Attached files
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EX-10.2 - China Energy Recovery, Inc. | v173063_ex10-2.htm |
EX-10.1 - China Energy Recovery, Inc. | v173063_ex10-1.htm |
EX-99.1 - China Energy Recovery, Inc. | v173063_ex99-1.htm |
UNITED
STATES
SECURITIES AND EXCHANGE
COMMISSION
Washington, D.C.
20549
FORM 8-K
CURRENT
REPORT
Pursuant to Section 13 or 15(d)
of The Securities Exchange Act of 1934
Date
of Report (Date of earliest event reported): February 1, 2010
China Energy Recovery,
Inc.
(Exact
name of registrant as specified in its charter)
Delaware
(State or other jurisdiction
of incorporation)
|
000-53283
(Commission
File Number)
|
33-0843696
(IRS Employer
Identification No.)
|
7F,
No. 267 Qu Yang Road
Hongkou
District
Shanghai,
China
(Address
of principal executive offices)
|
200081
(Zip
Code)
|
Registrant’s
telephone number, including area code (86) 021
5556-0020
(Former
name or former address, if changed since last report.)
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General Instructions A.2. below):
¨ Written communications
pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨ Soliciting material
pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
¨ Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
¨ Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
Item 1.01
— Entry into a Material Definitive Agreement
On February 1, 2010, China Energy
Recovery, Inc., a Delaware corporation (“Company”), through its subsidiaries,
CER Energy Recovery (Shanghai) Co., Ltd. (“Borrower”) and CER (Hong Kong)
Holdings Limited (“Paying Agent”) entered into a series of agreements for a loan
arrangement with two lenders (the “Loan Agreements”). The proceeds of this loan
are generally for construction of a new plant in China for the production of the
Company’s products.
The aggregate principal amount of the
loan under the two Loan Agreements is $4,000,000. The principal is
due January 15, 2013, and bears interest at the annual rate of
15.1%. The loan repayments are to be made three times a year starting
May 15, 2010, and are fully amortizing, such that the principal and interest
will be fully repaid at maturity. The Borrower has entered into other
agreements to provide that moneys due from a certain sale and service contract
and related guarantee will be directed to pay the amounts due under the Loan
Agreements, with the balance paid to the Borrower or its
affiliates. The loan agreement between the Paying Agent and Borrower
and related agreements have been registered with State Administration of Foreign
Exchange (SAFE) for the inflow of funds and the repayment of the loan
obligations. The loans may be prepaid at any time with a premium of
1.25% of the principal amount being paid. The Loan Agreements
provide for the typical events of default, including a cross default clause, and
the Company has made various representations and given various covenants to the
lenders as are typical of such arrangements.
As a guarantee of the payments under
the Loan Agreements, Mr. Wu, the Chief Executive Officer of the Company and the
principal officer of the Borrower, Paying Agent and other affiliates, has
pledged 8,000,006 shares for the repayment of the obligations under the Loan
Agreements. Additionally, since the repayment amount is fixed in
United States dollars, the lenders will receive shares of common stock on each
principal payment date in that number of shares representing the value of the
difference in the Renmenbi/US Dollar exchange rate between February 1, 2010, and
the payment date, provided the Renmenbi exchange rate increases against the US
dollar, times the amount of principal being repaid, divided by the closing price
of the common stock on the repayment date.
Contemporaneously with the funding of
the Loan Agreements, on February 1, 2010, Mr. Wu, the Chief Executive Officer of
the Company arranged for a loan from Haide Engineering (Hong Kong) Limited
(“Haide Engineering”), a company that Mr. Wu controls, to lend to the Paying
Agent the sum of $1,000,000. The proceeds of this loan will be
forwarded to CER Energy Recovery (Yang Zhou) Co., Ltd. for additional paid-in
capital which will help fund the new plant being built in China. The
loan is an interest only loan, bearing interest at the annual rate of 9.5%,
interest payable quarterly, and is unsecured. The principal is due in
full on January 30, 2012. The loan is unsecured and there are no
guarantees of the interest or principal. Haide Engineering has
subordinated its loan to those under the Loan Agreements.
Item 3.02
— Unregistered Sales of Equity Securities
Loan
Facility
The Company relied on the exemption
from registration contained in Section 4(2) of the Securities Act of 1933, as
amended (the “Securities Act”), in connection with issuing the loan arrangements
discussed above, including the share component of the Loan Agreements, and will
rely on the same exemption for the issuance, if any, of shares in conjunction
with any principal payment under the Loan Agreement. The other information
called for by this item is contained in Item 1.01, which is incorporated
herein by reference.
The shares of common stock issuable
under the terms of the Loan Agreements have not been registered under the
Securities Act, and may not be offered or sold in the United States without
registration or an applicable exemption from the registration requirements of
the Securities Act.
Item 9.01 — Financial Statements
and Exhibits
(d) Exhibits
EXHIBIT
NO.
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DESCRIPTION
|
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10.1
|
Form
of Loan Agreement dated February 1, 2010, between investors and CER
Holdings (Hong Kong) Limited
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10.2
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Loan
Agreement between Haide Engineering (Hong Kong) Limited and CER (Hong
Kong) Holdings Limited dated February 1, 2010
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99.1
|
Press
Release dated February 4, 2010 announcing the
financing.
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SIGNATURES
Pursuant to the requirements of the
Securities Exchange Act of 1934, the Registrant has duly caused this report to
be signed on its behalf by the undersigned hereunto duly
authorized.
China
Energy Recovery, Inc.
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||||
Date:
February 4, 2010
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By:
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/s/ Qinghuan Wu
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||
Qinghuan
Wu
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Chief
Executive Officer
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EXHIBIT
INDEX
EXHIBIT
NO.
|
DESCRIPTION
|
|
10.1
|
Form
of Loan Agreement dated February 1, 2010, between investors and CER
Holdings (Hong Kong) Limited
|
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10.2
|
Loan
Agreement between Haide Engineering (Hong Kong) Limited and CER (Hong
Kong) Holdings Limited dated February 1, 2010
|
|
99.1
|
Press
Release dated February 4, 2010 announcing the
financing
|