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):

 

November 16, 2015  

 

CHINA RECYCLING ENERGY CORPORATION
(Exact name of registrant as specified in its charter)

 

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

 

12/F, Tower A

Chang An International Building

No. 88 Nan Guan Zheng Jie

Xi An City, Shaanxi Province

China 710068
 (Address of principal executive offices, including zip code)

 

(86-29) 8765-1097
(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 November 16, 2015, Xi’an TCH Energy Technology Co., Ltd (“Xi’an TCH”), a wholly owned subsidiary of China Recycling Energy Corporation (the “Company”) entered into a Transfer Agreement of CDQ & Waste Heat Power Generation Project (the “Transfer Agreement”) with Tangshan Rongfeng Iron & Steel Co., Ltd., a limited liability company incorporated in China (the “Buyer”), and Xi’an Huaxin New Energy Co., Ltd., a limited liability company incorporated in China (the “Contractor”). Xi’an TCH originally entered into a Coke Dry Quenching (“CDQ”) Power Generation Energy Management Cooperative Agreement (the “Cooperative Agreement”) with the Buyer on December 12, 2013 to design, build and maintain CDQ waste heat power generation system and sell the power to the Buyer, as disclosed in the Form 8-K filed on December 17, 2013.

 

The Transfer Agreement provides for the sale to the Buyer of the CDQ Waste Heat Power Generation Project (the "Project") from Xi’an TCH. Additionally, Xi’an TCH will transfer to the Buyer the Engineering, Procurement and Construction (“EPC”) Contract for the CDQ Waste Heat Power Generation Project which Xi’an TCH had entered into with the Contractor in connection with the Project. As consideration for the transfer of the Project, the Buyer will pay to Xi’an TCH an aggregate purchase price of RMB 165,200, 000 (approximately $25,934,066 and the “Transfer Price”), whereby (a) RMB 65,200,000 will be paid by the Buyer to Xi’an TCH within 20 business days after the Transfer Agreement is signed, (b) RMB 50,000,000 will be paid by the Buyer to Xi’an TCH within 20 business days after the Project is completed, but no later than March 31, 2016 and (c) RMB 50,000,000 will be paid by the Buyer to Xi’an TCH no later than September 30, 2016. Mr. Cheng Li, the largest shareholder of the Buyer, will personally guarantee the payments. The ownership of the Project will conditionally be possessed by the Buyer within 3 business days following the initial payment of RMB 65,200,000 by the Buyer to Xi’an TCH and the full ownership of the Project will be officially transferred to the Buyer after it completes the entire payment pursuant to the Transfer Agreement. The Cooperative Agreement will be terminated when the Buyer has paid all amounts payable to Xi’an TCH pursuant to the Transfer Agreement and Xi'an TCH shall not pursue any breach of contract liability against the Buyer under the Cooperative Agreement if the Buyer pays in full the Transfer Price on time. If the Transfer Price is not fully paid on time pursuant to the Transfer Agreement, the Transfer Agreement shall be terminated automatically and Xi'an TCH shall retain the ownership of the Project and both parties shall continue to perform their respective rights and obligations according to Cooperative Agreement and assume the liabilities for breach of the Cooperative Agreement.

 

The description contained herein of the terms of the Transfer Agreement does not purport to be complete and is qualified in its entirety by reference to the Transfer Agreement, a copy of which is attached hereto as Exhibit 10.1 and incorporated by reference herein.

 

Item 1.02 Termination of a Material Definitive Agreement.

 

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

  

Item 9.01 Financial Statements and Exhibits

 

(d) The following exhibits are filed with this report.

 

 

Exhibits

Number

  Description
10.1   Transfer Agreement of CDQ & Waste Heat Power Generation Project with Tangshan Rongfeng

 

 

 

 

 

 

 

 

 

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: November 20, 2015 /s/ Jackie Shi  
  Jackie Shi, Chief Financial Officer  

 

 

   

 

 

 

 

 

Exhibit 10.1

 

 

Transfer Agreement of CDQ & Waste Heat Power Generation

Project of Tangshan Rongfeng

 

Party A: Xi’an TCH Energy Technology Co., Ltd.

Party B: Tangshan Rongfeng Iron & Steel Co., Ltd.

Party C: Xi’an Huaxin New Energy Co., Ltd.

 

Whereas , Party A entered into a CDQ Power Generation Energy Management Cooperative Agreement with Party B on December 12, 2013 (“Rongfeng Agreement”); Pursuant to the Rongfeng Agreement, Party A entered into an EPC Contract for the CDQ Waste Heat Power Generation Project (the “Project”) with Party C on December 25, 2013 (“Huaxin Agreement”). Pursuant to the Huaxin Agreement, Party C undertakes the construction of the Project. As of October 31, 2015, Party A has paid Party C RMB 165,200,000 construction fee according to the Huaxin Agreement. The ownership of assets of the Project under construction belongs to Party A.

 

Whereas , major changes have happened inside of Tangshan Rong Iron & Steel Co., Ltd. The original major shareholder, Tangshan Bainite Steel (Group) Fufeng Steel Co., Ltd. exited from Party B. The second largest shareholder, Cheng Li, became the largest shareholder of Party B. Both Party A and Party B considered there is no continuous cooperation conditions for both parties and agreed to terminate the Rongfeng Agreement and all project assets under construction shall be transferred to Party B. Through full consultation, parties reached followings in connection with the termination of the Rongfeng Agreement and relevant follow-up issues.

 

One, Settlement Methods

 

1. Party A shall transfer all the project assets under construction under the Rongfeng Agreement to Party B. Party B confirms that the assets under construction with the payment of construction fee by Party A as well as the paid amount of RMB 165.2 million by Party A have been verified and confirmed by Party A, B, and C.

 

2. Party A, B, and C all agree that Party C shall continue to construct and complete the Project. Party A transfers all its rights and obligation under the Huaxin Agreement to Party B.

 

Two, Transfer Price

 

Party B shall pay RMB 165,200,000 to Party A based on the proof of payments for the construction of the Project which should be provided by Party A.

 

 

 

Within three days after this Agreement is signed, Party A shall provide all payment proof for the construction fee paid to Party C, and Party C shall provide the project progress schedule as of October 31, 2015.

 

Three, Payment Method and Schedule

 

Within 20 business days after this Agreement is signed, Party B shall pay Party A the agreed transfer price of RMB 65,200,000. Within 20 business days after the completion of the construction but no later than March 31, 2016, Party B shall pay Party A RMB 50,000,000; before September 30, 2016, Party B shall pay Party A the remaining RMB 50,000,000.

 

Cheng Li, the legal representative of Tangshan Rongfeng Iron & Steel Co., Ltd. shall provide the joint liability guaranty for the payment under this Agreement and a separate guarantee agreement will be executed by the two parties.

 

Four, Content and Method of Assets Transfer

 

The transferred assets of the CDQ and waste heat power generation project include all above-ground structures on site and their attachments as well as machinery equipment used for the Project.

 

Within three business days after Party B makes the first payment of transfer price at RMB 65,200,000 pursuant to section three of this Agreement, Party A, B, and C shall designate their personnel to conduct an actual turn-over of the transferred assets on the site and the ownership of corresponding assets of Project shall be temporarily transferred from Party A to Party B. After all the Transfer Price are totally paid off by Party B pursuant to section three of this Agreement, the ownership of the Project will be formally transferred to Party B. Otherwise, section seven of this Agreement shall prevail.

 

Before the actual turn-over of the transfer assets, Party B shall not hinder Party A's management and control over the Project and its corresponding assets through trespassing, damaging, impairing or in any other ways and for any reason; and Party A also shall not demolish, damage and transfer the Project and its corresponding assets.

 

Five, Waiver Clause:

 

After Party B pays off the entire Transfer Price within the agreed time according to section three of this Agreement, Party A agrees not to take actions against Party B for breach of Rongfeng Agreement.

 

Six, Termination of the Original Cooperative Agreement

 

The CDQ Power Generation Energy Management Cooperative Agreement signed by Party A and Party B shall be terminated on the date when Party B pays off the entire Transfer Price within the agreed date according to section three of this Agreement, and both parties shall not continue the performance of the original cooperative agreement.

 

 

 

 

Seven, Liability for Breach of the Agreement

 

If Party B fails to pay off the entire transfer price within the time agreed in this Agreement, this Agreement is automatically terminated on the due date of the payment date and the temporary ownership of the Project by Party B is immediately cancelled and the ownership of the CDQ waste heat power generation project and its corresponding assets shall automatically return to Party A, and both parties shall continue performing their respective rights and obligations according to Rongfeng Agreement and assume the corresponding liabilities for breach of the Rongfeng Agreement.

 

Eight, Settlement of Disputes

 

Any dispute over this Agreement shall be solved through consultation between both parties and if consultation fails, any party may file a lawsuit to the local people’s court where Party A is located.

 

Nine, this Agreement takes effect on the date of signing and sealing by Party A, Party B and Party C.

 

Ten, this Agreement is signed in six copies and each party holds two copies and they all have the same legal effect.

 

Eleven , anything not covered in this Agreement shall be consulted by both parties.

 

 

Party A: Party B:
   
Authorized Representative: Authorized Representative:
   
Date of Signature: Date of Signature:

 

Party C:

 

Authorized Representative:

 

Date of Signature: