Document:

Exhibit
4.2

 

DESCRIPTION
OF THE REGISTRANT’S SECURITIES

REGISTERED
PURSUANT TO SECTION 12 OF THE

SECURITIES
EXCHANGE ACT OF 1934

 

As
of May 14, 2020, China Recycling Energy Corporation (the “Company”, “we”, “us” or “our”)
has one class of securities registered under Section 12 of the Securities Exchange Act of 1934, as amended, (the “Exchange
Act”) which consists of common stock, $0.001 par value per share (the “Common Stock”). The following is a summary
of information concerning our Common Stock. This summary does not purport to be a complete statement of the relevant provisions
of the Common Stock and is qualified in its entirety by the provisions of our Articles of Incorporation, as amended (the “Articles
of Incorporation”), our Fourth Amended and Restated Bylaws (“Bylaws”), and applicable provisions of the Nevada
Revised Statutes (the “NRS”).

 

Common
Stock

 

As of May 14, 2020,
our authorized capital stock consists of 10,000,000 shares of Common Stock of which 2,182,642 shares were issued and outstanding,
held by approximately 2,720 shareholders of record. The share and per share numbers relating to our Common Stock reflect a one-for-ten
(1:10) reverse stock split of the issued and outstanding shares of Common Stock (the “Reverse Stock Split”), which
became effective on April 13, 2020. Upon the effectiveness of the Reverse Stock Split, we also correspondingly decreased the number
of the authorized shares of our Common Stock.

 

The actual number
of the Company’s holders of Common Stock is greater than the number of stockholders of record and includes beneficial owners
whose shares are held in street name by brokers and other nominees. This number of holders of record also does not include stockholders
whose shares may be held in trust by other entities. In addition, as of May 14, 2020, we had options to purchase 900 shares of
Common stock issued and outstanding and warrants to purchase 30,411 shares of Common Stock issued and outstanding. The authorized
and unissued shares of Common Stock are available for issuance without further action by our stockholders unless such action is
required by applicable law or the rules of The Nasdaq Capital Market stock exchange on which our securities are listed. Unless
approval of our stockholders is so required, our board of directors will not seek stockholder approval for the issuance and sale
of our Common stock.

 

The
holders of our Common Stock are entitled to one vote per share. Our Articles of Incorporation do not provide for cumulative voting.
The holders of our Common Stock are entitled to receive ratably such dividends, if any, as may be declared by our board of directors
out of legally available funds; however, the current policy of our board of directors is to retain earnings, if any, for operations
and growth. Upon liquidation, dissolution or winding-up, the holders of our Common Stock are entitled to share ratably in all
assets that are legally available for distribution. The holders of our Common Stock have no preemptive, subscription, redemption
or conversion rights. All issued and outstanding shares of Common Stock are fully paid and nonassessable.

 

Our
Common Stock is currently traded on the The Nasdaq Capital Market under the symbol “CREG.” The transfer agent and
registrar for our common stock is Securities Transfer Corporation.

 

Anti-Takeover
Effects of Certain Provisions of Nevada Law

 

As
a Nevada corporation, we are also subject to certain provisions of the NRS that have anti-takeover effects and may inhibit a non-negotiated
merger or other business combination. These provisions are intended to encourage any person interested in acquiring us to negotiate
with, and to obtain the approval of, our board of directors in connection with such a transaction. However, certain of these provisions
may discourage a future acquisition of us, including an acquisition in which the stockholders might otherwise receive a premium
for their shares. As a result, stockholders who might desire to participate in such a transaction may not have the opportunity
to do so.

 

     

     

    

 

The
NRS provides that specified persons who, with or through their affiliates or associates, own, or affiliates and associates of
the subject corporation at any time within two years own or did own, 10% or more of the outstanding voting stock of a corporation
cannot engage in specified business combinations with the corporation for a period of two years after the date on which the person
became an interested stockholder, unless the combination meets all of the requirements of the articles of incorporation of the
company, and: (i) the combination or transaction by which such person first became an interested stockholder was approved by the
board of directors before they first became an interested stockholder; or (ii) such combination is approved by: (x) the board
of directors; and (y) at an annual or special meeting of the stockholders (not by written consent), the affirmative vote of stockholders
representing at least 60% of the outstanding voting power not beneficially owned by such interested stockholder. The law defines
the term “business combination” to encompass a wide variety of transactions with or caused by an interested stockholder,
including mergers, asset sales and other transactions in which the interested stockholder receives or could receive a benefit
on other than a pro rata basis with other stockholders.

 

The
Control Share Acquisition Statute generally applies only to Nevada corporations with at least 200 stockholders of record, including
at least 100 stockholders of record who are Nevada residents, and which conduct business directly or indirectly in Nevada. This
statute generally provides that any person that acquires a “controlling interest” acquires voting rights in the control
shares, as defined, only as conferred by the disinterested stockholders of the corporation at a special or annual meeting. A person
acquires a “controlling interest” whenever a person acquires shares of a subject corporation that, but for the application
of these provisions of the NRS, would enable that person to exercise (1) one-fifth or more, but less than one-third, (2) one-third
or more, but less than a majority or (3) a majority or more, of all of the voting power of the corporation in the election of
directors. Once an acquirer crosses one of these thresholds, shares which it acquired in the transaction taking it over the threshold
and within the 90 days immediately preceding the date when the acquiring person acquired or offered to acquire a controlling interest
become “control shares.” In the event control shares are accorded full voting rights and the acquiring person has
acquired at least a majority of all of the voting power, any stockholder of record who has not voted in favor of authorizing voting
rights for the control shares is entitled to demand payment for the fair value of its shares.

 

These
laws may have a chilling effect on certain transactions if our Articles of Incorporation or Bylaws are not amended to provide
that these provisions do not apply to us or to an acquisition of a controlling interest, or if our disinterested stockholders
do not confer voting rights in the control shares.Exhibit 10.38

 

Employment Agreement between CREG and Jackie
Shi

 

Signed on May 8, 2020.

 

The agreement was between China Recycling
Energy Corporation and Jackie (Yongjiang) Shi, whose national ID number is 610103197504183673.

 

One, General

 

1.1 The company employs Mr. Shi as the
CFO and a Vice President.

 

Two, Term

 

2.1 The agreement lasts for 24 consecutive
months beginning from December 20, 2019, unless the agreement was terminated according to the agreement.

 

2.2 Probation period

 

None.

 

2.3 Contract renewal

 

The company should notify the employee
for contract renewal at least 30 days prior to the expiration of the agreement. If the employee does not reply to the notice, it
is regarded that the employee refuses to renew the contract.

 

Three, Scope of work

 

3.1 Scope of work

 

It is agreed as follows: upon company’s
decision, the company could assign new position to the employee, or assign the employee to other work places, and the company could
increase or reduce employee’s salary and allowances in accordance with the job.

 

3.2 Responsibilities of the employee

 

The employee shall complete his/her duties.
The employee shall corporate with his/her superintendent and associates, and follow all codes of practice of the company.

 

3.3 Holidays and leave

 

The employee has the right to have statutory
holidays, annual leave and paid holiday according to applicable laws etc.

 

    1

     

    

 

3.4 Working agenda

 

The company might change the working agenda
of the employee, which includes the company might change the working days, request the employee to work overtime or work during
holidays upon needs under permission of applicable laws.

 

Four, Salary

 

4.1 Salary

 

Monthly salary is RMB 16,000. The company
will evaluate the employee’s skills and working efficiency to determine the actual monthly salary. As a member of the management
team, CREG will grant no less than 5000 shares of common stock annually. Monthly salary shall be paid to employee by the end of
each month or no later than the 15th day of the next month.

 

4.2 Payment

 

After the deduction of required individual
income tax, social insurance fees or other taxes required by law, the company will pay all the salary to the employee.

 

Five, Social insurance and labor protection

 

5.1 Social insurance

 

The company shall pay part of the pension,
injury insurance, medical insurance, housing fund, job insurance and other social insurance for the employee.

 

5.2 Medical leave and subsidy

 

The company provides medical leave, medical
subsidy, female employee subsidy, leave and other welfare according to applicable laws.

 

5.3 Labor protection

 

Labor protection for the employee shall
be executed according to national laws and regulations.

 

Six, Discipline

 

The employee shall follow the rules and
codes of practice published by the company.

 

Seven & Eight, Termination of the agreement

 

Both the company and the employee have
the right to terminate the agreement.

 

Nine, Confidentiality

 

    2

     

    

 

9.1 The employee shall comply with the
company’s confidentiality policies.

 

9.2 Upon expiration or termination of the
agreement, the employee shall return all company’s documents to the company.

 

Ten, training

 

10.1 The company has the right to provide
training for the employee.

 

Eleven, Breach of contract

 

The company and the employee shall assume
their responsibilities for breach of contract.

 

Twelve, Solution of disputes

 

The company and the employee have the right
to solve any disputes through negotiation, arbitration or lawsuit to local arbitration committee, and local court.

 

Thirteen, Others

 

13.1 The agreement becomes effective immediately
after signed and could be modified upon written approval of both parties. This agreement replaces other previous agreement (if
any).

 

13.2 Both parties agree that the company
has the right to change its name, and the agreement is still effective and binding for both parties.

 

13.3 Both parties hold one original of
the agreement. Copies of the agreement have the same legal effects.

 

	Signatures:	 
	 	 
	 	 

 

 

3

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