AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT
Exhibit
10.4
AMENDED
AND RESTATED REGISTRATION RIGHTS AGREEMENT
This
AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT, dated as of April 29, 2009
(the “Agreement”) by and
between China Recycling Energy Corporation, a Nevada corporation (the “Company”), on the one
hand, and Carlyle Asia Growth Partners III, L.P., a limited
partnership organized under the Laws of the Cayman Islands (“CAGP”), and CAGP III
Co-Investment, L.P., a limited partnership organized under the Laws of the
Cayman Islands (together with CAGP, the “Stockholders”), on
the other hand.
RECITALS
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A.
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The
Company and the Stockholders entered into a Registration Rights Agreement
on November 16, 2007 (the “Original Rights
Agreement”) granting the Stockholders certain rights to cause the
Company to register securities of the Company issued to them pursuant to
that certain Stock and Notes Purchase Agreement, dated November 16, 2007
(the “Original
Purchase Agreement”), by and among the Company and its subsidiaries
and the Stockholders;
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B.
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On
April 29, 2008 the Company and the Stockholders executed the Amendment to
the Stock and Notes Purchase Agreement (the “Amendment”) in
order to amend the Original Purchase Agreement and restructure the
transactions contemplated therein.
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C.
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On
June 29, 2008 the Company and the Stockholders executed the Rescission and
Subscription Agreement (the “Rescission and
Subscription”) relating to the
Amendment.
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D.
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Pursuant
to the Amendment and the Rescission and Subscription, (i) the Stockholders
subscribed for, and the Company issued to the Stockholders, 4,066,706
shares of Common Stock, as originally contemplated under the Original
Purchase Agreement; (ii) the Company repaid in full the 10% Secured
Convertible Promissory Note in the principal amount of $5,000,000 which
was issued under the Original Purchase Agreement to the Stockholders on
November 16, 2007 (the “First Note”);
(iii) the Investors subscribed for, and the Company issued and sold to the
Investors, 4,065,040 shares of Common Stock, at the price of $1.23 per
share for an aggregate purchase price of $5,000,000; (iv) the Company
issued and sold to the Investors, and the Investors purchased from the
Company, a 5% secured convertible promissory note in the principal amount
of $5,000,000 (the “$5,000,000
Note”); and (v) the Company granted to the Investors an option to
purchase the Option Note, which option is exercisable by the Investors at
any time within nine (9) months following April 29,
2008.
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E.
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On
April 29, 2009, the Company and the Stockholders executed the Note
Subscription and Amendment Agreement (the “Note Subscription and
Amendment Agreement”) which, among other things, amended the
Original Purchase Agreement (as amended by the Amendment), and provided
for the issuance and sale of an 8% secured convertible promissory note in
the principal amount of $3,000,000 (the “$3,000,000
Note”), and (ii) amend and restate the $5,000,000 Note (as amended,
the “Amended
$5,000,000 Note”, and together with the $3,000,000
Note, the “Notes”).
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F.
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The
Original Rights Agreement may be amended by the written agreement of the
Company and the Stockholders.
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AGREEMENT
As an
inducement to the Stockholders to enter into the Note Subscription and Amendment
Agreement, the Company agrees with the Stockholders to amend and restate in its
entirety the Original Rights Agreement as follows:
Section
1. Definitions.
In
addition to terms defined elsewhere herein, as used in this 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.
“Common Stock” means
the common stock, $0.001 par value per share, of the Company.
“Demand Notice” means
a written notice executed by Holders of more than 50% of the Registrable Shares
Then Outstanding
“Effective Date” means
with respect to any Registration Statement the earlier of (i) the one hundred
twentieth (120th) day following the Filing Date (as defined below) or (ii) in
the event the Registration Statement receives a “full review” by the Commission,
the one hundred fiftieth (150th) day following the Filing Date or (iii) the date
which is within five (5) Business Days after the date on which the Commission
informs the Company (x) the Commission will not review a Registration Statement
or (y) the Company may request the acceleration of the effectiveness of a
Registration Statement and the Company makes such request; provided, that, in
any event (i), (ii) or (iii), if the Effective Date falls on a Saturday, Sunday
or any other day that is a legal holiday or a day on which the Commission is
authorized or required by law or other government action to close, the Effective
Date shall be the following Business Day.
“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.
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“Filing Date” means
the ninetieth (90th) day following the delivery date of a Demand Notice or such
later date as specified in the Demand Notice or as agreed by the Requesting
Holders; provided, that, if the Filing Date falls on a Saturday, Sunday or any
other day that is a legal holiday or a day on which the Commission is authorized
or required by law or other government action to close, the Filing Date shall be
the following Business Day.
“Free Writing
Prospectus” means a free writing prospectus as defined in Rule 405 under
the Securities Act.
“Holders” means the
Stockholders 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.
“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.
“Purchase Agreement”
means the Original Purchase Agreement as amended by the Amendment, the
Rescission and Subscription and the Note Subscription and Amendment Agreement,
and as may be further amended, modified or supplemented from time to
time.
“Registrable Shares”
means the Restricted Shares purchased by the Holders pursuant to the Purchase
Agreement.
“Registrable Shares Then
Outstanding” means the number of shares of Common Stock of the
Company that are Registrable Shares and are then issued and outstanding or would
be outstanding assuming full conversion of all securities, warrants or other
rights which are, directly or indirectly, convertible, exercisable or
exchangeable into or for Registrable 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.
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“Restricted Shares”
means shares of Common Stock, shares of Common Stock issued as a dividend or
other distribution with respect to or in exchange for or in replacement of
shares of Common Stock, and shares of Common Stock issuable upon exercise,
exchange or conversion of any other securities which by their terms are
exercisable or exchangeable for or convertible into Common Stock (including the
Notes). As to any particular Restricted Shares held by a Holders,
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 in a single transaction without
restriction 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.
“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.
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Section
2. Demand
Registration.
(a) If
at any time after following the date of this Agreement, the Company
receives a Demand Notice, then on or prior to the Filing Date 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). The Registration Statement required hereunder
shall contain (except if otherwise directed by the Holders) the “Plan of Distribution”
attached hereto as Annex
A. The Holders agrees to furnish to the Company a completed
questionnaire in the form attached to the Agreement as Annex B (an “Electing Holder
Questionnaire”) not less than five (5) Trading Days prior to the
applicable Filing Date.
(b) Subject
to Section
2(e), the Company shall use its best efforts to cause such Registration
Statement to be declared effective under the Securities Act as promptly as
possible after the filing thereof, but in any event prior to the Effective Date,
and to keep such Registration Statement continuously effective under the
Securities Act until such date as is the earlier of (x) the date when all
Registrable Shares have been sold or (y) the date on which the Registrable
Shares may be sold without any restriction pursuant to Rule 144 of the
Securities Act as determined by the counsel to the Company pursuant to a written
opinion letter, addressed to the Company’s transfer agent to such effect (the
“Effective
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). 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.
(c) 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 this Section 2(c)(1)); or
(2) the Registration Statement does not become automatically effective or is not
declared effective by the Commission on or before the Effective 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(c)(1) or
Section 2(c)(2)
the date on which such breach occurs, and for purposes of Section 2(c)(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 (x) the Notes then held by the
Holders and not yet converted into shares of Common Stock, and (y) shares of
Common Stock purchased under the Purchase Price or shares of Common Stock
obtained upon conversion of the Notes (or, in each case, 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(c)(1), the date on which such Registration Statement is filed, (y) in
the case of Section
2(c)(2), the date on which such Registration Statement becomes effective
and (z) in the case of Section 2(c)(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 each 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.
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(d) 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.
(e) In
the event that the Company is unable to register all of the Registrable Shares
for resale under Rule 415 due to limits imposed by the Commission’s
interpretation of Rule 415, the Company will file a Registration Statement under
the Securities Act with the Commission covering the resale by the Holders of
such lesser amount of the Registrable Shares as the Company is able to register
pursuant to the Commission’s interpretation of Rule 415 and use its commercially
reasonable efforts to have such Registration Statement declared effective as
promptly as possible and, when permitted to do so by the Commission, to file
subsequent registration statement(s) under the Securities Act with the
Commission covering the resale of any Registrable Shares that were omitted from
previous registration statement(s) and use its commercially reasonable efforts
to have such registration declared effective as promptly as possible
thereafter. In furtherance of the Company’s obligations set forth in
the preceding sentence, the parties agree that in the event that any Holder
shall deliver to the Company a written notice at any time after the later of (x)
the date which is six months after the Effective Date of the latest Registration
Statement filed pursuant to Section 2(a) or Section 2(e) hereof,
as applicable, or (y) the date on which all Registrable Shares registered on all
of the prior Registration Statements filed pursuant to Section 2(a) and
Section 2(e)
hereof are sold, that the Company shall file, within thirty (30) days following
the date of receipt of such written notice, an additional Registration Statement
registering all Registrable Shares that were omitted from the initial
Registration Statement. The Holders agree that the Company shall not be
obligated to pay any amount of liquidated damages under Section 2(c) 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
Commission that either the Company or the Holders are ineligible to rely on Rule
415 with respect to the registration of any of the Registrable Shares for resale
by the Holders on a continuous or delayed basis; provided, that the Company
shall have complied with the requirements of this Section
2(e).
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Section
3. Incidental
Registration.
(a) 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 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) 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
the Electing Holder Questionnaire to the Holders. The Holders shall
have at least ten (10) calendar days from the date on which the Electing Holder
Questionnaire is first mailed to the Holders to return a completed and signed
Electing Holder Questionnaire to the Company. The term “Electing Holder”
shall mean any Holder that has returned a completed and signed Electing Holder
Questionnaire to the Company in accordance with this Section
4(a);
(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 or 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;
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(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;
(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);
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(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;
(l) 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;
10
(n) provide
a transfer agent and registrar (which may be the same entity and which may be
the Company) for such Registrable Shares;
(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, (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.
11
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.
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).
12
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.
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.
13
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.
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).
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.
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.
14
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 11, 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 Holders 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 Holders herein and had
originally been a party hereto.
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.
15
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:
(ii) if
to the Holders, to:
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.
Section
15. Amendment and
Restatement. This Agreement amends and restates in its entirety the
Original Rights Agreement.
Section
16. Other
Modifications; Amendments; Waivers. Any provision of this
Agreement may be amended and the observance thereof may be waived (either
generally or in a particular instance and either retroactively or prospectively)
only with the written consent of the Company and Holders of at least 75% of the
Registrable Shares Then Outstanding; provided that any amendment that
disproportionately affects any Holder vis-à-vis any other Holder shall require
the consent of such affected Holder. Any amendment or waiver effected in
accordance with this Section 16 shall be binding upon each Holder, each
permitted successor or assignee of such Holder and the Company.
16
Section
17. 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
18. 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
19. 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
20. 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
21. 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.
* * * *
17
IN
WITNESS WHEREOF, the parties hereto have executed this Registration Rights
Agreement on the date first written above.
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CHINA
RECYCLING ENERGY CORPORATION
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By:
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Name:
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Title:
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For
and on behalf of:
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CARLYLE
ASIA GROWTH PARTNERS III,
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L.P.
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By:
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Name:
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Title:
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For
and on behalf of:
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CAGP
III CO-INVESTMENT, L.P.
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By:
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Name:
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Title:
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S-1
ANNEX
A
Plan of
Distribution
The
shares covered by this prospectus may be offered and sold from time to time by
the selling Holders. The term “selling Holders” includes pledgees,
donees, transferees or other successors in interest selling shares received
after the date of this prospectus from each selling Holders as a pledge, gift,
partnership distribution or other non-sale related transfer. The
number of shares beneficially owned by a selling Holders will decrease as and
when it effects any such transfers. The plan of distribution for the
selling Holders’ shares sold hereunder will otherwise remain unchanged, except
that the transferees, pledgees, donees or other successors will be selling
Holders hereunder. To the extent required, we may amend and
supplement this prospectus from time to time to describe a specific plan of
distribution. The selling Holders will act independently of us in
making decisions with respect to the timing, manner and size of each
sale.
The
selling Holders may make these sales at prices and under terms then prevailing
or at prices related to the then current market price. The selling
Holders may also make sales in negotiated transactions. The selling
Holders may offer their shares from time to time pursuant to one or more of the
following methods:
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•
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ordinary
brokerage transactions and transactions in which the broker-dealer
solicits purchasers;
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•
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one
or more block trades in which the broker-dealer will attempt to sell the
shares as agent but may position and resell a portion of the block as
principal to facilitate the
transaction;
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•
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purchases
by a broker-dealer as principal and resale by the broker-dealer for its
account;
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•
|
an
exchange distribution in accordance with the rules of the applicable
exchange;
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•
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public
or privately negotiated
transactions;
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•
|
on
the Nasdaq Capital Market (or through the facilities of any national
securities exchange or U.S. inter-dealer quotation system of a
registered national securities association, on which the shares are then
listed, admitted to unlisted trading privileges or included for
quotation);
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•
|
through
underwriters, brokers or dealers (who may act as agents or principals) or
directly to one or more purchasers;
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•
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a
combination of any such methods of sale;
and
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•
|
any
other method permitted pursuant to applicable
law.
|
In
connection with distributions of the shares or otherwise, the selling Holders
may:
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•
|
enter
into hedging transactions with broker-dealers or other financial
institutions, which may in turn engage in short sales of the shares in the
course of hedging the positions they
assume;
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•
|
sell
the shares short after the effective date of the registration statement of
which this prospectus forms a part and redeliver the shares to close out
such short positions;
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•
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enter
into option or other transactions with broker-dealers or other financial
institutions which require the delivery to them of shares offered by this
prospectus, which they may in turn resell;
and
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•
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pledge
shares to a broker-dealer or other financial institution, which, upon a
default, they may in turn resell.
|
In
addition to the foregoing methods, the selling Holders may offer their shares
from time to time in transactions involving principals or brokers not otherwise
contemplated above, in a combination of such methods or described above or any
other lawful methods. The selling Holders may also transfer, donate
or assign their shares to lenders, family members and others and each of such
Persons will be deemed to be a selling Holder for purposes of this
prospectus. The selling Holders or their successors in interest may
from time to time pledge or grant a security interest in some or all of the
shares of common stock, and if the selling Holders default in the performance of
their secured obligations, the pledgees or secured parties may offer and sell
the shares of common stock from time to time under this prospectus; provided however in the event
of a pledge or then default on a secured obligation by the selling Holders, in
order for the shares to be sold under this registration statement, unless
permitted by law, we must distribute a prospectus supplement and/or amendment to
this registration statement amending the list of selling Holders to include the
pledgee, secured party or other successors in interest of the selling Holders
under this prospectus.
The
selling Holders may also sell their shares pursuant to Rule 144 under the
Securities Act, which permits limited resale of shares purchased in a private
placement subject to the satisfaction of certain conditions, including, among
other things, the availability of certain current public information concerning
the issuer, the resale occurring following the required holding period under
Rule 144 and the number of shares being sold during any three-month period not
exceeding certain limitations. Sales through brokers may be made by
any method of trading authorized by any stock exchange or market on which the
shares may be listed or quoted, including block trading in negotiated
transactions. Without limiting the foregoing, such brokers may act as
dealers by purchasing any or all of the shares covered by this prospectus,
either as agents for others or as principals for their own accounts, and
reselling such shares pursuant to this prospectus.
The
selling Holders may effect such transactions directly or indirectly through
underwriters, broker-dealers or agents acting on their behalf. In
effecting sales, broker-dealers or agents engaged by the selling Holders may
arrange for other broker-dealers to participate. Broker-dealers or
agents may receive commissions, discounts or concessions from the selling
Holders, in amounts to be negotiated immediately prior to the sale (which
compensation as to a particular broker-dealer might be in excess of customary
commissions for routine market transactions).
NASD
Notice to Members 88-101 states that in the event a selling Holders intends to
sell any of the shares registered for resale in this registration statement
through a member of the NASD participating in a distribution of our securities,
such member is responsible for insuring that a timely filing is first made with
the Corporate Finance department of the NASD and disclosing to the NASD the
following:
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·
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it
intends to take possession of the registered securities or to facilitate
the transfer of such certificates;
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·
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the
complete details of how the selling Holders shares are and will be held,
including location of the particular
accounts;
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·
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whether
the member firm or any direct or indirect affiliates thereof have entered
into, will facilitate or otherwise participate in any type of payment
transaction with the selling Holders, including details regarding any such
transactions; and
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·
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in
the event any of the securities offered by the selling Holders are sold,
transferred, assigned or hypothecated by any selling Holders in a
transaction that directly or indirectly involves a member firm of the NASD
or any affiliates thereof, that prior to or at the time of said
transaction the member firm will timely file all relevant documents with
respect to such transaction(s) with the Corporate Finance Department of
the NASD for review.
|
The
Company has advised the selling Holders that the anti-manipulation rules of
Regulation M under the Exchange Act may apply to sales of shares in the market
and to the activities of the selling Holders and their affiliates.
In
offering the shares covered by this prospectus, the selling Holders, and any
broker-dealers and any other participating broker-dealers who execute sales for
the selling Holders, may be deemed to be “underwriters” within the meaning of
the Securities Act in connection with these sales. Any profits
realized by the selling Holders and the compensation of such broker-dealers may
be deemed to be underwriting discounts and commissions.
The
Company is required to pay all of the Company’s fees and expenses incident to
the registration of the shares as well as certain of the expenses of the selling
Holders.
The
Company has agreed to indemnify the selling Holders against certain losses,
claims, damages and liabilities, including liabilities under the Securities
Act.
ANNEX B
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Name
of Electing Holder
|
CHINA
RECYCLING ENERGY GROUP, INC.
QUESTIONNAIRE
FOR ELECTING HOLDERS
SENT
ON: [ ____ ],
200_
PLEASE
RETURN BY: [ ____ ],
200_
This Electing Holder Questionnaire is
being furnished to all selling Holders of China Recycling Energy Group, Inc., a
Nevada corporation (the “Company”), and
relates to certain information required to be disclosed in the registration
statement (the “Registration
Statement”) being prepared on behalf of you and the Company for filing
with the United States Securities and Exchange Commission (the “SEC”).
Selling Holders of the Company may be
personally liable under the federal securities laws of the United States if the
Registration Statement contains any statement which is false or misleading as to
any material fact or omits to state any material fact necessary in order to make
the statements therein not false or misleading.
Your careful completion of this
Electing Holder Questionnaire will help ensure that the Registration Statement
will be complete and accurate. Careful consideration of the
instructions and definitions contained in the endnotes to various items is
essential to an understanding of the questions.
PLEASE PROVIDE A RESPONSE TO
EVERY QUESTION, indicating “None” or “Not Applicable” where
appropriate. Please complete, sign, and fax one copy of this Electing
Holder Questionnaire NO LATER THAN [ ____ ], 200_
to:
[ ]
Unless stated otherwise, answers should
be given as of the date you complete this Electing Holder
Questionnaire. However, it is your responsibility to
inform us of any changes that may occur to your situation between the date you
complete the Electing Holder Questionnaire and the effective date of the
Registration Statement. If there is any situation about which
you have any doubt, please give relevant facts so that the information may be
reviewed.
ELECTING
HOLDER QUESTIONNAIRE
STOCK
OWNERSHIP
Item
1. Beneficial
Ownership.
a. Deemed Beneficial
Ownership. Please state the amount of securities of the
Company you own as of [ ____ ], 200_, assuming, if applicable, the exercise of
Notes for shares of Common Stock. (If none, please so state in each
case.)
|
Number
of Shares of Common Stock Owned
|
|||
|
Amount Beneficially Owned1
|
(on
an as-converted basis, as applicable)
|
||
|
Total
Shares:
|
|||
|
Of
such shares:
|
|||
|
Shares
as to which you have sole
|
|||
|
voting
power:
|
|||
|
Shares
as to which you have shared
|
|||
|
voting
power:
|
|||
|
Shares
as to which you have sole
|
|||
|
investment
power:
|
|||
|
Shares
as to which you have shared
|
|||
|
investment
power:
|
|||
|
Please
state the number of shares owned by family members, trusts and other
organizations with which you have a relationship, and any other shares of
which you may be deemed to be the “beneficial owner”1:
|
|||
|
Total
Shares:
|
|||
|
Of
such shares:
|
|||
|
Shares
as to which you have sole
|
|||
|
voting
power:
|
|
||
|
Shares
as to which you have shared
|
|||
|
voting
power:
|
|
||
|
Shares
as to which you have sole
|
|||
|
investment
power:
|
|
||
|
Shares
as to which you have shared
|
|||
|
investment
power:
|
|
||
|
Shares
which you will have a right to acquire before
|
|||
|
[date 60 days from expected
filing date], through the
|
|||
|
exercise
of options, warrants, or otherwise:
|
|||
|
Shares
of Common Stock you intend to offer for sale
|
|||
|
pursuant
to the Registration Statement:
|
|||
|
Shares
of Common Stock that you will hold after the
|
|||
|
offering
for sale of Common Stock that is the subject
|
|||
|
of
the Registration Statement:
|
Do you have any present plans to exercise options or otherwise
acquire,
dispose of or transfer shares of Common Stock (on an
as-converted
basis) of the Company between the date you
complete
this Electing Holder Questionnaire and [date 60 days
from expected filing
date]?
Answer:
If so,
please describe.
b. Pledged
Securities. If any of such securities have been pledged or
otherwise deposited as collateral or are the subject matter of any voting trust
or other similar agreement or of any contract providing for the sale or other
disposition of such securities, please give the details thereof.
Answer:
c. Disclaimer of Beneficial
Ownership. Do you wish to disclaim beneficial ownership1 of any
of the shares reported in response to Item 1(a)?
Answer:
If the answer is “Yes”, please furnish
the following information with respect to the person or persons who should be
shown as the beneficial owner(s)1 of the
shares in question.
|
Name
and Address of
|
Relationship
of
|
Number
of Shares
|
|
Actual Beneficial
Owner
|
Such Person To
You
|
Beneficially
Owned
|
Item
2. Major
Holders. Please state below the names of persons or groups
known by you to own beneficially1 more
than 5% of the Company’s Common Stock.
Answer:
Item
3. Change of
Control. Do you know of any contractual arrangements,
including any pledge of securities of the Company, the operation of which may at
a subsequent date result in a change of control of the Company?
Answer:
Item
4. Relationship with the
Company. Please state the nature of any position, office or
other material relationship you have, or have had within the past three years,
with the Company or its affiliates.
|
Nature
of
|
||
|
Name
|
Relationship
|
Item
5. Correct
Name. Please confirm that your name or your organization’s
name, as it appears on the signature page to this Electing Holder Questionnaire,
is exactly as it should appear in the “Principal and Selling Holders” section of
the Registration Statement:
____ Yes,
this name is correct.
____ No,
the correct name should be:
_________________________________
Item
6. Broker-Dealer
Status. Please state whether you are a broker-dealer or an
affiliate of a broker-dealer. If you are an affiliate of a broker-dealer, please
state whether you have bought securities of the Company in the ordinary course
of business and, at the time of the purchase of such securities, whether you
have any agreements or understandings, directly or indirectly, with any person
to distribute such securities.
Answer:
SIGNATURE
By
signing below, the Electing Holder acknowledges that it understands its
obligation to comply, and agrees that it will comply, with the provisions of the
Securities Exchange Act of 1934, as amended, and the rules and regulations
thereunder, particularly Regulation M.
In the
event that the Electing Holder transfers all or any portion of the securities of
the Company after the date on which such information is provided to the Company,
the Electing Holder agrees to notify the transferee(s) at the time of the
transfer of its rights and obligations under this Electing Holder Questionnaire
and the Registration Rights Agreement.
By
signing below, the Electing Holder consents to the disclosure of the information
contained herein and the inclusion of such information in the Registration
Statement and related Prospectus, and any amendments or supplements thereto
filed with the SEC pursuant to the Securities Act of 1933, as
amended. The Electing Holder understands that such information will
be relied upon by the Company in connection with the preparation of the
Registration Statement and related Prospectus.
The
Electing Holder acknowledges that material misstatements and omissions of
material facts in the Registration Statement and any amendments or supplement
thereto may give rise to civil and criminal liabilities to the Company and to
each officer and director of the Company signing the Registration Statement and
to other persons signing such document. As a result, in accordance
with the Electing Holder’s obligation under Section 2(a) of the
Registration Rights Agreement to provide such information as may be required by
law for inclusion in the Registration Statement, the Electing Holder agrees to
promptly notify the Company of any inaccuracies or changes in the information
provided herein which may occur subsequent to the date hereof at any time while
the Registration Statement remains in effect. All notices hereunder
shall be made in accordance with the Registration Rights Agreement.
The
Electing Holder hereby consents to the inclusion of such information in the
Registration Statement.
|
Name
of Electing Holder: ___________________________________
|
|
|
Date: _______________,
200__
|
Signature:
______________________________________________
|
|
Print
Name: _____________________________________________
|
|
|
Title
(if applicable):
_______________________________________
|
|
|
Address:
_______________________________________________
|
|
| _______________________________________________________ | |
|
Telephone
Number: _______________________________________
|
|
|
Facsimile
Number:
________________________________________
|
ENDNOTE
___________________
|
1.
|
Beneficial
Ownership. You are the beneficial owner of a security,
as defined in Rule 13d-3 under the Securities Exchange Act of 1934
(the “Exchange
Act”), if you, directly or indirectly, through any contract,
arrangement, understanding, relationship or otherwise have or share:
(1) voting power, which includes the power to vote, or to direct the
voting of, such security, and/or (2) investment power, which includes
the power to dispose, or to direct the disposition of, such
security. You are also the beneficial owner of a security if
you, directly or indirectly, create or use a trust, proxy, power of
attorney, pooling arrangement or any other contract, arrangement, or
device with the purpose or effect of divesting yourself of beneficial
ownership of a security or preventing the vesting of such beneficial
ownership.
|
You are
deemed to be the beneficial owner of a security if you have the right to acquire
beneficial ownership of such security at any time within sixty days
including, but not limited to, any right to acquire such security
(a) through the exercise of any option, warrant or right, (b) through
the conversion of a security, or (c) pursuant to the automatic termination
of, or the power to revoke a trust, discretionary account, or similar
arrangement.
Ordinarily,
shares held in the name of your spouse or minor child should be considered as
beneficially owned by you absent special circumstances to indicate that you do
not have, as a practical matter, voting power or investment power over such
shares. Similarly, absent countervailing facts, securities held in
the name of relatives who share your home are to be reported as being
beneficially owned by you. In addition, securities held for your
benefit in the name of others, such as nominees, trustees and other fiduciaries,
securities held by a partnership of which you are a partner, and securities held
by a corporation controlled by you should be regarded as beneficially owned by
you.
This
definition of beneficial ownership is very broad; therefore, even through you
may not actually have or share voting or investment power with respect to
securities owned by persons in your family or living in your home, you should
include such shares in your beneficial ownership disclosure and may then
disclaim beneficial ownership of such securities. Please note, however, that shares in
which you have an economic interest but over which you have no voting or
investment control (for example, shares in a trust of which you are the
beneficiary but not the trustee) are not deemed beneficially owned by you for
the purposes of this questionnaire.
