Item
1.01.
Entry
into a Material Definitive Agreement.
Securities
Purchase Agreement
:
On
February 25, 2008, China Solar & Clean Energy Solutions, Inc. (the
“Company”) entered into a Securities Purchase Agreement (the “New Securities
Purchase Agreement”) with a number of institutional investors (the “New
Investors”) providing for the sale to the New Investors of up to an aggregate
of approximately 4.7 million shares of the Company’s common stock (the
“Shares”) for an aggregate purchase price of up to approximately $11.3
million (or $2.40 per Share). The financing is expected to close on or
about February 28, 2008.
The
New
Securities Purchase Agreement contains representations and warranties of the
Company and the Investors which are customary for transactions of this type.
The
New Securities Purchase Agreement also obligates the Company to indemnify the
Investors for any losses
arising
out of any breach of the agreement or failure by the Company to perform with
respect to the representations, warranties or covenants contained in the
agreement.
The
New
Securities Purchase Agreement also contains certain covenants on the part of
the
Company, including the following:
·
|
The
Company is required to deliver 1,000,000 additional shares of common
stock
to the investors on a pro rata basis for no additional consideration
in
the event that the Company’s after-tax net income for the fiscal year
ending December 31, 2008 is less than $4.8
million.
|
·
|
The
Company is required to deliver 1,000,000 additional shares of common
stock
to the investors on a pro rata basis for no additional consideration
in
the event that the Company’s after-tax net income for the fiscal year
ending December 31, 2009 is less than $8 million.
|
·
|
The
Company is required to hire a new full-time chief financial officer
who is
fluent in English and an expert in (x) GAAP and (y) auditing procedures
and compliance for United States public companies within 45 days
of the
closing.
|
·
|
During
the six months following the closing date, the Company may not issue
any
“future priced securities” as such term is described by NASD
IM-4350-1
|
In
connection with the transaction the Company has agreed to issue to the placement
agent, warrants to purchase
469,150
shares
of common stock exercisable for a period of five years at an exercise price
equal to $2.88 per share and a transaction fee equal to 7% of the gross proceeds
of the transaction.
Registration
Rights Agreement
In
connection with the New Securities Purchase Agreement, the Company entered
into
a registration rights agreement with the New Investors on February
25,
2008
which requires the Company to file with the SEC a "resale" registration
statement providing for the resale of all of the Shares, the 2,000,000 make
good
shares and the shares underlying the placement agent warrants (collectively,
the
“registrable securities”) for an offering to be made on a continuous basis
pursuant to Rule 415 of the Securities Act of 1933, as amended.
The
Company has agreed, among other things, to prepare and file an initial
registration statement within 45 days of the closing date to register for resale
all of the registrable securities (other than the make good shares) and to
cause
that registration statement to be declared effective by the earlier to occur
of
(i) 150 days after the closing date, or (ii) the fifth trading day following
the
day the Company receives notice from the SEC that
the
initial registration statement will not be reviewed or is no longer subject
to
further review and comments.
The
Company has also agreed to file additional registration statements covering
all
of the remaining registrable securities (or such lesser number as the SEC deems
appropriate) if any registrable securities could not be registered in the
initial registration statement,
by
the
15th day following the date
is
able
to effect the registration of such securities in accordance with any SEC
restrictions.
The
failure of the Company to meet this schedule and other timetables provided
in
the registration rights agreement could result in the imposition of liquidated
damages. No liquidated damages shall accrue on or as to any registrable
securities which the SEC has requested (due to the application of Rule 415)
the
Company to remove from the registration statement as and the required
effectiveness date for such securities will be tolled until such time as the
Company is able to effect the registration of those securities in accordance
with any SEC restrictions.
Waiver
and Consent
The
Company entered into a Securities Purchase Agreement, dated as of June 13,
2007
(the “June 07 Securities Purchase Agreement”) with certain investors (the “June
07 Investors”) under which the Company issued to those investors for an
aggregate purchase price of $2,750,000 (or $1.55 per share), 1,774,194 shares
of
Series A Preferred Stock (with each share of Series A Preferred Stock being
convertible into one (1) share of common stock, subject to adjustment), five
year warrants to purchase 1,774,194 shares of common stock at an exercise price
$1.90 per share, and five year warrants to purchase an additional 1,774,194
shares of common stock at an exercise price of $2.40 per share.
For
further information about the June 07 Securities Purchase Agreement and the
transaction in which the June 07 Investors acquired their securities, please
see
our current report on Form 8-K filed with the SEC on June 19, 2007.
Under
the
terms of the June 07 Securities Purchase Agreement, the June 07 Investors were
granted the right to participate in any subsequent funding by the Company on
a
pro rata basis. In connection with the June 07 Securities Purchase Agreement,
the Company and the June 07 Investors entered into a registration rights
agreement (the “June 07 Registration Rights Agreement”) under which, other
things, the June 07 Investors were granted certain registration rights.
On
February 25, 2008, in connection with the New Securities Purchase Agreement,
the
June 07 Investors executed a Waiver and Consent under which they waived the
application of their right of first refusal relating to the issuance of the
Shares and waived their registration rights under the June 07 Registration
Rights Agreement.
The
Company is a party to as agreement dated as of March 21, 2007 with Trenwith
Securities, LLC (the “Trenwith Agreement
”
).
Under the terms of the Trenwith Agreement,
Trenwith was
granted certain rights and Trenwith believes that it had the right to act as
placement agent with respect to this offering but the Company has disputed
that
right.