NONSTATUTORY
STOCK OPTION AGREEMENT

NON-EMPLOYEE DIRECTOR


  


This NONSTATUTORY STOCK
OPTION AGREEMENT (this "Agreement"), made and entered into as of the 30th day of October, 2009, by and between Mr. Timothy
Driscoll (the "Optionee") and China Recycling Energy Corporation, a Nevada corporation (the "Corporation"),
sets forth the terms and conditions of the stock option (the “Option”) granted by the Corporation to the Optionee as
to the number of shares of the Corporation’s Common Stock set forth below and its Board of Directors (“Board”)
resolution approving this stock option grant dated October 30, 2009 (“Grant Date”).


 


1.           Grant of Option.
Subject to the provisions of this Agreement, the Board grants to the Optionee an Option to purchase 40,000 shares of Common Stock
of the Corporation as of the Grant Date. The Option is not granted pursuant to the Corporation’s Nonstatutory Stock Option
Plan (the “Plan”), but is granted pursuant to the Board’s authority to grant such options to certain persons,
including non-employee directors of the Corporation. Notwithstanding the foregoing, all of the terms and conditions set forth in
the Plan, except those set forth in Sections 3, 4(a), 5(a), 5(b) (except for the paragraph titled “Medium and Time of
Payment” which shall be incorporated herein), 6, 7, 10, 11, and 17) of the Plan, are incorporated herein to the extent
applicable in the context of a non-Plan grant of stock options, and the Optionee hereby agrees that the Option and all rights of
the Optionee under this Agreement are subject to such terms and conditions. The Optionee agrees to be bound by the terms of this
Agreement, including all incorporated provisions. Any capitalized terms used but not defined herein shall have the meaning prescribed
in the incorporated provisions of the Plan.


 


2.          Exercise Price.
The exercise price for the granted shares of Common Stock subject to the Option shall equal the closing price per share of the
Common Stock on the Grant Date: $1.85.


 


3.          Vesting. The
Option shall vest and become exercisable on the six-month anniversary of the Grant Date. The Option may only be exercised to the
extent that the Option has become vested and exercisable. Vesting requires continued service through the vesting date as a condition
to the vesting of the Option and the rights and benefits under this Agreement. Service for only a portion of the vesting period,
even if a substantial portion, will not entitle the Optionee to any proportionate vesting or avoid or mitigate a termination of
rights and benefits upon or following a termination of service as provided in Section 4 below or under the incorporated provisions
of the Plan.


 


4.          Removal from
Service. In the event of the Optionee's resignation or removal as a director of the Corporation for any reason, any portion of
the Option that has not become vested and exercisable shall immediately be forfeited, and the Option, to the extent it has become
vested and exercisable, shall expire as set forth in Section 5 of this Agreement.


 


5.          Stock Option
Term. Unless an earlier date is provided herein, the Option shall expire on the fifth anniversary of the Grant Date.


 




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6.          Method of Stock
Option Exercise. The Option may be exercised during its term, in whole or in part, to the extent it has become vested and exercisable
pursuant to Section 3 or 4 and has not yet been forfeited or expired, by giving written notice of exercise to the Corporation (or
to such other party as the Corporation may designate from time to time) specifying the number of shares of Stock subject to the
Option to be purchased. Such notice shall be accompanied by payment in full of the purchase price by certified or bank check or
such other instrument as the Corporation may accept. Options may also be exercised by any other means permitted by the Plan that
the Committee may designate from time to time. To the extent permitted by applicable law and to the extent permitted by the Committee,
the Optionee may discharge any withholding obligation in respect of this Agreement by directing the Corporation or an Affiliate
to withhold shares of Stock to be delivered upon exercise of the Option that have a Fair Market Value on the date of exercise equal
to the Corporation's or such Affiliate’s minimum withholding obligation.


 


7.          Transferability.
The Option shall not be transferable by the Optionee other than by will or by the laws of descent and distribution. The Option
shall be exercisable, subject to the incorporated terms of the Plan, only by the Optionee, the Optionee's estate or beneficiary,
the guardian or legal representative of the Optionee, or any person to whom such Option is transferred pursuant to this Section
7, it being understood that the term "Optionee" includes such guardian, legal representative and other permitted transferee.


 


8.         
 Successors, Assigns and Transferees. Subject to the Corporation’s right to terminate the Option in accordance
with the incorporated provisions of Section 5(h) of the Plan, this Agreement shall be binding upon, and inure to the benefit
of, the parties hereto and each of their respective successors and permitted transferees (including, upon the death of the
Optionee, the Optionee's estate).


 


9.          
Incorporation of Plan. The Optionee acknowledges having read and understanding this Agreement. Unless otherwise expressly
provided in other sections of this Agreement, provisions of the Plan that are incorporated herein and that confer
discretionary authority on the Board or the Committee do not and shall not be deemed to create any rights in the Optionee
unless such rights are expressly set forth herein or are otherwise in the sole discretion of the Board or the Committee so
conferred by appropriate action of the Board or the Committee under the Plan after the date hereof. The Optionee may
obtain a copy of the Plan from the Corporation.


 


10.         Not an Employment
Contract. Nothing contained in this Agreement or in the incorporated provisions of the Plan shall confer on the Optionee any right
with respect to continuance of service with the Corporation or an Affiliate, nor shall it interfere in any way with any right the
Corporation or an Affiliate would otherwise have to terminate or modify the terms of the Optionee's service at any time, or affect
the right of the Corporation or an Affiliate to increase or decrease the Optionee’s other compensation.


 


11.         Integration.
This Agreement and the other documents referred to herein or delivered pursuant hereto, which form a part hereof, contain the entire
understanding of the parties with respect to their subject matter. There are no restrictions, agreements, promises, representations,
warranties, covenants or undertakings with respect to the subject matter hereof other than those expressly set forth herein. This
Agreement supersedes all prior agreements and understandings between the parties with respect to its subject matter.


 




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12.          Counterparts.
This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but which together constitute
one and the same instrument. Notwithstanding the foregoing, any duly authorized officer of the Corporation may execute this Agreement
by providing an appropriate facsimile signature, and any counterpart or amendment hereto containing such facsimile signature shall
for all purposes be deemed an original instrument duly executed by the Corporation.


 


13.          Modification;
Waiver. No provision of this Agreement may be amended, modified, or waived unless such amendment or modification is agreed to in
writing and signed by the Optionee and by a duly authorized officer of the Corporation, and such waiver is set forth in writing
and signed by the party to be charged. No waiver by either party hereto at any time of any breach by the other party hereto of
any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or subsequent time.


 


14.          Bonus Designation.
The Option is designated as a bonus that is in addition to the Optionee’s regular cash wages. By accepting the Option, the
Optionee acknowledges that this Award does not create a right or entitlement to future grants or awards.


 


15.          Data Collection.
By accepting the Option, the Optionee consents to the collection, holding, process, use, and transfer of Optionee’s personal
data across country borders that is necessary and needed to accomplish the full and complete implementation of the Option, including
the settlement of the granted shares of Stock. The Optionee can obtain a copy of the Corporation’s data processing activities
upon request by contacting the Human Resources representative.


 


IN WITNESS WHEREOF,
the Optionee has executed this Agreement on the Optionee's own behalf, thereby representing that the Optionee has carefully read
and understands this Agreement as of the day and year first written above, and the Corporation has caused this Agreement to be
executed in its name and on its behalf, all as of the date first written above.


 


	By:	 	 
	 	Mr. Timothy Driscoll	 
	 	Optionee	 
	 	 	 
	By:	 	 
	 	Guohua Ku	 
	 	Chairman	 
	 	China Recycling Energy Corporation	 


 








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