UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14C
INFORMATION
STATEMENT PURSUANT TO SECTION 14(c)
OF
THE SECURITIES EXCHANGE ACT OF 1934
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Preliminary
Information Statement
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Confidential,
for Use of the Commission Only (as permitted by
Rule
14(c)-5(d)(2))
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Definitive
Information Statement
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China
New Energy Group Company
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(Name
of the Registrant as Specified in its Charter)
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Payment
of Filing Fee (Check the appropriate box):
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No
Fee Required
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Fee
Computed on table below per Exchange Act Rules 14c-5(g) and
0-11.
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of each class of securities to which transaction
applies:
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Aggregate
number of securities to which transaction applies:
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Per
unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
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aggregate value of transaction:
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fee paid:
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Fee
paid previously with preliminary materials.
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Check
box is any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
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previously paid:
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schedule, or registration statement number:
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INFORMATION
STATEMENT
March __,
2010
CHINA
NEW ENERGY GROUP COMPANY
This
Information Statement is being distributed to the holders of (i) common stock,
par value $0.001 per share (the “Common Stock”), (ii) Series A Convertible
Preferred Stock, par value $0.001 per share (the “Series A Preferred Stock”) and
(iii) Series B Convertible Preferred Stock, par value $0.001 per share (the
“Series B Preferred Stock”), of China New Energy Group Company, a Delaware
corporation (the "Company" or “we”’), at the close of business on March 5, 2010
(the "Record Date") under Rule 14c-2 of the Securities Exchange Act of 1934, as
amended (the "Exchange Act").
The
Information Statement advises stockholders of the following action taken and
approved at a special meeting of our Board of Directors held on March 3, 2019
and by written consent, dated March 5, 2010, of the holders of outstanding
shares having not less than the minimum number of votes that would be necessary
to authorize or take the action at a meeting at which all shares entitled to
vote thereon were present and voted:
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The
adoption and approval of an amendment to our Certificate of Incorporation
to effect a reverse stock split of our issued and outstanding
shares of Common Stock by a ratio of between one-for-five and
one-for-twelve, inclusive, at the discretion of the Board of
Directors, without further approval or authorization by our
stockholders
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The
election of Yangkan Chong, Chunming Guo, John D. Kuhns, James Tie Li, Mary
Fellows, Shadron Lee Stastney and You-Su Lin
as
directors.
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The
reverse split will become effective on the filing of an amendment to our
Certificate of Incorporation with the Secretary of State of Delaware which
filing will occur at such time as the Board of Directors shall deem to be
appropriate and in the best interests of the stockholders but no earlier than 20
days after the date of the mailing of this Information Statement to our
stockholders.
The
election of the directors will be effective on the twentieth day following the
date of the mailing of this Information Statement to our
stockholders.
THIS IS NOT A NOTICE OF A SPECIAL
MEETING OF STOCKHOLDERS AND NO STOCKHOLDER MEETING WILL BE HELD TO CONSIDER ANY
MATTER DESCRIBED HEREIN. WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED
NOT TO SEND US A PROXY.
Voting Securities of the
Company
As of the
Record Date there were (i) 105,395,032 shares of Common
Stock, (ii) 2,098,918 shares of Series A Preferred Stock
and (iii) 1,116,388 shares of Series B Preferred Stock
issued and outstanding and entitled to vote.
Common
Stock:
Holders of Common Stock are entitled to one vote per
share.
Series A Preferred
Stock
: Holders of the Series A Preferred Stock have full
voting rights and are entitled to vote with respect to any matter on which
holders of Common Stock have the right to vote, including, without limitation,
the right to vote for the election of directors, voting together with the
holders of Common Stock as one class on an as converted basis. Each
holder of shares of Series A Preferred Stock is entitled to the number of votes
equal to the number of shares of Common Stock into which such shares of Series A
Preferred Stock would be converted if converted on the record date for the
taking of a vote or, if no record date is established, at the day prior to the
date such vote is taken or any written consent of stockholders is first
executed. As of the Record Date the Series A Preferred Stock was
convertible into Common Stock at the ratio of 35 to 1. Accordingly,
the Series A Preferred Stock is convertible into 73,462,130 shares of Common
Stock.
Series B Preferred
Stock:
For so long as the number of outstanding shares
of Series B Preferred Stock is at least thirty percent (30%) of the total number
of shares of Series B Preferred Stock originally issued, the holders of Series B
Preferred Stock vote together as a single class with the holders of
the Common Stock and the holders of the Series A Preferred Stock, with the
holders of Series B Preferred Stock being entitled to seventy percent (70%) of
the total votes on all such matters regardless of the actual number of shares of
Series B Preferred Stock then outstanding, and the holders of Series A Preferred
Stock and Common Stock being entitled to their proportionate share of the
remaining 30% of the total votes. At the Record Date the number
of outstanding shares of Series B Preferred Stock was at least thirty percent
(30%) of the total number of shares of Series B Preferred Stock originally
issued.
THE
REVERSE SPLIT
Our Board
of Directors and a majority of our shares entitled to vote thereon have
authorized and approved the reverse stock split, which would allow our Board of
Directors, in its discretion should it deem it to be appropriate and in the best
interests of the Company and its stockholders, to amend our Certificate of
Incorporation to effect a reverse stock split of our issued and outstanding
shares of Common Stock by a ratio of between one-for-five and one-for-twelve,
inclusive, without further approval or authorization by our
stockholders.
At the
time of the reverse split, based on the reverse split ratio decided by the Board
of Directors, holders of outstanding shares of Common Stock will receive certain
share(s) of post-reverse split Common Stock for each share(s) of pre-reverse
split Common Stock held as of the close of business on the date the amendment to
our certificate of incorporation is filed. No fractional shares
of common stock will be issued in connection with the reverse
split. All fractional share amounts resulting from the reverse split
will be rounded up to the next whole new share.
Authorization
by the Board of Directors and a Majority of our Stockholders
On March
3, 2010, the board of directors, at a special meeting, authorized the filing of
an amendment to our certificate of incorporation to effect a reverse stock split
of our issued and outstanding shares of Common Stock by a ratio of between
one-for-five and one-for-twelve, inclusive, without further approval or
authorization by our stockholders. A copy of the resolutions adopted
at the special meeting are attached hereto as
Exhibit
A.
Pursuant
to our bylaws and Section 228 of the Delaware General Corporation
Law (“DGCL”), any action which may be taken at any annual or special
meeting of stockholders may be taken without a meeting and without prior notice,
if one or more stockholders consents in writing, setting forth the action so
taken, and such written consent is signed by the holders of outstanding shares
having not less than the minimum number of votes that would be necessary to
authorize or take the action at a meeting at which all shares entitled to vote
thereon were present and voted.
By
written consent dated March 5, 2010, the holders of a majority of our
outstanding shares entitled to vote thereon on such date (a copy of which is
attached hereto as
Exhibit B
attached
hereto) authorized the filing of an amendment to our certificate of
incorporation to effect a reverse stock split of our issued and outstanding
shares of Common Stock by a ratio of between one-for-five and one-for-twelve,
inclusive, without further approval or authorization by our
stockholders. As of the close of business on March 5, 2010, there
were (i) 105,395,032 shares of Common Stock, (ii)
2,098,918 shares of Series A Preferred Stock
and (iii) 1,116,388 shares of Series B Preferred Stock issued
and outstanding and entitled to vote. Under the terms of our
certificate of incorporation, for so long as the number of
outstanding shares of Series B Preferred Stock is at least thirty percent (30%)
of the total number of shares of Series B Preferred Stock originally issued, the
holders of Series B Preferred Stock vote together as a single class
with the holders of the Common Stock and the holders of the Series A Preferred
Stock, with the holders of Series B Preferred Stock being entitled to seventy
percent (70%) of the total votes on all such matters regardless of the actual
number of shares of Series B Preferred Stock then outstanding. The
written consent of our stockholders was signed by the holders of all of the
Series B Preferred Stock. Accordingly, we have obtained the requisite
stockholder approval to file the amendment to our certificate of incorporation
and are furnishing this Information Statement solely for the purpose of
informing stockholders of the reverse split, in the manner required under the
Exchange Act, before the amendment to the certificate of incorporation
effectuating the reverse split may be filed.
Effective
Date of Reverse Split
The
reverse split will become effective immediately upon the filing of a certificate
of amendment to our certificate of incorporation with the Office of the
Secretary of State of Delaware. The filing will be made at such time
as our board of directors shall consider appropriate and in the best interests
of the Company and its stockholders but no earlier than 20 days after the date
this Information Statement is first mailed to our stockholders. At the time of
filing, all then outstanding shares of our common stock will be converted,
without any action on the part of the stockholders, into a new lesser number of
shares of common stock in accordance with the ratio selected by the board of
directors (within the range of one for 5 and one for 12, inclusive), except that
an additional new share will be issued for each fractional share resulting from
the reverse split.
As of
March 5, 2010, our Common Stock was held by 97 holders of
record.
Reasons
for the Reverse Split
The
reverse split will reduce the number of our outstanding shares of Common Stock
outstanding.
The
reverse split action may be taken, among other reasons, in order to enable us to
meet initial listing requirements for the Nasdaq Stock Market or other trading
markets or exchanges, or to ensure that
in the future there is a sufficient number of unissued authorized shares
available for use as consideration for acquisitions of synergistic businesses
and for issuance in connection with new employee benefit plans which may be
adopted. We currently do not have any pending acquisitions or benefit plans
pursuant to which equity compensation may be awarded, nor have any acquisitions
or benefit plans been proposed;
however, given the time and expense associated with convening a special meeting
of stockholders, which would be required to consider these issues at a later
time, our Board of Directors has determined that it is most efficient
and in the best interests of our stockholders for our Board of
Directors to have the discretion to implement the reverse stock split, within
the range described above, at any time without seeking further approval or
authorization by our stockholders. Our Board and our stockholders
have approved the ratio of between one-for-five and one-for-twelve, inclusive
without further approval or authorization by our stockholders. Our
Board of Directors and the holders of a majority of our shares
entitled to vote thereon have adopted a resolution, (i) declaring the
advisability of the reverse stock split by a ratio of between
one-for-five and one-for-twelve, inclusive, without further approval or
authorization by our stockholders, (ii) in connection therewith,
amending our certificate of incorporation to effect the reverse stock split at a
future time but no earlier than 20 days following the mailing of this
Information Statement to our stockholders. Our Board of
Directors may subsequently implement, in its discretion, the reverse stock split
within the range set forth above based on its determination that the reverse
stock split is appropriate and in the best interests of the Company and our
stockholders. If our Board of Directors determines that the reverse
stock split is appropriate and in the best interests of the Company and our
stockholders, the reverse stock split could become effective on any date
selected by our Board of Directors. Our Board of Directors may only
implement the reverse stock split within the range
approved. Moreover, our Board of Directors reserves the right to
forego implementing the reverse stock split if such action is determined not to
be appropriate and in the best interests of the Company and our
stockholders. If the reverse stock split is subsequently
not implemented by our Board of Directors and effected by the date of the next
annual meeting of stockholders the proposal will be deemed abandoned, without
any further effect.
Although
the increased proportion of unissued authorized shares to issued shares could,
under certain circumstances, have an anti-takeover effect (for example, by
permitting issuances that would dilute the stock ownership of a person seeking
to effect a change in the composition of our Board of Directors or contemplating
a tender offer or other transaction for the combination of our company with
another company), we are not proposing the reverse stock split in response to
any effort of which we are aware to accumulate any of our shares or obtain
control of our company. Our Board of Directors does not currently contemplate
recommending the adoption of any other proposals that could be construed to
affect the ability of anyone to take over or change the control of our
company.
Effects
of the Reverse Split
Voting Rights.
Holders
of our Common Stock will continue to have one vote for each share of Common
Stock owned after the reverse split
.
Consequently, the voting
and other rights of the holders of the Common Stock will not be affected by the
reverse split, other than as a result of the treatment of fractional
shares.
Number
of Stockholders; Par Value and Authorized Shares.
The
number of stockholders of record will not be affected by the reverse split
(except that non round lot holder will be eliminated). The par value
and authorized number of shares of Common Stock under our Certificate of
Incorporation will remain the same following the effective time of the reverse
split.
Public Status; Reporting
Requirements
.
The
Company currently has no intention to go private, and the reverse split is not
intended to be the first step in a “going private transaction” and will not have
the effect of a going private transaction under Rule 13e-3 of the Exchange
Act. Moreover, the reverse split will not increase the risk of the
company becoming a private company in the future. We will continue to be subject
to the periodic reporting requirements of the Exchange Act following the reverse
split.
Issuance
of Additional Shares.
The
number of authorized shares of common stock will continue to be 500,000,000
after the reverse split. However, the number of authorized but unissued shares
of common stock effectively will be increased significantly by the reverse split
because the 105,395,032 shares of common stock outstanding prior to
the reverse split (currently representing approximately 21% of the 500,000,000
authorized shares of common stock) will be reduced. The
issuance in the future of such additional authorized shares (including shares of
common stock that will be issued upon the conversion of the outstanding
preferred stock) may have the effect of diluting the earnings per
share and book value per share, as well as the stock ownership and voting
rights, of the currently outstanding shares of common stock. The
effective increase in the number of authorized, but unissued shares of common
stock may be construed as having an anti-takeover effect by permitting the
issuance of shares to purchasers who might oppose a hostile takeover bid or
oppose any efforts to amend or repeal certain provisions of the our certificate
of incorporation or bylaws. Such a use of these additional authorized shares
could render more difficult, or discourage, an attempt to acquire control of the
company through a transaction opposed by the board of directors. At this time,
other than for the conversion of the preferred stock, the board of directors
does not have plans to issue any shares of common stock resulting from the
effective increase in the number of our authorized, but unissued shares
resulting from the reverse split.
Federal
Income Tax Consequences
We will
not recognize any gain or loss as a result of the reverse split.
We have
not sought and will not seek an opinion of counsel or a ruling from the Internal
Revenue Service regarding the Federal income tax consequences of the reverse
split. The state and local tax consequences of the reverse split may
vary significantly as to each stockholder, depending upon the jurisdiction in
which such stockholder resides. Stockholders are urged to consult their own tax
advisers to determine the particular consequences of the reverse split to
them.
Distribution and
Costs
We will
pay the cost of preparing, printing and distributing this Information Statement.
Only one Information Statement will be delivered to multiple stockholders
sharing an address, unless contrary instructions are received from one or more
of such stockholders. Upon receipt of a written request at the address noted
above, we will deliver a single copy of this Information Statement and future
stockholder communication documents to any stockholders sharing an address to
which multiple copies are now delivered.
Absence
of Dissenters’ Rights of Appraisal
Neither
the adoption by the Board of Directors, nor the approval by the majority
stockholder, of the reverse split provides stockholders any right to dissent and
obtain appraisal of or payment for such stockholder's shares under Section 262
of the DGCL, the Certificate of Incorporation or the bylaws.
Election
to Board of Directors
The Board
of Directors at a special meeting held on March 3, 2010 nominated the following
7 individuals for election to the Board of Directors by the stockholders
entitled to vote thereon (a copy of the resolutions adopted by the Board of
Directors at the special meeting is set forth on
Exhibit A
attached
hereto): Yangkan Chong, Chunming Guo, John D. Kuhns, James Tie Li,
Mary Fellows Shadron Lee Stastney and You-Su Lin.
On March
5, 2010, the holder of all of our outstanding Series B Preferred Stock by
written consent, as set forth on
Exhibit B
attached
hereto, elected the directors set forth above to hold office beginning on the
20
th
day following the date of mailing of this information statement until their
respective successors shall be elected or their earlier resignation or
removal.
Yangkan Chong
,
54, was appointed as our
President and Chief Executive Officer effective May 18, 2009. Mr.
Chong has served as a director of the Company since April 27, 2008, and has
served as the Vice Chairman of our subsidiary, Tianjin SingOcean Public Utility
Development Co., Ltd., since October 2006. From March 2008 to May
2009, Mr. Chong served as the Deputy Chief Executive Officer of China EnerSave
Limited, a renewable energy provider that is listed on the Singapore Stock
Exchange, and Mr. Chong started his career with the company as a Senior General
Manager in March 2007. Mr. Chong has more than 20 years of experience
in the energy industry, and has held senior level positions with energy-related
companies including China Light & Power (CLP) Hong Kong, Enron
International, Edison Mission Energy, Singapore Power and Exxon Oil and other
Singapore Government-linked companies. Mr. Chong holds a Master of
Science (Mechanical Engineering) from the National University of Singapore and a
Bachelor of Engineering (Mechanical & Production) from the University of
Singapore.
Chunming Guo
, 49, became a
director on April 27, 2008. Since founding SingOcean on January 19,
2004, Mr. Guo has served as its Chairman, President and Chief Executive Officer.
Prior to this, Mr. Guo served as the Development manager of Tianjin Gas
from February 1997 to January 2004.
John D. Kuhns
, 59, became a
director on October 28, 2008. Mr. Kuhns has over 30 years of
experience in the hydroelectric, power technology and alternative energy
industries. In 1981, Mr. Kuhns founded Catalyst Energy, one of the first
publicly traded independent power producers in the United States; Mr. Kuhns
served as the president and chief executive officer of Catalyst until 1988. Mr.
Kuhns served as the chairman and chief executive officer of New World Power
Corporation from 1992 to 1996, during which time he worked on the development
and financing of hydroelectric projects in China, Argentina, Costa Rica and
Mexico, and formed a joint venture with Wuhan Steam Turbine, a state-owned
enterprise owned by the City of Wuhan in China to develop hydroelectric projects
in Asia. Mr. Kuhns is currently the president, chief executive officer, director
and controlling shareholder of Kuhns Brothers, Inc., an investment banking firm
founded by Mr. Kuhns in 1986 that specializes in providing financing for power
technology ventures and infrastructure companies operating in China. Mr. Kuhns
is also a principle of China Hand Fund I, LLC, a hedge fund that focuses on
investing in China. Mr. Kuhns obtained Bachelor of Arts degrees in
Sociology and Fine Arts from Georgetown University, a Master of Fine Arts degree
from the University of Chicago, and a Master's of Business Administration degree
from the Harvard Business School.
James Tie Li
, 41, became a
director on October 28, 2008. Mr. Li has extensive investment banking
and entrepreneur experience in the U.S. and China. Mr. Li was the founder of,
and senior executive with, a number of start-up companies in China including
China Hydroelectric Corporation. Mr. Li has been a consultant to Kuhns Brothers,
Inc., advising on corporate finance, valuation and acquisition matters related
to the firm's China-related equity financing transactions since 2006. In 2002,
Mr. Li founded Columbia China Capital Group, a U.S. based boutique investment
firm advising Asian firms in mergers and acquisitions, public listing and growth
strategy. Mr. Li obtained a Bachelor of Science degree in accounting
from City University of New York and a Master of Business Administration degree
from the Columbia University Graduate School of Business. Mr. Li is a Chartered
Financial Analyst and a Certified Public Accountant licensed in the State of New
Jersey.
Mary Fellows
, 47, became a
director on August 10, 2009. Ms, Fellows has been the executive vice
president and corporate secretary of China Hydroelectic Corporation since
2006. Ms. Fellows has been a partner and executive vice president of Kuhns
Brothers, Inc., an investment boutique, since 1997. She is a co-chairman
of the Distributed Power Company, a company with investments in solar
information publications. From 2003 to 2006, she was a director of GenSelf
Corporation. From 1997 to 2002, she was a corporate secretary of the Solar
Electric Light Company. From 1996 to 1999, she was a director of Corporate
Administration and corporate secretary of the New World Power Corporation. Ms.
Fellows is also a member of the board of directors of China Natural Energy
Corporation, China Silicon Corporation, China Electrode Corporation, China Board
Mill Corporation, Paragon Semitech USA and Lime Rock, LLC. Ms. Fellows
received her bachelor's degree in Science (Alpha Chi) from Teikyo Post
University.
Shadron Lee Stastney
, 39,
became a director on August 10, 2009. Mr. Stastney has been a
partner at Vicis Capital, LLC, Since June 2004, which is an investment
management firm and the managing partner of one of our principal shareholders,
Vicis Capital Master Fund. From July 2001 to May 2004, Mr. Stastney was a
managing director of Victus Capital, LP, an investment management firm.
Mr. Stastney received his bachelor's degree in Arts from the University of North
Dakota and a Juris Doctor degree from the Yale Law School.
Dr. You-Su Lin
, 57, has been a
director of China Hydroelectric Corporation since August 2008 and has been
chairman of Beijing A.B.C. Investment since 2007. Dr. Lin is the chairman of the
board of Beijing A.B.C. Investment. Dr. Lin has been the chairman of Greenstone
Investment Ltd since 2004 and he has also been the chairman of China Board Mill
Corporation since August 2008. He serves as a member of the board of directors
of China Silicon Corporation and China Natural Energy. Dr. Lin was a chief
consultant for Beijing Urban Construction Group Co., Ltd. in charge of the
construction of 2008 Olympic venues from 2002 to 2004. Dr. Lin received his
Ph.D. in the Arts and master’s degree in the Arts from Australian National
University and his bachelor’s degree in the Arts from Beijing Foreign Language
University.
All
directors shall serve until the next annual meeting of stockholders or until
their successors are elected and qualified or their earlier resignation or
removal . There are no family relationships between any of the
proposed directors.
To the
best of our knowledge, none of the proposed directors of the Company has
been
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the
subject of any bankruptcy petition filed by or against any business of
which such person was a general partner or executive officer either at the
time of the bankruptcy or within two years prior to that
time;
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convicted
in a criminal proceeding or been subject to a pending criminal proceeding
(excluding traffic violations and other minor offenses);
or
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subject
to any order, judgment or decree, not subsequently reversed, suspended or
vacated, of any court of competent jurisdiction, permanently or
temporarily enjoining, barring, suspending or otherwise limiting such
person’s involvement in any type of business, securities or banking
activities or been found by a court of competent jurisdiction (in a civil
action), the SEC or the Commodity Futures Trading Commission to have
violated a federal or state securities or commodities law, and the
judgment has not been reversed, suspended or
vacated.
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Board
Composition and Meetings of the Board of Directors
After the
effectiveness of the election of the Board of Directors, the Board of Directors
will be composed of the following seven members: Yangkan Chong, Chunming
Guo, John D. Kuhns, James Tie Li, Mary Fellows Shadron Lee Stastney and You-Su
Lin. All board action requires the approval of a majority of the
directors in attendance at a meeting at which a quorum is present.
Policy
Regarding Board Attendance
Our
directors are expected to attend board meetings as frequently as necessary to
properly discharge their responsibilities and to spend the time needed to
prepare for each such meeting. Our directors are expected to attend
annual meetings of stockholders, but we do not have a formal policy requiring
them to do so.
During
2009, our Board met 8 times and acted by unanimous written consent 7
times. None of our directors attended fewer than seventy-five percent
of the meetings of the Board of Directors and the meetings of the committees on
which he serves..
Independent
Directors
Our
securities are not currently listed on a national securities exchange or on
NASDAQ. Such a listing would require that a majority of our Board of
Directors be “independent.” We have not made a determination that any
of our directors qualify as “independent directors,” as the term
“independent” is defined by the rules of the Nasdaq Stock Market or the
AMEX.
Committees
Our Board
of Directors has established an Audit Committee and a Compensation
Committee. Neither of these committees has a written charter that has
been approved by the Board of Directors.
Audit
Committee.
The Board
of Directors established an Audit Committee on October 5, 2009.
Messrs. John D. Kuhns and James Tie Li currently serve on the Audit
Committee.
Our Board
of Directors has not determined whether each member of the Audit Committee is
“independent” for purposes of the NASDAQ Marketplace Rules and the rules of the
SEC as these rules apply to audit committee members.
Our Board
of Directors has determined that each Audit Committee member has sufficient
knowledge in financial and auditing matters to serve on the Audit Committee. Our
Board of Directors has designated Mr. John D. Kuhns as an “audit committee
financial expert,” as defined under the applicable rules of the
Commission.
The Audit
Committee intends to adopt a formal charter but has not yet done
so.
The Audit
Committee retains our independent auditors, reviews and approves the planned
scope, proposed fee arrangements and terms of engagement of the independent
auditors, reviews the results of the annual audit of our financial statements
and the interim reviews of our unaudited financial statements, evaluates the
adequacy of accounting and financial controls, reviews the independence of our
auditors, and oversees our financial reporting on behalf of the Board of
Directors. In addition, the Audit Committee reviews with our
independent auditors the scope and timing of their audit services and any other
services they are asked to perform, the independent auditor’s report on our
consolidated financial statements following completion of their audit, and our
critical accounting policies and procedures and policies with respect to our
internal accounting and financial controls.
The Audit
Committee held no meetings during 2009 and did not act by written
consent.
Compensation
Committee.
The Board
of Directors established a Compensation Committee on October 5, 2009. Mr. John
D. Kuhns, Mr. Shadron L. Stastney and Ms. Mary E. Fellows currently serve on the
Compensation Committee.
Our Board
of Directors has not determined whether each member of the compensation
committee is “independent” for purposes of the NASDAQ Marketplace Rules and the
rules of the SEC as these rules apply to compensation committee
members.
The
Compensation Committee intends to adopt a formal charter but has not yet done
so.
The
Compensation Committee’s responsibilities include:
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considering
and adoting the compensation philosophy for the Company’s
personnel;
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monitoring
and evaluating the compensation and benefits structure of the
Company
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reviewing
and approving corporate goals and objectives relevant to the Chief
Executive Officer and other executive officers’
compensation;
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evaluating
the Chief Executive Officer’s and other executive officers’ performance in
light of corporate goals and objectives and determining and approving the
Chief Executive Officer’s and other executive officers’ compensation based
on such evaluation;
|
|
|
·
|
reviewing
and approving all compensation for all the non-employee directors and
other employees of the Company and its subsidiaries with a base salary
greater than or equal to $100,000;
|
|
|
·
|
reviewing
the terms of the Company’s incentive compensation plans, equity-based
plans, retirement plans, deferred compensation plans and welfare benefit
plans
|
|
|
·
|
reviewing
and approving executive officer and director indemnification and insurance
matters
|
|
|
·
|
reviewing
and discussing the Compensation Discussion and Analysis section proposed
for inclusion in the Company’s Annual Report on Form 10-K and annual proxy
statement with management and recommending to the Board whether such
section should be so included
|
|
|
·
|
preparing
and approving the Committee’s report to be included as part of the
Company’s annual proxy statement
|
|
|
·
|
evaluating
its own performance on an annual basis and reporting on such performance
to the Board;
|
|
|
·
|
reviewing
and reassessing the Compensation Committee Charter and submitting any
recommended changes to the Board for its consideration;
and
|
|
|
·
|
having
such other powers and functions as may be assigned to it by the Board from
time to time
|
The
Compensation Committee held one meeting during 2009 and acted by written consent
once.
The Board
does not have a Nominating Committee.
Director
Compensation
Pursuant
to verbal agreements, Messrs. Kuhns, Li and Stastney and Ms. Fellows each
receive $20,000 annually for service on our Board of Directors. Pursuant to
verbal agreement, Mr. Chong received $20,000 annually for service on our Board
of Directors until he was appointed as our CEO on May 11, 2009. Mr.
Chong received a total of $6,668 as his compensation as director.
The Board
may award special remuneration to any director undertaking any special services
on our behalf other than those services ordinarily required of a director. In
2009, no such special remuneration was paid to any of our
directors.
All
authorized out-of-pocket expenses incurred by a director on our behalf is
subject to reimbursement upon our receipt of required supporting documentation
of such expenses.
Code of Business Conduct and Ethics
We have
adopted a code of business conduct and ethics relating to the conduct of our
business by our employees, officers and directors. We intend to maintain the
highest standards of ethical business practices and compliance with all laws and
regulations applicable to our business, including those relating to doing
business outside the United States.
Stockholder
Communications
The Board
does not currently consider Board candidates recommended by security holders but
may adopt such a policy in the future in connection with its application for
listing on NASDAQ.
EXECUTIVE
COMPENSATION
Summary
Compensation Table— Fiscal Years Ended December 31, 2009, 2008 and
2007
The
following table sets forth information concerning all cash and non-cash
compensation awarded to, earned by or paid to the named persons for services
rendered in all capacities during the noted periods. No other
executive officers received total annual salary and bonus compensation in excess
of $100,000.
|
Name
and
Principal
Position
|
|
Year
|
|
Salary
($)
|
|
Bonus
($)
|
|
Stock
Awards
($)
|
|
|
Option
Awards
($)
|
|
|
Non-Equity
Incentive Plan
Compensation
Earnings
($)
|
|
|
Non-
Qualified
Deferred
Compensation
Earnings
($)
|
|
|
All
Other
Compensation
($)
|
|
Total
($)
|
|
Yangkan
Chong,
|
|
2009
|
|
|
88,000
|
|
-
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
88,000
|
|
Chief
Executive Officer and Director
|
|
2008
|
|
|
-
|
|
-
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
-
|
Narrative
to Summary Compensation Table
Employment
Agreements
Mr.
Chong was appointed as our Chief Executive Officer effective May 18,
2009. Pursuant to an employment agreement, dated May 11, 2009, by and
between the Company and Mr. Chong, Mr. Chong receives an annual salary of
$192,000.
On
September 28, 2009, Eric Yu Tak Shing was appointed as Chief Financial Officer
of the Company. Pursuant to the terms of an employment agreement, dated
September 25, 2009, by and between the Company and Mr. Yu, the Company has
agreed to pay to Mr. Yu an annual salary of $156,000.
Mr. Shi
was appointed as our Chief Operating Officer on May 19, 2009. Pursuant to an
employment agreement, by and between the Company and Mr. Shi, Mr. Shi receives
an annual salary of $74,000.
Outstanding
Equity Awards at Fiscal Year End
None of
our executive officers received any equity awards, including, options,
restricted stock or other equity incentives during the fiscal year ended
December 31, 2009 and 2008.
Director
Compensation – 2009
|
Name
|
|
Fees
Earned
or Paid
in Cash
($)
|
|
|
Stock
Awards
($)
|
|
|
Option
Awards
($)
|
|
|
Non-Equity
Incentive
Plan
Compensation
($)
|
|
|
Nonqualified
Deferred
Compensation
Earnings
($)
|
|
|
All Other
Compensation
($)
|
|
|
Total
($)
|
|
|
Jia-Ji
Shang
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Chunming
Guo
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Yangkan
Chong
|
|
|
6,668
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
6,668
|
|
|
John
D. Kuhns
|
|
|
20,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
20,000
|
|
|
James
Tie Li
|
|
|
20,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
20,000
|
|
|
Mary
Fellows
|
|
|
10,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
|
|
Shadron
Lee Stastney
|
|
|
10,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
|
No
compensation was paid to Jia-Ji Shang and Chunming Guo,for services as a
director during the fiscal year ended December 31, 2009 for service as a member
of our Board of Directors.
Compensation
Committee Report
The
Compensation Committee is currently composed of the three directors named at the
end of this report.
The
Compensation Committee has reviewed and discussed with management the
disclosures contained in the Executive Compensation section of this Information
Statement. Based upon this review and discussion, the Compensation Committee
recommended to our Board of Directors that the Executive Compensation section be
included in this Information Statement.
Compensation
Committee of the Board of Directors
|
|
|
John
D. Kuhns
Shadron
L. Stastney
Mary
E. Fellows
|
|
|
Compensation
Committee Interlocks and Participation
The
Compensation Committee members whose names appear on the
Compensation
Committee
Report above were committee members. None of our executive
officers currently serve as a member of the board of directors or compensation
committee, or other committee serving an equivalent function, of any other
entity that has one or more of its executive officers serving as a member of our
Board of Directors or Compensation Committee.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS
AND MANAGEMENT
The
following table sets forth information regarding beneficial ownership of our
voting stock as of March 5, 2009 (i) by each person who is known by us to
beneficially own more than 5% of each class our voting stock; (ii) by each of
our executive officers and directors; and (iii) by all of our executive officers
and directors as a group.
Unless
otherwise specified, the address of each of the persons set forth below is in
care of China New Energy Group Company, 20F., Center Plaza, No. 188 Jiefang
Road, Heping District, Tianjin, China.
|
|
|
Amount and Nature of Beneficial Ownership (1)
|
|
|
|
|
Common Stock
|
|
|
Series A Convertible
Preferred Stock(2)
|
|
|
Series B Convertible
Preferred Stock (3)
|
|
|
Total
|
|
|
Name &
Address of
Beneficial
Owner
|
|
Shares
|
|
|
% of
Class
|
|
|
Shares
|
|
|
% of
Class
|
|
|
Shares
|
|
|
% of
Class
|
|
|
Voting
Power(4)
|
|
|
Yangkan
Chong,
Chief
Executive
Officer
and Director
|
|
|
4,382,502
|
|
|
|
4.16
|
%
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jiaji
Shang,
|
|
|
51,026,957
|
(5)
|
|
|
48.41
|
%
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
8.56
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chunming
Guo,
Director
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eric
Yu Tak Shing Chief Financial
Officer
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Changli
Li
Chief
Technology
Officer
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John
D. Kuhns
Director
558
Lime Rock
Road
Lakeville,
CT
06039
|
|
|
9,108,746
|
(6)
|
|
|
7.998
|
%
|
|
|
321,213
|
|
|
|
15.3
|
%
|
|
|
-
|
|
|
|
-
|
|
|
|
1.99
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James
Tie Li
Director
22
Berkshire
Way
East
Brunswick
NJ
08816
|
|
|
306,735
|
(7)
|
|
|
*
|
|
|
|
3,476
|
|
|
|
*
|
|
|
|
-
|
|
|
|
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mary
Fellows
Director
558
Lime Rock
Road Lakeville,
CT 06039
|
|
|
2,030,089
|
(8)
|
|
|
1.89
|
%
|
|
|
107,071
|
|
|
|
5.10
|
%
|
|
|
|
|
|
|
|
|
|
|
*
|
|
|
Shadron
Lee Stastney
Director
445
Park Ave
16
th
floor
NY,NY
10022
|
|
|
13,901,672
|
(9)
|
|
|
12.09
|
%
|
|
|
1,546,184
|
|
|
|
73.67
|
%
|
|
|
1,116,388
|
|
|
|
100
|
%
|
|
|
79.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
You-Su
Lin
Director
25B
New Poly
Plaza,
No1
North
Chaoyangmen
St.
Dongcheng
District
Beijing,
PRC
100010
|
|
|
870,721
|
(10)
|
|
|
*
|
|
|
|
107,071
|
|
|
|
5.1
|
%
|
|
|
|
|
|
|
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All
officers and
directors
as a
group
(10 persons
named
above)
|
|
|
81,627,422
|
|
|
|
64.66
|
%
|
|
|
2,085,015
|
|
|
|
99.34
|
%
|
|
|
1,116,388
|
|
|
|
100
|
%
|
|
|
83.88
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Qun
Wang
Room
2707,
27/F
Shui
on Centre
6-8
Harbour
Road
Wanchai
Hong
Kong
PRC
|
|
|
26,041,146
|
(11)
|
|
|
24.71
|
%
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4.37
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quick
Rise
PRC
Room
2707, 27F
Shui
On Centre
6-8
Harbour
Road
Wanchi
Hong
Kong
|
|
|
20,000,000
|
|
|
|
18.98
|
%
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3.35
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Waterpower
Investments
Limited
Room
2707, 27F
Shui
On Centre
6-8
Harbour
Road
Wanchi
Hong
Kong
PRC
|
|
|
14,807,828
|
|
|
|
14.05
|
%
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2.48
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Keen
Star Asia
Holdings
Limited
Room
2707,
27/F
Shui
On Centre
6-8
Harbour
Road
Wanchai,
Hong Kong PRC
|
|
|
9,490,865
|
|
|
|
9
|
%
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1.59
|
%
|
|
Eternal
International
Holding
Group
Limited
Room
2707,
27/F
Shui
On Centre
6-8
Harbour
Road
Wanchai,
Hong
Kong
PRC
|
|
|
9,490,865
|
|
|
|
9
|
%
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1.59
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vicis
Capital
Master
Fund
445
Park Ave
16
th
floor
NY,NY
10022
|
|
|
13,901,672
|
(12)
|
|
|
12.09
|
%
|
|
|
1,546,184
|
|
|
|
73.67
|
%
|
|
|
1,116,388
|
|
|
|
100
|
%
|
|
|
79.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New
World
Power,
LLC
558
Lime Rock
Road
Lakeville,
CT
06039
|
|
|
2,612,157
|
(13)
|
|
|
2.43
|
%
|
|
|
321,213
|
|
|
|
15.3
|
%
|
|
|
-
|
|
|
|
-
|
|
|
|
1.99
|
%
|
*
Less than 1%
(1) Beneficial
Ownership is determined in accordance with the rules of the SEC and generally
includes voting or investment power with respect to securities. Each of the
beneficial owners listed above has direct ownership of and sole voting power and
investment power with respect to the shares of our common stock.
(2) Shares
of Series A Preferred Stock, which are convertible into shares of our common
stock on the basis of 35 shares of common stock for each share of Series A
Preferred Stock. Holders of Series A Preferred Stock vote with the
holders of Common Stock on all matters on an as converted to common stock
basis. Therefore, each share of Series A Preferred Stock is entitled
to 35 votes per share whereas each share of common stock is entitled to one vote
per share. 2,098,918 shares of Series A Preferred Stock are
currently issued and outstanding which is convertible into 73,462,130
shares of Common Stock. The shares of common stock and Series A
Preferred Stock represent 30% of the voting power.
(3) For
so long as the number of outstanding shares of Series B Preferred Stock is at
least thirty percent (30%) of the total number of shares of Series B Preferred
Stock originally issued, the holders of Series B Preferred Stock shall vote
together as a single class with the holders of the Common Stock and the holders
of the Series A Preferred Stock, with the holders of Series B Preferred Stock
being entitled to seventy percent (70%) of the total votes on all such matters
regardless of the actual number of shares of Series B Preferred Stock then
outstanding, and the holders of Series A Preferred Stock and Common Stock being
entitled to their proportional share of the remaining 30% of the total
votes. At the Record Date the number of outstanding shares of
Series B Preferred Stock is at least thirty percent (30%) of the total number of
shares of Series B Preferred Stock originally issued. 1,116,388 shares of Series
B Preferred Stock are currently outstanding.
(4) Percentage
total voting power represents voting power with respect to all shares of our
common stock, Series A Preferred Stock and Series B Preferred Stock, as a single
class. As of March 5, 2010, a total of 105,395,032 shares of our
common stock, 2,098,918 shares of our Series A Preferred Stock (or 73,462,130
shares of common stock on an as-converted basis) and 1,116,388 shares of our
Series B Preferred Stock (or 39,073,580 shares of common stock on an
as-converted basis), are considered to be outstanding pursuant to SEC Rule
13d-3(d)(1).
(5)
Includes the following shares held by entities for which Mr. Shang is
deemed to be the beneficial owner: 7,592,692 shares held by Eternal
International; 4,382,502 shares held by Victory Boom Investments Limited, a
British Virgin Islands corporation; 20,000,000 shares held by Quick Rise
Investments Limited, a British Virgin Islands corporation; 14,807,828 shares
held by Waterpower Investments Limited, a British Virgin Islands corporation;
and 4,243,935 shares held by Lika Investments Limited, a British Virgin Islands
corporation.
(6) Includes 2,557,504
shares underlying warrants to purchase shares of our common stock, as well as
the following shares held by entities for which Mr. Kuhns is deemed to be the
beneficial owner: 622,420 shares issued as dividends of our Series A Preferred
Stock holding by New World Power, LLC, 1,989,737 shares underlying
warrants to purchase shares of our common stock held by New World Power, LLC and
3,939,085 shares underlying warrants to purchase shares of our common stock held
by Kuhns Brothers Inc.
(7) Includes
6,735 shares issued as dividends of our Series A Preferred Stock and 300,000
shares underlying warrants to purchase shares of our common stock.
(8) Includes
207,475 shares issued as dividends of our Series A Preferred Stock and 1,822,614
shares underlying warrants to purchase shares of our common stock.
(9)
Includes the following shares held by Vicis Capital Master Fund for which
Shadron Stastney is deemed to be the beneficial
owner: 2,996,071shares issued as dividends of our Series A Preferred
Stock, 1,327,874 shares issued as dividends of our Series B Preferred Stock and
9,577,727 shares underlying warrants to purchase shares of our common
stock.
(10)
Includes 207,475 shares issued as dividends of our Series A Preferred Stock and
663,246 shares underlying warrants to purchase shares of our common
stock.
(11)
Includes the following shares held by entities for which Mr. Wang is deemed to
be the beneficial owner: 1,898,173 shares held by Eternal International;
9,490,865 shares held by Keen Star Asia Holdings Limited, a British Virgin
Islands corporation; 4,382,502 shares held by Krum Power Group Limited, a
British Virgin Islands corporation; 4,382,502 shares held by Clever Keys Group
Limited, a British Virgin Islands corporation; 3,188,931 shares held by Oak Lake
Investments Limited, a British Virgin Islands corporation; and 2,698,173 shares
held by Longwide Investments Limited, a British Virgin Islands
corporation.
(12)
Includes all shares held by Vicis Capital Master Fund for which Shadron Stastney
is deemed to be the beneficial owner.
(13)
Includes 622,420 shares issued as dividends of our Series A Preferred Stock and
1,989,737 shares underlying warrants to purchase shares of our common
stock.
RECOMMENDATION
OF THE BOARD OF DIRECTORS
The Board
of Directors recommended that the stockholders approve the the filing of the
Certificate of Amendment and elect Yangkan Chong, Chunming Guo, John
D. Kuhns, James Tie Li, Mary Fellows, Shadron Lee Stastney and You-Su Lin as
directors.
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By
order of the Board of Directors
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/s/ Yangkan
Chong
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Yangkan
Chong
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Chief
Executive Officer and Director
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Date:
March 26, 2010
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Exhibit
A
CERTAIN
RESOLUTIONS ADOPTED AT SPECIAL MEETING OF
BOARD
OF DIRECTORS
OF
CHINA
NEW ENERGY GROUP COMPANY
HELD
ON MARCH 3, 2010
1. Reverse
Stock Split
WHEREAS,
under the terms of
the Series A Convertible Preferred Stock Securities Purchase Agreement dated as
of August 8, 2008 between China New Energy Group Company (the “
Company
”) and China
Hand Fund I, LLC (“
China Hand)
, and the
Series B Convertible Preferred Stock dated as of April 30, 2009 between the
Company and China Hand, the Company is required to effect a reverse stock split
for the purpose of listing the Company common stock on a national stock
exchange;
WHEREAS
, the Board of
Directors deems it to be advisable and in the best interests of the Company to
amend the Company’s Certificate of Incorporation to effect a reverse stock split
of the Company’s outstanding shares of Common Stock by a ratio of between one
for 5 and one for 12, inclusive, at the discretion of the Board;
Now
therefore on motion duly made and seconded it was,
RESOLVED,
that the Reverse
Split be and the same hereby is approved and that a certificate of
amendment to the Company’s Certificate of Incorporation reflecting the proposed
reverse split be submitted to the stockholders entitled to vote thereon for
approval; and be it further
RESOLVED
, that, subject to
stockholder approval, the proper officers of the Company be, and each of them
hereby is, authorized and directed, in the name of the Company and on its
behalf, to execute and file with the Delaware Secretary of State a Certificate
of Amendment to the Company’s Certificate of Incorporation effective the
proposed stock split.
2. Nominees
for Election to Board of Directors
WHEREAS,
the Board of
Directors desires to nominate individuals for election to the Board as directors
by the stockholders entitled to vote thereon; and
WHEREAS,
the holders of the
Company’s Series A Preferred Stock and Series B Preferred Stock have the right
to nominate an aggregate of four (4) members to the Board of Directors;
and
WHEREAS,
the holders of the
Company’s Series A Preferred Stock and Series B Preferred Stock have requested
that we nominate John Kuhns, James Tie Li, Mary Fellows and Shadron Lee Stastney
as directors;
Now
therefore on motion duly made and seconded it was,
RESOLVED
, that the following
(7) individuals be nominated for election as directors to the Board of Directors
by the stockholders entitled to vote thereon:
YANGKAN
CHONG
CHUNMING
GUO
JOHN D.
KUHNS
JAMES TIE
LI
MARY
FELLOWS
SHADRON
LEE STASTNEY
YOU-SU LIN
Exhibit
B
WRITTEN
CONSENT
OF
MAJORITY STOCKHOLDERS
OF
CHINA
NEW ENERGY GROUP COMPANY
March 5,
2010
The
undersigned, being the holder (the “Holder”) of (i) 100% of the
outstanding Series B Preferred Stock of China New Energy Group Company, a
Delaware corporation (the "Company"), which entitles the Holder to 70% of the
total voting power on all matters submitted to a stockholder vote, and (ii)
1,546,184 shares of the Series A Preferred Stock, which entitles the Holder
to approximately 9.08% of the Company’s outstanding voting power, hereby adopt
the following resolutions pursuant to the bylaws of the Company and Section 228
of the Delaware General Corporation Law (“
DGCL
”), as if adopted
at a meeting duly held, and expressly waive notice with respect
thereto.
RESOLVED,
that the Corporation be, and its hereby is, authorized, to execute and deliver
an Amendment to the Certificate of Incorporation of the Corporation (the “
Split Amendment
”),
authorizing the Board of Directors to effect a reverse stock split of the
outstanding Common Stock by a ratio of between one for five and one
for twelve, inclusive, at the discretion of the Board of Directors without
further approval by the stockholders, such Split Amendment to be in such form
and to contain such additional terms and conditions as the officers in their
sole discretion, shall determine to be necessary appropriate or desirable, any
such determination to be conclusively evidenced by the execution and delivery by
such officers of the Split Amendment; and be it further
RESOLVED,
that the proper officers of the Company be, and they and each of them hereby
are, authorized and empowered, in the name of the Company and on its behalf, to
execute and file with the Delaware Secretary of State the Split Amendment; and
be it further
RESOLVED,
that Yangkan Chong, Chunming Guo, John D. Kuhns, James Tie Li, Mary Fellows,
Shadron Lee Stastney and You-Su Lin are hereby elected as directors to hold
office until the next annual meeting of stockholders or their earlier
resignation or removal.
[Signature
pages follow]
IN
WITNESS WHEREOF, the undersigned have executed this Written Consent as of the
date first indicated above.
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Vicis
Capital Master Fund
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Name:
Keith Hughes
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Title:CFO
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