REGISTRATION RIGHTS AGREEMENT
Exhibit
99.2
This REGISTRATION RIGHTS AGREEMENT
(this “Agreement”) is made
and entered into as of December 22, 2009 among China Carbon Graphite Group,
Inc., a Nevada corporation (the “Company”), and the
several purchasers signatory hereto (each such purchaser is a “Purchaser” and
collectively, the “Purchasers”).
This
Agreement is made pursuant to separate Subscription Agreements, dated as of the
date hereof, between the Company and each Purchaser (the “Subscription
Agreements”).
The
Company and each Purchaser hereby agrees as follows:
1. Definitions. Capitalized
terms used and not otherwise defined herein that are defined in the Subscription
Agreements shall have the meanings given such terms in the Subscription
Agreements. In addition to the other capitalized terms defined
herein, the following terms shall have the following meanings:
“Common Stock” means
the common stock, par value $0.001 per share, of the Company.
“Effectiveness Date”
means no later than the 180th
calendar day following the final closing of the Offering; provided, however, that in the
event the Company is notified by the Commission that the Registration Statement
will not be reviewed or is no longer subject to further review and comments, the
Effectiveness Date shall be the fifth Trading Day following the date on which
the Company is so notified if such date precedes the date required
above.
“Filing Date” means no
later than the 45th
calendar day following the closing at which the Minimum Amount has been
raised.
“Holder(s)” means each
Purchaser and the holder or holders, as the case may be, from time to time of
Registrable Securities.
“Person(s)” shall mean
a natural person, corporation, trust, estate, partnership, incorporated or
unincorporated association or any other legal entity, and also includes any
department, agency, authority, or instrumentality of any state or its political
subdivisions.
“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 promulgated under the Securities Act), as amended or supplemented by
any prospectus supplement, with respect to the terms of the offering of any
portion of the Registrable Securities 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.
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“Registrable
Securities” means the Common Stock underlying the shares of Series B
Convertible Preferred Stock of the Company issued as part of the Units (the
“Unit Shares”),
the Common Stock issuable upon exercise of the Warrants included as part of the
Units (the “Warrant
Shares”) and the Common Stock issuable upon exercise of the warrant to be
issued to the Placement Agent (the “Placement Agent
Shares”); provided, however, that any such Registrable Securities shall
cease to be Registrable Securities (and the Company shall not be required to
maintain the effectiveness of any, or file another Registration Statement
hereunder with respect thereto) for so long as (a) a Registration Statement with
respect to the sale of such Registrable Securities is declared effective by the
Commission under the Securities Act and such Registrable Securities have been
disposed of by the Holder in accordance with such effective Registration
Statement, (b) such Registrable Securities have been previously sold in
accordance with Rule 144, or (c) such securities become eligible for resale
without volume or manner-of-sale restrictions and without current public
information pursuant to Rule 144 as set forth in a written opinion letter to
such effect, addressed, delivered and acceptable to the Transfer Agent and the
affected Holders (assuming that such securities and any securities issuable upon
exercise, conversion or exchange of which, or as a dividend upon which, such
securities were issued or are issuable, were at no time held by any affiliate of
the Company).
“Registration
Statement” means any registration statement required to be filed
hereunder, including the Prospectus, amendments and supplements to such
registration statement or Prospectus, including pre- and post-effective
amendments, all exhibits thereto, and all material incorporated by reference or
deemed to be incorporated by reference in such registration
statement.
“SEC Guidance” means
(i) any publicly-available written or oral guidance of the Commission
staff, or any comments, requirements or requests of the Commission staff and
(ii) the Securities Act.
“Securities Act” means
the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.
“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 purpose and 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 purpose and effect as
such Rule.
“Trading Day” means
any day on which the OTC Bulletin Board is open for ordinary
business.
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2. Registration
Rights.
(a) On or
prior to the Filing Date, the Company shall prepare and file with the Commission
a Registration Statement covering the resale of all or the maximum portion of
the Registrable Securities as permitted by SEC Guidance for an offering to be
made on a continuous basis pursuant to Rule 415. The Registration Statement
shall be on Form S-3 (except if the Company is not then eligible to register for
resale the Registrable Securities on Form S-3, in which case such registration
shall be on another appropriate form in accordance herewith) and shall contain a
customary “Selling Stockholders” and “Plan of Distribution” sections reasonably
satisfactory to the Placement Agent and its counsel. Subject to the
terms of this Agreement, the Company shall use its commercially reasonable best
efforts to cause the 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 applicable Effectiveness Date, and shall use its commercially
reasonable best efforts to keep the Registration Statement continuously
effective under the Securities Act until sooner of the second anniversary of the
date of such effectiveness or the date that all Registrable Securities covered
by the Registration Statement have been sold, or may be sold without volume
restrictions pursuant to Rule 144(k), as determined by the counsel to the
Company pursuant to a written opinion letter to such effect, addressed and
acceptable to the Company’s transfer agent and the affected Holders (the “Effectiveness
Period”). The Company shall telephonically request
effectiveness of the Registration Statement no later than 5:00 pm Eastern time
on a Trading Day. The Company shall immediately notify the
Holders via facsimile or by e-mail of the effectiveness of the Registration
Statement on the same Trading Day that the Company telephonically confirms
effectiveness with the Commission, which shall be the date requested for
effectiveness of the Registration Statement. The Company shall, by
9:30 am Eastern time on the second Trading Day after the Effective Date, file a
final Prospectus with the Commission as required by Rule 424. All
selling shareholders included on the applicable Registration Statement shall be
given notice of the effectiveness of such Registration Statement substantially
at the same time.
(b) Notwithstanding any other provision of this Agreement,
if any SEC Guidance sets forth a limitation on the number of Registrable
Securities permitted to be registered on a particular Registration Statement
(and notwithstanding that the Company used diligent efforts to advocate with the
Commission for the registration of all or a greater portion of Registrable
Securities), then the Company shall include in such Registration Statement: (a)
first, the Registrable Securities represented by the Warrant Shares (applied to
the Holders on a pro rata basis based on the total number of unregistered
Warrant Shares held by such Holders), (b) second, the Unit Shares (applied to
the Holders on a pro rata basis based on the total number of unregistered Unit
Shares held by such Holders) and (c) third, the Registrable Securities
represented by the Placement Agent Shares; provided, however, that, prior to any
reduction in the number of Registrable Securities included in a Registration
Statement as set forth in this sentence, all shares of Common Stock set forth on
Schedule 6(b) hereto shall be reduced first. In the event of a cutback
hereunder, the Company shall give the Holder at least five (5) Trading Days
prior written notice along with the calculations as to such Holder’s
allotment.
3. Registration
Procedures.
In
connection with each of the Company’s registration obligations hereunder, the
Company shall:
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(a) Not less
than five (5) Trading Days prior to the filing of the Registration Statement and
not less than one Trading Day prior to the filing of the related Prospectus or
any amendment or supplement thereto (including any document that would be
incorporated or deemed to be incorporated therein by reference), the Company
shall: (i) furnish to each Holder copies of such Registration or Prospectus or
any amendment or supplement thereto, as applicable, proposed to be filed, which
documents (other than those incorporated or deemed to be incorporated by
reference) will be subject to the review of such Holders, and (ii) cause its
officers and directors, counsel and independent certified public accountants to
respond to such inquiries as shall be necessary, in the reasonable opinion of
respective counsel to each Holder to conduct a reasonable investigation within
the meaning of the Securities Act. The Company shall not file the Registration
Statement or any such Prospectus or any amendments or supplements thereto to
which the Holders of a majority of the Registrable Securities shall reasonably
object in good faith, provided that, the Company is notified of such objection
in writing no later than five (5) Trading Days after the Holders have been so
furnished copies of the Registration Statement or one (1) Trading Day after the
Holders have been so furnished copies of the related Prospectus or amendment or
supplement thereto. Each Holder agrees to furnish to the Company a completed
Questionnaire in the form attached to this Agreement as Annex B (a “Selling Shareholder
Questionnaire”) not less than two (2) Trading Days prior to the Filing
Date or by the end of the fourth (4th) Trading Day following the date on which
such Holder receives draft materials in accordance with this
Section. The Company shall have the right to exclude any Holder that
does not comply with the preceding sentence from the Registration
Statement.
(b) (i)
Prepare and file with the Commission such amendments, including post-effective
amendments, to the Registration Statement and the Prospectus used in connection
therewith as may be necessary to keep the Registration Statement continuously
effective as to the applicable Registrable Securities for the Effectiveness
Period; (ii) cause the related Prospectus to be amended or supplemented by any
required Prospectus supplement (subject to the terms of this Agreement), and as
so supplemented or amended to be filed pursuant to Rule 424; (iii) respond as
promptly as reasonably possible to any comments received from the Commission
with respect to the Registration Statement or any amendment thereto and as
promptly as reasonably possible provide the Holders true and complete copies of
all correspondence from and to the Commission relating to the Registration
Statement (provided that the Company may excise any information contained
therein which would constitute material non-public information as to any Holder
which has not executed a confidentiality agreement with the Company); and (iv)
comply in all material respects with the provisions of the Securities Act and
the Exchange Act with respect to the disposition of all Registrable Securities
covered by the Registration Statement during the Effectiveness Period in
accordance (subject to the terms of this Agreement) with the intended methods of
disposition by the Holders thereof set forth in the Registration Statement as so
amended or in such Prospectus as so supplemented.
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(c) Notify
the Holders of Registrable Securities to be sold (which notice shall, pursuant
to clauses (iii) through (vi) hereof, shall also be accompanied by an
instruction to suspend the use of the Prospectus until the requisite changes
have been made) as promptly as reasonably possible (and, in the case of (i)(A)
below, not less than one (1) Trading Day prior to such filing) and (if requested
by any such Person) confirm such notice in writing no later than one (1) Trading
Day following the day (i)(A) when a Prospectus or any Prospectus supplement or
post-effective amendment to the Registration Statement is filed; (B) when the
Commission notifies the Company whether there will be a “review” of such
Registration Statement and whenever the Commission comments in writing on such
Registration Statement; and (C) with respect to the Registration Statement or
any post-effective amendment, when the same has become effective; (ii) of any
request by the Commission or any other Federal or state governmental authority
for amendments or supplements to the Registration Statement or Prospectus; (iii)
of the issuance by the Commission or any other federal or state governmental
authority of any stop order suspending the effectiveness of the Registration
Statement covering the Registrable Securities or the initiation of any
proceedings for that purpose; (iv) of the receipt by the Company of any
notification with respect to the suspension of the qualification or exemption
from qualification of any of the Registrable Securities for sale in any
jurisdiction, or the initiation or threatening of any proceeding for such
purpose; (v) of the occurrence of any event not in the ordinary course that
makes the financial statements included in the Registration Statement ineligible
for inclusion therein or any statement made in the Registration Statement or
Prospectus or any document incorporated or deemed to be incorporated therein by
reference untrue in any material respect or that requires any revisions to the
Registration Statement, Prospectus or other documents so that, in the case of
the Registration Statement or the Prospectus, as the case may be, it will not
contain any untrue statement of a material fact or omit to state any 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
(vi) the occurrence or existence of any pending corporate development with
respect to the Company that the Company believes may be material and that, in
the determination of the Company, makes it not in the best interest of the
Company to allow continued availability of the Registration Statement or
Prospectus; provided that any and
all of such information shall remain confidential to each Holder until such
information otherwise becomes public, unless disclosure by a Holder is required
by law; provided, further, that
notwithstanding each Holder’s agreement to keep such information confidential,
the Holders make no acknowledgement that any such information is material,
non-public information.
(d) Use its
commercially reasonable 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 Securities for sale in
any jurisdiction, at the earliest practicable moment.
(e) Furnish
to each Holder, without charge, at least one (1) conformed copy of the
Registration Statement and each amendment thereto, including financial
statements and schedules, all documents incorporated or deemed to be
incorporated therein by reference (other than material to which the Commission
has granted confidential treatment and thus not publicly filed) to the extent
requested by such Person, and all exhibits to the extent requested by such
Person (including those previously furnished or incorporated by reference)
promptly after the filing of such documents with the Commission; provided, that
any such item which is available on the XXXXX system (or successor thereto) need
not be furnished in physical form.
(f) Subject
to the terms of this Agreement, the Company hereby consents to the use of such
Prospectus and each amendment or supplement thereto by each of the selling
Holders in connection with the offering and sale of the Registrable Securities
covered by such Prospectus and any amendment or supplement thereto, except after
the giving of any notice pursuant to Section 3(c).
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(g) The
Company shall cooperate with any broker-dealer through which a Holder proposes
to resell its Registrable Securities in effecting a filing with the Corporate
Financing Department of the Financial Industry Regulatory, Inc. (“FINRA”) pursuant to
FINRA Rule 5110 and the Company shall pay the filing fee required by such filing
within two (2) Trading Days of request therefor.
(h) Prior to
any resale of Registrable Securities by a Holder, use its commercially
reasonable best efforts to register or qualify or cooperate with the selling
Holders in connection with the registration or qualification (or exemption from
the Registration or qualification) of such Registrable Securities for the resale
by the Holder under the securities or Blue Sky laws of such jurisdictions within
the United States as any Holder reasonably requests in writing, to keep each
registration or qualification (or exemption therefrom) effective during the
Effectiveness Period and to do any and all other acts or things reasonably
necessary to enable the disposition in such jurisdictions of the Registrable
Securities covered by each Registration Statement; provided, that the
Company shall not be required to qualify generally to do business in any
jurisdiction where it is not then so qualified, subject the Company to any
material tax in any such jurisdiction where it is not then so subject or file a
general consent to service of process in any such jurisdiction.
(i) If
requested by a Holder, cooperate with such Holder to facilitate the timely
preparation and delivery of certificates representing Registrable Securities to
be delivered to a transferee pursuant to the Registration Statement, which
certificates shall be free, to the extent permitted by the Subscription
Agreements, of all restrictive legends, and to enable such Registrable
Securities to be in such denominations and registered in such names as any such
Holders may request.
(j) Upon the
occurrence of any event contemplated by this Section 3, as promptly as
reasonably possible under the circumstances taking into account the Company’s
good faith assessment of any adverse consequences to the Company and its
stockholders of the premature disclosure of such event, prepare a supplement or
amendment, including a post-effective amendment, to the Registration Statement
or a supplement to the related Prospectus or any document incorporated or deemed
to be incorporated therein by reference, and file any other required document so
that, as thereafter delivered, neither the Registration Statement nor such
Prospectus will 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. If the Company notifies the Holders in accordance with
clauses (iii) through (vi) of Section 3(c) above to suspend the use of any
Prospectus until the requisite changes to such Prospectus have been made, then
the Holders shall suspend use of such Prospectus. The Company will
use its commercially reasonable best efforts to ensure that the use of the
Prospectus may be resumed as promptly as is practicable. The Company
shall be entitled to exercise its right under this Section 3(j) to suspend the
availability of the Registration Statement and Prospectus for a period not to
exceed thirty (30) calendar days (which need not be consecutive days) in any
twelve (12) month period.
(k) Comply
with all applicable rules and regulations of the Commission.
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(l) The
Company may require each selling Holder to furnish to the Company a certified
statement as to the number of shares of Common Stock beneficially owned by such
Holder and, if required by the Commission, the natural persons thereof that have
voting and dispositive control over the Common Stock.
4. Registration
Expenses. All fees and expenses incident to the performance of or
compliance with this Agreement by the Company shall be borne by the Company
whether or not any Registrable Securities are sold pursuant to the Registration
Statement. The fees and expenses referred to in the foregoing sentence shall
include, without limitation: (i) all registration and filing fees (including,
without limitation, fees and expenses (A) with respect to filings required to be
made with any trading market on which the Common Stock is then listed for
trading, (B) in compliance with applicable state securities or Blue Sky laws
reasonably agreed to by the Company in writing (including, without limitation,
fees and disbursements of counsel for the Company in connection with Blue Sky
qualifications or exemptions of the Registrable Securities) and (C) if not
previously paid by the Company in connection with an Issuer Filing, with respect
to any filing that may be required to be made by any broker through which a
Holder intends to make sales of Registrable Securities pursuant to FINRA Rule
5110, so long as the broker is receiving no more than a customary brokerage
commission in connection with such sale, (ii) printing expenses of the Company
(including, without limitation, expenses of printing certificates for
Registrable Securities, (iii) messenger, telephone and delivery expenses of the
Company, (iv) fees and disbursements of counsel for the Company, (v) Securities
Act liability insurance, if the Company so desires such insurance, and (vi) fees
and expenses of all other Persons retained by the Company in connection with the
consummation of the transactions contemplated by this Agreement. In
addition, the Company shall be responsible for all of its internal expenses
incurred in connection with the consummation of the transactions contemplated by
this Agreement (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties), the expense of
any annual audit and the fees and expenses incurred in connection with the
listing of the Registrable Securities on any securities exchange as required
hereunder. In no event shall the Company be responsible for any
broker or similar commissions of any Holder or, except to the extent provided
for in the Transaction Documents, any legal fees or other costs of the
Holders.
5. Indemnification
(a) Indemnification by the
Company. The Company shall, notwithstanding any termination of this
Agreement, indemnify and hold harmless each Holder, the officers, directors,
members, partners, agents, brokers (including brokers who offer and sell
Registrable Securities as principal as a result of a pledge or any failure to
perform under a margin call of Common Stock), investment advisors and employees
(and any other Persons with a functionally equivalent role of a Person holding
such titles, notwithstanding a lack of such title or any other title) of each of
them, each Person who controls any such Holder (within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act) and the officers,
directors, members, shareholders, partners, agents and employees (and any other
Persons with a functionally equivalent role of a Person holding such titles,
notwithstanding a lack of such title or any other title) of each such
controlling Person, to the fullest extent permitted by applicable law, from and
against any and all losses, claims, damages, liabilities, costs (including,
without limitation, reasonable attorneys’ fees) and expenses (collectively,
“Losses”), as
incurred, arising out of or relating to (1) any untrue or alleged untrue
statement of
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a
material fact contained in the Registration Statement, any Prospectus or any
form of prospectus or in any amendment or supplement thereto or in any
preliminary prospectus, or arising out of or relating to any omission or alleged
omission of a material fact required to be stated therein or necessary to make
the statements therein (in the case of any Prospectus or form of prospectus or
supplement thereto, in light of the circumstances under which they were made)
not misleading, or (2) any violation or alleged violation by the Company of the
Securities Act, Exchange Act or any state securities law, or any rule or
regulation thereunder, in connection with the performance of its obligations
under this Agreement, except to the extent, but only to the extent, that (i)
such untrue statements or omissions are based solely upon information regarding
such Holder furnished in writing to the Company by such Holder expressly for use
therein, or to the extent that such information relates to such Holder or such
Holder’s proposed method of distribution of the Registrable Securities and was
reviewed and expressly approved in writing by such Holder expressly for use in
the Registration Statement, such Prospectus or such form of Prospectus or in any
amendment or supplement thereto (it being understood that the Holder has
approved Annex B hereto for this purpose) or (ii) in the case of an occurrence
of an event of the type specified in Section 3(c)(iii)-(vi), the use by such
Holder of an outdated or defective Prospectus after the Company has notified
such Holder in writing that the Prospectus is outdated or defective and prior to
the receipt by such Holder of the Advice contemplated in Section
6(d). The Company shall notify the Holders promptly of the
institution, threat or assertion of any proceeding arising from or in connection
with the transactions contemplated by this Agreement of which the Company is
aware.
(b) Indemnification by
Holders. Each Holder shall, severally and not jointly, indemnify and hold
harmless the Company, its directors, officers, agents and employees, each Person
who controls the Company (within the meaning of Section 15 of the Securities Act
and Section 20 of the Exchange Act), and the directors, officers, agents or
employees of such controlling Persons (and any other Persons with a functionally
equivalent role of a Person holding such titles, notwithstanding a lack of such
title or any other title, to the fullest extent permitted by applicable law,
from and against all Losses, as incurred, to the extent arising out of or based
solely upon: (x) such Holder’s failure to comply with the prospectus delivery
requirements of the Securities Act or (y) any untrue or alleged untrue statement
of a material fact contained in any Registration Statement, any Prospectus, or
any form of prospectus, or in any amendment or supplement thereto or in any
preliminary prospectus, or arising out of or relating to any omission or alleged
omission of a material fact required to be stated therein or necessary to make
the statements therein not misleading (i) to the extent, but only to the extent,
that such untrue statement or omission is contained in any information so
furnished in writing by such Holder to the Company specifically for inclusion in
such Registration Statement or such Prospectus or (ii) to the extent that such
information relates to such Holder’s proposed method of distribution of the
Registrable Securities and was reviewed and expressly approved in writing by
such Holder expressly for use in the Registration Statement (it being understood
that the Holder has approved Annex B hereto for this purpose), such Prospectus
or such form of Prospectus or in any amendment or supplement thereto or (iii) in
the case of an occurrence of an event of the type specified in Section
3(c)(iii)-(vi), the use by such Holder of an outdated or defective Prospectus
after the Company has notified such Holder in writing that the Prospectus is
outdated or defective and prior to the receipt by such Holder of the Advice
contemplated in Section 6(d). In no event shall the liability of any selling
Holder hereunder be greater in amount than the dollar amount of the net proceeds
received by such Holder upon the sale of the Registrable Securities giving rise
to such indemnification obligation.
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(c) Conduct of Indemnification
Proceedings. If any proceeding shall be brought or asserted against any
Person entitled to indemnity hereunder (an “Indemnified Party”),
such Indemnified Party shall promptly notify the Person from whom indemnity is
sought (the “Indemnifying Party”)
in writing, and the Indemnifying Party shall have the right to assume the
defense thereof, including the employment of counsel reasonably satisfactory to
the Indemnified Party and the payment of all fees and expenses incurred in
connection with defense thereof; provided, that the failure of any Indemnified
Party to give such notice shall not relieve the Indemnifying Party of its
obligations or liabilities pursuant to this Agreement, except (and only) to the
extent that it shall be finally determined by a court of competent jurisdiction
(which determination is not subject to appeal or further review) that such
failure shall have prejudiced the Indemnifying Party.
An
Indemnified Party shall have the right to employ separate counsel in any such
proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Party or Parties
unless: (1) the Indemnifying Party has agreed in writing to pay such
fees and expenses; (2) the Indemnifying Party shall have failed promptly to
assume the defense of such proceeding and to employ counsel reasonably
satisfactory to such Indemnified Party in any such proceeding; or (3) the named
parties to any such proceeding (including any impleaded parties) include both
such Indemnified Party and the Indemnifying Party, and counsel to the
Indemnified Party shall reasonably believe that a material conflict of interest
is likely to exist if the same counsel were to represent such Indemnified Party
and the Indemnifying Party (in which case, if such Indemnified Party notifies
the Indemnifying Party in writing that it elects to employ separate counsel at
the expense of the Indemnifying Party, the Indemnifying Party shall not have the
right to assume the defense thereof and the reasonable fees and expenses of no
more than one separate counsel shall be at the expense of the Indemnifying
Party, regardless of whether the Losses relate to one or more Registration
Statements so long as they arise from the same claim). The
Indemnifying Party shall not be liable for any settlement of any such proceeding
effected without its written consent, which consent shall not be unreasonably
withheld or delayed. No Indemnifying Party shall, without the prior
written consent of the Indemnified Party, effect any settlement of any pending
proceeding in respect of which any Indemnified Party is a party, unless such
settlement includes an unconditional release of such Indemnified Party from all
liability on claims that are the subject matter of such proceeding.
Subject
to the terms of this Agreement, all reasonable fees and expenses of the
Indemnified Party (including reasonable fees and expenses to the extent incurred
in connection with investigating or preparing to defend such proceeding in a
manner not inconsistent with this Section) shall be paid to the Indemnified
Party, as incurred, within ten Trading Days of written notice thereof to the
Indemnifying Party; provided, that the Indemnified Party shall promptly
reimburse the Indemnifying Party for that portion of such fees and expenses
applicable to such actions for which such Indemnified Party is judicially
determined to be not entitled to indemnification hereunder.
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(d) Contribution. If the
indemnification under Section 5(a) or 5(b) is unavailable to an Indemnified
Party or insufficient to hold an Indemnified Party harmless for any Losses, then
each Indemnifying Party shall contribute to the amount paid or payable by such
Indemnified Party, in such proportion as is appropriate to reflect the relative
fault of the Indemnifying Party and Indemnified Party in connection with the
actions, statements or omissions that resulted in such Losses as well as any
other relevant equitable considerations. The relative fault of such Indemnifying
Party and Indemnified Party shall be determined by reference to, among other
things, whether any action in question, including any untrue or alleged untrue
statement of a material fact or omission or alleged omission of a material fact,
has been taken or made by, or relates to information supplied by, such
Indemnifying Party or Indemnified Party, and the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent such
action, statement or omission. The amount paid or payable by a party
as a result of any Losses shall be deemed to include, subject to the limitations
set forth in this Agreement, any reasonable attorneys’ or other fees or expenses
incurred by such party in connection with any proceeding to the extent such
party would have been indemnified for such fees or expenses if the
indemnification provided for in this Section was available to such party in
accordance with its terms.
The
parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 5(d) were determined by pro rata allocation or by any
other method of allocation that does not take into account the equitable
considerations referred to in the immediately preceding
paragraph. Notwithstanding the provisions of this Section 5(d), no
Holder shall be required to contribute, in the aggregate, any amount in excess
of the amount by which the net proceeds actually received by such Holder from
the sale of the Registrable Securities subject to the proceeding exceeds the
amount of any damages that such Holder has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission, except in the case of fraud by such Holder.
The
indemnity and contribution agreements contained in this Section are in addition
to any liability that the Indemnifying Parties may have to the Indemnified
Parties.
6. Miscellaneous
(a) Remedies. In
the event of a breach by the Company or by a Holder, of any of their respective
obligations under this Agreement, each Holder or the Company, as the case may
be, in addition to being entitled to exercise all rights granted by law and
under this Agreement, including recovery of damages, will be entitled to
specific performance of its rights under this Agreement. The Company
and each Holder agree that monetary damages would not provide adequate
compensation for any losses incurred by reason of a breach by it of any of the
provisions of this Agreement and hereby further agrees that, in the event of any
action for specific performance in respect of such breach, it shall not assert
or shall waive the defense that a remedy at law would be adequate.
10
(b) No Piggyback on
Registrations; Prohibition on Filing Other Registration Statements.
Except as set forth on Schedule 6(b)
attached hereto, neither the Company nor any of its security holders (other than
the Holders in such capacity pursuant hereto) may include securities of the
Company in any Registration Statement filed pursuant to Section 2 other than the
Registrable Securities. The Company shall not file any other
Registration Statements (except Registration Statements on Form S-4 or Form S-8,
each as promulgated under the Securities Act, or their then equivalents relating
to equity securities to be issued solely in connection with any acquisition of
any entity or business or equity securities issuable in connection with the
Company’s stock option, equity incentive or other employee benefit plans) until
all Registrable Securities are registered pursuant to a Registration Statement
that is declared effective by the Commission, provided that this Section 6(b)
shall not prohibit the Company from filing amendments to registration statements
filed prior to the date of this Agreement.
(c) Compliance. Each
Holder covenants and agrees that it will comply with the prospectus delivery
requirements of the Securities Act as applicable to it in connection with sales
of Registrable Securities pursuant to the Registration Statement.
(d) Piggy-Back
Registrations. If at any time during the Effectiveness Period there is
not an effective Registration Statement covering all of the Registrable
Securities and the Company shall determine to prepare and file with the
Commission a Registration Statement relating to an offering for its own account
or the account of others under the Securities Act of any of its equity
securities, other than on Form S-4 or Form S-8 (each as promulgated under the
Securities Act) or their then equivalents relating to equity securities to be
issued solely in connection with any acquisition of any entity or business or
equity securities issuable in connection with the stock option or other employee
benefit plans, then the Company shall send to each Holder a written notice of
such determination and, if within fifteen days after the date of such notice,
any such Holder shall so request in writing, the Company shall include in such
registration statement all or any part of such Registrable Securities such
Holder requests to be registered; provided, however, that, the
Company shall not be required to register any Registrable Securities pursuant to
this Section 6(d) that are eligible for resale without restriction or limitation
pursuant to Rule 144 promulgated under the Securities Act or that are the
subject of a then effective Registration Statement. If an underwriter advises
the Company that the dollar amount or number of shares of Registrable Securities
which the Holders desire to sell, taken together with all other shares of Common
Stock or other securities which the Company desires to sell and the shares of
Common Stock, if any, as to which registration has been requested pursuant to
written contractual piggy-back registration rights held by other stockholders of
the Company who desire to sell, exceeds the maximum dollar amount or maximum
number of shares that can be sold in such offering without adversely affecting
the proposed offering price, the timing, the distribution method, or the
probability of success of such offering (such maximum dollar amount or maximum
number of shares, as applicable, the “Maximum Number of
Shares”), then the Company shall include in such registration: (i) first,
the Registrable Securities as to which registration has been requested by the
Holders (in the order set forth in Section 2(b)) that can be sold without
exceeding the Maximum Number of Shares; (ii) second, to the extent that the
Maximum Number of Shares has not been reached under the foregoing clause (i),
the shares of Common Stock or other securities that the Company desires to sell
that can be sold without exceeding the Maximum Number of Shares; (iii) third, to
the extent that the Maximum Number of Shares have not been reached under the
foregoing clauses (i) and (ii), the shares of Common Stock or other securities
for the account of other persons that the Company is obligated to register
pursuant to written contractual arrangements with such persons, pro rata, and
that can be sold without exceeding the Maximum Number of Shares; and (iv)
fourth, to the extent that the Maximum Number of Shares have not been reached
under the foregoing clauses (i), (ii), and (iii), securities that other security
holders of the Company desire to sell, pro rata, that can be sold without
exceeding the Maximum Number of Shares.
11
(e) Amendments and
Waivers. The provisions of this Agreement, including the provisions of
this sentence, may not be amended, modified or supplemented, and waivers or
consents to departures from the provisions hereof may not be given, unless the
same shall be in writing and signed by the Company and Holders holding at least
67% of the then outstanding Registrable Securities. Notwithstanding
the foregoing, a waiver or consent to depart from the provisions hereof with
respect to a matter that relates exclusively to the rights of Holders and that
does not directly or indirectly affect the rights of other Holders may be given
by Holders of all of the Registrable Securities to which such waiver or consent
relates; provided, however, that the
provisions of this sentence may not be amended, modified, or supplemented except
in accordance with the provisions of the immediately preceding
sentence.
(f) Notices. Any and all
notices or other communications or deliveries required or permitted to be
provided hereunder shall be delivered as set forth in the Subscription
Agreements.
(g) Successors and
Assigns. This Agreement shall inure to the benefit of and be binding upon
the successors and permitted assigns of each of the parties and shall inure to
the benefit of each Holder. The Company may not assign (except by merger) its
rights or obligations hereunder without the prior written consent of all of the
Holders of the then-outstanding Registrable Securities. Each Holder may assign
their respective rights hereunder in the manner and to the Persons as permitted
under the Subscription Agreements; provided, however, that no such transfer or
assignment shall be binding upon or obligate the Company to any such assignee
unless and until the Company shall have received written notice of such transfer
or assignment as herein provided and a written agreement of the assignee to be
bound by the provisions of this Agreement.
(h) No Inconsistent
Agreements. Neither the Company nor any of its Subsidiaries has entered,
as of the date hereof, nor shall the Company or any of its Subsidiaries, on or
after the date of this Agreement, enter into any agreement with respect to its
securities, that would have the effect of impairing the rights granted to the
Holders in this Agreement or otherwise conflicts with the provisions
hereof. Neither the Company nor any of its subsidiaries has
previously entered into any agreement granting any registration rights with
respect to any of its securities to any Person that have not been satisfied in
full.
(i) Execution and
Counterparts. This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party, it being understood that both
parties need not sign the same counterpart. In the event that any
signature is delivered by facsimile transmission or by e-mail delivery of a
“.pdf” format data file, such signature shall create a valid and binding
obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such facsimile or “.pdf”
signature page were an original thereof.
12
(j) Governing
Law. All questions concerning the construction, validity,
enforcement and interpretation of this Agreement and the venue for resolution of
disputes hereunder shall be determined in accordance with the provisions of the
Subscription Agreements.
(k) Cumulative Remedies.
The remedies provided herein are cumulative and not exclusive of any other
remedies provided by law.
(l) Severability. If any
term, provision, covenant or restriction of this Agreement is held by a court of
competent jurisdiction to be invalid, illegal, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions set forth herein
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated, and the parties hereto shall use their commercially reasonable
best efforts to find and employ an alternative means to achieve the same or
substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be the
intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.
(m) Headings. The
headings in this Agreement are for convenience only, do not constitute a part of
this Agreement and shall not be deemed to limit or affect any of the provisions
hereof.
(n) Independent Nature of
Holders’ Obligations and Rights. The obligations of each
Holder hereunder are several and not joint with the obligations of any other
Holder hereunder, and no Holder shall be responsible in any way for the
performance of the obligations of any other Holder hereunder. Nothing contained
herein or in any other agreement or document delivered at any closing, and no
action taken by any Holder pursuant hereto or thereto, shall be deemed to
constitute the Holders as a partnership, an association, a joint venture or any
other kind of entity, or create a presumption that the Holders are in any way
acting in concert with respect to such obligations or the transactions
contemplated by this Agreement. Each Holder shall be entitled to protect and
enforce its rights, including without limitation the rights arising out of this
Agreement, and it shall not be necessary for any other Holder to be joined as an
additional party in any proceeding for such purpose.
[Signature
Page Follows]
13
IN WITNESS WHEREOF, the
parties hereto have caused this Registration Rights Agreement to be duly
executed by their respective authorized signatories as of the date first
indicated above.
COMPANY:
By: /s/ Donghai
Yu________________________
Name:
Donghai Yu
Title: Chief
Executive Officer
PURCHASERS:
The
Purchasers executing the Signature Page in the form attached hereto as Annex A and
delivering the same to the Company or its agents shall be deemed to have
executed this Agreement and agreed to the terms hereof.
14
Annex
A
Purchaser
Counterpart Signature Page
The
undersigned, desiring to: (i) enter into this Registration Rights Agreement,
dated as of _________________, 2009 (the “Agreement”), between the
undersigned, China Carbon Graphite Group, Inc., a Nevada corporation (the “Company”), and the other
parties thereto, in or substantially in the form furnished to the undersigned
and (ii) purchase the securities of the Company appearing below, hereby agrees
to purchase such securities from the Company as of the Closing and further
agrees to join the Agreement as a party thereto, with all the rights and
privileges appertaining thereto, and to be bound in all respects by the terms
and conditions thereof.
IN WITNESS WHEREOF, the
undersigned has executed the Agreement as of _____________________,
2009.
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Name
and Address, Fax No. and Social Security No./EIN of
Investor:
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________________________________________________
________________________________________________
________________________________________________
Fax
No.: _________________________________________
Soc.
Sec. No./EIN: _________________________________
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If
a partnership, corporation, trust or other business entity:
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By:_________________________________________
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Name:
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Title:
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If
an individual:
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_________________________________________
Signature
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Annex
B
Selling
Securityholder Notice and Questionnaire
The
undersigned beneficial owner of common stock (the “Registrable
Securities”) of CHINA CARBON GRAPHITE GROUP, INC., a Delaware corporation
(the “Company”),
understands that the Company has filed or intends to file with the Securities
and Exchange Commission (the “Commission”) the
Registration Statement (the “Registration
Statement”) for the registration and resale under Rule 415 of the
Securities Act of 1933, as amended (the “Securities Act”), of
the Registrable Securities, in accordance with the terms of the Registration
Rights Agreement (the “Registration Rights
Agreement”) to which this document is annexed. A copy of the
Registration Rights Agreement is available from the Company upon request at the
address set forth below. All capitalized terms not otherwise defined
herein shall have the meanings ascribed thereto in the Registration Rights
Agreement.
Certain
legal consequences arise from being named as a selling securityholder in the
Registration Statement and the related prospectus. Accordingly,
holders and beneficial owners of Registrable Securities are advised to consult
their own securities law counsel regarding the consequences of being named or
not being named as a selling securityholder in the Registration Statement and
the related prospectus.
NOTICE
The
undersigned beneficial owner (the “Selling
Securityholder”) of Registrable Securities hereby elects to include the
Registrable Securities owned by it in the Registration Statement.
The
undersigned hereby provides the following information to the Company and
represents and warrants that such information is accurate:
QUESTIONNAIRE
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1.
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Name.
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(a)
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Full
Legal Name of Selling
Securityholder
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(b)
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Full
Legal Name of Registered Holder (if not the same as (a) above) through
which Registrable Securities are
held:
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(c)
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If
the Selling Securityholder is not an individual, please provide the full
legal name of the Natural Control Person(s) (which means the natural
person(s) who directly or indirectly, alone or with others, has power to
vote or dispose of the securities covered by the
questionnaire):
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2. Address
for Notices to Selling
Securityholder:
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Telephone:
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Fax:
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E-mail
address:
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Contact
Person:
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3. Broker-Dealer
Status:
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(a)
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Are
you a broker-dealer?
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Yes o No o
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(b)
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If
“yes” to Section 3(a), did you receive your Registrable Securities as
compensation for investment banking services to the
Company.
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Yes o No o
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Note:
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If
no, the Commission’s staff has indicated that you should be identified as
an underwriter in the Registration
Statement.
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(c)
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Are
you an affiliate of a
broker-dealer?
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Yes o No o
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(d)
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If
you are an affiliate of a broker-dealer, do you certify that you bought
the Registrable Securities in the ordinary course of business, and at the
time of the purchase of the Registrable Securities to be resold, you had
no agreements or understandings, directly or indirectly, with any person
to distribute the Registrable
Securities?
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Yes o No o
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Note:
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If
no, the Commission’s staff has indicated that you should be identified as
an underwriter in the Registration
Statement.
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4. Beneficial
Ownership of Other Securities of the Company Owned by the Selling
Securityholder.
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Except
as set forth below in this Item 4, the undersigned is not the beneficial or
registered owner of any securities of the Company other than the securities
issuable pursuant to the Subscription Agreements.
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(a)
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Type
and Amount of other securities beneficially owned by the Selling
Securityholder:
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5. Relationships
with the Company:
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Except
as set forth below, neither the undersigned nor any of its affiliates, officers,
directors or principal equity holders (owners of 5% of more of the equity
securities of the undersigned) has held any position or office or has had any
other material relationship with the Company (or its predecessors or affiliates)
during the past three years.
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State
any exceptions here:
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The
undersigned agrees to promptly notify the Company of any inaccuracies or changes
in the information provided herein that may occur subsequent to the date hereof
at any time while the Registration Statement remains effective.
By
signing below, the undersigned consents to the disclosure of the information
contained herein in its answers to Items 1 through 5 and the inclusion of such
information in the Registration Statement and the related prospectus and any
amendments or supplements thereto. The undersigned understands that
such information will be relied upon by the Company in connection with the
preparation or amendment of the Registration Statement and the related
prospectus.
IN
WITNESS WHEREOF the undersigned, by authority duly given, has caused this Notice
and Questionnaire to be executed and delivered either in person or by its duly
authorized agent.
Dated: Beneficial Owner:
By:
Name:
Title:
PLEASE
FAX A COPY OF THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE, AND RETURN
THE ORIGINAL BY OVERNIGHT MAIL, TO:
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