8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 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):

April 20, 2009

CHINA RECYCLING ENERGY CORPORATION

(Exact name of registrant as specified in its charter)

Nevada	000-12536	90-0093373
(State or other jurisdiction of	(Commission File Number)	(IRS Employer Identification
incorporation)		No.)

Suite 909, Tower B

Chang An International Building

No. 88 Nan Guan Zheng Jie

Xi An City, Shan Xi Province

China 710068

 (Address of principal executive offices, including zip code)

(86-29) 8769-1097

(Registrant’s telephone number, including area code)

Not Applicable

(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 (see General Instruction A.2. below):

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

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

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

¨   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 April 20, 2009, China Recycling Energy Corporation (the “Company”) entered into a Stock Purchase  Agreement (“Purchase Agreement”) and Registration Rights Agreement (“Registration Agreement”), each dated as of April 15, 2009, with Great Essential Investment, Ltd., a company registered in the Virgin Islands (the “Investor”).

Under the terms of the Purchase Agreement, the Company issued and the Investor purchased a total of 2,352,941 shares of common stock, $0.001 par value, of the Company (the “Shares”), for an aggregate purchase price of $2,000,000.  Under the Purchase Agreement, the Investor agreed, for a period of one year, not to sell or otherwise dispose of the Shares without the consent of the Company.

Under the terms of the Registration Agreement, the Company granted certain registration rights to the Investor covering the Shares, including piggyback registration rights in connection with a primary offering for cash for the account of the Company or a secondary offering.

The Company intends to use the net proceeds from this transaction to cover capital expenditures for its operations in China and other working capital needs.

This Current Report of Form 8-K does not constitute an offer to sell or the solicitation of an offer to buy any securities.

The foregoing is qualified in its entirety by reference to the Purchase Agreement and Registration Agreement filed herewith as Exhibits 10.1 and 10.2, respectively, and incorporated hereto by reference.

Item 3.02             Unregistered Sales of Equity Securities.

See Item 1.01 above, which is incorporated herein by reference.

The issuance of securities to the Investor in the transaction is made in reliance on the exemptions from registration provided by (i) Section 4(2) of the Securities Act as a transaction by an issuer not involving any public offering and (ii) Regulation S under the Securities Act.

Item 9.01             Financial Statements and Exhibits

(d) Exhibits

Exhibit No.	Description
10.1	Stock Purchase Agreement, dated as of April 15, 2009.
10.2	Registration Rights Agreement, dated as of April 15, 2009.

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.

	China Recycling Energy Corporation
Date: April 22, 2009	/s/ Xinyu Peng
	Xinyu Peng, Chief Financial Officer

Exhibit Index

Exhibit No.	Description
10.1	Stock Purchase Agreement, dated as of April 15, 2009.
10.2	Registration Rights Agreement, dated as of April 15, 2009.

EX-10.1

Exhibit 10.1

EXECUTION VERSION

STOCK PURCHASE AGREEMENT

by and among

China Recycling Energy Corporation

Sifang Holdings Co., Ltd.

Shanghai TCH Energy Technology

and

Great Essential Investment, Ltd.

April 15, 2009

TABLE OF CONTENTS

			Page
1.	Definitions		1
2.	Purchase and Sale		4
	2.1	Sale and Issuance of the Shares	4
	2.2	Closing	4
	2.3	Use of Proceeds	5
3.	Representations and Warranties of the Company Group		5
	3.1	Organization, Good Standing and Qualification	5
	3.2	Capitalization and Voting Rights	5
	3.3	Authorization	5
	3.4	Valid Issuance of Shares	6
	3.5	Governmental Consents	6
	3.6	Broker	6
	3.7	SEC Reports and OTC Requirements	6
	3.8	Litigation	6
	3.9	Compliance with Laws	7
	3.10	Environmental and Safety Laws	8
	3.11	Intellectual Property Rights	8
	3.12	Certain Securities Law Representations	9
4.	Representations, Warranties and Covenants of the Investor		9
	4.1	Status	9
	4.2	Authorization	9
	4.3	Purchase for Own Account	10
	4.4	Disclosure of Information	10
	4.5	Investment Experience	10
	4.6	Regulation S	10
	4.7	Lock Up Agreement	11
	4.8	Restricted Securities	11
	4.9	Legends	11
5.	Conditions of the Investor’s Obligations at the Closing		12
	5.1	Representations and Warranties	12

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TABLE OF CONTENTS

(continued)

			Page
	5.2	No Material Adverse Effect	12
	5.3	Performance	12
	5.4	Authorizations	12
	5.5	No Restraints	12
	5.6	Proceedings and Documents	12
	5.7	Transaction Documents	13
	5.8	Closing Certificates	13
6.	Conditions of the Company’s Obligations at the Closing		13
7.	Confidentiality		13
	7.1	Confidentiality	13
8.	Termination		14
	8.1	Termination by Investor	14
	8.2	Termination by the Company	15
	8.3	Effect of Termination	15
9.	Miscellaneous		16
	9.1	Survival	16
	9.2	Successors and Assigns	16
	9.3	Indemnity	16
	9.4	Governing Law	17
	9.5	Dispute Resolution	17
	9.6	Notices	18
	9.7	Fees and Expenses	18
	9.8	Severability	19
	9.9	Amendments and Waivers	19
	9.10	No Waiver	19
	9.11	Rights Cumulative	19
	9.12	No Presumption	19
	9.13	Headings and Subtitles; Interpretation	19
	9.14	Counterparts	19
	9.15	Entire Agreement	20

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TABLE OF CONTENTS

(continued)

Exhibits		Page
Exhibit A	Form of Registration Rights Agreement

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STOCK PURCHASE AGREEMENT

This STOCK PURCHASE AGREEMENT (this “Agreement”) is entered into as of April 15, 2009 (the “Effective Date”), by and among China Recycling Energy Corporation, a Nevada corporation (the “Company”), Sifang Holdings Co., Ltd., a company organized under the Laws of the Cayman Islands (“Sifang”), Shanghai TCH Energy Technology Co., Ltd., a wholly-foreign-owned enterprise organized under the Laws of the People’s Republic of China (“TCH” and together with the Company and Sifang, the “Company Group”), and Great Essential Investment, Ltd., a company registered in the Virgin Islands (the “Investor”).  Each of the Company, Sifang, TCH and the Investor is referred to herein individually as a “Party” and collectively as the “Parties.”

RECITALS

The Company proposes to issue, and the Investor proposes to purchase 2,352,941 shares (the “Shares”) of common stock, US$0.001 par value, of the Company (the “Common Stock”).

WITNESSETH

NOW, THEREFORE, in consideration of the foregoing, the mutual promises hereinafter set forth, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto hereby agree as follows:

1.           Definitions.  The following terms shall have the meanings ascribed to them below:

“Affiliate” means, with respect to a Person, any other Person that, directly or indirectly, Controls, is Controlled by or is under common Control with such Person.

“Agreement” has the meaning set forth in the Preamble of this Agreement.

“Arbitration Notice” has the meaning set forth in Section 9.5(b) hereof.

“Board” or “Board of Directors” means the board of directors of the Company.

“Business Day” means 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 New York, USA.

“Closing” has the meaning set forth in Section 2.2 hereof.

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

“Company” has the meaning set forth in the Preamble of this Agreement.

“Company Group” has the meaning set forth in the Preamble of this Agreement.

“Confidential Information” has the meaning set forth in Section 7.1 hereof.

“Contract” means, as to any Person, any provision of any security issued by such Person or any oral or written contract, agreement, undertaking, understanding, indenture, note, bond, loan, instrument, lease, mortgage, deed of trust, franchise, or license to which such Person is a party or by which such Person or any of its property is bound.

“Control” of a given Person means the power or authority, whether exercised or not, to direct the business, management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; provided, that such power or authority shall conclusively be presumed to exist upon possession of beneficial ownership or power to direct the vote of more than fifty percent (50%) of the votes entitled to be cast at a meeting of the members or shareholders of such Person or power to control the composition of a majority of the board of directors of such Person.  The terms “Controlled” and “Controlling” have meanings correlative to the foregoing.

“Disclosing Party” has the meaning set forth in Section 7.1(c) hereof.

“Dispute” has the meaning set forth in Section 9.5(a) hereof.

“Effective Date” has the meaning set forth in the Preamble of this Agreement.

“Environmental Laws” has the meaning set forth in Section 3.10 hereof.

“FCPA” means the United States Foreign Corrupt Practices Act of 1977, as amended.

“Governmental Authority” means any nation or government or any federation, province or state or any other political subdivision thereof; any entity, authority or body exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, including any government authority, agency, department, board, commission or instrumentality of the U.S., Cayman Islands, PRC or any other country, or any political subdivision thereof, any court, tribunal or arbitrator, and any self-regulatory organization.

“Indemnifiable Loss” means, with respect to any Person, any action, cost, damage, disbursement, expense, liability, loss, deficiency, diminution in value, obligation, penalty or settlement of any kind or nature.  Notwithstanding anything to the contrary provided in the preceding sentence, “Indemnifiable Loss” shall include, but shall not be limited to, (i) interest or other carrying costs, penalties, legal, accounting and other professional fees and expenses incurred in the investigation, collection, prosecution and defense of claims and amounts paid in settlement, that may be imposed on or otherwise incurred or suffered by such Person and (ii) any Taxes that may be payable by such Person by reason of the indemnification of any Indemnifiable Loss hereunder, other than Taxes that would have been payable notwithstanding the event giving rise to indemnification.

“Indemnified Party” has the meaning set forth in Section 9.3(b) hereof.

“Indemnifying Party” has the meaning set forth in Section 9.3(b) hereof.

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“Investor” has the meaning set forth in the Preamble of this Agreement.

“Intellectual Property” means all patents, patent applications, trademarks, service marks, trade names, copyrights, trade secrets, processes, compositions of matter, formulas, designs, inventions, proprietary rights, know-how and any other confidential or proprietary information owned or otherwise used by the Company Group.

“Knowledge” means, with respect to any Person, the actual knowledge of such Person and that knowledge which should have been acquired by such Person after making such due inquiry and exercising such due diligence as a prudent business person would have made or exercised in the management of his or her business affairs, including but not limited to due inquiry of all officers, directors, employees, consultants and professional advisers (including attorneys, accountants and auditors) of the Person and of its Affiliates who could reasonably be expected to have knowledge of the matters in question.

“Law” or “Laws” means any constitutional provision, statute or other law, rule, regulation, official policy or interpretation of any Governmental Authority and any injunction, judgment, order, ruling, assessment or writ issued by any Governmental Authority.

“Material Adverse Effect” means with respect to any Person, any event, occurrence, fact, condition, change or development that (i) has or is reasonably like to have a material adverse effect on the operations, results of operations, financial condition, prospects, assets or liabilities of such Person, or (ii) materially impairs or is reasonably likely to materially impair the ability to perform the material obligations of such Person hereunder or under any Transaction Document or any Material Contract of such Person, as applicable.  In the case of any member of the Company Group, any Material Adverse Effect with respect to such member of the Company Group shall be deemed to constitute a Material Adverse Effect with respect to all of the members of the Company Group.

“Party” has the meaning set forth in the Preamble of this Agreement.

“Person” means any individual, corporation, partnership, limited partnership, proprietorship, association, limited liability company, firm, trust, estate or other enterprise or entity.

“PRC” means the People’s Republic of China, but solely for the purposes of this Agreement and the other Transaction Documents, excluding the Hong Kong Special Administrative Region, the Macau Special Administrative Region and the islands of Taiwan.

“Purchase Price” has the meaning set forth in Section 2.1 hereof.

“Registration Rights Agreement” means the Registration Rights Agreement entered into by the Company and the Investor on the date hereof, in the form attached hereto as Exhibit A.

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“SAFE” means the State Administration of Foreign Exchange of the PRC.

“SEC” means the U.S. Securities and Exchange Commission.

“SEC Reports” has the meaning set forth in Section 3.7(a) hereof.

“Securities Act” means the U.S. Securities Act of 1933, as amended and interpreted from time to time.

“Subsidiary” means, with respect to any specified Person, any other Person Controlled by the specified Person, directly or indirectly, whether through contractual arrangements or through ownership of equity securities, voting power or registered capital.

“Tax” means any national, provincial or local income, sales and use, excise, franchise, real and personal property, gross receipt, capital stock, production, business and occupation, disability, employment, payroll, severance or withholding tax or any other type of tax, levy, assessment, custom duty or charge imposed by any Governmental Authority, any interest and penalties (civil or criminal) related thereto or to the nonpayment thereof, and any loss or Liabilities incurred in connection with the determination, settlement or litigation of any Liabilities arising therefrom.

“Tax Return” means any tax return, declaration, report, estimate, claim for refund, claim for extension, information return, or statement relating to any Tax, including any schedule or attachment thereto.

“Transaction Documents” means this Agreement and the Registration Rights Agreement, and each of the agreements and other documents otherwise required in connection with implementing the transactions contemplated by any of the foregoing.

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

“US $” means United States dollars, the lawful currency of the United States.

2.           Purchase and Sale.

2.1           Sale and Issuance of the Shares.  Subject to the terms and conditions of this Agreement at the Closing (as defined below), the Company  will issue and sell to the Investor, and the Investor will subscribe for and purchase, the Shares, for an aggregate purchase price of US $2,000,000 (the “Share Purchase Price”).

2.2           Closing.  The consummation of the sale and issuance of Shares pursuant to Section 2.1 (the “Closing”) shall take place remotely via the exchange of documents and signatures as soon as practicable after all closing conditions specified in Section 5 hereof have been waived or satisfied in accordance thereto, or at such time and place as the Company and the Investor shall mutually agree upon, orally or in writing.  At the Closing, the Company shall deliver to the Investor a certificate or certificates representing the Shares (or through its transfer agent as applicable), and the Investor shall pay the Purchase Price at the Closing, by check or wire transfer to a bank account designated in writing by the Company prior to the Closing.

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2.3           Use of Proceeds.  The proceeds from the Purchase Price shall be used by the Company for general corporate purposes and for its other working capital needs.

3.           Representations and Warranties of the Company Group.  Each member of the Company Group, jointly and severally, represents and warrants to the Investor that each of the statements contained in this Section 3 is true, complete and not misleading as of the date of this Agreement, and each of such statements shall be true, complete and not misleading on and as of the date of the Closing, with the same effect as if made on and as of the date of the Closing.

3.1           Organization, Good Standing and Qualification.  Each member of the Company Group is duly organized, validly existing and in good standing under the Laws of the jurisdiction of its incorporation.  Each member of the Company Group has all requisite legal and corporate power and authority to carry on its business as now conducted, and is duly qualified to transact business in each jurisdiction in which it conducts and proposes to conduct business.

3.2           Capitalization and Voting Rights.

(a)           As of the date of this Agreement, the authorized capital of the Company consists of 100,000,000 shares of Common Stock, of which (i) 36,425,094 shares of Common Stock are currently issued and outstanding, (ii) 3,000,000 shares of Common Stock are subject to options, and (iii) there are no other capital stock issued or authorized.

(b)           All share capital of each member of the Company Group has been duly and validly issued (or subscribed for), fully paid and non-assessable and are free of Liens and any restrictions on transfer (except for any restrictions on transfer under applicable securities Law or as expressly contemplated under the Transaction Documents) and have been issued in compliance with the requirements of all applicable securities Laws and regulations, including, to the extent applicable, the Securities Act.

(c)           No member of the Company Group has granted or agreed to grant any Person any registration rights (including piggyback registration rights) with respect to any of their securities, except to Carlyle Asia Growth Partners III, L.P. and its affiliates.

3.3           Authorization.  Each member of the Company Group has all requisite legal and corporate power, and has taken all corporate action on the part of such Person, its officers, directors and shareholders as may be necessary for the authorization, execution and delivery of this Agreement and each of the Transaction Documents to which it is a party and the performance of all obligations of such Person hereunder and thereunder.  The authorization, issuance of the Shares being sold hereunder, has been taken or will be taken prior to the Closing, and this Agreement, each of the Transaction Documents to which each member of the Company Group is a party, when executed and delivered by such Person, will constitute the valid and legally binding obligation of such Person, enforceable against such Person in accordance with their respective terms.

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3.4           Valid Issuance of Shares.

(a)           The Shares that are being purchased by or issued to the Investors hereunder, when issued, delivered and paid for in accordance with the terms of this Agreement for the consideration expressed herein, will be duly and validly issued, fully paid and non-assessable, free from any Liens and will be free of restrictions on transfer except as provided in this Agreement (except for any restrictions on transfer under applicable securities Laws).

(b)           Except as expressly contemplated by the Transaction Documents, the Shares are not subject to any preemptive rights, rights of first refusal or other similar rights.

3.5           Governmental Consents.  No consent, approval, order or authorization of, or registration, qualification, designation, declaration or filing with, any Governmental Authority on the part of the Company Group is required in connection with the valid execution, delivery and consummation of the transactions contemplated by this Agreement or the Transaction Documents or the offer, sale, issuance or reservation for issuance of the Shares.

3.6           Broker.  The Company does not have any Contract with any broker, finder or similar agent with respect to the transactions contemplated by this Agreement or by any of the Transaction Documents and the Company has incurred no liability for any brokerage fees, agents’ fees, commissions or finders’ fees in connection with any of the Transactions Documents or the consummation of the transactions contemplated therein.

3.7           SEC Reports and OTC Requirements.

(a)           The Company has filed all reports, schedules, forms, statements and other documents required to be filed by it under the Securities Act and the Exchange Act (the foregoing materials, including the exhibits thereto and documents incorporated by reference therein, being collectively referred to herein as the “SEC Reports”) on a timely basis or has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension.

(b)           The Company has not, in the 12 months preceding the date hereof, received notice from the OTC on which the Common Stock has been traded to the effect that the Company is not in compliance with the OTC requirements.  The Company is, and upon consummation of the transactions contemplated hereby expects to be, in compliance with all of the OTC listing requirements.

3.8           Litigation.  There is no action, suit, investigation or other court, regulatory or other proceeding pending or to the Knowledge of the Company Group, currently threatened against any member of the Company Group or their respective assets, businesses or proposed business activities, nor is there any basis for any of the foregoing.  There is no judgment, decree or order of any court or Governmental Authority in effect and binding on any member of the Company Group or their respective assets or properties.  No Government Authority has at any time materially challenged or questioned in writing the legal right of any member of the Company Group to conduct its business as presently being conducted or proposed to be conducted.  No member of the Company Group has received any opinion or memorandum or advice from legal counsel to the effect that it is exposed, from a legal standpoint, to any liability or disadvantage which may be material to its business.

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3.9           Compliance with Laws.

(a)           Each member of the Company Group is in compliance with all material Laws or regulations that are applicable to it or to the conduct or operation of its business or the ownership or use of any of its assets or properties.

(b)           No event has occurred and no circumstance exists that (with or without notice or lapse of time) (i) may constitute or result in a violation by any member of the Company Group of, or a failure on the part of such member to comply with, any material Law or regulation, or (ii) may give rise to any obligation on the part of a member of the Company Group to undertake, or to bear all or any portion of the cost of, any remedial action of any material nature.

(c)           No member of the Company Group has received any notice from any Governmental Authority regarding (i) any actual, alleged, possible or potential material violation of, or material failure to comply with, any material Law, or (ii) any actual, alleged, possible or potential material obligation on the part of such member of the Company Group to undertake, or to bear all or any portion of the cost of, any remedial action of any material nature.

(d)           Neither any member of the Company Group nor any of its respective officers, directors or representatives has (i) made, directly or indirectly, any payment, loan or gift of any money, or anything of value to, or for the use of, any government official (including an official of a government-owned or controlled entity), any political party or official, or any candidate for political office, or any other person where it knew or had reason to know that such payment, loan or gift would be given directly or indirectly to any government official or political party or official candidate, and it has not taken any action or made any payment (including promises to take action or make payments) for the purpose of inducing any of the foregoing persons to do any act to make any decisions in his or its official capacity (including a decision to fail to perform his or its official function) or use his or its influence with a government or instrumentality in order to affect any act or decision of such government or instrumentality in order to assist any member of the Company Group or Investor or their respective Affiliates in obtaining or retaining any business or to obtain an unfair competitive advantage or which may cause any member of the Company Group or Investor or their respective Affiliates to be in violation of, the FCPA or similar laws and regulations, or (ii) established or maintained any fund or assets in which any member of the Company Group has proprietary rights that have not been recorded in its books and records of such member of the Company Group.

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3.10           Environmental and Safety Laws.  Each member of the Company Group (a) is in compliance with any and all currently applicable foreign, federal, state, national, provincial, and local laws and regulations relating to the protection of the environment or hazardous or toxic substances or wastes, pollutants or contaminants (“Environmental Laws”), (b) has received and is in compliance with all permits, licenses or other approvals required of it under applicable Environmental Laws to conduct its business, (c) has not received actual notice of any actual or potential liability for the investigation or remediation of any disposal or release of hazardous or toxic substances or wastes, pollutants or contaminants, (d) no member of the Company Group has Knowledge of any facts which would give rise to any claim, public or private, against it of violation of Environmental Laws arising out of the operations of the Company and its Subsidiaries; and (e) no member of the Company Group has stored any hazardous materials on real properties now or formerly owned, leased or operated by any of them, and has not disposed of any hazardous materials, in a manner contrary to any Environmental Laws.

3.11           Intellectual Property Rights.

(a)           The members of the Company Group own or otherwise has the sufficient right or license to use all Intellectual Property necessary for its business as currently conducted without any violation or infringement of the rights of others, free and clear of all Liens other than Permitted Liens.  There is no pending or, to the Knowledge of the Company Group, threatened, claim or litigation against any member of the Company Group, contesting the right to use its Intellectual Property, asserting the misuse thereof, or asserting the infringement or other violation of any Intellectual Property of any third party.  All material inventions and material know-how conceived by employees of the Company Group, including without limitation the Principal Shareholders, and related to the businesses of the Company Group are “works made for hire”, and all right, title, and interest therein, including any applications therefore, have been transferred and assigned to, and are currently owned by, the Company Group.

(b)           No proceedings or claims in which any member of the Company Group alleges that any person is infringing upon, or otherwise violating, any member of the Company Group’s Intellectual Property rights are pending, and none has been served, instituted or asserted by any member of the Company Group.

(c)           None of the Key Employees of any member of the Company Group is obligated under any Contract, or subject to any judgment, decree or order of any court or administrative agency, that would interfere with the use of his or her best efforts to promote the interests of the Company Group or that would conflict with the business of the Company Group as presently conducted.  It will not be necessary to utilize in the course of the Company Group’s business operations any inventions of any of the respective employees of the Company Group made prior to their employment by the Company Group, except for inventions that have been validly and properly assigned or licensed to the Company Group as of the date hereof.

(d)           The members of the Company Group have each taken all security measures that in the judgment of the Company Group are commercially prudent in order to protect the secrecy, confidentiality and value of their respective Intellectual Property.

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3.12           Certain Securities Law Representations.

(a)           Assuming the accuracy of the Investor’s representations and warranties set forth in Section 4, the offer, sale and issuance of the Shares as contemplated by the Transaction Documents, are exempt from the qualification, registration and prospectus delivery requirements of the Securities Act, the Trust Indenture Act of 1939, as amended and any applicable securities Laws.

(b)           None of the Company, its Subsidiaries, their respective Affiliates, or any Person acting on its or their behalf has, directly or indirectly, made offers or sales of any security, or solicited offers to buy, sell or offer to sell or otherwise negotiate in respect of, in the United States or to any United States citizen or resident, any security which is or would be integrated with the sale of the Shares in a manner or under circumstances that would require the registration of the Shares under the Securities Act.

(c)           None of the Company, its Subsidiaries, their respective Affiliates, or any Person acting on its or their behalf (other than the Investor, its Affiliates or persons acting on their behalf, as to whom the Company makes no representation) has engaged in any directed selling efforts (within the meaning of Regulation S) with respect to the Shares; and each of the Company, its Subsidiaries, their respective Affiliates and each person acting on its or their behalf has complied with the offering restrictions requirement of Regulation S.

(d)           None of the Company or its Subsidiaries has and no one acting on its behalf has, (a) taken, directly or indirectly, any action designed to cause or to result in, or that has constituted or which might reasonably be expected to constitute, the stabilization or manipulation of the price of the Common Stock to facilitate the sale or resale of any of the Shares, (b) sold, bid for, purchased, or paid anyone any compensation for soliciting purchases of, the Shares, or (c) paid or agreed to pay to any person any compensation for soliciting another to purchase any other securities of the Company or its Subsidiaries.

4.           Representations, Warranties and Covenants of the Investor.  The Investor hereby represents, warrants and covenants to the Company Group, that:

4.1           Status.  The Investor is an entity duly organized, validly existing and in good standing under the Laws of the jurisdiction of its incorporation or formation

4.2           Authorization.  The Investor has full power and authority to enter into this Agreement and each of the Transaction Documents to which it is a party, and this Agreement and each of the Transaction Documents to which it is a party, when executed and delivered by the Investor, will constitute valid and legally binding obligations of the Investor, enforceable against it in accordance with their respective terms except (a) as limited by applicable bankruptcy, insolvency, reorganization, moratorium and other Laws of general application affecting enforcement of creditors’ rights generally, (b) as limited by Laws relating to the availability of specific performance, injunctive relief or other equitable remedies, and (c) to the extent the indemnification provisions contained in the Transaction Documents may be limited by applicable securities Laws.

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4.3           Purchase for Own Account.  The Shares to be received by the Investor, if any, will be acquired for investment purposes for the Investor’s own account or the account of one or more of the Investor’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.

4.4           Disclosure of Information.  The Investor believes it has received all the information it considers necessary or appropriate for deciding whether to purchase the Shares.  The Investor and its 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 offering of the Shares and relating to the business, finances and operations of the members of the Company Group.  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 Company Group in this Agreement or the right of the Investor to rely thereon.

4.5           Investment Experience.  The Investor is an investor in securities of companies in the development stage and acknowledges that it is able to fend for itself, can bear the economic risk of its investment, and has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment in the Shares.  If other than an individual, the Investor also represents it has not been organized for the purpose of acquiring the Shares.

4.6           Regulation S.

(a)           The Investor is not a “U.S. Person” (as defined in Rule 902 of Regulation S under the Securities Act) and 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 Shares in any country or jurisdiction where action for that purpose is required.  The Investor is not acquiring the Shares for the account or benefit of any U.S. persons except in accordance with exemption from registration requirements of the Securities Act or in a transaction not subject thereto.

(b)           The Investor (i) agrees that it will not offer, sell or otherwise transfer any of the Shares nor, unless in compliance with the Securities Act, engage in hedging transactions involving such Shares on or prior to the date which is one year after the later of the date of the commencement of the offering and the date of original issuance and such later date, if any, as may be required by applicable law, 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 Shares 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 any other available exemption from the registration requirements of the Securities Act, and (ii) agrees that it will give to each Person to whom Shares are transferred a notice substantially to the effect of this paragraph.

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(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 Investor or any of its representatives in connection with the offer and sale of any of the Shares.

4.7           Lock Up Agreement.  The Investor covenants and agrees that, for a period beginning at Closing and ending on the date that is one year after Closing, the Investor will not, without the prior written consent of the Company (which consent may be withheld in the Company’s sole discretion) (i) sell, offer to sell, contract or agree to sell, hypothecate, pledge, grant any option to purchase or otherwise dispose of or agree to dispose of, directly or indirectly, or request or file (or participate in the filing of) a registration statement with the SEC in respect of the Shares, (ii) establish or increase a put equivalent position or liquidate or decrease a call equivalent position within the meaning of the rules and regulations of the SEC with respect to, any Common Stock or any securities convertible into or exercisable or exchangeable for Common Stock, or warrants or other rights to purchase Common Stock or any such securities, or (iii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of Common Stock or any securities convertible into or exercisable or exchangeable for Common Stock, or warrants or other rights to purchase Common Stock or any such securities, whether any such transaction is to be settled by delivery of Common Stock or such other securities, in cash or otherwise or (iv) publicly announce an intention to effect any transaction specified in clause (i), (ii) or (iii) above.

4.8           Restricted Securities.  The Investor understands that the Shares are characterized as “restricted securities” under U.S. federal securities Laws inasmuch as they are being acquired from the Company in a transaction not involving a public offering and that under such Laws and applicable regulations such securities may be resold without registration under the Securities Act only in certain limited circumstances.  The Investor understands that the Shares 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.

4.9           Legends.  The Investor understands that the certificates evidencing the Shares 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 (1) 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 RULE 144 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.”

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5.           Conditions of the Investor’s Obligations at the Closing.  The obligations of the Investor to consummate the Closing under Section 2.1 of this Agreement, unless otherwise waived in writing by the Investor, are subject to the fulfillment on or before the Closing of each of the following conditions:

5.1           Representations and Warranties.  Each of the representations and warranties of the Company Group contained in Section 3 shall be true, complete and not misleading when made, and shall be true, complete and not misleading in all material respects on and as of the Closing with the same effect as though such representations and warranties had been made on and as of the date of the Closing, except in either case for those representations and warranties (a) that already contain any materiality qualification, which representations and warranties, to the extent already so qualified, shall instead be true, complete and not misleading in all respects as so qualified as of such respective dates and (b) that address matters only as of a particular date, which representations will have been true, complete and not misleading in all material respects (subject to clause (a) of this Section 5.1) as of such particular date.

5.2           No Material Adverse Effect.  Since the date of this Agreement there shall not have been or occurred any Material Adverse Effect in respect of any member of the Company Group.

5.3           Performance.  The Company Group shall have performed and complied with all agreements, obligations and conditions contained in the Transaction Documents that are required to be performed or complied with by such Parties, on or before the Closing.

5.4           Authorizations.  The Company Group shall have obtained all authorizations, approvals, waivers, permits or filings of any Person or any Governmental Authority necessary for the consummation of all of the transactions contemplated by this Agreement and each of the other Transaction Documents, including without limitation any filings, authorizations, approvals, waivers or permits that are required in connection with the lawful issuance of the Shares pursuant to this Agreement and all such filings, authorizations, approvals, waivers and permits shall be effective as of the Closing.

5.5           No Restraints.  No court of competent jurisdiction or other Governmental Authority shall have issued any judgment to, and no Person shall have instituted any action seeking to, enjoin, restrain or otherwise prohibit the consummation of the Transactions.

5.6           Proceedings and Documents.  All corporate and other proceedings in connection with the transactions to be contemplated at the Closing and all documents incident thereto, including without limitation written approval from all of the then current holders of equity interests of the Company and the other members of the Company Group, as applicable, with respect to this Agreement and the other Transaction Documents and the transactions contemplated hereby and thereby, shall have been completed in form and substance satisfactory to the Investor, and the Investor shall have received all such counterpart original or other copies of such documents as it may reasonably request.

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5.7           Transaction Documents.  The parties shall have executed and delivered the Transaction Documents.

5.8           Closing Certificates.  The chief executive officer or president of each member of the Company Group shall have executed and delivered to the Investor at the Closing a certificate dated as of the Closing stating that the conditions specified in this Section 5 have been fulfilled or satisfied (including, for the avoidance of doubt, a “bringdown” as of the Closing to the effect of Sections 5.1(a) and(b)), and (ii) attaching thereto (a) the Charter Documents of such member of the Company Group as then in effect, and (b) copies of all resolutions approved by the shareholders and boards of directors of such member of the Company Group related to the transactions contemplated hereby (as applicable).

6.           Conditions of the Company’s Obligations at the Closing.  The obligations of the Company to consummate the Closing under Section 2 of this Agreement, unless otherwise waived in writing by the Company, is subject to the conditions that (i) the representations and warranties of the Investor contained in Section 4 shall be true, complete and not misleading in all material respects when made, and shall be true, complete and not misleading in all material respects on and as of the Closing with the same effect as though such representations and warranties had been made on and as of the date of the Closing and (ii) the Investor shall have paid the Purchase Price as contemplated in Section 2.2 hereof.  For the avoidance doubt, the obligation of the Company to consummate the transactions under the Closing shall not be relieved or modified by any waiver by the Investor of the applicable closing conditions set forth in Section 5.

7.           Confidentiality.

7.1           Confidentiality.

(a)           Disclosure.  The terms and conditions of this Agreement, any term sheet or memorandum of understanding entered into pursuant to the transactions contemplated hereby, all exhibits and schedules attached hereto and thereto, the transactions contemplated hereby and thereby, and all information furnished by any Party hereto and by representatives of such Parties to any other Party hereof or any of the representatives of such Parties in connection with the transactions, including any information relating to the business, markets, financial data of such Party or its Affiliates (collectively, the “Confidential Information”), shall be considered confidential information and shall not be disclosed by any Party hereto to any third party except in accordance with the provisions set forth below.

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(b)           Permitted Disclosures.  Notwithstanding the foregoing, the Company and the Investor may disclose (a) the Confidential Information to its current or bona fide prospective investors, Affiliates and their respective employees, bankers, lenders, accountants, legal counsels, business partners or representatives or advisors who need to know such information, in each case only where such persons or entities are informed of the confidential nature of the Confidential Information and are under appropriate nondisclosure obligations substantially similar to those set forth in this Section 7.1, (b) such Confidential Information as is required to be disclosed pursuant to routine examination requests from Governmental Authorities with authority to regulate such Party’s operations, in each case as such Party deems appropriate in its sole discretion, and the Confidential Information to any Person to which disclosure is approved in writing by the other Parties hereto.  Any Party hereto may also provide disclosure in order to comply with applicable Laws, as set forth in Section 7.1(c) below.

(c)           Legally Compelled Disclosure; SEC Disclosure.  Except as set forth in Section 7.1(b) above, in the event that any Party is requested or becomes legally compelled (including without limitation, pursuant to any applicable tax, securities, or other Laws and regulations of any jurisdiction) to disclose the existence of this Agreement, such party (the “Disclosing Party”) shall provide the other Parties hereto with prompt written notice of that fact and shall consult with the other Parties hereto regarding such disclosure.  At the request of any other Parties, the Disclosing Party shall, to the extent reasonably possible and with the cooperation and reasonable efforts of the other Parties, seek a protective order, confidential treatment or other appropriate remedy.  In any event, the Disclosing Party shall furnish only that portion of the information that is legally required and shall exercise reasonable efforts to obtain reliable assurance that confidential treatment will be accorded such information.  Notwithstanding the foregoing, the Parties agree and acknowledge that certain public disclosure or filings may be required by applicable securities Law with respect to the transactions contemplated by the Transaction Documents, and the Parties agree to consult with one another and agree upon the form and substance of such announcement or filing prior to making such announcement or filing.  No later than the later of (i) the day following the Closing and (ii) the Business Day following the clearance for the announcement of the Closing in the United States, the Company shall file a Form 8-K announcing the Closing of the transactions contemplated hereby and the material terms thereof, which must be reviewed and consented to by the Investor prior to the filing.

(d)           Other Exceptions.  Notwithstanding any other provision of this Section 7.1, the confidentiality obligations of the Parties shall not apply to: (i) information which a restricted party learns from a third party which the receiving party reasonably believes to have the right to make the disclosure, provided the restricted party complies with any restrictions imposed by the third party; (ii) information which is rightfully in the restricted party’s possession prior to the time of disclosure by the protected party and not acquired by the restricted party under a confidentiality obligation; or (iii) information which enters the public domain without breach of confidentiality by the restricted party.

8.           Termination.

8.1           Termination by Investor.  The Investor may terminate this Agreement at any time prior to any Closing by written notice to the Company if any of the following has occurred:

(a)           any Material Adverse Effect has occurred;

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(b)           if any court of competent jurisdiction or other Governmental Authority shall issue any judgment or take such other action enjoining, restraining or otherwise prohibiting the consummation of any of the transactions contemplated by this Agreement;

(c)           the failure of any member of the Company Group to satisfy the conditions contained in Sections 5 hereof (including, for the avoidance of doubt, the breach, inaccuracy or incompleteness of any representation or warranty such that the condition contained in Section 5.1 would not be satisfied) on or prior to, April 14, 2009;

(d)           any outbreak or escalation of hostilities or other national or international calamity or crisis, including acts of terrorism, or material adverse change or disruption in economic conditions in, or in the financial markets of, the United States, the European Union, the Peoples’ Republic of China or Hong Kong (it being understood that any such change or disruption shall be relative to such conditions and markets as in effect on the date hereof), if the effect of such outbreak, escalation, calamity, crisis, act or material adverse change in the economic conditions in, or in the financial markets of, the United States, the European Union, the Peoples’ Republic of China or Hong Kong could be reasonably expected to make it, in the Investor’s sole judgment, impracticable or inadvisable to proceed with the consummation of the transactions on the terms and in the manner contemplated in this Agreement;

(e)           suspension of trading in the Common Stock by the OTC Bulletin Board;

(f)           the enactment, publication, decree or other promulgation after the date hereof of any applicable Law that could be reasonably expected to have a Material Adverse Effect; or

(g)           the declaration of a banking moratorium by any federal or New York state Governmental Authority; or the taking of any action by any Governmental Authority after the date hereof in respect of its monetary or fiscal affairs that could reasonably be expected to have a material adverse effect on the financial markets in the United States, European Union, the Peoples’ Republic of China, Hong Kong or elsewhere.

8.2           Termination by the Company.  The Company may terminate this Agreement at any time prior to any Closing by written notice to the Investor based upon the Investor’s intentional breach of its representations, warranties, covenants and obligations under this Agreement.

8.3           Effect of Termination.  In the event that this Agreement is terminated pursuant to this Section 8, and if:

(a)           the termination occurs before the Closing, then this Agreement shall immediately terminate, become void and have no effect, without any liability or obligation on the part of any party to this Agreement;

Notwithstanding anything to the contrary in the foregoing, if this Agreement is terminated pursuant to Section 8.1 or 8.2 as a result of a material or intentional breach of any representation, warranty or covenant contained in this Agreement, nothing herein shall affect the non-breaching party’s right to damages and any other costs, expenses and losses on account of such other party’s breach, and any other remedies available in equity or at law.  Notwithstanding anything to the contrary in this Agreement, the provisions of Section 7.1 (Confidentiality), this Section 8.3 and Section 9 (Miscellaneous) shall survive any termination of this Agreement.

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9.           Miscellaneous.

9.1           Survival.  The representations and warranties set forth under Section 3 and any covenants and agreements of the Company Group contained in or made pursuant to this Agreement shall survive the Closing; provided, that notwithstanding any provision herein to the contrary, any claim for indemnity made pursuant to this Agreement by Investor shall be made within one year of the Closing.

9.2           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 the Investor may assign its rights and obligations to an Affiliate of the Investor 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.

9.3           Indemnity.

(a)           Each of the members of the Company Group hereby agrees to jointly and severally indemnify and hold harmless the Investor, and the Investor’s employees, Affiliates, agents and assigns, from and against any and all Indemnifiable Losses suffered by the Investor, or the Investor’s employees, Affiliates, agents and assigns, directly or indirectly, as a result of, or based upon or arising from any (i) 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 and (ii) compliance with SAFE by the Company or any of its shareholders.

(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 9.3.  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.

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(d)           This Section 9.3 shall not be deemed to preclude or otherwise limit in any exercise of any other rights or pursuit of other remedies for the breach of this Agreement or with respect to any misrepresentation.

9.4           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.

9.5           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 in accordance with the Rules of the International Chamber of Commerce by one (1) arbitrator selected in accordance with such Rules.

(d)           The arbitration proceedings shall be conducted in English.

(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 arbitrator 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 arbitral 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.

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(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.

9.6           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 9.6):

If to the Company, to:

Room 909, Tower B

Chang’an Metropolis Center

No. 88 Nanguanzheng Street

Xi’ an 710068, China

Attention:  Mr. Guohua Ku

Tel: +86 (29) 8765-1096

Fax: +86 (29) 8765-1099

If to the Investor, to:

Great Essential Investment, Ltd

Akara Building, 24 De Castro Street

Wickhams Cay 1

Road Town Tortola

British Virgin Islands

Attention: Mr. Jinghe Dong

Tel:  86-29-8187-8609

Fax: 86-29-8187-8609

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.

9.7           Fees and Expenses.  Each Party shall pay all of its own costs and expenses incurred in connection with the negotiation, execution, delivery and performance of this Agreement and other Transaction Documents and the transactions contemplated hereby and thereby.  If any action at law or in equity is necessary to enforce or interpret the terms of this Agreement, the prevailing party shall be entitled to reasonable attorney’s fees and expenses in addition to any other relief to which such party may be entitled.

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9.8           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.

9.9           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 Investor.  Any amendment or waiver effected in accordance with this paragraph shall be binding upon each of the Parties hereto.

9.10           No Waiver.  Failure to insist upon strict compliance with any of the terms, covenants, or conditions hereof will not be deemed a waiver of such term, covenant, or condition, nor will any waiver or relinquishment of, or failure to insist upon strict compliance with, any right, power or remedy power hereunder at any one or more times be deemed a waiver or relinquishment of such right, power or remedy at any other time or times.

9.11           Rights Cumulative.  Each and all of the various rights, powers and remedies of a party hereto will be considered to be cumulative with and in addition to any other rights, powers and remedies which such Party may have at law or in equity in the event of the breach of any of the terms of this Agreement.  The exercise or partial exercise of any right, power or remedy will neither constitute the exclusive election thereof nor the waiver of any other right, power or remedy available to such Party.

9.12           No Presumption.  The Parties acknowledge that any applicable Law that would require interpretation of any claimed ambiguities in this Agreement against the Party that drafted it has no application and is expressly waived.  If any claim is made by a Party relating to any conflict, omission or ambiguity in the provisions of this Agreement, no presumption or burden of proof or persuasion will be implied because this Agreement was prepared by or at the request of any Party or its counsel.

9.13           Headings and Subtitles; Interpretation.  The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement.  Unless a provision hereof expressly provides otherwise: (i) the term “or” is not exclusive; (ii) words in the singular include the plural, and words in the plural include the singular; (iii) the terms “herein”, “hereof”, and other similar words refer to this Agreement as a whole and not to any particular section, subsection, paragraph, clause, or other subdivision; (iv) the term “including” will be deemed to be followed by “, but not limited to,”; (v) the masculine, feminine, and neuter genders will each be deemed to include the others; (vi) the terms “shall”, “will”, and “agrees” are mandatory, and the term “may” is permissive; (vii) the term “day” means “calendar day”, and (viii) all references to dollars or to “US$” are to currency of the United States of America (and shall be deemed to include reference to the equivalent amount in other currencies).

9.14           Counterparts.  This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.  Facsimile and e-mailed copies of signatures shall be deemed to be originals for purposes of the effectiveness of this Agreement.

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9.15           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 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]

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

COMPANY GROUP:	CHINA RECYCLING ENERGY CORPORATION
	By:	/s/ Guohua Ku
		Name: Guohua Ku
		Title: Chief Executive Officer
	SIFANG HOLDINGS CO., LTD.
	By:	/s/ Guohua Ku
		Name: Guohua Ku
		Title: Chief Executive Officer
	SHANGHAI TCH ENERGY TECHNOLOGY CO., LTD.
	By:	/s/ Xiaoshan He
		Name: Xiaoshan He
		Title: Director

Signature page continued on next page

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INVESTOR:	For and on behalf of
	GREAT ESSENTIAL INVESTMENT, LTD.
	By:	/s/ Jinghe Dong
		Name: Jinghe Dong
		Title: Executive Director

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EX-10.2

EXHIBIT 10.2

EXECUTION VERSION

REGISTRATION RIGHTS AGREEMENT

This REGISTRATION RIGHTS AGREEMENT, dated as of April 15, 2009 (the “Agreement”) by and between China Recycling Energy Corporation, a Nevada corporation (the “Company”), on the one hand, and Great Essential Investment, Ltd. (the “Investor”), on the other hand.

The Agreement is made pursuant to that Share Purchase Agreement dated as of April 15, 2009 (the “Purchase Agreement”) by and among the Company and its subsidiaries and the Investor, which provides for, among other things, the issuance and sale 2,352,941 shares (the “Shares”) of common stock, US$0.001 par value, of the Company (the “Shares”).

As an inducement to the Investor to enter into the Purchase Agreement, and in satisfaction of one of the conditions to the obligations of the Investor thereunder, the Company agrees with the Investor as follows:

Section 1. Definitions.

As used in the Agreement, the following terms shall have the following meanings:

“Affiliate” means, with respect to any Person, any other Person that (a) directly, or indirectly through one or more intermediaries, controls, is controlled by or is under common control with, such specified Person, (b) is an officer, director, general partner, trustee or manager of such Person, or of a Person described in clause (a) of this sentence, or (c) is a Relative of such specified Person or of an individual described in clause (a) or (b) of this sentence.  As used in this definition, “Relative” means with respect to any individual, (i) such individual’s spouse, (ii) any direct descendent, parent, grandparent, great grandparent or sibling (in each case, whether by blood or adoption) of such individual or such individual’s spouse, and (iii) any spouse of a Person described in clause (ii) of this sentence.

“Business Day” means any day other than a Saturday or Sunday or any day on which banks in the State of New York are required or authorized to be closed.

“Commission” means the Securities and Exchange Commission or any other agency at the time administering the Securities Act.

“Closing Date” has the meaning set forth in the Subscription Agreement.

“Common Stock” means the common stock, $0.001 par value per share, of the Company.

“Deemed Underwriter Inspectors” shall have the meaning set forth in Section

“Effective Date” shall have the meaning set forth in Section 2(a).

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“Effectiveness Date” means, with respect to the Registration Statement required to be filed pursuant to Section 2 hereunder, the earlier of (a) the 120th calendar day following the Filing Date (or 150th calendar day following the Filing Date in the event of a full review by the Commission) and (b) the fifth (5th) Business Day following the date on which the Company is notified by the Commission that the Registration Statement will not be reviewed or is no longer subject to further review and comments.

“Effectiveness Period” shall have the meaning set forth in Section 2(a).

“Electing Holder” shall have the meaning set forth in Section 3(a).

“Event” shall have the meaning set forth in Section 2(h).

“Event Date” shall have the meaning set forth in Section 2(b).

“Exchange Act” means the Securities Exchange Act of 1934, as amended, or any successor statute, and the rules and regulations of the Commission promulgated thereunder, all as the same shall be in effect from time to time.

“Filing Date” means, with respect to the Registration Statement required to be filed pursuant to Section 2 hereunder, unless such other date is agreed to by the Holders, in its sole discretion, the earlier of (A) the date on which such Registration Statement is deemed to be filed initially with the Commission and (B) (i) the 120th calendar day following the Holder’s exercise of a mandatory registration right pursuant to Section 2(a) hereof.

“Free Writing Prospectus” means a free writing prospectus as defined in Rule 405 under the Securities Act.

“Holders” means the Investor or any transferee of such Registrable Shares and the rights under this Agreement pursuant to Section 10 hereof

“Issuer Free Writing Prospectus” means an issuer free writing prospectus as defined in Rule 433 under the Securities Act.

“Permitted Free Writing Prospectus” shall have the meaning set forth in Section 6.

“Person” shall be construed in the broadest sense and means and includes a natural person, a partnership, a corporation, an association, a joint stock company, a limited liability company, a trust, a joint venture, an unincorporated organization and any other entity and any federal, state, municipal, foreign or other government, governmental department, commission, board, bureau, agency or instrumentality, or any private or public court or tribunal.

“Prospectus” means the prospectus included in the Registration Statement (including, without limitation, a prospectus that includes any information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A), as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Shares covered by the Registration Statement, and all other amendments and supplements to the Prospectus, including post-effective amendments, and all material incorporated by reference or deemed to be incorporated by reference in such Prospectus.

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“Registrable Shares” means shares of Common Stock which have registration rights pursuant to any agreement with the Company, including the Restricted Shares.

“Registration Statement” means, as the context requires, the registration statement required to be filed pursuant to Section 2 or Section 3 hereunder, including any applicable Prospectus, amendments and supplements to the registration statement or applicable Prospectus, including pre- and post-effective amendments, and all exhibits thereto, and all material incorporated by reference or deemed to be incorporated by reference in such Registration Statement.

“Restricted Shares” means shares of Common Stock issued under the Purchase Agreement.  As to any particular Restricted Shares held by a Holder, once issued, such Restricted Shares shall cease to be Restricted Shares when (i) all such shares of Common Stock have been disposed of pursuant to such effective registration statement, (ii) all such shares of Common Stock are eligible to be sold or distributed pursuant to Rule 144(k) in a single transaction by the Holders, or (iii) they shall have ceased to be outstanding.

“Rule 144” means Rule 144 promulgated under the Securities Act or any successor rule thereto or any complementary rule thereto (including, without limitation, Rule 144A).

“Rule 405” means Rule 405 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule.

“Rule 415” means Rule 415 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule.

“Rule 424” means Rule 424 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule.

“Rule 430A” means Rule 430A promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule.

“Securities Act” means the Securities Act of 1933, as amended, or any successor statute, and the rules and regulations of the Commission thereunder, all as the same shall be in effect from time to time.

“Holders” has the meaning set forth in the Preamble to this Agreement.

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“Purchase Agreement” has the meaning set forth in the Recitals to this Agreement.

“Trading Day” means a day on which the Common Stock is trading on a Trading Market.

“Trading Market” means the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the NASDAQ Capital Market, the American Stock Exchange, the New York Stock Exchange, the NASDAQ Global Market, or the OTC Bulletin Board.

Section 2. Mandatory Registration.

(a)           Subject to Section 4.7 of the Purchase Agreement, upon the written request of the Holders of not less than 5,000,000 Registrable Shares, the Company shall prepare and file with the Commission a Registration Statement covering the resale of all of the Registrable Shares for an offering to be made on a continuous basis pursuant to Rule 415, or if Rule 415 is not available for offers or sales of the Registrable Shares, for such other means of distribution of Registrable Shares as the Holders may specify.  The Registration Statement required hereunder shall be on Form S-3 (except if the Company is not then eligible to register for resale the Registrable Shares on Form S-3, in which case the Registration Statement shall be on another appropriate form in accordance herewith).  If the Company is not eligible to register for resale the Registrable Shares on Form S-3, the Company shall not be obligated to file more than three (3) Registration Statements pursuant to this Section 2(a).

Subject to Section 2(b), the Company shall use its best efforts to cause the Registration Statement to be declared effective under the Securities Act (unless it becomes effective automatically upon filing) as promptly as possible after the filing thereof (but such effectiveness date shall not be later than the Effectiveness Date), and shall use its best efforts to keep such Registration Statement continuously effective under the Securities Act (including the filing of any necessary amendments, post-effective amendments and supplements) until such date when there are no longer any Registrable Shares outstanding (the “Effectiveness Period”).  The Company shall telephonically request effectiveness of the Registration Statement (unless it becomes effective automatically upon filing) as of 5:00 pm Eastern Standard Time on a Trading Day.  The Company shall promptly notify the Holders via facsimile or email of the effectiveness of a Registration Statement on the same Trading Day that the Company telephonically confirms effectiveness with the Commission (if possible, otherwise as soon as practicable on the following Trading Day), which shall be the date requested for effectiveness of a Registration Statement (the “Effective Date”), unless the Registration Statement becomes automatically effective upon filing, in which case the “Effective Date” shall be the date on which the Registration Statement was filed.  The Company shall, by 9:30 am Eastern Standard Time on the Trading Day immediately after the Effective Date, file a Rule 424(b) prospectus with the Commission.

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(b)           If: (1) the Registration Statement is not filed on or prior to the Filing Date (it being understood that if the Company files the Registration Statement without affording the Holders the opportunity to review and comment on the same as required by Section 4(c), the Company shall not be deemed to have satisfied Section 2(b)(1)); or (2) the Registration Statement does not become automatically effective or is not declared effective by the Commission on or before the Effectiveness Date or (3) after the Effective Date, a Registration Statement ceases for any reason to remain continuously effective as to all Registrable Shares for which it is required to be effective, or the Holders are not permitted to utilize the Prospectus therein to resell such Registrable Shares in either event for thirty (30) consecutive calendar days during any 12-month period (provided, no suspension period may begin until at least twelve (12) months have passed since any previous suspension period) (any such failure or breach being referred to as an “Event,” and for purposes of Section 2(b)(1) or Section 2(b)(2) the date on which such breach occurs, and for purposes of Section 2(b)(3) the date on which such thirty (30) calendar day period is exceeded, being referred to as an “Event Date”), then in addition to any other rights or remedies the Holders may have hereunder or under applicable law, the Holders shall receive from the Company, on the Event Date and each thirty (30) day anniversary of the Event Date until the applicable Event is cured with respect to each Restricted Share, as liquidated damages and not as a penalty, cash in an amount equal to 1.0% of the purchase price paid for the  shares of Common Stock purchased under the Purchase Agreement (or a pro rata portion thereof if the period is less than thirty (30) calendar days); provided, however, that in no event shall the aggregate amounts paid as liquidated damages exceed 1.0% in any thirty (30) calendar day period.  For purposes of the preceding sentence, the applicable Event shall be deemed to be cured on: (x) in the case of Section 2(b)(1), the date on which such Registration Statement is filed, (y) in the case of Section 2(b)(2), the date on which such Registration Statement becomes effective and (z) in the case of Section 2(b)(3), the date on which such Registration Statement becomes effective again or any Prospectus becomes usable again, as applicable.  Such payments shall be made to the Investor in cash not later than three (3) Business Days following the Event Date or end of each thirty (30) calendar day period, as applicable.

(c)           In the event that, in the reasonable judgment of the Company, it is advisable to suspend use of a Registration Statement or Prospectus therein due to pending material developments or other events that have not yet been publicly disclosed and as to which the Company believes public disclosure would be detrimental to the Company, the Company shall notify the Holders to such effect, and, upon receipt of such notice, the Holders shall immediately discontinue any sales of Registrable Shares pursuant to such Registration Statement and/or Prospectus until the Holders have received copies of a supplemented or amended prospectus or until the holders are advised in writing by the Company that the then current prospectus may be used and has received copies of any additional or supplemental filings that are incorporated or deemed incorporated by reference in such prospectus.  Notwithstanding anything to the contrary herein, the Company shall not exercise its rights under the preceding sentence to suspend sales of Registrable Shares for a period in excess of sixty (60) consecutive calendar days during any 12-month period; provided, no suspension period may begin until at least twelve (12) months have passed since any previous suspension period.

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(d)           The Holders acknowledge that the SEC has recently given enhanced scrutiny to registration statements attempting to register the resale of shares obtained by purchasers in private placements and that such SEC reviews have resulted in registrants being denied the use of Rule 415(a)(1)(i).  Accordingly, the Holders agree that (i) the Company shall not be obligated to pay any amount of liquidated damages under subsection (b) above in the event a Registration Statement is not declared effective on or prior to the Event Date solely as a result of or in connection with a determination by the SEC that either the Company or the Holders are ineligible to rely on Rule 415(a)(l)(i) under the Securities Act with respect to the registration of any of the Registrable Securities for resale by the Holders on a continuous or delayed basis; provided, that the Company shall thereafter use its commercially reasonable efforts to find alternative methods to register the Registrable Securities with the SEC for resale; and (ii) in the event the Company, after conducting a pre-filing conference with the SEC, if possible, reasonably determines that it is unable to, or it is inadvisable for the Company to attempt to, register all of the Registrable Securities in a single Registration Statement, the Company may elect to fulfill the registration requirements of this Agreement by registering the Registrable Securities in two or more Registration Statements, provided that the Company shall use its best efforts to file each subsequent Registration Statement no later than the earlier of (A) 60 days following the date on which the last of the Registrable Securities registered under the preceding Registration Statement were sold or (B) 6 months following the date on which the preceding Registration Statement was declared effective.

Section 3. Incidental Registration.

(a)           Subject to Section 4.7 of the Purchase Agreement, if at any time from and after the date hereof, the Company proposes to register any of its securities under the Securities Act (other than (A) any registration of public sales or distributions solely by and for the account of the Company of securities issued (x) pursuant to any employee benefit or similar plan or any dividend reinvestment plan, or (y) pursuant to a S-4 registration in connection with the acquisition of the Company, or (B) pursuant to Section 2 hereof), either in connection with a primary offering for cash for the account of the Company or a secondary offering, the Company will, each time it intends to effect such a registration, give written notice to all Holders at least ten (10) but no more than thirty (30) business days prior to the expected initial filing of a Registration Statement with the Commission pertaining thereto, informing such Holders of its intent to file such Registration Statement, the expected filing date, and of the Holders’ rights to request the registration of the Registrable Shares held by such Holder (the “Company Notice”).  Upon the written request of any Holder made within ten (10) business days after any such Company Notice is given (which request shall specify the Registrable Shares intended to be disposed of by such Holder or its transferees and, unless the applicable registration is intended to effect a primary offering of Shares for cash for the account of the Company, the intended method of distribution thereof), the Company will use its reasonable best efforts to effect the registration under the Securities Act of all Registrable Shares which the Company has been so requested to register by such Holders to the extent required to permit the disposition (in accordance with the intended methods of distribution thereof or, in the case of a registration which is intended to effect a primary offering for cash for the account of the Company, in accordance with the Company’s intended method of distribution) of the Registrable Shares so requested to be registered, including, if necessary, by filing with the Commission a post-effective amendment or a supplement to the Registration Statement or the related Prospectus or any document incorporated therein by reference or by filing any other required document or otherwise supplementing or amending the Registration Statement, if required by the rules, regulations or instructions applicable to the registration form used by the Company for such Registration Statement or by the Securities Act, any state securities or blue sky laws, or any rules and regulations thereunder; provided, however, that if, at any time after giving written notice of its intention to register any securities and prior to the effective date of the Incidental Registration Statement filed in connection with such registration, the Company shall determine for any reason not to register or to delay registration of such securities, the Company may, at its election, give written notice of such determination to each Holder and, thereupon, (A) in the case of a determination not to register, the Company shall be relieved of its obligation to register any Registrable Shares in connection with such registration (but not from its obligation to pay the Registration Expenses incurred in connection therewith), and (B) in the case of a determination to delay such registration, the Company shall be permitted to delay registration of any Registrable Shares requested to be included in such Registration Statement for the same period as the delay in registering such other securities.  The registration rights granted pursuant to the provisions of this Section 3(a) shall be in addition to the registration rights granted pursuant to the other provisions of this Agreement.

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(b)           The Company shall be required to include in the registration pursuant to this Section 3 the percentage of the Registrable Shares held by the Holders in such registration as will equal the fraction, (x) the numerator of which shall be the number of all the Registrable Shares and (y) the denominator of which shall be the number of shares of the outstanding capital stock of the Company on a fully-diluted basis, in each case, immediately prior to the effectiveness of such registration statement.  The number of Registrable Shares to be included in the Incidental Registration shall be allocated pro rata among the Holders thereof requesting inclusion in such registration on the basis of the number of securities requested to be included by all such Holders.

(c)           If the registration pursuant to this Section 3 is underwritten and in the good faith judgment of the managing underwriter the inclusion of the Registrable Shares requested to be registered would interfere with the successful marking of the offering, then the number of Registrable Shares to be included in the offering will be reduced to such smaller number with the participation in the offering to be in the following order of priority: (1) first, the securities to which the Company proposes to sell for its own account, (2) second, the shares of Registrable Shares requested by the Holders to be included in such registration , pro rata among the Holders thereof requesting inclusion in such registration on the basis of the number of securities requested to be included by all such Holders, and (3) third, any other securities requested to be included.

Section 4. Preparation and Filing.

If and whenever the Company is under an obligation pursuant to the provisions of the Agreement to effect the registration of any Registrable Shares, the Company shall, as expeditiously as practicable:

(a)           mail a registration questionnaire to the Holders requesting information regarding prospective selling shareholders as may be reasonably necessary to the Company’s preparation of a registration statement.  The Holders shall have at least ten (10) calendar days from the date on which registration questionnaire is first mailed to the Holders to return a completed and signed registration questionnaire to the Company.  The term “Electing Holder” shall mean any Holder that has returned a completed and signed registration questionnaire to the Company in accordance with this Section 3(a);

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(b)           use its best efforts to cause a registration statement that registers such Registrable Shares to become and remain effective until all of such Registrable Shares have been disposed of;

(c)           furnish, at least five (5) Business Days before filing of the Registration Statement or other registration statement that registers such Registrable Shares, the Prospectus or other prospectus relating thereto or any amendments or supplements relating to such a registration statement or prospectus, to the Electing Holders and any counsel of such holders copies of all such documents proposed to be filed which documents shall be subject to review thereof.  If any such Registration Statement refers to any Electing Holder by name or otherwise as the holder of any securities of the Company, then such Electing Holder shall have the right to require (i) the insertion therein of language, in form and substance reasonably satisfactory to such Electing Holder, to the effect that the holding by such Electing Holder of such securities is not to be construed as a recommendation by such Electing Holder of the investment quality of the Company’s securities covered thereby or (ii) in the event that such reference to such Electing Holder by name or otherwise is not required by the Securities Act or any similar federal statute then in force, the deletion of the reference to such Electing Holder in any amendment or supplement to the Registration Statement filed or prepared subsequent to the time such reference ceases to be required;

(d)           prepare and file with the Commission such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to ensure the inclusion of all Registrable Shares in such applicable registration statement and/or prospectus and as may be necessary to keep such registration statement effective until all of such Registrable Shares have been disposed of and to comply with the provisions of the Securities Act with respect to the sale or other disposition of such Registrable Shares; cause the related Prospectus or other prospectus to be amended oz supplemented by any required prospectus supplement, and as so supplemented or amended to be filed pursuant to Rule 424; and respond as promptly as reasonably possible to any comments received from the Commission with respect to such Registration Statement or other registration statement or any amendment thereto;

(e)           notify the Electing Holders immediately at any time when a prospectus relating to such Registrable Shares or any document related thereto includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing and, at the request of the Electing Holders prepare and furnish to such Electing Holders a reasonable number of copies of a supplement to or an amendment of such prospectus as may be necessary so that, as thereafter delivered to the offerees of such shares, such prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing;

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(f)           from the date hereof until all of such Registrable Shares have been disposed of, the Company shall promptly take such action as may be necessary, including preparing a post-effective amendment or supplement to the Registration Statement or Prospectus, or any document incorporated therein by reference, so that (i) each of the Registration Statement and any amendment thereto and the Prospectus and any amendment or supplement thereto (and each report or other document incorporated by reference therein in each case) complies in all respects with the Securities Act and the Exchange Act and the respective rules and regulations thereunder, (ii) each of the Registration Statement and any amendment thereto does not, when it becomes effective, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading and (iii) each of the Prospectus and any amendment or supplement to the Prospectus does not at any time prior to the disposal of all of such Registrable Shares include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading;

(g)           notify in writing the Electing Holders participating in such registration and their counsel (i) of the receipt by the Company of any notification with respect to any comments by the Commission with respect to such registration statement or prospectus or any amendment or supplement thereto or any request by the Commission for the amending or supplementing thereof or for additional information with respect thereto, (ii) of the receipt by the Company of any notification with respect to the issuance by the Commission of any stop order suspending the effectiveness of such registration statement or prospectus or any amendment or supplement thereto or the initiation or threatening of any proceeding for that purpose, (iii) of the receipt by the Company of any notification with respect to the suspension of the qualification of such Registrable Shares for sale in any jurisdiction or the initiation or threatening of any proceeding for such purposes and (iv) of the existence of any fact or the happening of any event that causes the Company to become an “ineligible issuer,” as defined in Rule 405;

(h)           use its best efforts to register or qualify such Registrable Shares under such other securities or blue sky laws of such jurisdictions as the Holders reasonably request and do any and all other acts and things which may be reasonably necessary or advisable to enable the Holders to consummate the disposition in such jurisdictions of the Registrable Shares owned by the Holders; provided, however, that the Company will not be required to qualify generally to do business, subject itself to general taxation or consent to general service of process in any jurisdiction where it would not otherwise be required to do so but for this Section 4(h);

(i)           without limiting Section 4(h), use its best efforts to cause such Registrable Shares to be registered with or approved by such other governmental agencies or authorities as may be necessary by virtue of the business and operations of the Company to enable the Electing Holders to consummate the disposition of such Registrable Shares;

(j)           use its best efforts to avoid the issuance of, or, if issued, obtain the withdrawal of (i) any order suspending the effectiveness of the Registration Statement, or (ii) any suspension of the qualification (or exemption from qualification) of any of the Registrable Shares for sale in any jurisdiction, at the earliest practicable moment;

(k)           furnish to the Electing Holders such number of copies of a summary prospectus, if any, or other prospectus, including a preliminary prospectus, in conformity with the requirements of the Securities Act, and such other documents as such Electing Holders may reasonably request in order to facilitate the public sale or other disposition of such Registrable Shares;

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(1)           in connection with any underwritten offering:

(i)           use its best efforts to obtain from its independent certified public accountants comfort letters in customary form and at customary times and covering matters of the type customarily covered by comfort letters and deliver such letters to any applicable underwriters;

(ii)           use its best efforts to obtain from its counsel an opinion or opinions in customary form and deliver such opinions to any applicable underwriters;

(iii)           issue and deliver customary officer’s and other closing certificates to any applicable underwriters;

(iv)           promptly issue to any underwriter to which the Electing Holders may sell shares in such offering, certificates evidencing such Registrable Shares;

(v)           the Company shall, if requested, promptly include or incorporate in a prospectus supplement or post-effective amendment to the Registration Statement such information as the applicable underwriters reasonably agree should be included therein and to which the Company does not reasonably object and shall make all required filings of such prospectus supplement or post-effective amendment as soon as practicable after it is notified of the matters to be included or incorporated in such prospectus supplement or post-effective amendment;

(m)           if an Electing Holder is or is to be identified by the Commission or the NASD as an “underwriter”, at the request of such Electing Holder, the Company shall (A) furnish to such Electing Holder, on the date of the effectiveness of the Registration Statement and thereafter from time to time on such dates as the Holders may reasonably request (i) a comfort letter from the Company’s independent certified public accountants at customary times in form and substance as is customarily given by independent certified public accountants to underwriters in an underwritten public offering, addressed to the Holders, and (ii) an opinion of counsel representing the Company for purposes of such Registration Statement at customary times in form, scope and substance as is customarily given in an underwritten public offering, addressed to the Holders, and (B) permit such Electing Holder to participate in good faith in the preparation of such registration or comparable statement and to require the insertion therein of material, furnished to the Company in writing, which in the reasonable judgment of such holder and its counsel should be included, subject to review by the Company and their counsel after consultation with such holder.  Notwithstanding anything herein to the contrary, no Electing Holder shall be designated as an “underwriter” by the Company in any Registration Statement without the consent of such Electing Holder;

(n)           provide a transfer agent and registrar (which may be the same entity and which may be the Company) for such Registrable Shares;

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(o)           otherwise use its best efforts to comply with all applicable rules and regulations of the Commission and make available to its security holders, as soon as reasonably practicable, but in any event not later than eighteen months after (i) the effective date (as defined in Rule 158(c) under the Securities Act) of the Registration Statement, (ii) the effective date of each post-effective amendment to the Registration Statement, and (iii) the date of each filing by the Company with the Commission of an Annual Report on Form 10-K that is incorporated by reference in the Registration Statement, an earnings statement of the Company and its subsidiaries complying with Section 11(a) of the Securities Act and the rules and regulations of the Commission thereunder (including, at the option of the Company, Rule 158);

(p)           if requested by an Electing Holder, the Company shall (i) as soon as practicable incorporate in a prospectus supplement or post-effective amendment such information as such Electing Holder reasonably requests to be included therein relating to the sale and distribution of Registrable Shares, including, without limitation, information with respect to the number of Registrable Shares being offered or sold, the purchase price being paid therefor and any other terms of the offering of the Registrable Shares to be sold in such offering; (ii) as soon as practicable make all required filings of such prospectus supplement or post-effective amendment after being notified of the matters to be incorporated in such prospectus supplement or post-effective amendment; and (iii) as soon as practicable, supplement or make amendments to any Registration Statement reasonably requested by such holder;

(q)           otherwise use its best efforts to take all other steps necessary to effect the registration of such Registrable Shares contemplated hereby; and

(r)           in connection with the due diligence efforts of any Electing Holder who is or is to be identified as an “underwriter,” the Company shall make available for inspection during business hours and upon reasonable advance request by (i) any Electing Holder, (ii) counsel for such Electing Holder and (iii) one firm of accountants or other agents retained by such Electing Holder (collectively, the “Deemed Underwriter Inspectors”), all Records, as shall be reasonably deemed necessary by each Deemed Underwriter Inspector, and cause the Company’s officers, directors and employees to supply all information which any Deemed Underwriter Inspector may reasonably request.

The Company shall not permit any officer, director, underwriter, broker, or any other Person acting on behalf of the Company to use any Free Writing Prospectus in connection with the Registration Statement covering Registrable Shares, without the prior written consent of the holders of a majority of the Registrable Shares, which consent shall not be unreasonably withheld or delayed.  Any consent to the use of a Free Writing Prospectus included in an underwriting agreement to which the Electing Holders are parties shall be deemed to satisfy the requirement for such consent.  The Holders, upon receipt of any notice from the Company of any event of the kind described in Sections 4(e) or 4(g), shall forthwith discontinue disposition of the Registrable Shares pursuant to the registration statement covering such Registrable Shares until such holder’s receipt of the copies of the supplemented or amended prospectus contemplated by Sections 4(e) or 4(g), and, if so directed by the Company, the Holders shall deliver to the Company all copies, other than permanent file copies then in such holder’s possession, of the prospectus covering such Registrable Shares at the time of receipt of such notice.

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Section 5. Expenses.

All expenses incurred by the Company, and all expenses separately incurred by the Holders, in complying with their obligations pursuant to the Agreement and in connection with the registration and disposition of Registrable Shares, including, without limitation, all registration and filing fees (including all filing fees incident to filing with the NASD), fees and expenses of complying with securities and blue sky laws, printing expenses, fees and expenses of the Company’s counsel and accountants and the Holders’ counsel shall be paid by the Company, including all underwriting fees and expenses (including legal expenses and expenses of the Company’s other advisors); provided, however, that all underwriting discounts and selling commissions applicable to the Registrable Shares shall be borne by the Holders in the applicable underwritten offering.

Section 6. Indemnification.

(a)           In connection with any registration of any Registrable Shares under the Securities Act pursuant to the Agreement, the Company shall indemnify and hold harmless the Holders, its officers, directors, employees, members, partners, and advisors and their respective Affiliates, each underwriter, broker or any other Person acting on behalf of the Holders and each other Person, if any, who controls any of the foregoing Persons within the meaning of the Securities Act against any losses, claims, damages, liabilities, or actions joint or several (or actions in respect thereof), to which any of the foregoing Persons may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or allegedly untrue statement of a material fact contained in the registration statement under which such Registrable Shares were registered under the Securities Act, any preliminary prospectus or final prospectus contained therein or otherwise filed with the Commission, any amendment or supplement thereto or any document incident to registration or qualification of any Registrable Shares, or any Issuer Free Writing Prospectus, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading or, with respect to any prospectus, necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, or any violation by the Company of the Securities Act or state securities or blue sky laws applicable to the Company or relating to action or inaction required of the Company in connection with such registration or qualification under such state securities or blue sky laws; and shall reimburse such Persons for any legal or other expenses reasonably incurred by any of them in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the Company shall not be liable in any such case to the extent that any such loss, claim, damage, liability or action (including any legal or other expenses incurred) arises out of or is based solely upon an untrue statement or allegedly untrue statement or omission or alleged omission made in said registration statement, preliminary prospectus, final prospectus, amendment, supplement, Issuer Free Writing Prospectus or document incident to registration or qualification of any Registrable Shares in reliance upon and in conformity with written information furnished to the Company by the Holders specifically for use in the preparation thereof or for any Holder’s failure to deliver a prospectus, Issuer Free Writing Prospectus or for selling any shares of Common Stock pursuant to such prospectus after the Company has provided to the Holders written notice of the Company’s receipt of a stop order relating to such Registration Statement or for selling any shares of Common Stock pursuant to such prospectus after the Holders have received written notice pursuant to Sections 4(e) or 4(g).

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(b)           In connection with any registration of Registrable Shares under the Securities Act pursuant to the Agreement, each Electing Holder shall severally (based on the percentage of all Registrable Shares included in such registration that were owned by such holder) and not jointly and severally indemnify and hold harmless the Company, each director of the Company, each employee and advisor of the Company, each officer of the Company who shall sign such registration statement, each underwriter, broker or other Person acting on behalf of the Holders, the Affiliates of each of the foregoing, and each Person who controls any of the foregoing Persons within the meaning of the Securities Act with respect to any statement or omission from such registration statement, any preliminary prospectus or final prospectus contained therein or otherwise filed with the Commission, any amendment or supplement thereto or Issuer Free Writing Prospectus or any document incident to registration or qualification of any Registrable Shares, if such statement or omission was made in reliance upon and in conformity with written information furnished to the Company or such underwriter by such Electing Holder specifically for use in connection with the preparation of such registration statement, preliminary prospectus, final prospectus, amendment, supplement, document or Issuer Free Writing Prospectus; provided, however, that the maximum amount of liability in respect of such indemnification shall be limited, in the case of each Electing Holder, to an amount equal to the gross amount actually received by such Electing Holder from the sale of Registrable Shares effected pursuant to such registration.

(c)           Promptly after receipt by an indemnified party of notice of the commencement of any action involving a claim referred to in this Section 5, such indemnified party will, if a claim in respect thereof is made against an indemnifying party, give written notice to the latter of the commencement of such action.  The failure of any indemnified party to notify an indemnifying party of any such action shall not (unless such failure shall have a material adverse effect on the indemnifying party) relieve the indemnifying party from any liability in respect of such action that it may have to such indemnified party hereunder.  In case any such action is brought against an indemnified party, the indemnifying party will be entitled to participate in and to assume the defense thereof, jointly with any other indemnifying party similarly notified to the extent that it may wish, with counsel reasonably satisfactory to such indemnified party, and after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party shall not be responsible for any legal or other expenses subsequently incurred by the indemnified party in connection with the defense thereof; provided, however, that if any indemnified party shall have reasonably concluded that there may be one or more legal or equitable defenses available to such indemnified party which are additional to or conflict with those available to the indemnifying party, or that such claim or litigation involves or could have an effect upon matters beyond the scope of the indemnity agreement provided hereunder, the indemnifying party shall not have the right to assume the defense of such action on behalf of such indemnified party (but shall have the right to participate therein with counsel of its choice) and such indemnifying party shall reimburse such indemnified party and any Person controlling such indemnified party for that portion of the fees and expenses of any counsel retained by the indemnified party which is reasonably related to the matters covered by the indemnity agreement provided hereunder.  If the indemnifying party assumes the defense of a claim, the indemnified party shall agree to any settlement, compromise or discharge of a claim that the indemnifying party may recommend that has as the sole remedy monetary damages, that by its terms obligates the indemnifying party to pay the full amount of the liability in connection with such claim, and that has no finding or admission of any violation of any law or regulation or of the rights of any Person and no effect on any other claims that may be made against the indemnified party.  If the indemnifying party is not entitled to, or elects not to, assume the defense of a claim, it will not be obligated to pay the fees and expenses of more than one counsel with respect to such claim.

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(d)           If the indemnification provided for hereunder is held by a court of competent jurisdiction to be unavailable to an indemnified party with respect to any loss, claim, damage, liability or action referred to herein, then the indemnifying party, in lieu of indemnifying such indemnified party hereunder, shall contribute to the amounts paid or payable by such indemnified party as a result of such loss, claim, damage, liability or action in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and of the indemnified party on the other in connection with the statements or omissions which resulted in such loss, claim, damage, liability or action as well as any other relevant equitable considerations.  The relative fault of the indemnifying party and of the indemnified party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the indemnifying party or by the indemnified party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.  The parties agree that it would not be just and equitable if contribution pursuant hereto does not take account of the equitable considerations referred to herein.  No Person guilty or liable of fraudulent misrepresentation shall be entitled to contribution from any Person.

(e)           Notwithstanding any other provision of this Section 6, in no event will any Electing Holder be required to undertake any liability or obligation under this Section 6 for an aggregate amount in excess of the dollar amount of the proceeds (after deducting any fees, discounts and commissions applicable thereto) received by such Electing Holder from the sale of such Electing Holder’s Registrable Shares giving rise to such liability or obligation (net of all expenses paid by such holder in connection with any claim relating to this Section 5 and the amount of any damages such holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission).

(f)           The obligations of the Company under this Section 6 shall be in addition to any liability that the Company may otherwise have to any indemnified party and the obligations of any indemnifying party under this Section 6 shall be in addition to any liability that such indemnifying party may otherwise have to the Company.  The remedies provided in this Section 5 are not exclusive and shall not limit any rights or remedies that may otherwise be available to an indemnified party at law or in equity.

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Section 7.      Free Writing Prospectus.  Each Holder represents that it has not prepared or had prepared on its behalf or used or referred to or distributed, and agrees that it will not prepare or have prepared on its behalf or use or refer to or, except as contemplated by the Agreement, distribute, any Free Writing Prospectus with respect to the sale of its Registrable Shares pursuant to the Registration Statement, in each case, without the prior written consent of the Company not to be unnecessarily withheld and, in connection with any underwritten offering, the underwriters.  Any such Free Writing Prospectus consented to by the Company and the underwriters, as the case may be, is hereinafter referred to as a “Permitted Free Writing Prospectus.”  The Company represents and agrees that it has treated and will treat, as the case may be, each Permitted Free Writing Prospectus as an Issuer Free Writing Prospectus, including in respect of timely filing with the Commission, legending and record keeping.

Section 8. Exchange Act Compliance.

The Company shall comply with all of the reporting requirements of the Exchange Act applicable to it and shall comply with all other public information reporting requirements of the Commission which are conditions to the availability of Rule 144.  The Company shall cooperate with the Holders in supplying such information as may be necessary for the Holders to complete and file any information reporting forms presently or hereafter required by the Commission as a condition to the availability of Rule 144.  The Company shall cause its counsel to issue a legal opinion to the Company’s transfer agent if required by the Company’s transfer agent to effect the removal of any legend to the extent that such legend is permitted to be removed in accordance with the terms of Rule 144, the Agreement and the other applicable rules and regulations.

Section 9. Remedies.

The Company acknowledges and agrees that any failure by the Company to comply with its obligations under the Agreement may result in material irreparable injury to the Holders for which there is no adequate remedy at law, that it will not be possible to measure damages for such injuries precisely and that, in the event of any such failure, the Holders or any holder of Registrable Shares may obtain such relief as may be required to specifically enforce the Company’s obligations hereunder.  The Company further agrees to waive the defense in any action for specific performance that a remedy at law would be adequate.

Section 10. Benefits of Agreement; Third Party Beneficiaries.

Except as provided herein, the Agreement shall bind and inure to the benefit of the Company, the Holders and subject to Section 10, the respective successors and permitted assigns of the Company and the Holders.

Section 11. Assignment.

The Holders may assign its rights hereunder to any purchaser or transferee of Registrable Shares; provided, however, that such purchaser or transferee shall, as a condition to the effectiveness of such assignment, be required to execute a counterpart to the Agreement agreeing to be treated as a Holder whereupon such purchaser or transferee shall have the benefits and liabilities of, and shall be subject to the restrictions contained in, the Agreement as if such purchaser or transferee was originally included in the definition of a Holder herein and had originally been a party hereto.

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Section 12. Entire Agreement.

The Agreement, and the other writings referred to herein or delivered pursuant hereto, contain the entire agreement among the parties hereto with respect to the subject matter hereof and supersede all prior and contemporaneous arrangements or understandings with respect thereto.

Section 13.    Other Registration Rights.  The Company will not, on or after the date of the Agreement, enter into any agreement with respect to its securities that is inconsistent with the rights granted to the Holders in the Agreement or otherwise conflicts with the provisions hereof The Company shall not permit any securities other than the Registrable Shares to be included in any Registration Statement without the prior written consent of the Holders and upon terms reasonably acceptable to the Holders.

Section 14. Notices.

All notices, requests, consents and other communications hereunder to any party shall be deemed to be sufficient if contained in a written instrument delivered in person or sent by telecopy, electronic transmission, nationally-recognized overnight courier or first class registered or certified mail, return receipt requested, postage prepaid, addressed to such party at the address set forth below or such other address as may hereafter be designated in writing by such party to the other parties:

(i)           if to the Company, to:

Room 909, Tower B

Chang’an Metropolis Center No.

88 Nanguanzheng Street Xi’an

710068, China

Attention:  Mr. Guohua Ku

Tel: +86 (29) 8765-1096

Fax: +86 (29) 8765-1099

(ii)           if to the Investor, to:

Great Essential Investment, Ltd

Akara Building, 24 De Castro Street

Wickhams Cay 1

Road Town Tortola

British Virgin Islands

Attention: Mr. Jinghe Dong

Tel:  86-29-8187-8609

Fax: 86-29-8187-8609

All such notices, requests, consents and other communications shall be deemed to have been delivered (a) in the case of personal delivery or delivery by telecopy, on the date of such delivery, (b) in the case of dispatch by nationally-recognized overnight courier, on the next Business Day following such dispatch and (c) in the case of email, upon receipt of acknowledgement of receipt (d) in the case of mailing, on the fifth Business Day after the posting thereof.

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Section 15. Modifications; Amendments; Waivers.

The terms and provisions of the Agreement may not be modified or amended except pursuant to a writing signed by the Company and the Holders.  Any waiver of any provision of the Agreement requested by any party hereto must be granted in advance, in writing by the party granting such waiver.

Section 16. Counterparts; Facsimile Signatures.

The Agreement may be executed in any number of original or facsimile counterparts, and each such counterpart hereof shall be deemed to be an original instrument, but all such counterparts together shall constitute but one agreement.

Section 17. Headings.

The headings of the various sections of the Agreement have been inserted for convenience of reference only and shall not be deemed to be a part of the Agreement.

Section 18. Governing Law.

The Agreement shall be governed by and construed in accordance with the laws of the State of New York, without giving effect to any law or rule that would cause the laws of any jurisdiction other than the State of New York to be applied.

Section 19. Severability.

It is the desire and intent of the parties that the provisions of the Agreement be enforced to the fullest extent permissible under the law and public policies applied in each jurisdiction in which enforcement is sought.  Accordingly, in the event that any provision of the Agreement would be held in any jurisdiction to be invalid, prohibited or unenforceable for any reason, such provision, as to such jurisdiction, shall be ineffective, without invalidating the remaining provisions of the Agreement or affecting the validity or enforceability of such provision in any other jurisdiction.  Notwithstanding the foregoing, if such provision could be more narrowly drawn so as to not be invalid, prohibited, or unenforceable in such jurisdiction, it shall, as to such jurisdiction, be so narrowly drawn, without invalidating the remaining provisions of the Agreement or affecting the validity or enforceability of such provision in any other jurisdiction.

Section 20.    Survival.  The respective indemnities, agreements, representations, warranties and other provisions set forth in the Agreement or made pursuant hereto shall remain in full force and effect, and shall survive the transfer and registration of the Registrable Shares of the Holders.

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IN WITNESS WHEREOF, the parties hereto have executed this Registration Rights Agreement on the date first written above.

CHINA RECYCLING ENERGY CORPORATION
By:	/s/ Guohua Ku
Name:	Guohua Ku
Title:	Chief Executive Officer
GREAT ESSENTIAL INVESTMENT, LTD.
By:	/s/ Jinghe Dong
Name:	Jinghe Dong
Title:	Executive Director

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