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):

March 14, 2016

 

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 March 14, 2016, Xi’an TCH Energy Technology Co., Ltd. (“Xi’an TCH”), a wholly owned subsidiary of China Recycling Energy Corporation (the “Company”) entered into a Xuzhou Zhongtai CDQ and Waste Heat Power Generation System Transfer Agreement (the “Transfer Agreement”) with Xuzhou Zhongtai Energy Technology Co., Ltd., a limited liability company incorporated in China (the “Zhongtai”), 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”) and Waste Heat Power Generation Energy Management Cooperative Agreement (the “Cooperative Agreement”) with Zhongtai on December 6, 2013 to design, build and maintain a 150 ton per hour CDQ system and a 25 MW CDQ waste heat power generation system and sell the power to Zhongtai and to build a furnace to generate steam from the waste heat of the smoke pipeline and sell the steam to Zhongtai (the “Project”), as disclosed in the Form 8-K filed on December 9, 2013.

 

The Transfer Agreement provides for the sale to Zhongtai of all the assets of the Project under construction from Xi’an TCH. Additionally, Xi’an TCH will transfer to Zhongtai the Engineering, Procurement and Construction (“EPC”) Contract for the Project which Xi’an TCH had entered into with the Contractor in connection with the Project. As consideration for the transfer of the Project, Zhongtai shall pay to Xi’an TCH an aggregate purchase price of RMB 167,360,000 (approximately $25,747,692 and the “Transfer Price”), whereby (a) RMB 50,000,000 (approximately $7,692,308) of the Transfer Price shall be paid within 20 working days from the execution of the Transfer Agreement; (b) RMB 30,000,000 (approximately $4,615,385) of the Transfer Price shall be paid within 20 working days upon the completion of the construction of the Project but shall not be later than July 30, 2016; and (c) RMB 87,360,000 (approximately $13,440,000) of the Transfer Price shall be paid before July 30, 2017. The temporary ownership of the Project shall be transferred from Xi'an TCH to Zhongtai within 3 working days after the first payment of RMB 50,000,000 is made to Xi'an TCH and the full ownership of the Project shall be officially transferred to Zhongtai upon Zhongtai pays off the entire Transfer Price. The Cooperative Agreement will be terminated and Xi'an TCH shall not pursue any breach of contract liability against the Zhongtai under the Cooperative Agreement when Zhongtai pays off the entire Transfer Price according to the requirement of the Transfer Agreement. 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 the 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  

Xuzhou Zhongtai CDQ and Waste Heat Power Generation System Transfer Agreement

 

 

 

 

  

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: March 18, 2016 /s/ Jackie Shi  
  Jackie Shi, Chief Financial Officer  

 

 

 

 

Exhibit 10.1

 

Xuzhou Zhongtai CDQ & Waste Heat Power Generation System Transfer Agreement

 

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

Party B: Xuzhou Zhongtai Energy Technology 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 6, 2013 (“Zhongtai Agreement”); Pursuant to the Zhongtai Agreement, Party A entered into an EPC Contract for the CDQ Waste Heat Power Generation Project (the “Project”) with Party C on December 12, 2013 (“EPC Contract”). Pursuant to the EPC Contract, Party C undertakes the construction of the Project. As of January 31, 2016, Party A has paid Party C RMB 152,360,000 construction fee according to the EPC Contract, which has been verified and confirmed by the three parties. Party A has incurred RMB 31,916,487.60 loan interest for the Project. The ownership of assets of the Project belongs to Party A.

 

Whereas , at the end of 2015, Party B planned integration by repurchasing all its outsourced projects, including CDQ waste heat power generation projects. Party B proposed to repurchase the CDQ waste heat power generation project from Party A. Both Party A and Party B agreed to terminate the Zhongtai 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 Zhongtai Agreement and relevant follow-up issues.

 

One, Settlement Methods

 

1. Party A shall transfer all the project assets under construction under the Zhongtai Agreement to Party B. Party B confirms the assets under construction, which has been jointly inspected and verified by three parties.

 

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 EPC Contract to Party B.

 

Two, Transfer Price

 

Party B shall pay RMB 152,360,000 to Party A based on the proof of payment expenses for the construction of the Project provided by Party A. Party B shall also pay to Party As partial loan interest of RMB 15,000,000 incurred during the construction period. The total transfer price is RMB 167,360,000 (“Transfer Price”).

 

 

 

 

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 50,000,000. Within 20 business days after the completion of the construction but no later than July 30, 2016, Party B shall pay Party A RMB 30,000,000; before July 30, 2017, Party B shall pay Party A the remaining RMB 87,360,000.

 

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 50,000,000 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 is 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 Zhongtai 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 Zhongtai Agreement and assume the corresponding liabilities for breach of the Zhongtai 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: