Exhibit
10.14
SMARTHEAT INC.
REGISTRATION RIGHTS AGREEMENT
This
REGISTRATION RIGHTS AGREEMENT (the "Agreement"), dated as of
June ___, 2008, is made by and between SmartHeat Inc., a
Nevada corporation (the "Company"), and the undersigned
investor (the "Investor").
WHEREAS,
in connection with that certain Subscription Agreement by and
among the Company and the Investor (the "Subscription
Agreement"), the Company desires to sell to the Investor, and
the Investor desires to purchase from the Company units of (a)
shares of the Company's common stock, $0.001 par value per
share (the "Common Stock"); and (b) Warrants to purchase
additional shares of Common Stock (the "Warrants") equal to
15% of the Common Stock initially purchased; and
WHEREAS,
to induce the Investor to purchase the Common Stock and
Warrants, the Company has agreed to register the shares of
Common Stock purchased and the Common Stock underlying the
Warrants pursuant to the terms of this Agreement.
NOW,
THEREFORE, the Company and the Investor hereby covenant and
agree as follows:
1.
Certain Definitions. As used in this Agreement, the
following terms shall have the following respective
meanings:
"Commission"
shall mean the Securities and Exchange Commission, or any
other federal agency at the time administering the Securities
Act.
"Effectiveness
Date" shall mean that date which is one hundred eighty (180)
days following the final closing of the Offering.
"Exchange
Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Filing
Date" shall mean that date which is sixty (60) days following
the final closing of the Offering.
"Offering"
shall refer to the Company's proposal to sell Units for $3.50
per Unit, with each Unit consisting of (i) one share of Common
Stock of the Company and (ii) a three (3) year Warrant to
purchase 15% of one share of Common Stock of the Company with
an exercise price of $6.00. The total amount of Units being
offered is 2,285,714 for a total maximum purchase price of
$8,000,000 USD.
"Register,"
"registered" and "registration" each shall refer to a
registration effected by preparing and filing a Registration
Statement or statements or similar documents in compliance
with the Securities Act and the declaration or ordering of
effectiveness of such Registration Statement or document by
the Commission,
"Registrable
Securities" shall mean the shares of Common Stock issued
pursuant to the Subscription Agreement or upon the exercise of
the Warrants delivered as part of the Offering; provided,
however, that shares of Common Stock which are Registrable
Securities shall cease to be Registrable
Securities (x) upon any sale pursuant to a Registration
Statement or Rule 144 under the Securities Act or (y) at such time
as they become eligible for sale pursuant to Rule 144 under the
Securities Act or another similar exemption under the Securities
Act
"Securities
Act" shall mean the Securities Act of 1933, as
amended.
Capitalized
terms used but not defined herein shall have the meanings set
forth in the Subscription Agreement or the
Warrants.
2.
Automatic Registration.
(a) On
or prior to the Filing Date, the Company shall prepare and file
with the Commission the Registration Statement covering the resale
of all of the Registrable Securities for an offering to be made on
a continuous basis pursuant to Rule 415. The Registration Statement
required hereunder shall be on Form S-1. Subject to the terms of
this Agreement, the Company shall use its commercially reasonable
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 not later than the
Effectiveness Date, and shall use its commercially reasonable
efforts to keep the Registration Statement continuously effective
under the Securities Act until the date when all Registrable
Securities covered by the Registration Statement have been sold or
may be sold pursuant to Rule 144 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
Investor (the "Effectiveness Period").
(b) If:
(i) a Registration Statement is not filed on or prior to the Filing
Date, or (ii) the Company fails to file with the Commission a
request for acceleration in accordance with Rule 461 promulgated
under the Securities Act, within 5 trading days of the date that
the Company is notified (orally or in writing, whichever is
earlier) by the Commission that a Registration Statement will not
be "reviewed," or is not subject to further review, or (iii) a
Registration Statement filed or required to be filed hereunder is
not declared effective by the Commission on or before the
Effectiveness Date as a result of the failure of the Company to
meet its obligations with respect to such filing as provided for
herein, or (iv) after a Registration Statement is first declared
effective by the Commission, it ceases for any reason to remain
continuously effective as to the Registrable Securities held by the
Investor, or the Investor is not permitted to utilize the
Prospectus therein to resell such Registrable Securities, for in
any such case 15 consecutive trading days but no more than an
aggregate of 25 trading days during any 12-month period (which need
not be consecutive trading days) during which the Investor is not
permitted to sell such Registrable Securities under Rule 144 (any
such failure or breach being referred to as an "Event," and for
purposes of clause (i) or (iii) the date on which such Event
occurs, or for purposes of clause (ii) the date on which such 5
trading day period is exceeded, or for purposes of clause (iv) the
date on which such 15- or 25-day period, as applicable, is exceeded
being referred to as "Event Date"), then: (x) on the first Event
Date to occur the Company shall pay to such Investor an amount in
cash, as liquidated damages and not as a penalty, equal to 2.0% of
the aggregate purchase price paid by such Investor pursuant to the
Subscription Agreement for any Registrable Securities then held by
such Investor for which such Investor has not received liquidated
damages pursuant to Section 2(c) below; and (y) on each anniversary
of such Event Date (if the applicable Event, or any subsequent
Event, shall not have been cured by such date) until all Event(s)
are cured, the Company shall pay to such Investor an amount in
cash, as liquidated damages and not as a penalty, equal to 2.0% of
the aggregate purchase price paid by such Investor pursuant to the
Subscription Agreement for any Registrable Securities then held by
such Investor for which such Investor has not received liquidated
damages pursuant to Section 2(c) below. If the Company fails to pay
any liquidated damages pursuant to this Section in
full within seven days after the date payable, the Company will pay
interest thereon at a rate of 10% per annum (or such lesser maximum
amount that is permitted to be paid by applicable law) to the
Investor, accruing daily from the date such liquidated damages are
due until such amounts, plus all such interest thereon, are paid in
full The liquidated damages pursuant to the terms hereof shall
apply on a daily pro-rata basis for any portion of a year prior to
the cure of an Event.
(c)
Notwithstanding
any other provision of this Section 2, if the Commission determines
that the number of securities that the Company may register on the
Registration Statement pursuant to Rule 415 is limited such that
the shares so registered thereunder shall exclude any Registrable
Securities held by the Investor, then the Company shall promptly so
advise the Investor and the Company shall use commercially
reasonable efforts to effect the registration of any Registrable
Securities not so included on the Registration Statement as a
result thereof as soon as is legally possible to do so. In such
event, the Company shall pay to such Investor liquidated damages as
set forth in Section 2(b) hereof with respect to any Registrable
Securities then held by the Investor that were not registered by
the Effectiveness Date.
(d) The
parties acknowledge and agree that (i) the maximum amount of
damages that the Company shall be obligated to pay the Investor for
any and all breaches of this Section 2 is the amount of liquidated
damages set forth in Section 2(b) or 2(c), and (ii) such liquidated
damages shall be the sole remedy available to Investor for any
breach of this Agreement, provided that nothing in this Section
2(d) shall preclude Investor from seeking injunctive relief,
including specific performance of its rights under this Section
2.
3.
Registration Procedures. If and whenever the Company is
required by the provisions of Section 2 hereof to use its
commercially reasonable efforts to affect the registration of any
Registrable Securities under the Securities Act, the Company will,
as expeditiously as possible:
(a) prepare
and file with the Commission the Registration Statement with
respect to such securities and use its reasonable best efforts to
cause such Registration Statement to become effective in an
expeditious manner;
(b) prepare
and file with the Commission such amendments and supplements to
such Registration Statement and the prospectus used in connection
therewith as may be necessary to keep such Registration Statement
continuously effective during the Effectiveness Period and comply
with the provisions of the Securities Act with respect to the
disposition of all Registrable Securities covered by such
Registration Statement in accordance with the intended method of
disposition set forth in such Registration Statement for such
period;
(c)
furnish
to each seller of Registrable Securities and to each underwriter
such number of copies of the Registration Statement and the
prospectus included therein (including each preliminary prospectus)
as such persons reasonably may request in order to facilitate the
intended disposition of the Registrable Securities covered by such
Registration Statement;
(d)
use
its commercially reasonable efforts (i) to register or qualify the
Registrable Securities covered by such Registration Statement under
the securities or "blue sky" laws of such jurisdictions as the
sellers of Registrable Securities or, in the case of an
underwritten public offering, the managing underwriter, reasonably
shall request, (ii) to prepare and file in those jurisdictions such
amendments (including post-effective amendments) and supplements,
and take such other actions, as may be necessary to maintain such
registration and qualification in effect at all times for the
period of distribution contemplated thereby and (iii) to take such
further action as may be necessary or advisable to enable the
disposition of the Registrable Securities in such
jurisdictions,
provided, that the Company shall not for any such purpose be
required to qualify generally to transact business as a foreign
corporation in any jurisdiction where it is not so qualified or to
consent to general service of process in any such
jurisdiction;
(e)
use
its commercially reasonable efforts to list the Registrable
Securities covered by such Registration Statement with any
securities exchange on which the Common Stock of the Company is
then listed;
(f)
immediately
notify each seller of Registrable Securities and each underwriter
under such Registration Statement, at any time when a prospectus
relating thereto is required to be delivered under the Securities
Act, of the happening of any event of which the Company has
knowledge as a result of which the prospectus contained in such
Registration Statement, as then in effect, includes any untrue
statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances then existing
and promptly amend or supplement such Registration Statement to
correct any such untrue statement or omission;
(g)
promptly
notify each seller of Registrable Securities of the issuance by the
Commission of any stop order suspending the effectiveness of the
Registration Statement or the initiation of any proceedings for
that purpose and make every reasonable effort to prevent the
issuance of any stop order and, if any stop order is issued, to
obtain the lifting thereof at the earliest possible
time;
(h)
if
the offering is an underwritten offering, enter into a written
agreement with the managing underwriter selected in the manner
herein provided in such form and containing such provisions as are
usual and customary in the securities business for such an
arrangement between such underwriter and companies of the Company's
size and investment stature, including, without limitation,
customary indemnification and contribution provisions;
(i)
if
the offering is an underwritten offering, at the request of any
seller of Registrable Securities, use its commercially reasonable
efforts to furnish to such seller on the date that Registrable
Securities are delivered to the underwriters for sale pursuant to
such registration: (i) a copy of an opinion dated such date of
counsel representing the Company for the purposes of such
registration, addressed to the underwriters, stating that such
Registration Statement has become effective under the Securities
Act and that (A) to the knowledge of such counsel, no stop order
suspending the effectiveness thereof has been issued and no
proceedings for that purpose have been instituted or are pending or
contemplated under the Securities Act, (B) the Registration
Statement, the related prospectus and each amendment or supplement
thereof comply as to form in all material respects with the
requirements of the Securities Act (except that such counsel need
not express any opinion as to financial statements or other
financial or statistical information contained therein) and (C) to
such other effects as reasonably may be requested by counsel for
the underwriters; and (ii) a copy of a letter dated
such
