="color: #0070C0"> </FONT><FONT STYLE="font-size: 10pt">and
Xi'an TCH hereby waives its right to purchase the equity of the Fund in the Project Company. The purchase price will be determined
by the Fund Management Company and HHVC. If the transfer occurs within 5 years of HHVC becoming a shareholder of the Project Company,
the Project Company promises it will begin to distribute at least 80% of its distributable profits annually after HHVC becomes
a shareholder of the Project Company. </FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; color: #0070C0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">If HHVC does not purchase the equity in the Project Company
from the Fund, Xi'an TCH or Mr. Ku shall purchase the equity from the Fund. The parties shall negotiate the purchase price but
it shall not be lower than RMB 3 million (approximately $500,000 at an exchange rate of 1:6) x (1+13% x 5).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><U>Investment in the Project Company</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Fund shall use RMB 3 million (approximately $500,000) to
purchase the 10% equity of the Project Company and RMB 457 million (approximately $76 million) as a loan to the Project Company.
The loan shall be deposited to a bank account at the Supervising Bank (the Industrial Bank Xi'an Branch ) and will be jointly supervised
by the Project Company and the Fund Management Company. Project spending shall be verified by the Fund Management Company to confirm
that it is in accordance with the project schedule before the funds are released. All the operating accounts of the Project Company
shall be opened with the branches of the Supervising Bank and the Supervising Bank has the right to monitor all bank accounts opened
by the Project Company. The Project Company shall use its accounts receivable as a guarantee for the loan.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; color: #0070C0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Shareholders of the Project Company shall hold their voting
rights and dividend rights according to their percentage capital contribution to the Project Company. Unless all shareholders agree,
no party shall transfer its ownership in the Project Company, except that the Fund can transfer its ownership to its affiliated
companies. The Project Company shall have a 3 member board of directors. The Fund nominated one member and Xi'an TCH nominated
two members. The Chairman of the board shall be elected by the majority of the board. The board meetings shall only be held when
the director nominated by the Fund attends the meeting and there are more than half of the board members in attendance. All board
resolutions shall be passed by unanimous vote.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">China Orient Asset Management Co., Ltd. will recommend the company
supervisor to the Project Company. The Fund has the right to send accountants and engineers to take over the responsibilities or
supervise the project expenses and revenues and project construction progress. The funds for the expenses of the projects shall
be allocated according to their progress upon review and approval by the personnel assigned or appointed by the Fund. The Fund
has the right to review and verify the target cost management plan according to the construction schedule of the projects and conduct
real time on site project cost control. If the cost of any item is beyond the scope in the target cost management plan, Xi'an TCH
or any other third parties shall be responsible for payment of such cost and it shall not be included in the Project Company's
cost. The Board of Directors of the Project Company shall establish detailed project supervision and cost management policies.
Without the written consent of HHVC and the Fund, Xi'an TCH and Ku shall not change the company structure of Xi'an TCH and the
Project Company.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; color: #0070C0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-size: 10pt">The Fund has lent RMB 457 million
(approximately $76 million) to the Project Company through the Bank under a loan agreement among the Fund, the Bank and the Project
Company on July 30, 2013. The Bank charges a 0.01% processing fee and also acts as Supervising Bank. The term of this loan is for
60 months from July 31, 2013 to July 30, 2018. On August 6, 2016, the Project Company shall repay principal in the amount of RMB
280 million; on August 6, 2017, it shall repay principal in amount of RMB 100 million and on July 30, 2018, it shall repay the
remainder of RMB 77 million. The interest rate is a fixed rate of 12.5% per year. Xi'an TCH and Mr. Ku have each provided pledges
to guarantee the</FONT><FONT STYLE="color: #0070C0"> </FONT><FONT STYLE="font-size: 10pt">repayment of the principal and interest.
</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Bank can terminate advances and accelerate the maturity
of the loan if certain situations occur:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.3in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>Construction of any one of the three CDQ projects (two with Jiangsu Tianyu and one with Boxing) has not been completed and
operations have not begun within 18 months from the date of the first release of the construction fund;</TD></TR></TABLE>

<P STYLE="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.3in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>The Project Company has not received the service fees/electricity fees from any one of the three CDQ projects for three consecutive
months after it starts operations;</TD></TR></TABLE>

<P STYLE="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.3in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>The Project Company has not received at least 75% of the service fees/electricity fees from any one of the three CDQ projects
for six consecutive months;</TD></TR></TABLE>

<P STYLE="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.3in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>The Project Company breaches the fund supervision agreement;</TD></TR></TABLE>

<P STYLE="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.3in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>The Project Company terminates any one of the projects with Tianyu or Boxing or there are breaches of agreements by Tianyu
or Boxing that cause or could cause major damage to the Fund;</TD></TR></TABLE>

<P STYLE="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.3in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>Xi'an TCH's operations deteriorate and it is unable fulfill its guarantee obligations;</TD></TR></TABLE>

<P STYLE="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.3in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>Any breach of warranties and statements by the Project Company or Xi'an TCH in the guarantee agreements or loan agreement.</TD></TR></TABLE>

<P STYLE="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&nbsp;&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Project Company shall maintain a minimal funding level in
its designated account with the Bank to make sure it has sufficient funds to make principal payments when they are due:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.3in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>At the end of the 33rd calendar month from the first release of the loan, the deposit balance shall be no less than RMB 140
million (approximately $23.33 million);</TD></TR></TABLE>

<P STYLE="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.3in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>At the end of the 34th calendar month from the first release of the loan, the balance shall be no less than RMB 196 million
(approximately $32.66 million); at the end of the 35th calendar month from the first release of the loan, the balance is no less
than RMB 280 million (approximately $46.6 million);</TD></TR></TABLE>

<P STYLE="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.3in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>At the end of the 45th calendar month from the first release of the loan, the deposit balance shall be no less than RMB 50
million (approximately $8.33 million);</TD></TR></TABLE>

<P STYLE="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.3in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>At the end of the 46th calendar month from the first release of the loan, the balance shall be no less than RMB 70 million
(approximately $11.66 million);</TD></TR></TABLE>

<P STYLE="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.3in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>At the end of the 47th calendar month from the first release of the loan, the balance shall be no less than RMB 100 million
(approximately $16.66 million).</TD></TR></TABLE>

<P STYLE="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Project Company shall also maintain certain capital level
in its account with the Bank to make sure it has sufficient funds to make interest payments when they are due:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.3in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>During the first three years from the first release of the loan, the balance in its account shall be no less than RMB 7.14
million (approximately $1.19 million) on the 20<SUP>th</SUP> day of the 2<SUP>nd</SUP> month of each quarter and no less than RMB
14.28 million (approximately $2.38 million) on the 14<SUP>th</SUP> day of the last month of each quarter ;</TD></TR></TABLE>

<P STYLE="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.3in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>During the fourth year from the first release of the loan, the balance in its account shall be no less than RMB 1.92 million
(approximately $ 320 thousand) on the 20<SUP>th</SUP> day of the 2<SUP>nd</SUP> month of each quarter and no less than RMB 3.85
million (approximately $641,633) on the 14<SUP>th</SUP> day of the last month of each quarter;</TD></TR></TABLE>

<P STYLE="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.3in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD>During the fifth year from the first release of the loan, the balance in its account shall be no less than RMB 96,300 (approximately
$ 16,050) on the 20<SUP>th</SUP> day of the 2<SUP>nd</SUP> month of each quarter and no less than RMB 192,500 (approximately $32,083)
on the 14<SUP>th</SUP> day of the last month of each quarter.</TD></TR></TABLE>

<P STYLE="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&nbsp;</P>

<P STYLE="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Before the Fund releases the money to the Project Company,
Xi'an TCH shall pay 2% of the funds raised, i.e. RMB 9.2 million to the Fund Management Company as a consulting fee and it shall
pay such 2% on the amount of funds actually contributed as an annual management fee on every 365 day anniversary thereafter until
the Project Company fully repays the loan and the Fund on longer owns any equity of the Project Company.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><U>The Board of Directors for the Fund Management Company</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Fund Management Company has a board of directors consisting
of 5 members. HHVC nominated 3 members, Xi'an TCH nominated 1 member and China Orient Asset Management Co., Ltd. nominated 1 member.
The Chairman of the Fund Management Company shall be nominated by HHVC. Both voting rights and dividend rights are allocated between
HHVC and Xi'an TCH at 80% and 20%, respectively.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The description contained herein of the terms of the Partnership
Agreement and Loan Agreement (the &quot;Agreements&quot;) do not purport to be complete and the Agreements will be filed as exhibits
to the Company&rsquo;s Quarterly Report on Form 10-Q for the quarter-ended September 30, 2013.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Item 2.03 Creation of a Direct Financial Obligation or an
Obligation under an Off-Balance Sheet Arrangement of a Registrant.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">See Item 1.01 above.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>SIGNATURES</B><BR>
<BR>
</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pursuant to the requirements
of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned
hereunto duly authorized.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

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<TR STYLE="vertical-align: top">
    <TD STYLE="width: 53%">&nbsp;</TD>
    <TD STYLE="width: 35%; text-align: left; vertical-align: bottom"><FONT STYLE="font-size: 10pt; color: black">China Recycling Energy Corporation</FONT></TD>
    <TD STYLE="width: 12%">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: left; vertical-align: bottom">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD><FONT STYLE="font-size: 10pt; color: black">Date: October 4, 2013</FONT></TD>
    <TD STYLE="text-align: left; vertical-align: bottom; border-bottom: Black 1pt solid">
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">/s/ David
        Chong</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"></P></TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: left; vertical-align: bottom"><FONT STYLE="font-size: 10pt; color: black">David Chong, Chief Financial Officer</FONT></TD>
    <TD>&nbsp;</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;&#9;<B>&nbsp;</B></P>

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