REGISTRATION RIGHTS AGREEMENT
This
Registration Rights Agreement (the "Agreement")
is
made as of the date set forth below between China Energy Recovery, Inc.,
a
Delaware corporation (the "Company"),
and
the purchasers of its Series A Preferred Stock (as defined below) pursuant
to a
Securities Purchase Agreement dated as of the date hereof (each an "Investor"
and,
collectively, the "Investors").
Capitalized terms used and not defined herein shall have the respective meanings
ascribed to them in the Securities Purchase Agreement.
RECITALS
WHEREAS,
the Company has sold up to 8,339,902 shares (the "Preferred
Shares")
of
Series A Convertible Preferred Stock of the Company, par value $0.001 per
share
(the "Series
A Preferred Stock"),
convertible into shares ("Shares")
of the
Company's common stock, par value $0.001 per share (the "Common
Stock"),
and
warrants (the "Warrants")
to
purchase up to 4,169,951 Shares at an exercise price of $1.29 per share (the
"Warrant
Shares,"
and
together with the Shares, the "Securities")
to
certain investors in a private placement (the "Offering");
and
WHEREAS,
the execution and delivery of this Agreement by the Company is a condition
to
the completion of the Offering.
NOW,
THEREFORE, the parties hereto agree as follows:
1. Registration
Procedures and Expenses.
The
Company shall:
(a) subject
to receipt of necessary information from the Investors, use its commercially
reasonable efforts to cause a Registration Statement on Form S-3, or on such
other form as is available to the Company (the "Initial
Registration Statement"),
to be
filed with the Securities and Exchange Commission ("SEC"),
within 30 calendar days following the Closing Date (the "Required
Filing Date"),
to
enable the resale of the Securities by the Investors from time to time.
Notwithstanding the registration obligations set forth in the first sentence
of
this Section
1(a),
in the
event the SEC informs the Company that all of the Securities cannot, as a
result
of the application of Rule 415, be registered for resale as a secondary offering
on a single registration statement, the Company agrees to promptly (i) inform
each of the holders thereof, (ii) use its best efforts to file amendments
to the
Initial Registration Statement as required by the SEC or (iii) withdraw the
Initial Registration Statement and file a new registration statement (a
"New
Registration Statement,"
and
together with the Initial Registration Statement, the "Registration
Statement"),
in
either case covering the maximum number of Securities permitted to be registered
by the SEC on Form S-3 or such other form available to register for resale
the
Securities as a secondary offering, with the number of shares included on
such
amendment or the New Registration Statement cut back proportionally for each
Investor; provided, however, that prior to filing such amendment or New
Registration Statement, the Company shall be obligated to use its best efforts
to advocate with the SEC for the registration of all of the Securities in
accordance with SEC policies. In the event the Company amends the Initial
Registration Statement or files a New Registration Statement, as the case
may
be, under clauses (ii) or (iii) above, the Company will use its commercially
reasonable efforts to file with the SEC, as promptly as allowed by the SEC,
one
or more registration statements on Form S-3 or such other form available
to
register for resale those Securities that were not registered for resale
on the
Initial Registration Statement, as amended, or the New Registration Statement;
(b) subject
to receipt of necessary information from the Investors, use its commercially
reasonable efforts to cause the Registration Statement to become effective
no
later than the date that is 90 calendar days after the Closing Date, (or,
in the
event of a "full review" of the Registration Statement by the SEC, 150 calendar
days after the Closing Date) (the "Required
Effective Date").
If
the Registration Statement (i) has not been filed by the Required Filing
Date or
(ii) has not been declared effective by the SEC on or before the Required
Effective Date, the Company shall, on the Business Day immediately following
the
Required Filing Date or the Required Effective Date, as the case may be,
and
each 30th day thereafter, make a payment to the Investor as partial compensation
for such delay (the "Late
Registration Payments")
equal
to 1% of the purchase price paid for the Preferred Shares purchased by the
Investor and not previously sold by the Investor until the Registration
Statement is filed or declared effective by the SEC, as the case may be;
provided, however, that in no event shall the payments made pursuant to this
Subsection
(b)
if any,
exceed in the aggregate 10% of such purchase price. Late Registration Payments
will be prorated on a daily basis during each 30 day period and will be paid
to
the Investor by wire transfer or check within five Business Days after the
earlier of (i) the end of each 30 day period following the Required Effective
Date or (ii) the effective date of the Registration Statement;
(c) subject
to a Suspension (as defined in Section
2(c))
being
in effect, use its commercially reasonable efforts to prepare and file with
the
SEC such amendments and supplements to the Registration Statement and the
related prospectus (the "Prospectus")
as may
be necessary to keep the Registration Statement current and effective for
a
period ending on the earlier of (i) the second anniversary of the Closing
Date,
(ii) the date on which the Investor may sell Securities pursuant to Rule
144
under the Securities Act or any successor rule ("Rule
144")
or
(iii) such time as all Securities purchased by such Investor in this Offering
have been sold (A) pursuant to a registration statement, (B) to or through
a
broker, dealer or underwriter in a public distribution or a public securities
transaction or (C) in a transaction exempt from the registration and prospectus
delivery requirements of the Securities Act under Section 4(1) thereof so
that
all transfer restrictions and restrictive legends with respect thereto, if
any,
are removed upon the consummation of such sale, and to notify each Investor
promptly upon the Registration Statement and each post-effective amendment
thereto, being declared effective by the SEC;
(d) furnish
to the Investor such number of copies of the Registration Statement and the
Prospectus (including supplemental prospectuses) (collectively, the
"Prospectuses")
as the
Investor may reasonably request, in order to facilitate the public sale or
other
disposition of all or any of the Securities by the Investor;
(e) file
documents required of the Company for customary blue sky clearance in states
specified in writing by the Investor; provided, however, that the Company
shall
not be required to qualify to do business or consent to service of process
in
any jurisdiction in which it is not now so qualified or has not so
consented;
(f) bear
all
expenses (other than underwriting discounts and commissions, if any) in
connection with the procedures in paragraph (a) through (e) of this Section
1
and the
registration of the Securities pursuant to the Registration Statement;
(g) advise
the Investors, promptly after it shall receive notice or obtain knowledge
of the
issuance of any stop order by the SEC delaying or suspending the effectiveness
of the Registration Statement or of the initiation of any proceeding for
that
purpose; and it will promptly use its commercially reasonable efforts to
prevent
the issuance of any stop order or to obtain its withdrawal at the earliest
possible moment if such stop order should be issued; and
(h) with
a
view to making available to the Investor the benefits of Rule 144 and any
other
rule or regulation of the SEC that may at any time permit the Investor to
sell
Securities to the public without registration, the Company covenants and
agrees
to use its commercially reasonable efforts to: (i) make and keep public
information available, as those terms are understood and defined in Rule
144,
until the earlier of (A) such date as all of the Investor's Securities may
be
resold pursuant to Rule 144 or any other rule of similar effect or (B) such
date
as all of the Investor's Securities shall have been resold; (ii) file with
the
SEC in a timely manner all reports and other documents required of the Company
under the Securities Act and under the Securities Exchange Act of 1934, as
amended (the "Exchange
Act");
and
(iii) furnish to the Investor upon request, as long as the Investor owns
any
Securities, (A) a written statement by the Company that it has complied with
the
reporting requirements of the Securities Act and the Exchange Act, (B) a
copy of
the Company's most recent Annual Report on Form 10-K or Quarterly Report
on Form
10-Q, and (C) such other information as may be reasonably requested in order
to
avail the Investor of any rule or regulation of the SEC that permits the
selling
of any such Securities without registration.
It
shall
be a condition precedent to the obligations of the Company to take any action
pursuant to this Section
1
that the
Investor shall furnish to the Company such information regarding itself,
the
Securities to be sold by the Investor, and the intended method of disposition
of
such securities as shall be required to effect the registration of the
Securities.
The
Company understands that the Investor disclaims being an underwriter, but
acknowledges that a determination by the SEC that the Investor is deemed
an
underwriter shall not relieve the Company of any obligations it has hereunder.
2. Transfer
of Shares After Registration; Suspension.
(a) The
Investor agrees that it will not effect any disposition of the Securities
or its
right to purchase the Securities that would constitute a sale within the
meaning
of the Securities Act other than transactions exempt from the registration
requirements of the Securities Act, as contemplated in the Registration
Statement and as described below, and that it will promptly notify the Company
of any material changes in the information set forth in the Registration
Statement regarding the Investor or its plan of distribution.
(b) Except
in
the event that Subsection
(c)
below
applies, the Company shall: (i) if deemed necessary by the Company, prepare
and
file from time to time with the SEC a post-effective amendment to the
Registration Statement or a supplement to the related Prospectus or a supplement
or amendment to any document incorporated therein by reference or file any
other
required document so that such Registration Statement will not 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 not misleading,
and
so that, as thereafter delivered to purchasers of the Securities being sold
thereunder, such Prospectus will not 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; (ii) provide the Investor copies of any documents
filed pursuant to Section
2(b)(i);
and
(iii) upon request, inform each Investor who so requests that the Company
has
complied with its obligations in Section
2(b)(i)
(or
that, if the Company has filed a post-effective amendment to the Registration
Statement which has not yet been declared effective, the Company will notify
the
Investor to that effect, will use its commercially reasonable efforts to
secure
the effectiveness of such post-effective amendment as promptly as possible
and
will promptly notify the Investor pursuant to Section
2(b)(i)
hereof
when the amendment has become effective).
(c) Subject
to Subsection
(d)
below,
in the event: (i) of any request by the SEC or any other federal or state
governmental authority during the period of effectiveness of the Registration
Statement for amendments or supplements to the Registration Statement or
related
Prospectus or for additional information; (ii) of the issuance by the SEC
or any
other federal or state governmental authority of any stop order suspending
the
effectiveness of the Registration Statement or the initiation of any proceedings
for that purpose; (iii) 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 Securities for sale in any jurisdiction or the initiation of
any
proceeding for such purpose; or (iv) of any event or circumstance which
necessitates the making of any changes in the Registration Statement or
Prospectus, or any document incorporated or deemed to be incorporated therein
by
reference, so that, in the case of the Registration Statement, it will not
contain any 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, and that in the case of the Prospectus, it will not contain any
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 the light
of
the circumstances under which they were made, not misleading; then the Company
shall promptly deliver a certificate in writing to the Investor (the
"Suspension
Notice")
to the
effect of the foregoing and, upon receipt of such Suspension Notice, the
Investor will refrain from selling any Securities pursuant to the Registration
Statement (a "Suspension")
until
the Investors are advised in writing by the Company that the current Prospectus
may be used, and has received copies of any additional or supplemental filings
that are incorporated or deemed incorporated by reference in any such
Prospectus. In the event of any Suspension, the Company will use its
commercially reasonable efforts to cause the use of the Prospectus so suspended
to be resumed as soon as reasonably practicable after delivery of a Suspension
Notice to the Investors. In addition to and without limiting any other remedies
(including, without limitation, at law or at equity) available to the Investor,
the Investor shall be entitled to specific performance in the event that
the
Company fails to comply with the provisions of this Section
2(c).
The
Investor covenants that from the date hereof it will maintain in confidence
the
receipt and content of any Suspension Notice provided in accordance with
this
Section
2(c)
in
accordance with and subject to Section
4.6
of
Annex
I
to the
Securities Purchase Agreement.
(d) Notwithstanding
the foregoing paragraphs of this Section
2,
the
Company shall use its commercially reasonable efforts to ensure that (i)
a
Suspension shall not exceed 60 days individually and (ii) no more than two
Suspensions shall occur during any 12-month period (each Suspension that
satisfies the foregoing criteria being referred to herein as a "Qualifying
Suspension").
(e) If
a
Suspension is not then in effect, the Investor may sell Securities under
the
Registration Statement, provided that it complies with any applicable prospectus
delivery requirements. Upon receipt of a request therefor, the Company will
provide an adequate number of current Prospectuses to the Investor and to
any
other parties requiring such Prospectuses.
(f) In
the
event of a sale of Securities by the Investor, unless such requirement is
waived
by the Company in writing, the Investor must also deliver to the Company's
transfer agent, with a copy to the Company, a Certificate of Subsequent Sale
substantially in the form attached hereto as Exhibit
A,
so that
the Securities may be properly transferred.
(g) The
Company agrees that it shall, immediately prior to the Registration Statement
being declared effective, deliver to its transfer agent an opinion letter
of
counsel, opining that at any time the Registration Statement is effective,
the
transfer agent shall issue, in connection with the sale of the Securities,
certificates representing such Securities without restrictive legend, provided
the Securities are to be sold pursuant to the Prospectus contained in the
Registration Statement and the transfer agent receives a Certificate of
Subsequent Sale in the form attached hereto as Exhibit
A.
Upon
receipt of such opinion, the Company shall cause the transfer agent to confirm,
for the benefit of the Investor, that no further opinion of counsel is required
at the time of transfer in order to issue such Securities without restrictive
legend.
The
Company shall cause its transfer agent to issue a certificate without any
restrictive legend to a purchaser of any Securities from the Investor, if
(a)
the sale of such Securities is registered under the Registration Statement
(including registration pursuant to Rule 415 under the Securities Act) and
the
Investor has delivered a Certificate of Subsequent Sale to the Transfer Agent;
(b) the holder has provided the Company with an opinion of counsel, in form,
substance and scope customary for opinions of counsel in comparable
transactions, to the effect that a public sale or transfer of such Securities
may be made without registration under the Securities Act; or (c) such
Securities are sold in compliance with Rule 144 under the Securities Act.
3. Indemnification.
For the
purpose of this Section
3:
(a) the
term
"Selling
Stockholder"
shall
mean the Investor and each person, if any, who controls the Investor within
the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act;
(b) the
term
"Registration
Statement"
shall
include any final Prospectus, exhibit, supplement or amendment included in
or
relating to, and any document incorporated by reference in, the Registration
Statement (or deemed to be a part thereof) referred to in Section
1;
and
(c) the
term
"untrue
statement"
shall
mean any untrue statement or alleged untrue statement, or any omission or
alleged omission to state in the Registration Statement a material fact required
to be stated therein or necessary to make the statements therein, not
misleading.
(d)
(i) The
Company agrees to indemnify and hold harmless each Selling Stockholder from
and
against any losses, claims, damages or liabilities to which such Selling
Stockholder may become subject (under the Securities Act or otherwise) insofar
as such losses, claims, damages or liabilities (or actions or proceedings
in
respect thereof) arise out of, or are based upon (i) any untrue statement
of a
material fact contained in the Registration Statement, (ii) any inaccuracy
in
the representations and warranties of the Company contained in the Agreement
or
the failure of the Company to perform its obligations hereunder or (iii)
any
failure by the Company to fulfill any undertaking included in the Registration
Statement, and the Company will reimburse such Selling Stockholder for any
reasonable legal expense or other actual accountable out of pocket expenses
reasonably incurred in investigating, defending or preparing to defend any
such
action, proceeding or claim; provided, however, that the Company shall not
be
liable in any such case to the extent that such loss, claim, damage or liability
arises out of, or is based upon, an untrue statement made in such Registration
Statement in reliance upon and in conformity with written information furnished
to the Company by or on behalf of such Selling Stockholder specifically for
use
in preparation of the Registration Statement, or any inaccuracy in
representations made by such Selling Stockholder in the Investor Questionnaire
or the failure of such Selling Stockholder to comply with its covenants and
agreements contained in Section
4
of
Annex
I
to the
Securities Purchase Agreement or Section
2
hereof
or any statement or omission in any Prospectus that is corrected in any
subsequent Prospectus that was delivered to the Selling Stockholder prior
to the
pertinent sale or sales by the Selling Stockholder.
(ii)
The
Investor agrees to indemnify and hold harmless the Company (and each person,
if
any, who controls the Company within the meaning of Section 15 of the Securities
Act, each officer of the Company who signs the Registration Statement and
each
director of the Company) from and against any losses, claims, damages or
liabilities to which the Company (or any such officer, director or controlling
person) may become subject (under the Securities Act or otherwise), insofar
as
such losses, claims, damages or liabilities (or actions or proceedings in
respect thereof) arise out of, or are based upon, (i) any failure to comply
with
the covenants and agreements contained in Section
4
of
Annex
I
to the
Securities Purchase Agreement or Section
2
hereof,
or (ii) any untrue statement of a material fact contained in the Registration
Statement if, and only if, such untrue statement was made in reliance upon
and
in conformity with written information furnished by or on behalf of the Investor
specifically for use in preparation of the Registration Statement, and the
Investor will reimburse the Company (or such officer, director or controlling
person), as the case may be, for any reasonable legal expense or other actual
accountable out-of-pocket expenses reasonably incurred in investigating,
defending or preparing to defend any such action, proceeding or claim. The
obligation to indemnify shall be limited to the net amount of the proceeds
received by the Investor from the sale of the Securities pursuant to the
Registration Statement.
(iii) Promptly
after receipt by any indemnified person of a notice of a claim or the beginning
of any action in respect of which indemnity is to be sought against an
indemnifying person pursuant to this Section
3,
such
indemnified person shall notify the indemnifying person in writing of such
claim
or of the commencement of such action, but the omission to so notify the
indemnifying party will not relieve it from any liability which it may have
to
any indemnified party under this Section
3
(except
to the extent that such omission materially and adversely affects the
indemnifying party's ability to defend such action) or from any liability
otherwise than under this Section
3.
Subject
to the provisions hereinafter stated, in case any such action shall be brought
against an indemnified person, the indemnifying person shall be entitled
to
participate therein, and, to the extent that it shall elect by written notice
delivered to the indemnified party promptly after receiving the aforesaid
notice
from such indemnified party, shall be entitled to assume the defense thereof,
with counsel reasonably satisfactory to such indemnified person. After notice
from the indemnifying person to such indemnified person of its election to
assume the defense thereof (unless it has failed to assume the defense thereof
and appoint counsel reasonably satisfactory to the indemnified party), such
indemnifying person shall not be liable to such indemnified person for any
legal
expenses subsequently incurred by such indemnified person in connection with
the
defense thereof; provided, however, that if there exists or shall exist a
conflict of interest that would make it inappropriate, in the reasonable
opinion
of counsel to the indemnified person, for the same counsel to represent both
the
indemnified person and such indemnifying person or any affiliate or associate
thereof, the indemnified person shall be entitled to retain its own counsel
at
the expense of such indemnifying person; provided, however, that no indemnifying
person shall be responsible for the fees and expenses of more than one separate
counsel (together with appropriate local counsel) for all indemnified parties.
In no event shall any indemnifying person be liable in respect of any amounts
paid in settlement of any action unless the indemnifying person shall have
approved the terms of such settlement; provided that such consent shall not
be
unreasonably withheld. No indemnifying person shall, without the prior written
consent of the indemnified person, effect any settlement of any pending or
threatened proceeding in respect of which any indemnified person is or could
reasonably have been a party and indemnification could have been sought
hereunder by such indemnified person, unless such settlement includes an
unconditional release of such indemnified person from all liability on claims
that are the subject matter of such proceeding.
(iv) If
the
indemnification provided for in this Section
3
is
unavailable to or insufficient to hold harmless an indemnified party under
Subsections
3(d)(i)
or
3(d)(ii)
above in
respect of any losses, claims, damages or liabilities (or actions or proceedings
in respect thereof) referred to therein, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities (or actions in respect thereof)
in such proportion as is appropriate to reflect the relative fault of the
Company on the one hand and the Investor on the other in connection with
the
statements or omissions or other matters which resulted in such losses, claims,
damages or liabilities (or actions in respect thereof), as well as any other
relevant equitable considerations. The relative fault shall be determined
by
reference to, among other things, in the case of an untrue statement, whether
the untrue statement relates to information supplied by the Company on the
one
hand or the Investor on the other and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such untrue
statement. The Company and the Investor agree that it would not be just and
equitable if contribution pursuant to this Section
3(d)
were
determined by pro rata allocation (even if the Investors were treated as
one
entity for such purpose) or by any other method of allocation which does
not
take into account the equitable considerations referred to above in this
Section
3(d).
The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to
above
in this Section
3(d)
shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such
action
or claim. Notwithstanding the provisions of this Section
3(d),
the
Investor shall not be required to contribute any amount in excess of the
amount
by which the gross amount received by the Investor from the sale of the
Securities to which such loss relates exceeds the amount of any damages which
the Investor has otherwise been required to pay by reason of such untrue
statement. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution
from
any person who was not guilty of such fraudulent misrepresentation. The
Investors' obligations in this subsection to contribute are several in
proportion to their sales of Securities to which such loss relates and not
joint.
The
parties to this Agreement hereby acknowledge that they are sophisticated
business persons who were represented by counsel during the negotiations
regarding the provisions hereof including, without limitation, the provisions
of
this Section
3,
and are
fully informed regarding said provisions. They further acknowledge that the
provisions of this Section 3 fairly allocate the risks in light of the ability
of the parties to investigate the Company and its business in order to assure
that adequate disclosure is made in the Registration Statement as required
by
the Securities Act and the Exchange Act.
4. Termination
of Conditions and Obligations.
The
conditions precedent imposed by Section
4
of
Annex
I
to the
Securities Purchase Agreement or this Agreement upon the transferability
of the
Securities shall cease and terminate as to any particular number of the
Securities when such Securities shall have been effectively registered under
the
Securities Act and sold or otherwise disposed of in accordance with the intended
method of disposition set forth in the Registration Statement covering such
Securities or at such time as an opinion of counsel satisfactory to the Company
shall have been rendered to the effect that such conditions are not necessary
in
order to comply with the Securities Act.
5. Information
Available.
So long
as the Registration Statement is effective covering the resale of Securities
owned by the Investor, the Company will furnish (or, to the extent such
information is available electronically through the Company's filings with
the
SEC, the Company will make available) to the Investor:
(a) as
soon
as practicable after it is available, one copy of (i) its most recent Annual
Report to Stockholders (which Annual Report shall contain financial statements
audited in accordance with generally accepted accounting principles by an
independent registered public accounting firm, and (ii) if not included in
substance in the Annual Report to Stockholders, its most recent Annual Report
on
Form 10-K (the foregoing, in each case, excluding exhibits);
(b) upon
the
reasonable request of the Investor, all exhibits excluded by the parenthetical
to Subsection
(a)(ii)
of this
Section
5
as filed
with the SEC and all other information that is made available to shareholders;
and
(c) upon
the
reasonable request of the Investor, an adequate number of copies of the
Prospectuses to supply to any other party requiring such Prospectuses; and
the
Company, upon the reasonable request of the Investor, will meet with the
Investor or a representative thereof at the Company's headquarters during
the
Company's normal business hours to discuss all information relevant for
disclosure in the Registration Statement covering the Securities and will
otherwise reasonably cooperate with the Investor conducting an investigation
for
the purpose of reducing or eliminating the Investor's exposure to liability
under the Securities Act, including the reasonable production of information
at
the Company's headquarters; provided, that the Company shall not be required
to
disclose any confidential information to or meet at its headquarters with
the
Investor until and unless the Investor shall have entered into a confidentiality
agreement, in form and substance reasonably satisfactory to the Company,
with
the Company with respect thereto.
6. Limits
on Additional Issuances.
Except
for the issuance of stock options, restricted stock and stock appreciation
rights under the Company's long term incentive plans, the issuance of Common
Stock purchase warrants, or the issuance of Common Stock upon the conversion
of
preferred stock or upon exercise of outstanding options, warrants and other
equity-based rights and the offering contemplated hereby, the Company will
not,
for a period of six months following the Closing Date, offer for sale or
sell
any securities unless, in the opinion of the Company's counsel, such offer
or
sale does not jeopardize the availability of exemptions from the registration
and qualification requirements under applicable securities laws with respect
to
the Offering. The foregoing shall not apply to securities issued in connection
with any acquisition, including by way of merger, or purchase of stock or
all or
substantially all of the assets of any third party. Except for the issuance
of
stock options, restricted stock and stock appreciation rights under the
Company's long term incentive plans, the issuance of Common Stock purchase
warrants, or the issuance of Common Stock upon the conversion of preferred
stock
or upon exercise of outstanding options, warrants and other equity-based
rights
and the offering contemplated hereby, the Company has not engaged in any
such
offering during the six-month period prior to the date of this Agreement.
The
foregoing provisions shall not prevent the Company from filing a "shelf"
registration statement pursuant to Rule 415 under the Securities Act, but
the
foregoing provisions shall apply to any sale of securities thereunder.
7. Notices.
All
notices, requests, consents and other communications hereunder shall be in
writing, shall be delivered (A) if within the United States, by first-class
registered or certified airmail, or nationally recognized overnight express
courier, postage prepaid, or by facsimile, or (B) if from outside the United
States, by International Federal Express (or comparable service) or facsimile,
and shall be deemed given (i) if delivered by first-class registered or
certified mail domestic, upon the Business Day received, (ii) if delivered
by
nationally recognized overnight carrier, one Business Day after timely delivery
to such carrier, (iii) if delivered by International Federal Express (or
comparable service), two Business Days after timely delivery to such carrier,
(iv) if delivered by facsimile, upon electric confirmation of receipt and
shall
be addressed as follows, or to such other address or addresses as may have
been
furnished in writing by a party to another party pursuant to this paragraph:
if
to the
Company, to:
0000
Xxxxxx Xxxxx Xxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxx
Xxxxx, Xxxxxxxxxx 00000
Attention:
Xxxxxxx Xxxxxxxx
Facsimile:
(000) 000-0000
with
a
copy to:
Xxxxxxxxxx
Xxxxx Xxxxxx Xxxxxxx, LLP
000
Xxxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx,
Xxxxxxxx 00000
Attention:
Xxxx X. Xxxxx
if
to the
Investor, at its address on the signature page hereto.
8. Amendments;
Waiver.
This
Agreement may not be modified or amended except pursuant to an instrument
in
writing signed by the Company and the Investor. Any waiver of a provision
of
this Agreement must be in writing and executed by the party against whom
enforcement of such waiver is sought.
9. Headings.
The
headings of the various sections of this Agreement have been inserted for
convenience of reference only and shall not be deemed to be part of this
Agreement.
10. Entire
Agreement; Severability.
This
Agreement sets forth the entire agreement and understanding of the parties
relating to the subject matter hereof and supersedes all prior and
contemporaneous agreements, negotiations and understandings between the parties,
both oral and written relating to the subject matter hereof. If any provision
contained in this Agreement is determined to be invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of
the
remaining provisions contained herein shall not in any way be affected or
impaired thereby.
11. Governing
Law.
This
Agreement shall be governed by, and construed in accordance with, the internal
laws of the State of Delaware, without giving effect to the principles of
conflicts of law.
12. Counterparts.
This
Agreement may be executed in two or more counterparts, each of which shall
constitute an original, but all of which, when taken together, shall constitute
but one instrument, and shall become effective when one or more counterparts
have been signed by each party hereto and delivered to the other parties.
[Remainder
of This Page Intentionally Left Blank; Signature Page to
Follow]
Please
confirm that the foregoing correctly sets forth the agreement between us
by
signing in the space provided below for that purpose.
Dated
as
of: ______________, 2008
| [Investor Name] | ||
| By: | ||
| Name: | ||
| Title: | ||
| Address: | ||
AGREED
AND ACCEPTED:
By:
________________________________
Name: Xxxxxxx
Xxxxxxxx
Title: Chief
Executive Officer
EXHIBIT
A
CERTIFICATE
OF SUBSEQUENT SALE
Corporate
Stock Transfer, Inc.
0000
Xxxxxx Xxxxx Xxxxx Xxxxx, Xxxxx 000
Xxxxxx,
Xxxxxxxx 00000
Attention:
Xxxxxxx Xxxx
|
RE:
|
Sale
of Shares of Common Stock of China Energy Recovery, Inc. (the
"Company")
pursuant to the Company's Prospectus dated _______________, 2008
(the
"Prospectus").
|
Dear
Sir/Madam:
The
undersigned hereby certifies, in connection with the sale of shares of Common
Stock of the Company included in the table of Selling Stockholders in the
Prospectus, that the undersigned has sold the Shares pursuant to the Prospectus
and in a manner described under the caption "Plan
of Distribution"
in the
Prospectus and that such sale complies with all applicable securities laws,
including, without limitation, the Prospectus delivery requirements of the
Securities Act of 1933, as amended.
| Selling Stockholder (the beneficial owner): |
| Record Holder (e.g., if held in name of nominee): |
| Restricted Stock Certificate No.(s): |
| Number of Shares Sold: |
| Date of Sale: |
In
the
event that you receive a stock certificate(s) representing more shares of
Common
Stock than have been sold by the undersigned, then you should return to the
undersigned a newly issued certificate for such excess shares in the name
of the
Record Holder and BEARING A RESTRICTIVE LEGEND. Further, you should place
a stop
transfer on your records with regard to such certificate.
| Dated:_____________ | Very truly yours, | |
| By: | ||
| Name: | ||
| Title: | ||
