8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

__________________

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(D) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of Earliest Event Reported):     July 13, 2010

CHINA ARCHITECTURAL ENGINEERING, INC.

(Exact Name of Registrant as Specified in Charter)

Delaware	001-33709	51-05021250
(State or other jurisdiction	(Commission	(IRS Employer
of incorporation)	File Number)	Identification No.)

105 Baishi Road, Jiuzhou West Avenue, Zhuhai 519070 People’s Republic of China	N/A
(Address of principal executive offices)	(Zip code)
Registrant’s telephone number, including area code:	0086-756-8538908

N/A

(Former Name or Former Address, If Changed Since Last Report)

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:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01 Entry into a Material Definitive Agreement.

On July 13, 2010, China Architectural Engineering, Inc. (the “Company”) entered into an Amendment and Waiver Agreement (the “Agreement”) with The Royal Bank of Scotland N.V., London Branch (“RBS N.V.”); CITIC Capital China Mezzanine Fund Limited (“CITIC,” and together with RBS N.V., the “Bondholders”); The Royal Bank of Scotland (China) Co. Ltd. Shenzhen Branch; Luo Ken Yi; Jun Tang; KGE Group Limited; and First Jet Investments Limited.  The Agreement was entered into to, among other things, extend the term of a similar waiver agreement dated February 24, 2010 entered into by and between the same parties as reported by the Company in the Current Report on Form 8-K filed with the Securities and Exchange Commission on February 24, 2010.

The Bondholders are the holders of its outstanding Variable Rate Convertible Bonds due 2012 (the “2007 Bonds”) and 12% Convertible Bonds due 2011 (the “2008 Bonds,” and collectively with the 2007 Bonds, the “Bonds”) and warrants to purchase 300,000 shares of common stock of the Company expiring 2013 (the “2008 Warrants”).  Pursuant to the Agreement, the holders of the Bonds and the 2008 Warrants agreed to waive their right to a reduction in the conversion price of the Bonds and the exercise price of the 2008 Warrants upon the Company’s anticipated issuance of up to 25,000,000 shares of its common stock (the “Shares”) to First Jet Investment Limited (“First Jet”) for a proposed acquisition of a 60% ownership interest in Shanghai ConnGame Network Co. Ltd. (“ConnGame”).  Additionally, the holders of the 2008 Bonds agreed to waive any default under the terms and conditions of the trust deed governing the 2008 Bonds relating to the requirement that KGE Group Limited own at least 45% of the Company’s issued and outstanding common stock.

The waivers contained in the Agreement are subject to numerous conditions, including repayments of debt and lock-up restrictions.

Repayments

The Company agreed that it would pay to the Bondholders all outstanding interests in arrears on the Bonds, plus all other applicable interest up until the payment date, within 30 days after the closing of the issuance of the Shares, but which in any event, would not be later than September 30, 2010.  The Company also agreed to pay all unsettled amounts of an overdraft facility, which include all outstanding principal and interest amounts, within 30 days after the closing of the issuance of the Shares, but which in any event, would not be later than September 30, 2010.

The Company agreed that it will not repay or prepay any debt prior to its currently scheduled due date until the Company makes all of the payments specified in the Waiver and the Bonds have been redeemed in full and that any new indebtedness incurred by the Company for the purpose of repaying the overdraft facility shall (i) not exceed the outstanding amount due and payable under the overdraft facility and (ii) be subordinated to all amount owed under the Bonds.

Lock-up restrictions

First Jet and KGE Group agreed to certain lock-up restrictions.  Pursuant to the terms of the Agreement, First Jet Investment Limited (“First Jet”), the owner of the 60% ownership interest in ConnGame being sold to the Company, and KGE Group each agreed that they will maintain an ownership in the Company that is no less than 20% and 15%, respectively, of the Company’s common stock (the “Company Lock-Up Shares”) after the issuance of the Shares until all liabilities due to the holders of the Bonds and the Overdraft Lender have been paid in full.  First Jet and KGE Group also agreed not offer, sell, contract to sell, pledge, grant any option to purchase, make any short sale or otherwise dispose of or encumber the Company Lock-Up Shares until released from such restriction.  Mr. Jun Tang, the largest shareholder of First Jet, and Mr. Luo Ken Yi each agreed that, until all liabilities due to the holders of the Bonds and the Overdraft Lender have been paid in full, he will own at least 20% and 15%, respectively, of the Company’s outstanding shares of common stock  (the “Individual Lock-Up Shares”) and that he shall not offer, sell, contract to sell, pledge, grant any option to purchase, make any short sale or otherwise dispose of or encumber any of the Individual Lock-Up Shares.  Mr. Luo Ken Yi is the largest shareholder of KGE Group, in addition to the Chief Executive Officer and Chairman of the Board of the Company.

In addition, Mr. Luo agreed to not offer, sell, contract to sell, pledge, grant any option to purchase, make any short sale or otherwise dispose of or encumber any of the Company shares beneficially owned by Mr. Luo without prior consent of the Bondholders, which shall not be unreasonably withheld for the purpose of allowing the payments under the bonds and related interest to be made.  Mr. Luo would be subject to such restrictions until the payment required under the waiver and interest of 2008 Bonds due on October 15, 2010 are paid in full.

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If the Company fails to make any of the payments specified in the Agreement, then all rights of the holders of the Bonds and 2008 Warrants waived under the Agreement to or to be waived under the Agreement, shall not be waived and will be reinstated, and any previous waivers will be null and void.  In such case, appropriate adjustments will be made to the conversion prices of the Bonds and the exercise price of the 2008 Warrants in the event any of the Shares are issued and an event of default under the terms and conditions of the trust deed governing the 2008 Bonds shall exist, making the 2008 Bonds immediately due and payable.  Additionally, (a) if any part of the proposed issuance of the Shares is cancelled or not consummated within three months from the effective date of the Agreement or (b) if the Company breaches either of the covenants, or (c) if any of KGE Group, First Jet, Mr. Luo Ken Yi or Mr. Jun Tang fails to beneficially own the specified percentage of the Company’s outstanding shares of common stock or breaches their lock-up restrictions with respect to such shares, then all rights of the holders of the Bonds and 2008 Warrants waived under the Agreement or to be waived under the Agreement, shall not be waived and will be reinstated, and any previous waivers will be null and void.

A copy of the Agreement is filed as Exhibit 10.1 to this Current Report on Form 8-K, which is incorporated herein by reference.  The foregoing description of the Agreement is a summary only and is subject to, and qualified in its entirety by, such exhibit.

Item 7.01  Regulation FD Disclosure.

On July 19, 2010, the Company issued a press release announcing the execution of the Amendment and Waiver Agreement.  A copy of the press release is attached to this Current Report on Form 8-K as Exhibit 99.1 and the information therein is incorporated herein by reference.

The information reported under Item 7.01 in this Current Report on Form 8-K, including Exhibit 99.1 attached hereto, shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in such filing.

Item 9.01  Financial Statements and Exhibits.

(d)     Exhibits

Exhibit Number	Description
10.1	Amendment and Waiver Agreement dated July 13, 2010 by and among The Royal Bank of Scotland N.V., London Branch (formerly ABN AMRO Bank N.V., London Branch); CITIC Capital China Mezzanine Fund Limited; The Royal Bank of Scotland (China) Co. Ltd. Shenzhen Branch (formerly ABN AMRO Bank (China) Co., Ltd., Shenzhen Branch); Mr. Luo Ken Yi; Mr. Jun Tang; KGE Group Limited; and First Jet Investments Limited.
99.1	Press Release dated July 19, 2010.

3

SIGNATURES

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.

Date: July 19, 2010	CHINA ARCHITECTURAL ENGINEERING, INC.
	By:	/s/  Luo Ken Yi
	Name:	Luo Ken Yi
	Title:	Chief Executive Officer

EX-10.1

AMENDMENT AND WAIVER AGREEMENT

This Amendment and Waiver Agreement (the “Agreement”) is made and entered into as of July 13th, 2010 (the “Effective Date”), by and among China Architectural Engineering, Inc., a Delaware corporation (the “Company”); The Royal Bank of Scotland N.V., London Branch (formerly ABN AMRO Bank N.V., London Branch) (“RBS N.V.”); CITIC Capital China Mezzanine Fund Limited (formerly known as “CITIC Allco Investments Limited.”) (“CITIC,” and together with RBS N.V., the “Bondholders”); The Royal Bank of Scotland (China) Co. Ltd. Shenzhen Branch (formerly ABN AMRO Bank (China) Co., Ltd., Shenzhen Branch) (the “Overdraft Lender” and together with RBS N.V. and CITIC, the “Creditors”); Mr. Ken Luo, an individual; Mr. Jun Tang, an individual; KGE Group Limited, a company organized under the laws of Hong Kong (“KGE Group”); and First Jet Investments Limited, a company organized under the laws of the British Virgin Islands (“First Jet”).

Recitals

WHEREAS, on April 12, 2007, the Company sold and issued to RBS N.V. US $10,000,000 Variable Rate Convertible Bonds due 2012 (the “2007 Bonds”) and warrants to purchase 800,000 shares of common stock of the Company expiring 2010 (the “2007 Warrants”);

WHEREAS, the 2007 Bonds were issued pursuant to a trust deed dated April 12, 2007, as amended and restated on August 29, 2007 (the “2007 Trust Deed”), entered into by and between the Company and The Bank of New York, London Branch (the “Trustee”);

WHEREAS, the 2007 Warrants have been fully exercised pursuant to the terms of the 2007 Warrants and are no longer outstanding;

WHEREAS, on April 15, 2008, the Company issued to the Bondholders an aggregate amount of US$20,000,000 12% Convertible Bonds due 2011 (the “2008 Bonds,” and together with the 2007 Bonds, the “Bonds”) and 300,000 warrants to purchase 300,000 shares of common stock of the Company expiring 2013 (the “2008 Warrants”);

WHEREAS, the 2008 Bonds were issued pursuant to a trust deed dated April 15, 2008, as amended and restated on September 29, 2008, as may be amended from time to time (the “2008 Trust Deed,” and together with the 2007 Trust Deed, the “Trust Deeds”), entered into by and between the Company and the Trustee;

WHEREAS, the 2008 Warrants, none of which have been exercised as of the date of this Agreement, were issued pursuant to a Warrant Instrument dated April 15, 2008 (the “2008 Warrant Instrument”) entered into by and between the Bondholders and the Company;

WHEREAS, the 2007 Trust Deed and 2008 Trust Deed each provide that the then-current conversion price of the respective Bonds shall be adjusted downward upon certain triggering events, including upon the issuance by the Company of shares of the Company’s common stock, $0.001 par value per share (“Shares”) for consideration per Share that is less than the then-current conversion price of the respective Bonds, as determined pursuant to the terms and conditions of the Trust Deeds;

WHEREAS, paragraph 8.1(e) of the 2008 Warrant Instrument provides that the occurrence of an adjustment to the conversion price of the 2008 Bonds shall result in an identical adjustment to the exercise price of the 2008 Warrants;

WHEREAS, the Company has agreed to provide a guarantee over an Overdraft Facility letter (reference number CZ2008003C) provided by The Royal Bank of Scotland (China) Co. Ltd. Shenzhen Branch, dated 13 May 2009 (the “Bank Overdraft Facilities”);

WHEREAS, Condition 12(A)(xiv) of the Terms and Conditions of the 2008 Trust Deed provide that it is an event of default if KGE Group ceases to own at least 45% of the outstanding Shares;

WHEREAS, RBS N.V. holds 100% of the issued and outstanding 2007 Bonds, and the Bondholders in aggregate hold 100% of the issued and outstanding 2008 Bonds and 100% of the 2008 Warrants;

WHEREAS, the Company is currently contemplating the issuance of up to 25,000,000 Shares to First Jet as consideration for the acquisition of First Jet’s 60% equity interest in Shanghai ConnGame Network Ltd., a company organized under the laws of the People’s Republic of China (“ConnGame”), on the terms and conditions described in Appendix A attached to this Agreement (the “Proposed Issuance”);

WHEREAS, if consummated, the Proposed Issuance (a) would trigger a reduction in the conversion price of each of the Bonds and a reduction in the exercise price of the 2008 Warrants pursuant to the terms of the Bonds and the 2008 Warrants (the “Adjustment Rights”) and (b) would result in an event of default under Condition 12(A)(xiv) of the 2008 Bonds;

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WHEREAS, the Proposed Issuance is subject to the NASDAQ Stock Exchange and United States federal securities law requirements described in Appendix A;

WHEREAS, the parties entered into that certain Amendment and Waiver Agreement dated February 24, 2010 (the “February 2010 Waiver”) as related to the Proposed Issuance and Agreed Payments pursuant to which the Company made certain payments;

WHEREAS, each of the Bondholders is requested to waive their Adjustment Rights only as it relates to the Proposed Issuance and to waive their right to declare a default as a result of a failure of KGE Group to maintain the minimum percentage ownership required under Condition 12(A)(xiv) of the 2008 Bonds only as it relates to the Proposed Issuance, and only for the sole purpose of allowing the Proposed Issuance to take place and be completed no later than three months from the effective date of this Agreement;

WHEREAS, if any but not all the portion of the Proposed Issuance is consummated and the Agreed Payments, as defined in Appendix B, are not paid to the Creditors in accordance with the time periods and amounts set forth in Appendix B; then no rights of the Bondholders, including those rights under Condition 12(A)(xiv) of the 2008 Bonds and the Adjustment Rights, shall be waived and appropriate adjustments shall be made to the conversion prices of the Bonds and the exercise price of the 2008 Warrant to reflect the Shares sold by the Company in the Proposed Issuance and an event of default under Condition 12(A)(xiv) of the 2008 Bonds shall exist, making the 2008 Bonds immediately due and payable; and

WHEREAS, immediately following the Proposed Issuance, Mr. Jun Tang (through First Jet) and Mr. Ken Luo (through KGE Group) will each beneficially own approximately 31.2% and 30.1%, respectively, of the outstanding shares of the Company.

NOW, THEREFORE, in consideration of the mutual promises and agreements hereinafter set forth, the parties hereto, intending to be legally bound, agree as follows:

1.           Waivers.  Subject to compliance by the Company with the terms and conditions set forth, and for the sole purpose of allowing the Proposed Issuance to take place in full, each of the parties hereby agrees that, with respect to Shares issued pursuant to and in accordance with the terms of the Proposed Issuance set forth herein (including in Appendix A and Appendix B):

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           (A)           notwithstanding any provisions of the Trust Deeds or the 2008 Warrant Instrument, or any other related documents or agreements, the Adjustment Rights that would otherwise be triggered by the Proposed Issuance shall not be applicable and shall be waived, and there shall be no adjustment to the conversion price of the Bonds or the exercise price of the 2008 Warrants; and

           (B)           no default shall occur under Condition 12(A)(xiv) of the 2008 Trust Deed relating to the minimum percentage ownership requirements by KGE Group,

in each case provided, that the Company shall comply with clause 2 of this Agreement.

2.           Payment ofAgreed Payments. The Company agrees to pay to the Creditors each of the Agreed Payments in the amounts and within the time periods indicated in Appendix B.

3.           Failure to Pay Agreed Payments.  If any portion of the Proposed Issuance occurs and any of the Agreed Payments are not paid to the Creditors in the amounts and within the time periods specified in Appendix B then no rights of the Bondholders, including those rights under Condition 12(A)(xiv) of the 2008 Bonds and the Adjustment Rights, shall be waived and appropriate adjustments shall be made to the conversion prices of the Bonds and the exercise price of the 2008 Warrants to reflect the impact of the Shares issued in the Proposed Issuance as if this Agreement had never been executed and an event of default under Condition 12(A)(xiv) of the 2008 Bonds shall exist, making the 2008 Bonds immediately due and payable.

4.           Covenants of the Company.

(A)           The Company will not repay or prepay any debt prior to its currently scheduled due date until the Company makes all of the Agreed Payments specified in Appendix B and the Bonds have been redeemed in full.

(B)           The Company agrees that any new indebtedness incurred by it for the purpose of repaying Bank Overdraft Facilities shall (i) not exceed the outstanding amount due and payable under the Bank Overdraft Facilities and (ii) be subordinated to all amount owed under the Bonds.

5.           Lock-Up of Shares.

(A)           First Jet and KGE Group each agree that, until all liabilities due to the Creditors have been paid in full, they shall at all times maintain ownership of a number of shares of common stock that is equal to at least 20% and 15%, respectively, of the shares outstanding immediately after the closing of the Proposed Issuance (the “Company Lock-Up Shares”) and they shall not offer, sell, contract to sell, pledge, grant any option to purchase, make any short sale or otherwise dispose of or encumber the Company Lock-Up Shares. Mr. Jun Tang and Mr. Ken Luo each agree that, until all liabilities due to the Creditors have been paid in full, they shall at all times maintain beneficial ownership, as defined by the rules and regulations of the SEC, of a number of shares of common stock of the Company that is equal to at least 20% and 15%, respectively of the shares then outstanding (the “Individual Lock-Up Shares”) and that they shall not offer, sell, contract to sell, pledge, grant any option to purchase, make any short sale or otherwise dispose of or encumber any of the Individual Lock-Up Shares.

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 (B)           Further, Mr. Ken Luo agrees that prior to the Agreed Payments specified in Appendix B and the interests of 2008 Bonds due on 15 October 2010 being paid in full, Mr. Ken Luo will not offer, sell, contract to sell, pledge, grant any option to purchase, make any short sale or otherwise dispose of or encumber any of CAEI shares beneficially owned by Mr. Ken Luo unless with the prior consent of the Creditors, which shall not be unreasonably withheld for the purpose of allowing the Agreed Payments and the said interests to be made.

6.           Reinstatement of Waived Rights.  If (a) any part of the Proposed Issuance is cancelled or not consummated within three (3) months from the effective date of this Agreement and otherwise in accordance with the terms of this Agreement and Appendix A,  or (b) if the Company breaches any agreement contained herein including clause 4 hereof, or (c) if any of KGE Group, First Jet, Mr. Ken Luo or Mr. Jun Tang breaches the terms of clause 5 hereof, then all rights previously waived or to be waived hereunder (including under clause 1), shall not be waived and shall be reinstated, and any previous waivers shall be null and void.

7.           Continued Effect of Trust Deeds and 2008 Warrant Instrument.  All terms and conditions of the Trust Deeds and the 2008 Warrant Instrument, and related documents, not expressly amended or waived by this Agreement remain unchanged and in full force and effect, and the parties reserve all existing rights thereunder.  To the extent there is any conflict between the terms of the Bonds or those of the 2008 Warrants and the express terms hereof, the terms of this Agreement shall take precedence.

8.           No Negative Impact on the Company’s Obligations. The Company represents and warrants to the Creditors that the acquisition of the equity interest in ConnGame and the Proposed Issuance will not have a negative effect on the Company’s or any of its Subsidiaries’ liabilities and obligations owed to the Creditors.

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9.           Agreement to Subsequent Negotiations.  Upon and contingent upon Company’s timely payment of all of the Agreed Payments in accordance with Appendix B and the successful completion of the Proposed Issuance as described in Appendix A, each of the Bondholders agrees to commence negotiations in good faith with the Company to waive (i) its right to declare a default as a result of a any defaults under the Trust Deeds existing at the time of such negotiations, including but not limited to Condition 10A (Undertakings Not to Take or Permit Certain Changes) and Condition 10B (Financial Covenants) of the Terms and Conditions of the 2008 Trust Deed, and (ii) its Put Option Rights under the Trust Deeds.  Solely for purposes of this clause 9, “Put Option Rights” refers to each of the Bondholders’ rights under the 2007 Trust Deed to require the Company to redeem the 2007 Bonds at 126.51% of the principal amount, plus all accrued but unpaid interest, at any time after April 12, 2010, and each of the Bondholders’ rights under the 2008 Trust Deed to require the Company to redeem the 2008 Bonds at 116.61% of the principal amount of the Bonds redeemed, plus all accrued but unpaid interest, on any Interest Payment Date on or after April 15, 2010.

10.           Ownership of the Bonds and 2008 Warrants.  As of the date of this Agreement, RBS N.V. hereby represents and warrants that it owns 100% of the 2007 Bonds, 37.5% of the 2008 Bonds and 37.5% of the 2008 Warrants.  As of the date of this Agreement, CITIC represents and warrants that it owns 62.5% of the 2008 Bonds and 62.5% of the 2008 Warrants.  As of the date of this Agreement, each of RBS N.V. and CITIC represents and warrants that it is the sole and lawful owner of all rights, title and interest in and to all ownership interests indicated in the immediately preceding sentence, and that there has been no assignment or other transfer of any such interests.

11.           Accuracy of the Appendices.  The Company (x) represents and warrants to each Creditor that, as of the date of this Agreement, Appendix A and Appendix B are accurate and complete descriptions of the Proposed Issuance and the required approvals therefor and (y) covenants and agrees to use its best efforts to consummate the Proposed Issuance and make the Agreed Payments in accordance with such terms.  The Company acknowledges that the Creditors are executing this Agreement in reliance on these representations and warranties, covenants and agreements.

12.           Compliance with Laws and Regulations.  The Company shall comply with all relevant Laws and Regulations applicable to it, including satisfying all filings, notification and other requirements of Nasdaq, the United States Securities and Exchange Commission and U.S. Securities Laws.

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13.           Duly Authorized.  The execution, delivery and performance of this Agreement have been duly authorized by all required corporate action by each of the parties hereto.

14.           Notice to Trustee.  The execution of this Agreement, and instructions related to the actions contemplated hereunder, shall be provided to the Trustee in accordance with the terms of the Bonds and the 2008 Warrants.

15.           Counterparts.  This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same Agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other party, it being understood that all parties need not sign the same counterpart.

16.           Successors and Assigns.  It is expressly understood and agreed by the parties that this Agreement and all of its terms shall be binding upon the parties’ respective representatives, executors, administrators, successors and assigns.

[SIGNATURE PAGES TO FOLLOW]

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

CHINA ARCHITECTURAL ENGINEERING, INC.
By:	/s/ Luo Ken Yi
Name:	Luo Ken Yi
Title:	Chief Executive Officer

The Royal Bank of Scotland N.V., LONDON BRANCH
By:	/s/ Lay Tueng Tan
Name:	Lay Tueng Tan
Title:	Director, Global Restructuring Group Asia

CITIC CAPITAL CHINA MEZZANINE FUND LIMITED (formerly known as CITIC Allco Investments Limited.)
By:	/s/ Miu Cheung
Name:	Miu Cheung
Title:	Authorized Signatory

THE ROYAL BANK OF SCOTLAND (CHINA) CO. LTD. SHENZHEN BRANCH
By:	/s/ Jeff Zhu
Name:	Jeff Zhu
Title:	Deputy Branch Manager

THE ROYAL BANK OF SCOTLAND (CHINA) CO. LTD. SHENZHEN BRANCH
By:	/s/ Jeff Zhu
Name:	Jeff Zhu
Title:	Deputy Branch Manager

[RBS BANK STAMP]

By:	/s/ Linda Gong
Name:	Linda Gong
Title:	GTS OPS MANAGER

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[AMENDMENT AND WAIVER AGREEMENT – CONTINUED]

MR. JUN TANG

/s/ Jun Tang

MR. KEN LUO

/s/ Luo Ken Yi

FIRST JET INVESTMENTS LIMITED

/s/  Jun Tang

By:

Name:  Jun Tang

Title:    Chairman

KGE GROUP LIMITED

/s/  Luo Ken Yi

By:

Name:  Luo Ken Yi

Title:    Chairman

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APPENDIX A

PROPOSED ISSUANCE

The Company intends to issue up to 25,000,000 shares of newly issued common stock of the Company to acquire a 60% equity interest in ConnGame from First Jet.  The Company expects that the consideration per share at which the 25,000,000 shares will be issued will be less than the current conversion price of the Bonds, as determined under the terms and conditions of the Trust Deeds.

Nasdaq Marketplace Rules require that the Company complete and submit an additional listing application to the Nasdaq Stock Market and receive approval from NASDAQ before the Company may issue any new shares in the Proposed Issuance.  In addition, Nasdaq Marketplace Rule 5635 requires that, among other things, the Company obtain shareholder approval of the issuances of securities in connection with the acquisition of the stock or assets of another company where the number of shares of common stock to be issued is or will be equal to or in excess of 20% of the number of shares of common stock outstanding before the issuance of the stock or securities, in addition to other restrictions if certain tests are met.  Because the 25,000,000 shares of common stock the Company intends to issue exceeds the 20% threshold as set forth in the Nasdaq Marketplace Rules, and may also trigger other tests, the Company must obtain shareholder approval, which is subject to compliance with Section 14 of the Securities Exchange Act of 1934, as amended.  The Company has obtained shareholder approval for the Proposed Issuance and has filed a Preliminary Schedule 14C with the Securities and Exchange Commission (“SEC”).  The Company has received and responded to comment letters from the SEC and the Company intends to file and mail to shareholders a Definitive Schedule 14C upon the SEC’s approval of the Preliminary Schedule 14C.

Upon the issuance of the 25,000,000 shares of newly issued common stock in the Proposed Issuance, KGE Group Limited will own approximately 31.2% of the outstanding shares of the Company’s common stock, based on the estimated 80,156,874 shares of common stock that will be issued and outstanding  immediately following the Proposed Issuance.

A-1

APPENDIX B

PAYMENT SCHEDULE FOR AMOUNTS DUE TO THE CREDITORS

The Company agrees to make the following payments to the Creditors within the following time periods (collectively, the “Agreed Payments”):

1.           Payment to the Bondholders

           The Company agrees to pay to the Bondholders all outstanding interests in arrears on the Bonds, plus all other applicable interest up until the payment date, (i) within thirty (30) days after the closing of the Proposed Issuance or (ii)30 September 2010, whichever is earlier.

2.           Payments to the Overdraft Lender

The Company agreed in the February 2010 Waiver to repay in total the principal amount due and all accrued interest owed by the Company to the Overdraft Lender (the “Total Amount Owed”) in three separate installments, and the Company made partial payments on the first and second installments.  The Company agrees to pay in full, all unsettled amounts which include all outstanding principal amount of RMB $ 16,094,080.04plus all other applicable interest up until the payment date, (i) within thirty (30) days after the closing of the Proposed Issuance or (ii) 30 September 2010, whichever is earlier.

B-1

EX-99.1

China Architectural Engineering Receives Extended Waiver from Bondholders to

Acquire Majority Stake in ConnGame

ZHUHAI, China & NEW YORK, July 19, 2010 – China Architectural Engineering, Inc. (“CAE” or the “Company”) (NASDAQ: CAEI), a provider of design, engineering, fabrication and installation services of high-end building envelope systems, today announced that it has received an extension of the waiver agreement from its bondholders for the Company’s proposed acquisition of a majority stake in Shanghai ConnGame Network Co. Ltd. (“ConnGame”).

Under the extended waiver agreement, the Company is able to move forward with its proposed acquisition of a 60% equity interest of ConnGame for the issuance of the 25 million CAEI shares, subject to compliance with the terms and conditions of the waiver.  In the waiver, the Company agreed that it would pay to The Royal Bank of Scotland N.V., London Branch and CITIC Capital China Mezzanine Fund Limited all outstanding interest in arrears on the bonds, plus all other applicable interest up until the payment date, within 30 days after the closing of the ConnGame acquisition and issuance of the shares, but no later than September 30, 2010.  The Company has also agreed to pay all unsettled amounts of an overdraft facility, which include all outstanding principal and interest amounts.

The Company also announced today that it has filed its definitive information statement with the Securities and Exchange Commission and intends to mail out the information statement to its shareholders in this week. CAE intends to close the ConnGame acquisition after 20 calendar days of the mailing in accordance with federal proxy rules.

The proposed acquisition of ConnGame is subject to a number of closing conditions, including but not limited to the bondholders’ continued waiver of their rights to a reduction in the conversion price of the Company’s outstanding convertible bonds and exercise price of the related warrants as a result of the proposed acquisition and execution of a definitive acquisition agreement for the proposed acquisition.

Mr. Ken Yi Luo, the Company’s Chief Executive Officer and Chairman, commented, “We are pleased to have received an extended waiver from our bondholders, providing CAE time to complete the final documentation of our ConnGame acquisition. We appreciate the support of our bondholders and look forward to the completion of the ConnGame acquisition in the near future. We believe that the dedicated efforts of our management team will drive the company’s growth and reward our shareholders in the long run.”

About China Architectural Engineering

China Architectural Engineering, Inc. (NASDAQ:CAEI) is a provider of design, engineering, fabrication and installation services of high-end curtain wall systems, roofing systems, steel construction systems, and eco-energy systems.  Founded in 1992, CAEI has maintained its market leadership by providing timely, high-quality, reliable, fully integrated, and cost-effective solutions.  Collaborating with world-renowned architects and building engineers, the Company has successfully completed over one hundred large, complex and unique projects worldwide, including numerous award-winning landmarks across Asia’s major cities.

For further information on China Architectural Engineering, Inc., please visit www.caebuilding.com

About Shanghai ConnGame

Shanghai ConnGame, founded and led by seasoned experts with extensive previous success in China’s online game industry, develops and operates MMORPGs in China.  Leveraging its innovative game engines, scalable development platforms, and accomplished production teams, ConnGame focuses on self-developed MMORPGs game titles that are based on China’s iconic characters and nostalgic epochs.

Forward-Looking Statements

In addition to historical information, the statements set forth above may include forward-looking statements that may involve risk and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Actual results could differ materially from the expectations contained in forward-looking statements as a result of risks and uncertainties, including, but not limited to, the negotiation and execution of a definitive acquisition agreement for the proposed acquisition; closing conditions including but not limited to regulatory approvals; required Company payments and other obligations under the waiver agreement; difficulties related to integration and management of the combined operations; reduction or reversal of the Company's recorded revenue or profits due to "percentage of completion" method of accounting and expenses; the Company’s ability to obtain a modification for the Waiver agreement with the bondholders applicable to the proposed acquisition of ConnGame; increasing provisions for bad debt related to the Company’s accounts receivable; fluctuation and unpredictability of costs related to our products and services; the Company’s plans to enter into real estate development projects such as the Nine Dragons Project; adverse capital and credit market conditions;  fluctuation and unpredictability of costs related to the Company’s products and services; expenses and costs associated with its convertible bonds, regulatory approval requirements and competitive conditions. These and other factors that may   result in differences are discussed in greater detail in the Company’s reports and other filings with the Securities and Exchange Commission.

Investor Contact:

ICR:

Michael Tieu

Tel:   +86-10-6599-7960

Email: michael.tieu@icrinc.com

Bill Zima

Tel:   +1-203-682-8200

Email: bill.zima@icrinc.com