Document:

Exhibit 10.1

 

EXECUTION VERSION

 

Scheme Implementation Agreement

 

Talison Lithium Limited

Talison

 

Rockwood Holdings, Inc.

Bidder

 

Clayton Utz

Lawyers

Level 27, QV1 Building 250 St Georges Terrace Perth WA 6000 Australia

GPO Box P1214 Perth WA 6844

T +61 8 9426 8000 F +61 8 9481 3095

 

www.claytonutz.com

 

Our reference 60067/17115/80123998

 

 

Contents

 

	
1.
    	
Definitions   and interpretation
    	
1
    
	
 
    	
 
    	
 
    
	
 
    	
1.1
    	
Definitions
    	
1
    
	
 
    	
1.2
    	
Best   and reasonable endeavours
    	
11
    
	
 
    	
1.3
    	
Business   Day
    	
12
    
	
 
    	
1.4
    	
Knowledge   of Talison
    	
12
    
	
 
    	
1.5
    	
Interpretation
    	
12
    
	
 
    	
 
    	
 
    	
 
    
	
2.
    	
Obligations in   relation to Scheme and Option Scheme
    	
13
    
	
 
    	
 
    	
 
    
	
 
    	
2.1
    	
Talison to propose Scheme   and Option Scheme
    	
13
    
	
 
    	
2.2
    	
Talison and Bidder to   Implement Scheme and Option Scheme
    	
13
    
	
 
    	
 
    	
 
    	
 
    
	
3.
    	
Conditions   precedent
    	
13
    
	
 
    	
 
    	
 
    
	
 
    	
3.1
    	
Conditions to Scheme
    	
13
    
	
 
    	
3.2
    	
Conditions to Option Scheme
    	
15
    
	
 
    	
3.3
    	
General obligations in   relation to Conditions
    	
15
    
	
 
    	
3.4
    	
Obligations in relation to   Regulatory Conditions
    	
16
    
	
 
    	
3.5
    	
Notice in relation to   satisfaction of Conditions
    	
17
    
	
 
    	
3.6
    	
Waiver of Conditions
    	
17
    
	
 
    	
3.7
    	
Failure of Conditions
    	
18
    
	
 
    	
 
    	
 
    	
 
    
	
4.
    	
Implementation   of Scheme and Option Scheme
    	
18
    
	
 
    	
 
    	
 
    
	
 
    	
4.1
    	
Talison’s obligations
    	
18
    
	
 
    	
4.2
    	
Bidder’s obligations
    	
22
    
	
 
    	
4.3
    	
Dispute as to Explanatory   Memorandum
    	
23
    
	
 
    	
4.4
    	
Reconstitution of Talison   Board
    	
24
    
	
 
    	
4.5
    	
Responsibility statement
    	
24
    
	
 
    	
 
    	
 
    	
 
    
	
5.
    	
Scheme   Consideration and Option Scheme Consideration
    	
24
    
	
 
    	
 
    	
 
    
	
 
    	
5.1
    	
Bidder’s covenant in respect   of the Scheme Consideration
    	
24
    
	
 
    	
5.2
    	
Bidder’s covenant in respect   of the Option Consideration
    	
25
    
	
 
    	
 
    	
 
    	
 
    
	
6.
    	
Treatment of   Talison Warrants, LTIP Shares and Special Voting Share
    	
25
    
	
 
    	
 
    	
 
    
	
 
    	
6.1
    	
Warrant Commitments
    	
25
    
	
 
    	
6.2
    	
Talison obligations in   respect of Talison Warrants
    	
25
    
	
 
    	
6.3
    	
LTIP Shares
    	
26
    
	
 
    	
6.4
    	
Special Voting Share
    	
26
    
	
 
    	
 
    	
 
    	
 
    
	
7.
    	
Conduct of   business and co-operation
    	
27
    
	
 
    	
 
    	
 
    
	
 
    	
7.1
    	
Conduct of Talison’s   business
    	
27
    
	
 
    	
7.2
    	
Requests for access
    	
27
    
	
 
    	
7.3
    	
GAM Arrangements
    	
28
    
	
 
    	
7.4
    	
Cooperation
    	
28
    
	
 
    	
 
    	
 
    	
 
    
	
8.
    	
Recommendation,   intentions and announcements
    	
29
    
	
 
    	
 
    	
 
    
	
 
    	
8.1
    	
Talison Board Recommendation   and Voting Intention
    	
29
    
	
 
    	
8.2
    	
Confirmation
    	
29
    
	
 
    	
8.3
    	
Announcement
    	
29
    
	
 
    	
 
    	
 
    	
 
    
	
9.
    	
Exclusivity   arrangements
    	
30
    
	
 
    	
 
    	
 
    
	
 
    	
9.1
    	
No shop
    	
30
    
	
 
    	
9.2
    	
No talk and no due diligence
    	
30
    
	
 
    	
9.3
    	
Notice of Competing Proposal
    	
30
    
	
 
    	
9.4
    	
Matching right
    	
30
    

 

i

 

	
 
    	
9.5
    	
Normal provision of   information
    	
31
    
	
 
    	
 
    	
 
    	
 
    
	
10.
    	
Talison Break   Fee
    	
31
    
	
 
    	
 
    	
 
    
	
 
    	
10.1
    	
Payment of costs
    	
31
    
	
 
    	
10.2
    	
Talison Break Fee payable
    	
32
    
	
 
    	
10.3
    	
Talison Break Fee not   payable
    	
32
    
	
 
    	
10.4
    	
Compliance with law
    	
33
    
	
 
    	
10.5
    	
Other claims
    	
33
    
	
 
    	
 
    	
 
    	
 
    
	
11.
    	
Bidder Break   Fee
    	
33
    
	
 
    	
 
    	
 
    
	
 
    	
11.1
    	
Payment of costs
    	
33
    
	
 
    	
11.2
    	
Bidder Break Fee payable
    	
34
    
	
 
    	
11.3
    	
Bidder Break Fee not payable
    	
34
    
	
 
    	
11.4
    	
Compliance with law
    	
34
    
	
 
    	
11.5
    	
Other claims
    	
34
    
	
 
    	
 
    	
 
    	
 
    
	
12.
    	
Liability of   directors and employees
    	
34
    
	
 
    	
 
    	
 
    
	
 
    	
12.1
    	
Liability of directors and   employees
    	
34
    
	
 
    	
12.2
    	
Directors’ and officers’ insurance
    	
34
    
	
 
    	
12.3
    	
Obligations in relation to   directors’ and officers’ insurance
    	
35
    
	
 
    	
 
    	
 
    	
 
    
	
13.
    	
Representations,   warranties and indemnities
    	
35
    
	
 
    	
 
    	
 
    
	
 
    	
13.1
    	
Representations and   warranties by Bidder
    	
35
    
	
 
    	
13.2
    	
Qualification of Bidder   Warranties
    	
37
    
	
 
    	
13.3
    	
Bidder indemnity
    	
37
    
	
 
    	
13.4
    	
Representations and   warranties by Talison
    	
37
    
	
 
    	
13.5
    	
Qualification of Talison   Warranties
    	
39
    
	
 
    	
13.6
    	
Talison indemnity
    	
40
    
	
 
    	
13.7
    	
Notifications
    	
40
    
	
 
    	
13.8
    	
Status of representations   and warranties
    	
40
    
	
 
    	
13.9
    	
Status and enforcement of   indemnities
    	
40
    
	
 
    	
13.10
    	
Acknowledgements
    	
40
    
	
 
    	
 
    	
 
    	
 
    
	
14.
    	
Confidentiality   and communications
    	
41
    
	
 
    	
 
    	
 
    
	
 
    	
14.1
    	
Confidentiality Deed
    	
41
    
	
 
    	
14.2
    	
Survival of obligations
    	
41
    
	
 
    	
14.3
    	
Disclosure on termination of   agreement
    	
41
    
	
 
    	
14.4
    	
Required disclosure
    	
41
    
	
 
    	
 
    	
 
    	
 
    
	
15.
    	
Termination
    	
41
    
	
 
    	
 
    	
 
    
	
 
    	
15.1
    	
Limited termination events
    	
41
    
	
 
    	
15.2
    	
Termination by Bidder
    	
41
    
	
 
    	
15.3
    	
Termination by Talison
    	
42
    
	
 
    	
15.4
    	
Effect of termination
    	
42
    
	
 
    	
15.5
    	
Remedies
    	
43
    
	
 
    	
 
    	
 
    	
 
    
	
16.
    	
Notices
    	
43
    
	
 
    	
 
    	
 
    
	
 
    	
16.1
    	
How notice to be given
    	
43
    
	
 
    	
16.2
    	
When notice taken to be   received
    	
44
    
	
 
    	
 
    	
 
    	
 
    
	
17.
    	
GST
    	
44
    
	
 
    	
 
    	
 
    
	
 
    	
17.1
    	
Interpretation
    	
44
    
	
 
    	
17.2
    	
Reimbursements and similar   payments
    	
45
    
	
 
    	
17.3
    	
GST payable
    	
45
    
	
 
    	
 
    	
 
    	
 
    
	
18.
    	
Entire   agreement
    	
45
    

 

ii

 

	
19.
    	
General
    	
45
    
	
 
    	
 
    	
 
    
	
 
    	
19.1
    	
No representation or   reliance
    	
45
    
	
 
    	
19.2
    	
Amendments
    	
46
    
	
 
    	
19.3
    	
Assignment
    	
46
    
	
 
    	
19.4
    	
Consents
    	
46
    
	
 
    	
19.5
    	
Costs
    	
46
    
	
 
    	
19.6
    	
Counterparts
    	
46
    
	
 
    	
19.7
    	
Further acts and documents
    	
46
    
	
 
    	
19.8
    	
No merger
    	
46
    
	
 
    	
19.9
    	
Severance
    	
46
    
	
 
    	
19.10
    	
Waivers
    	
46
    
	
 
    	
 
    	
 
    	
 
    
	
20.
    	
Governing law, jurisdiction and service of process
    	
47
    
	
 
    	
 
    	
 
    
	
 
    	
20.1
    	
Governing law
    	
47
    
	
 
    	
20.2
    	
Jurisdiction
    	
47
    
	
 
    	
 
    	
 
    	
 
    
	
Schedule 1 Timetable
    	
48
    
	
 
    	
 
    
	
Schedule 2 Talison Options
    	
49
    
	
 
    	
 
    
	
Annexure A   Scheme
    	
 
    
	
 
    	
 
    
	
Annexure B   Deed Poll
    	
 
    
	
 
    	
 
    
	
Annexure C   Option Scheme
    	
 
    
	
 
    	
 
    
	
Annexure D Option Scheme Deed Poll
    	
 
    

 

iii

 

Scheme implementation agreement dated 23 August 2012

 

Parties                                                                                         Talison Lithium Limited ACN 140 122 078 of Level 4, 37 St Georges Terrace, Perth, Western Australia (Talison)

 

Rockwood Holdings, Inc. of 100 Overlook Center, Princeton, New Jersey, 08540, United States of America (Bidder)

 

Background

 

A.                                                    Bidder proposes that one or more wholly owned, related or other entities or bodies (Bidder Subsidiary) will acquire all of the Talison Shares and all of the Talison Options pursuant to schemes of arrangement under section 411 of the Corporations Act between Talison and the holders of Talison Shares and Talison Options respectively.

 

B.                                                    Talison has agreed to propose the Scheme and the Option Scheme and issue the Explanatory Memorandum at the request of Bidder, and Talison and Bidder have agreed to implement the Scheme and the Option Scheme on the terms and conditions of this agreement.

 

Operative provisions

 

1.                                                      Definitions and interpretation

 

1.1                                               Definitions

 

In this agreement:

 

Aggregate Scheme Consideration means the aggregate amount of the Scheme Consideration payable to Scheme Shareholders under the Scheme.

 

Aggregate Option Scheme Consideration means the aggregate amount of the Option Scheme Consideration payable to Scheme Optionholders under the Option Scheme.

 

AIFRS means International Financial Reporting Standards as adopted in Australia, as at the date of this agreement.

 

Announcement has the meaning given to that term in clause 8.3(a).

 

ASIC means the Australian Securities and Investments Commission.

 

Associate has the meaning given in section 12 of the Corporations Act.

 

Bidder Board means the board of directors of Bidder.

 

Bidder Break Fee means C$7 million.

 

Bidder Information means all information regarding Bidder and its Related Bodies Corporate and the Scheme Consideration and Option Scheme Consideration that is required by the Corporations Act, the Regulatory Guides and Canadian Securities Law to be included in the Explanatory Memorandum including all the information that would be required under sections 636(1)(c), (f), (h), (i), (k), (l) and (m) of the Corporations Act to be included in a bidder’s statement if Bidder Subsidiary were offering the Scheme Consideration and Option Scheme Consideration as consideration under takeover bids, and any other information that the parties agree is Bidder Information for the purposes of this agreement, but does not include the Talison Information or the Independent Expert’s Report.

 

1

 

Bidder Indemnified Parties means Bidder and its Related Bodies Corporate and their respective directors, officers and employees.

 

Bidder Subsidiary has the meaning given in Recital A.

 

Bidder Warranties means the warranties made by Bidder in clause 13.1.

 

Budget means the “2013 Budget and Five Year Business Plan” which was formally adopted by the Talison Board on 6 June 2012.

 

Business Day means a day that is not a Saturday, Sunday or public holiday and on which banks are open for business generally in Perth, Western Australia and Princeton, New Jersey.

 

Canadian Securities Laws means all applicable Canadian provincial and territorial securities laws and the rules and regulations thereunder, together with all applicable published instruments, notices and orders of the securities regulatory authorities and the rules and policies of the TSX.

 

Circuit MOU means the memorandum of understanding between GAM and Talison dated 28 June 2012 relating to the installation of a tantalum circuit in Talison’s lithium concentrate production facility at Greenbushes.

 

Competing Proposal means a proposed transaction or arrangement (whether by way of takeover, share acquisition, scheme of arrangement, capital reconstruction, acquisition of assets or otherwise) under which a person other than Bidder or any of its Related Bodies Corporate would, if the proposed transaction or arrangement is entered into or completed substantially in accordance with its terms:

 

(a)                                                  acquire, whether alone or together with its Associates, an interest or a Relevant Interest in 20% or more of Talison Shares;

 

(b)                                                  directly or indirectly acquire, have a right to acquire or otherwise acquire an economic interest in all, or a substantial part, of the business, assets or undertaking of the Talison Group;

 

(c)                                                   acquire Control of Talison; or

 

(d)                                                  merge with Talison (including reverse takeover bid, reverse scheme of arrangement or dual listed company or similar structure).

 

Condition means a condition to the Scheme specified in clause 3.1 and/or a condition to the Option Scheme specified in clause 3.2, as the case may be.

 

Confidentiality Deed means the Confidentiality Deed between Bidder and Talison dated 25 June 2012.

 

Control has the meaning given in the Corporations Act.

 

Corporations Act means the Corporations Act 2001 (Cth).

 

Corporations Regulations means Corporations Regulations 2001 (Cth).

 

Court means the Federal Court of Australia or such other court of competent jurisdiction as Talison and Bidder  agree in writing.

 

Deed Poll means a deed poll to be executed by Bidder and Bidder Subsidiary in favour of the Scheme Shareholders, substantially in the form set out in Annexure B or in such other form as Talison and Bidder agree in writing.

 

2

 

Due Diligence Material means the information disclosed by or on behalf of Talison and its Subsidiaries, including:

 

	
(a)
    	
in management presentations and interviews   and management discussions with directors, employees and advisors of Bidder;
    
	
 
    	
 
    
	
(b)
    	
in responses to requests for information; and
    
	
 
    	
 
    
	
(c)
    	
in written correspondence between Talison’s   advisers, directors and employees and Bidder’s advisers, directors and   employees,
    

 

to Bidder and its Representatives on or prior to the date of this agreement.

 

EBITDA means consolidated earnings of the Talison Group before interest, tax, depreciation and amortisation calculated on the basis of AIFRS.

 

Effective means, when used in relation to the Scheme or the Option Scheme, the coming into effect, pursuant to section 411(10) of the Corporations Act, of the order of the Court made under section 411(4)(b) of the Corporations Act in relation to the Scheme or the Option Scheme respectively.

 

Effective Date means the date on which the Scheme (or the Option Scheme, as the context requires) becomes Effective.

 

Encumbrance means a mortgage, charge, pledge, lien, encumbrance, security interest, title retention, preferential right, trust arrangement, contractual right of set-off, or any other security agreement or arrangement in favour of any person, whether registered or unregistered, including any Security Interest.

 

End Date means 31 January 2013 or such other date agreed in writing between Talison and Bidder.

 

Exclusivity Period means the period commencing on the date of this agreement and ending on the earliest of:

 

	
(a)
    	
the End Date;
    
	
 
    	
 
    
	
(b)
    	
the date this agreement is terminated in   accordance with its terms; and
    
	
 
    	
 
    
	
(c)
    	
the Implementation Date.
    

 

Explanatory Memorandum means the explanatory memorandum to be prepared by Talison pursuant to section 412 of the Corporations Act in respect of the Scheme and the Option Scheme, including and comprising a management information circular to be prepared in accordance with applicable Canadian Securities Laws, in accordance with the terms of this agreement and to be dispatched to the Talison Shareholders and Talison Optionholders.

 

First Court Date means the first day of the hearing of an application made to the Court for an order pursuant to section 411(1) of the Corporations Act convening the Scheme Meeting and the Option Scheme Meeting or, if the hearing of such application is adjourned for any reason, means the first day of the adjourned hearing.

 

GAM means Global Advanced Metals Pty Ltd ACN 139 987 465.

 

Implementation Date means the date which is 3 Business Days after the Record Date or such other date as Talison and Bidder  agree in writing.

 

3

 

Independent Expert means the independent expert to be engaged by Talison to express an opinion on whether the Scheme and the Option Scheme is in the best interests of the Talison Shareholders and Talison Optionholders respectively.

 

Independent Expert’s Report means the report from the Independent Expert in respect of the Scheme and the Option Scheme.

 

Insolvency Event means in relation to an entity:

 

	
(a)
    	
the entity resolving that it be wound up or   the making of an application or order for the winding up or dissolution of   the entity, other than where the application or order (as the case may be) is   set aside within 14 days;
    
	
 
    	
 
    
	
(b)
    	
a liquidator or provisional liquidator of the   entity being appointed;
    
	
 
    	
 
    
	
(c)
    	
a court making an order for the winding up of   the entity;
    
	
 
    	
 
    
	
(d)
    	
an administrator of the entity being   appointed;
    
	
 
    	
 
    
	
(e)
    	
the entity ceasing, or threatening to cease   to, carry on the business that it conducts as at the date of this agreement;
    
	
 
    	
 
    
	
(f)
    	
the entity being or becoming unable to pay   its debts when they fall due;
    
	
 
    	
 
    
	
(g)
    	
the entity executing a deed of company   arrangement; or
    
	
 
    	
 
    
	
(h)
    	
a receiver, or a receiver and manager, being   appointed in relation to the entity, or a substantial part, of the property   of the entity.
    

 

Law includes any constitution or provision, treaty, decree, convention, statute, Act, regulation, rule, ordinance, proclamation, subordinate legislation, delegated legislation, by-law, judgment, rule of common law or equity, rule, ruling or guideline by a competent entity exercising jurisdiction in the relevant matter (including any government, Regulatory Authority or self-regulatory authority, including the TSX), including a rule, ruling or guideline of any Regulatory Authority.

 

LTIP Shares has the meaning given in clause 13.4(g)(i).

 

LTIP Trust means the Talison Long Term Incentive Plan Trust established under the Trust Deed.

 

Material Adverse Change means any event, change, matter, thing or condition which individually or when aggregated with other such events, changes, matters, things or conditions has had, or is reasonably likely to have, the effect of a diminution in:

 

	
(a)
    	
the consolidated net assets of the Talison Group by   A$20 million or more, or
    
	
 
    	
 
    
	
(b)
    	
EBITDA   by A$10m or more for the 12 month period commencing on the date after the   date on which the event, change, matter, thing or condition occurs provided   that the event, change, matter, thing or condition is likely to persist and   is incapable of being (or reasonably unlikely to be) rectified or off-set   over a reasonable period of time,
    
	
 
    	
 
    
	
other than:
    
	
 
    	
 
    
	
(c)
    	
an event, occurrence or matter required to be   done or procured by Talison pursuant to this agreement or the Scheme or Option Scheme;
    

 

4

 

	
(d)
    	
an event, occurrence or matter to the extent   that it was fairly disclosed in the Due Diligence Material or in documents that   were publicly available prior to the date of this agreement from public   filings of Talison with SEDAR;
    
	
 
    	
 
    
	
(e)
    	
any change to legislation or regulation, any   judicial or administrative interpretation of the law or any practice or   policy of a Regulatory Authority (whether or not retrospective in effect),   including in relation to Tax;
    
	
 
    	
 
    
	
(f)
    	
any change or disruption to the existing   financial markets or economic conditions of Australia, the European Union,   the United States of America, Hong Kong, Canada or China;
    
	
 
    	
 
    
	
(g)
    	
an event, occurrence or matter which affects the   lithium market generally;
    
	
 
    	
 
    
	
(h)
    	
any change to   currency exchange or commodity market conditions;
    
	
 
    	
 
    
	
(i)
    	
any outbreak or   escalation of hostilities or armed conflict; or
    
	
 
    	
 
    
	
(j)
    	
an event, change, matter,   thing or condition that is reasonably likely to have resulted from, been   caused by or occurred in response to, the Transaction or its announcement.
    

 

Option Scheme means the creditors’ scheme of arrangement under Part 5.1 of the Corporations Act between Talison and the Scheme Optionholders, substantially in the form set out in Annexure C or in such other form as Talison and Bidder agree in writing, pursuant to which all Scheme Options will be transferred to Bidder on the Implementation Date.

 

Option Scheme Consideration means the consideration to be provided to Scheme Optionholders under the terms of the Option Scheme, being for each Scheme Option C$6.50 less the exercise price for that Scheme Option.

 

Option Scheme Deed Poll means a deed poll to be executed by Bidder and Bidder Subsidiary in favour of Scheme Optionholders, substantially in the form set out in Annexure D or in such other form as Talison and Bidder agree in writing.

 

Option Scheme Meeting means the meeting or meetings to be convened by the Court in relation to the Option Scheme pursuant to section 411(1) of the Corporations Act.

 

Policy means the directors and officers insurance policy in place for Talison at the date of this agreement.

 

Prescribed Occurrence means the occurrence of, or agreement to do, any of the following events:

 

	
(a)
    	
Talison converts all or any of its securities   into a larger or smaller number of securities;
    
	
 
    	
 
    
	
(b)
    	
Talison or another member of the Talison   Group (other than a wholly-owned Subsidiary of Talison) resolves to reduce   its capital in any way or resolves to re-classify, combine, split, redeem or   re-purchase directly or indirectly any of its shares;
    
	
 
    	
 
    
	
(c)
    	
Talison or another member of the Talison   Group (other than a wholly-owned Subsidiary of Talison):
    
	
 
    	
 
    
	
 
    	
(i)
    	
enters into a buy-back   agreement; or
    

 

5

 

	
 
    	
(ii)
    	
resolves to approve the   terms of a buy-back agreement under the Corporations Act;
    
	
 
    	
 
    
	
(d)
    	
any member of the Talison Group issues   shares, or grants an option over its shares or agrees to make such an issue   or grant such an option (other than upon exercise of a Talison Option granted   before the date of this agreement);
    
	
 
    	
 
    
	
(e)
    	
any member of the Talison Group issues, or   agrees to issue, convertible notes or any other security convertible into   shares or debt securities;
    
	
 
    	
 
    
	
(f)
    	
any member of the Talison Group agrees to   pay, declares or pays a dividend or any other form of distribution of profits   or return of capital to its members, other than to Talison or a wholly-owned   Subsidiary of Talison;
    
	
 
    	
 
    
	
(g)
    	
any member of the Talison Group disposes of   the whole, or a substantial part, of its business or property;
    
	
 
    	
 
    
	
(h)
    	
any member of the Talison Group creates any   Encumbrance over, or declares itself the trustee of, the whole, or a   substantial part, of its business or property;
    
	
 
    	
 
    
	
(i)
    	
an Insolvency Event occurs in relation to a   member of the Talison Group;
    
	
 
    	
 
    
	
(j)
    	
any member of the Talison Group acquires or   disposes of or leases, or agrees to acquire or dispose of or lease, any   assets, business or shares other than as contemplated in the Budget that   would require the approval of, or would customarily be referred to, the   Talison Board under existing delegations and practices or in excess of   A$1,000,000 in value for any individual item or A$2,000,000 in aggregate   value;
    
	
 
    	
 
    
	
(k)
    	
the commitment by any member of the Talison   Group to capital expenditure not provided for in the Budget in excess of   A$500,000, in aggregate;
    
	
 
    	
 
    
	
(l)
    	
the constitution of Talison or any other   member of the Talison Group is amended or replaced or any member of the   Talison Group states its intention to or makes any change to its   constitution;
    
	
 
    	
 
    
	
(m)
    	
any member of the Talison Group settles any   legal proceedings, claim, investigation, arbitration or other like proceeding   where the amount claimed by or against a member of the Talison Group exceeds   A$1,000,000;
    
	
 
    	
 
    
	
(n)
    	
any member of the Talison Group enters, or   proposes to enter, into or amends, or proposes to amend, in any material   respect any joint venture or partnership agreement with any person other than   a member of the Talison Group involving or reasonably likely to involve   expenditure or other commitment on the part of the Talison Group in excess of   A$750,000;
    
	
 
    	
 
    
	
(o)
    	
any member of the Talison Group incurs any   indebtedness or issues any debt securities, where doing so would result in   the value of the indebtedness incurred or debt issued by members of the   Talison Group following the date of this agreement exceeding A$1,500,000 in   aggregate, other than:
    
	
 
    	
 
    	
 
    
	
 
    	
(i)
    	
any draw down within   existing limits of any existing debt facility in the ordinary course of   business;
    
	
 
    	
 
    	
 
    
	
 
    	
(ii)
    	
trade credit in the   ordinary course of business; or
    
	
 
    	
 
    	
 
    
	
 
    	
(iii)
    	
indebtedness to a member   of the Talison Group;
    

 

6

 

	
(p)
    	
any member of the Talison Group enters into, terminates, extends, renews or varies any   commitment (including any non-contractual commitment or undertaking but   excluding any sales contract) which has a value or involves a liability,   expenditure or revenue, as the case may be, of A$1,000,000 or more when   aggregated with related transactions;
    
	
 
    	
 
    
	
(q)
    	
any member of the Talison Group exercises a contractual right or other option which has   a value or involves a liability or expenditure, as the case may be, of   A$1,000,000 or more when aggregated with related transactions;
    
	
 
    	
 
    
	
(r)
    	
any member of the Talison Group enters into any long term commitment (including any   non-contractual commitment or undertaking) with any customers which (i) has   a duration of more than 12 months, or (ii) is inconsistent in a material   respect with typical arrangements;
    
	
 
    	
 
    
	
(s)
    	
any member of the Talison Group enters into any commitment (including any   non-contractual commitment or undertaking) with any customer which has a   volume rebate or similar arrangement with a value or aggregate value of   A$200,000 or more;
    
	
 
    	
 
    
	
(t)
    	
any member of the Talison Group enters into a new employment contract or increases the remuneration of, or otherwise varies the existing employment arrangements with,   any of its directors or executives or any other employees which employee’s   total annual employment cost is in excess of A$250,000;
    
	
 
    	
 
    
	
(u)
    	
any member of the Talison Group pays or agrees to pay any bonus to any of its directors   or executives or any other employees where such payment, if made, would   result in the aggregate value of the bonuses paid or agreed to be paid by   members of the Talison Group following execution of this agreement being in   excess of A$200,000 (provided that any bonus already accrued as at the date   of this agreement or which is provided for in the Budget shall be excluded   for the purposes of this paragraph);
    
	
 
    	
 
    
	
(v)
    	
any member of the Talison Group accelerates the rights of any of its directors or   executives or any employee to benefits of any kind (other than under any   executive or employee share plans) or enters into a commitment to pay a   director or executive a termination payment (including a “golden parachute”);
    
	
 
    	
 
    
	
(w)
    	
any member of the Talison Group enters into any guarantee or indemnity on behalf of any   member of the Talison Group or provides security for the obligations of any   member of the Talison Group in relation to amounts greater than A$1,000,000;
    
	
 
    	
 
    
	
(x)
    	
any member of the Talison Group provides   financial accommodation to any Talison Director or any employee or officer of   any member of the Talison Group;
    
	
 
    	
 
    
	
(y)
    	
any member of the Talison Group surrenders a   mining tenement granted to or applied for by a member of the Talison Group   under the Mining Act 1978   (WA) which is material in the context of the Talison Group (other than a   surrender or expiry that is required by law); or
    
	
 
    	
 
    
	
(z)
    	
any member of the Talison Group authorises, commits or agrees to do any of the   matters set out above,
    
	
 
    	
 
    
	
other than an event:
    
	
 
    	
 
    
	
(aa)
    	
required to be undertaken or procured by the   Talison Group pursuant to the Transaction Documents;
    

 

7

 

	
(bb)
    	
to which Bidder has provided its prior   written consent; or
    
	
 
    	
 
    
	
(cc)
    	
fairly disclosed in the Due Diligence   Material or any public filings of Talison with SEDAR regarding the Talison   Group prior to the parties entering into this agreement.
    

 

Recommendation has the meaning in clause 8.1(a)(i).

 

Record Date means:

 

	
(a)
    	
if no date is set pursuant to clause 6.1(b),   5.00 pm (Perth time) on the date which is 5 Business Days after the Effective   Date;
    
	
 
    	
 
    
	
(b)
    	
if a time and date is set pursuant to clause   6.1(b), that time and date; or
    
	
 
    	
 
    
	
(c)
    	
in each case, such other time and date agreed   in writing between Bidder and Talison.
    

 

Regulator’s Draft has the meaning given in clause 4.1(g).

 

Regulatory Authority means:

 

	
(a)
    	
any government or local authority, any   department, minister or agency of any government and any other governmental,   administrative, fiscal, monetary or judicial body; and
    
	
 
    	
 
    
	
(b)
    	
any other authority, agency, commission or   similar entity having powers or jurisdiction under any law or regulation or   the listing rules of any recognised stock or securities exchange,
    

 

in any part of the world.

 

Regulatory Condition means:

 

	
(a)
    	
in relation to the Scheme, the conditions in   clause 3.1(b) and 3.1(c); and
    
	
 
    	
 
    
	
(b)
    	
in relation to the Option Scheme, the   condition in clause 3.2(a).
    

 

Regulatory Guides means all regulatory guides published by ASIC and in force at the date of this agreement.

 

Regulatory Review Period means the period from the date on which Talison provides the Regulator’s Draft to ASIC in accordance with clause 4.1(g) to the date on which ASIC provides a letter indicating whether or not it proposes to appear to make submissions, or will intervene to oppose the Scheme, when the application made to the Court for orders under section 411(1) of the Corporations Act convening the Scheme Meeting to consider the Scheme is heard.

 

Related Body Corporate of a corporation means a related body corporate of that corporation within the meaning of section 50 of the Corporations Act, and in relation to Bidder includes Bidder Subsidiary.

 

Relevant Interest has the meaning given in the Corporations Act.

 

Representatives means, in relation to a party, all officers, employees, professional advisers, Related Bodies Corporate and agents of the party or of its Related Bodies Corporate.

 

Rival Bidder has the meaning given to that term in clause 9.3.

 

8

 

Scheme means a scheme of arrangement under Part 5.1 of the Corporations Act between Talison and the Scheme Shareholders substantially in the form set out in Annexure A or in such other form as Talison and Bidder  agree in writing.

 

Scheme Consideration means, for each Scheme Share held by a Scheme Shareholder, C$6.50.

 

Scheme Meeting means the meeting of Talison Shareholders to be convened by the Court in relation to the Scheme pursuant to section 411(1) of the Corporations Act.

 

Scheme Option means each Talison Option on issue as at the Record Date.

 

Scheme Optionholder means each person who is registered as the holder of Scheme Options as at the Record Date.

 

Scheme Share means a Talison Share on issue as at the Record Date.

 

Scheme Shareholder means a person who is registered as the holder of Scheme Shares as at the Record Date.

 

Second Court Date means the first day of hearing of an application made to the Court for an order pursuant to section 411(4)(b) of the Corporations Act approving the Scheme and the Option Scheme or, if the hearing of such application is adjourned for any reason, means the first day of the adjourned hearing.

 

Security Interest has the meaning given in section 12 of the Personal Property Securities Act 2009 (Cth).

 

SEDAR means the System for Electronic Document Analysis and Retrieval described in National Instrument 13-101 - System for Electronic Document Analysis and Retrieval (SEDAR) of the Canadian Securities Administrators available to the public for viewing at www.sedar.com.

 

Shared Services Term Sheet means the shared services agreement (including binding term sheets) dated 13 November 2009 between GAM and Talison relating to the provision of services by Talison to GAM.

 

Special Voting Share means the special voting share in the capital of Talison, issued in connection with the issue of exchangeable shares as part of the merger between Talison Lithium Limited and Salares Lithium Inc pursuant to an arrangement agreement dated 12 August 2010.

 

Subleases means the subleases over certain areas of the Greenbushes operation between Talison Lithium Australia Pty Ltd, as sub-lessor, and Global Advanced Metals Greenbushes Pty Ltd, as sub-lessee.

 

Subsidiary means a subsidiary within the meaning given to that term in the Corporations Act.

 

Superior Proposal means a bona fide Competing Proposal which, in the determination of the Talison Board acting in good faith and after receiving advice from its external legal and external financial advisors, would, if it is completed, be more favourable to Talison Shareholders (as a whole) than the Transaction, taking into account all aspects of the Competing Proposal, including:

 

	
(a)
    	
the value of the consideration payable to   Talison Shareholders under the Competing Proposal and the Tax consequences   related to payment of that consideration (as compared to the consideration   available under the Transaction);
    

 

9

 

	
(b)
    	
the conditions of the Competing Proposal, the   likelihood of those conditions being satisfied and the level of certainty in   respect of the funding required for the Competing Proposal; and
    
	
 
    	
 
    
	
(c)
    	
the likely timing required to implement or   complete the Competing Proposal.
    

 

Talison Board means the board of directors of Talison.

 

Talison Break Fee means C$7 million.

 

Talison Director means a director of Talison.

 

Talison Group means Talison and each of its Subsidiaries.

 

Talison Indemnified Parties means Talison and its Related Bodies Corporate and their respective directors, officers and employees.

 

Talison Information means all information included in the Explanatory Memorandum, other than the Bidder Information and the Independent Expert’s Report.

 

Talison Option means an option to subscribe for a Talison Share.

 

Talison Optionholder means each person who is registered in the Talison Option Register as the holder of a Talison Option.

 

Talison Option Register means the register of holders of Talison Options maintained by or on behalf of Talison in accordance with section 168(1) of the Corporations Act.

 

Talison Share Register means the register of members of Talison maintained by or on behalf of Talison in accordance with section 168(1) of the Corporations Act.

 

Talison Share Registry means Computershare Investor Services Pty Limited ACN 078 279 277.

 

Talison Shareholder means a person who is registered in the Talison Share Register as a holder of Talison Shares.

 

Talison Shares means fully paid ordinary shares in the capital of Talison.

 

Talison Warrantholder means each holder of Talison Warrants.

 

Talison Warrant means  a  warrant to subscribe for a Talison Share at an exercise price of C$0.90 on the terms set out in certificates dated 22 September 2010.

 

Talison Warranties means the warranties made by Talison in clause 13.4.

 

Tax means any tax, levy, excise, duty, charge, surcharge, contribution, withholding tax (including royalty withholding tax), impost or withholding obligation of whatever nature, whether direct or indirect, (including any tax payable under a country’s foreign source income attribution or anti-tax-deferral rules) by whatever method collected or recovered, together with any fees, penalties, fines, interest or statutory charges in any country or jurisdiction but excluding any stamp duty payable on any transfer of the Talison Shares.

 

Third Party means a person other than Bidder, Talison, or their respective Related Bodies Corporate.

 

Timetable means the indicative timetable in relation to the Scheme set out in Schedule 1, or such other indicative timetable as Talison and Bidder  agree in writing.

 

10

 

Transaction means the acquisition by Bidder Subsidiary of the Scheme Shares for the Scheme Consideration pursuant to the Scheme and the acquisition by Bidder Subsidiary of the Scheme Options for the Option Scheme Consideration pursuant to the Option Scheme.

 

Transaction Documents means:

 

	
(a)
    	
this agreement;
    
	
 
    	
 
    
	
(b)
    	
the Scheme;
    
	
 
    	
 
    
	
(c)
    	
the Deed Poll;
    
	
 
    	
 
    
	
(d)
    	
the Option Scheme; and
    
	
 
    	
 
    
	
(e)
    	
the Option Scheme Deed Poll.
    

 

Trust Account means a Canadian dollar denominated trust account operated by Talison (or a depositary appointed by Talison) as trustee for the Scheme Shareholders and Scheme Optionholders, as nominated by Talison and notified to Bidder at least 5 Business Days prior to the Implementation Date, being the account into which Bidder Subsidiary will deposit the Aggregate Scheme Consideration in accordance with clauses 5.2(b) and 5.1(b).

 

Trust Deed means the trust deed in respect of the Talison Long Term Incentive Plans between Talison and the Trustee dated 7 June 2011.

 

Trustee means Talison Services Pty Ltd ACN 125 608 684.

 

TSX means the Toronto Stock Exchange.

 

Voting Intention has the meaning in clause 8.1(a)(ii).

 

Warrant Commitment means an agreement between Bidder, Talison and a Talison Warrantholder pursuant to which:

 

	
(a)
    	
a Talison Warrantholder commits to exercise   all of their Talison Warrants with effect on the Effective Date so as to   permit participation of the Talison Warrantholder in the Scheme; or
    
	
 
    	
 
    
	
(b)
    	
subject to all necessary approvals, a Talison   Warrantholder agrees to the cancellation of all of their Talison Warrants in   consideration for Bidder paying C$5.60 per Talison Warrant,
    

 

such agreement to be subject to the Scheme becoming Effective and otherwise in a form reasonably acceptable to Bidder.

 

1.2                                               Best and reasonable endeavours

 

Any provision of this agreement which requires a party to use best endeavours or all reasonable endeavours  to procure that something is performed or occurs or does not occur does not include any obligation:

 

	
(a)
    	
to   pay any money or to provide any financial compensation, valuable   consideration or any other incentive to or for the benefit of any person   except for payment of any applicable fee for the lodgement or filing of any   relevant application with any Regulatory Authority; or
    
	
 
    	
 
    
	
(b)
    	
to   commence any legal action or proceeding against any person,
    

 

11

 

except where that provision expressly specifies otherwise.

 

1.3                                               Business Day

 

If the day on which any act to be done under this agreement is a day other than a Business Day, that act must be done on the immediately preceding Business Day except where this agreement expressly specifies otherwise.

 

1.4                                               Knowledge of Talison

 

If any Talison Warranty is qualified by Talison’s knowledge, the facts of which Talison is aware or that are within Talison’s knowledge are taken to be all facts of which any one of the Chief Executive Officer, the Chief Executive Officer’s direct reports (as at the date of this agreement) and the General Manager Greenbushes Lithium Operations is actually aware at the relevant time.

 

1.5                                               Interpretation

 

In this agreement headings are for convenience only and do not affect interpretation and, unless the contrary intention appears:

 

	
(a)
    	
a   word importing the singular includes the plural and vice versa, and a word of   any gender includes the corresponding words of any other gender;
    
	
 
    	
 
    
	
(b)
    	
the   word including or any other form   of that word is not a word of limitation;
    
	
 
    	
 
    
	
(c)
    	
if   a word or phrase is given a defined meaning, any other part of speech or   grammatical form of that word or phrase has a corresponding meaning;
    
	
 
    	
 
    
	
(d)
    	
a   reference to a person includes   an individual, the estate of an individual, a corporation, an authority, an   association or parties in a joint venture, a partnership and a trust;
    
	
 
    	
 
    
	
(e)
    	
a   reference to a party includes that party’s executors, administrators,   successors and permitted assigns, including persons taking by way of novation   and, in the case of a trustee, includes any substituted or additional   trustee;
    
	
 
    	
 
    
	
(f)
    	
a   reference to a document (including this agreement) is to that document as   varied, novated, ratified or replaced from time to time;
    
	
 
    	
 
    
	
(g)
    	
a   reference to a party, clause, schedule, exhibit, attachment, or annexure is a   reference to a party, clause, schedule, exhibit, attachment, or annexure to   or of this agreement, and a reference to this agreement includes all   schedules, exhibits, attachments, and annexures to it;
    
	
 
    	
 
    
	
(h)
    	
a   reference to an agency or body if that agency or body ceases to exist or is   reconstituted, renamed or replaced or has its powers or function removed (obsolete body), means the agency or body   which performs most closely the functions of the obsolete body;
    
	
 
    	
 
    
	
(i)
    	
a   reference to a statute includes any regulations or other instruments made   under it (delegated legislation)   and a reference to a statute or delegated legislation or a provision of   either includes consolidations, amendments, re-enactments and replacements;
    
	
 
    	
 
    
	
(j)
    	
a   reference to C$ or Canadian  dollar is to Canadian currency and a reference to A$ or Australian    dollar is to Australian   currency;
    

 

12

 

(k)                 if a word or phrase is not given a defined meaning in clause 1.1 but is defined in or for the purposes of the Corporations Act, it has the same meaning when used in this agreement;

 

(l)                  a reference to a date or time is to that date or time in Perth, Western Australia; and

 

(m)               this agreement must not be construed adversely to a party just because that party prepared it or caused it to be prepared.

 

2.                  Obligations in relation to Scheme and Option Scheme

 

2.1                Talison to propose Scheme and Option Scheme

 

(a)                 Talison agrees to propose the Scheme and the Option Scheme on and subject to the terms and conditions of this agreement.

 

(b)                 Bidder agrees to assist Talison to propose the Scheme and the Option Scheme on and subject to the terms and conditions of this agreement.

 

2.2                Talison and Bidder to Implement Scheme and Option Scheme

 

Talison and Bidder agree to implement the Scheme and the Option Scheme on and subject to the terms and conditions of this agreement, subject in each case to the scheme of arrangement becoming Effective.

 

3.                  Conditions precedent

 

3.1                Conditions to Scheme

 

Subject to this clause 3, the Scheme will not become Effective, and the obligations of the Bidder under clauses 4.2(k) and 5.1 and Talison under clause 4.1(u) are not binding, until each of the conditions listed in the first column of the following table are either satisfied or waived in accordance with clause 3.6:

 

	
Condition
    	
 
    	
Right to
   benefit and
   waive
    	
 
    	
Responsibility
   to satisfy
    
	
(a)   (No Material Adverse Change) no Material   Adverse Change occurs or becomes known to Bidder between the date of this   agreement and 8:00 am on the Second Court Date
    	
 
    	
Bidder
    	
 
    	
Talison
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
(b)   (FIRB approval) before 8.00 am on the   Second Court Date, the Treasurer of the Commonwealth of Australia:

 

(i)    gives an approval to the   proposed acquisition by Bidder Subsidiary of all the Talison securities and   that approval is not subject to conditions, or is subject only to conditions   that Bidder, acting reasonably, considers to be acceptable; or

 

(ii)   has issued a notice stating that the 
    	
 
    	
None
    	
 
    	
Bidder and Talison
    

 

13

 

	
Condition
    	
 
    	
Right to
   benefit and
   waive
    	
 
    	
Responsibility
   to satisfy
    
	
Commonwealth   Government does not object to Bidder Subsidiary acquiring all the Talison   securities and that notice is not subject to conditions, or is subject only   to conditions that Bidder, acting reasonably, considers to be acceptable; or

 

(iii)  has become, or is   precluded from making an order in respect of the acquisition of the Talison   securities by Bidder Subsidiary,

 

under the Foreign Acquisitions and   Takeovers Act 1975 (Cth)
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
(c)   (Regulatory approvals) on or before 8.00 am on the Second Court Date,   all approvals from ASIC required to implement the Scheme are granted or obtained   and those regulatory approvals are not withdrawn, cancelled or revoked. To   avoid doubt, this includes ASIC having issued or provided such consents or   approvals or having done such other acts which Bidder and Talison agree are   reasonably necessary to implement the Scheme notwithstanding   that a condition or conditions may have been attached to any such regulatory   approval, if that condition (or conditions) is acceptable to Bidder and   Talison (acting reasonably)
    	
 
    	
Bidder and Talison
    	
 
    	
Bidder and Talison
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
(d)   (Prescribed Occurrence) no Prescribed   Occurrence has occurred or becomes known to Bidder after the date of this   agreement and before 8.00 am on the Second Court Date
    	
 
    	
Bidder
    	
 
    	
Talison
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
(e)   (Talison Shareholder approval) Talison   Shareholders approve the Scheme by the majorities required under section   411(4)(a)(ii) of the Corporations Act
    	
 
    	
None
    	
 
    	
Talison
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
(f)    (Court approval) the Court approves the   Scheme in accordance with section 411(4)(b) of the Corporations Act
    	
 
    	
None
    	
 
    	
Bidder and Talison
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
(g)   (Option Scheme Effective) the Court   approves the Option Scheme in accordance with section 411(4)(b) of the   Corporations Act
    	
 
    	
Bidder
    	
 
    	
Bidder and Talison
    

 

14

 

3.2                Conditions to Option Scheme

 

Subject to this clause 3, the Option Scheme will not become Effective, and the obligations of the Bidder under clauses 4.2(l) and 5.2 and Talison under clause 4.1(v) are not binding, until each of the conditions listed in the first column of the following table are either satisfied or waived in accordance with clause 3.6:

 

	
Condition
    	
 
    	
Right to
   benefit and
   waive
    	
 
    	
Responsibility
   to satisfy
    
	
(a)   (Regulatory approvals) on or before 8.00 am on the Second Court Date,   all approvals from ASIC required to implement the Option Scheme are granted   or obtained and those regulatory approvals are not withdrawn, cancelled or   revoked. To avoid doubt, this includes ASIC having issued or provided such   consents or approvals or having done such other acts which Bidder and Talison   agree are reasonably necessary to implement the Option Scheme notwithstanding that a condition or conditions may have been attached   to any such regulatory approval, if that condition (or conditions) is   acceptable to Bidder and Talison (acting reasonably)
    	
 
    	
Bidder and Talison
    	
 
    	
Bidder and Talison
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
(b)   (Scheme Effective) the Scheme becomes   Effective
    	
 
    	
Bidder
    	
 
    	
Bidder and Talison
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
(c)   (Talison Optionholder approval) Talison   Optionholders approve the Option Scheme by the majorities required under   section 411(4)(a)(ii) of the Corporations Act
    	
 
    	
None
    	
 
    	
Talison
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
(d)   (Court approval) the Court approves the   Option Scheme in accordance with section 411(4)(b) of the Corporations   Act
    	
 
    	
None
    	
 
    	
Bidder and Talison
    

 

3.3                General obligations in relation to Conditions

 

Without prejudice to any other obligations of the parties under this agreement, in respect of any given Condition:

 

(a)                 if one party is specified in the third column of the table in clause 3.1 or 3.2 opposite that Condition, that party must use its best endeavours to procure the satisfaction of that Condition as soon as practicable after the date of this agreement and continues to be satisfied at all times up until the last time it is to be satisfied (as the case may require);

 

(b)                 if both parties are specified in the third column of a table in clause 3.1 or 3.2 opposite that Condition, both parties must, to the extent that it is within their respective control or influence, use their best endeavours to procure the satisfaction of that Condition as soon as practicable after the date of this agreement and 

 

15

 

continues to be satisfied at all times up until the last time it is to be satisfied (as the case may require); and

 

(c)                 each party must, to the extent that it is within its respective control or influence, use its best endeavours to procure that there is no occurrence that would prevent the Condition being satisfied and no party shall take any action that will or is likely to hinder or prevent the satisfaction of the Condition except to the extent that such action is required to be done or procured pursuant to the Transaction Documents or is required by Law.

 

3.4               Obligations in relation to Regulatory Conditions

 

Each party must use its best endeavours to ensure that the Regulatory Conditions are satisfied as soon as practicable after the date of this agreement and, in particular, the party that is specified in the third column of the table in clause 3.1 opposite a Regulatory Condition (or both parties, if both parties are so specified) must use its best endeavours to ensure that the Regulatory Conditions are satisfied as soon as practicable after the date of this agreement and in any event before the scheduled date for the Scheme Meeting in the Timetable and, in particular, each party must:

 

(a)                 as soon as practicable prepare and, subject to clause 3.4(c), lodge, each notice or application required to be given by that party for the purposes of procuring the satisfaction of the Regulatory Conditions (as applicable) and take all procedural steps it is responsible for as part of such approval process, including responding to requests for information at the earliest practicable time and use best endeavours to obtain such approvals as soon as practicable after the date of this agreement;

 

(b)                 furnish, on a timely basis, all information as may reasonably be required by another party or by any Regulatory Authority to ensure the Regulatory Conditions are satisfied, and each covenants that, to its knowledge, no information so furnished by it in writing shall contain any material misrepresentation;

 

(c)                 consult with the other party, in advance, in relation to all communications with any Regulatory Authority relating to any such regulatory approval (other than those of a purely mechanical or housekeeping type);

 

(d)                 keep the other party informed of progress in relation to each such regulatory approval and of any material matters raised by, or conditions or other arrangements proposed by, or to, any Regulatory Authority which relate to any such regulatory approval; and

 

(e)                 provide copies of all documents provided to and received from each relevant Regulatory Authority in relation to each such regulatory approval (including before the date of this agreement), on a confidential basis, to the other party,

 

provided that, in each case:

 

(f)                                                    the party applying for the approval may withhold or redact information or documents if and to the extent that they are confidential to a third party or commercially sensitive and confidential to the applicant;

 

(g)                 nothing in this clause 3.4 or any other provision of this agreement requires a party to disclose materially commercially sensitive information to the other party; and

 

(h)                 the party applying for the approval will not be prevented from taking procedural steps or communicating with or providing documents to a Regulatory Authority if the other party has not responded promptly under clause 3.4(c).

 

16

 

The other party must provide the applicant for a Regulatory Approval with all assistance and information reasonably requested by the applicant in connection with the application for and obtaining the approval.

 

3.5                Notice in relation to satisfaction of Conditions

 

Each party must:

 

(a)                 keep the other party promptly and reasonably informed of the steps it has taken and of its progress towards satisfaction of the Conditions;

 

(b)                 in relation to any Condition, promptly notify the other party in writing upon becoming aware of:

 

(i)                  the satisfaction of that Condition, in which case the notifying party must also provide reasonable evidence that the Condition has been satisfied; or

 

(ii)                 any fact or circumstance that it becomes aware of which results in, or may result in, that Condition becoming incapable of satisfaction or may result in that Condition not being satisfied in accordance with its terms; and

 

(c)                 in relation to any Condition, immediately notify the other party in writing of a breach or non-fulfilment of a Condition or any occurrence or event that will prevent a Condition from being satisfied and where a party is entitled to waive that Condition upon receipt or delivery of such a notice (as applicable) that party must notify the other party in accordance with clause 3.6 as soon as possible, (in any event before 5.00 pm on the Business Day before the Second Court Date) as to whether the party waives the breach or non-fulfilment of the Condition resulting from the occurrence or event.

 

If there occurs a breach or non-fulfilment of a Condition or any occurrence or event that will prevent a Condition from being satisfied, the parties will consult in good faith for 5 Business Days to determine whether an alternative solution can be agreed.

 

3.6                Waiver of Conditions

 

(a)                 A Condition is only for the benefit of:

 

(i)                  if one party is specified in the second column of the tables in clause 3.1 and 3.2 opposite that Condition, that party; or

 

(ii)                 if both parties are specified in the second column of the tables in clause 3.1 and 3.2 opposite that Condition, both parties.

 

(b)                 A Condition may be waived and may only be waived:

 

(i)                  if one party is specified in the second column of the tables in clause 3.1 and 3.2 opposite that Condition, by that party by written notice to the other party; or

 

(ii)                 if both parties are specified in the second column of the tables in clause 3.1 and 3.2 opposite that Condition, by written agreement between the parties.

 

17

 

(c)                 A party entitled to waive or to agree to waive a Condition under this clause 3.6 may do so in its absolute discretion subject to the provision of written notice to the other party.

 

(d)                 A party that waives or agrees to waive a Condition is not prevented from bringing a claim against any other party in respect of any breach of this agreement that caused that Condition not to be satisfied.

 

(e)                 Waiver of a breach or non-fulfilment in respect of one Condition does not constitute:

 

(i)                  a waiver of breach or non-fulfilment of any other Condition resulting from the same event; or

 

(ii)                 a waiver of breach or non-fulfilment of that Condition resulting from any other event.

 

3.7                Failure of Conditions

 

A party is entitled to terminate this agreement by notice to the other party at any time before the Effective Date:

 

(a)                 if any Condition has become incapable of satisfaction and that Condition has not been waived in accordance with clause 3.6 within 5 Business Days after the other party is given a notice under clauses 3.5(b)(ii) or 3.5(c) of the occurrence of the fact, matter or circumstance which caused that Condition to become incapable of satisfaction and no alternative solution has been agreed under clause 3.5;

 

(b)                 if any Condition has not been satisfied or waived in accordance with clause 3.6 before the End Date; or

 

(c)                 if any Condition, having been satisfied on or before the End Date ceases to be satisfied before the Effective Date,

 

except where the relevant Condition has become incapable of satisfaction, has not been satisfied, or ceases to be satisfied, as a direct result of a failure by the party seeking to terminate to comply with its obligations under clause 4 or this clause 3.

 

4.                  Implementation of Scheme and Option Scheme

 

4.1                Talison’s obligations

 

Talison must take all steps reasonably necessary to implement the Scheme and the Option Scheme as soon as is reasonably practicable after the date of this agreement and so as to complete the Transaction substantially in accordance with the Timetable (unless otherwise agreed by the parties acting reasonably and in good faith), and in particular Talison must:

 

(a)                 (Explanatory Memorandum) as soon as practicable after the date of this agreement, prepare the Explanatory Memorandum (excluding Bidder Information and the Independent Expert’s Report) in accordance with all applicable Law and in particular the requirements of the Corporations Act, the Corporations Regulations, the Regulatory Guides and Canadian Securities Law;

 

(b)                 (Review of the Bidder Information) as soon as practicable after receiving a draft of the Bidder Information pursuant to clause 4.2(a), review and provide comments on the form and content of the Bidder Information to Bidder;

 

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(c)                 (Independent Expert) promptly appoint the Independent Expert and provide all assistance and information reasonably requested by the Independent Expert in connection with the preparation of the Independent Expert’s Report for inclusion in the Explanatory Memorandum;

 

(d)                 (Provide draft Explanatory Memorandum to Bidder) provide drafts of the Explanatory Memorandum to Bidder, consult with Bidder in relation to the content of those drafts and (acting reasonably and in good faith) take into account any comments from Bidder and its Representatives on those drafts;

 

(e)                 (Provide draft Independent Expert’s Report) provide a draft of the Independent Expert’s Report to Bidder no later than 2 Business Days prior to provision of the Regulator’s Draft to ASIC;

 

(f)                 (Approval of draft Explanatory Memorandum) procure that a meeting of the Talison Board is convened to approve the draft Explanatory Memorandum to be provided to ASIC for its review;

 

(g)                 (ASIC review) as soon as reasonably practicable provide an advanced draft of the Explanatory Memorandum (Regulator’s Draft) to ASIC, for its review and approval for the purposes of section 411(2) of the Corporations Act, and to Bidder, and:

 

(i)                  liaise with ASIC as necessary during the Regulatory Review Period; and

 

(ii)                 promptly notify, and consult with, Bidder in relation to any matters raised by ASIC in connection with the Explanatory Memorandum or the Scheme and any presentation or submission to, or at any proposed meeting with, ASIC, and co-operate and consult with Bidder to resolve any such matters;

 

(h)                 (Section 411(17)(b) statement) apply to ASIC for the production of:

 

(i)                  an indication of intent letter stating that it does not intend to appear before the Court on the First Court Date; and

 

(ii)                 a statement in writing pursuant to section 411(17)(b) of the Corporations Act stating that ASIC has no objection to the Scheme or the Option Scheme;

 

(i)                  (Court documents): consult with Bidder in relation to the content of the documents required for the purposes of the Court hearings held for the purposes of sections 411(1) and 411(4)(b) of the Corporations Act in relation to the Scheme and the Option Scheme (including originating process, affidavits, submissions and draft minutes of Court orders) and consider in good faith comments on, and suggested amendments to, those documents from Bidder and its Representatives;

 

(j)                  (First Court hearing) lodge all documents with the Court and take all other reasonable steps to ensure that an application is heard by the Court for an order under section 411(1) of the Corporations Act directing Talison to convene the Scheme Meeting and the Option Scheme Meeting;

 

(k)                (Approval of Explanatory Memorandum) procure that a meeting of the Talison Board is convened to approve the Explanatory Memorandum for registration with ASIC and dispatch to Talison Shareholders;

 

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(l)                 (Due diligence and verification) Talison must undertake appropriate due diligence and verification processes in relation to the Explanatory Memorandum (other than the Bidder Information and the Independent Expert’s Report);

 

(m)               (Register Explanatory Memorandum) request ASIC that the explanatory statement included in the Explanatory Memorandum in relation to the Scheme and the Option Scheme be registered in accordance with section 412(6) of the Corporations Act;

 

(n)                 (Compliance with Court orders) take all reasonable steps necessary to comply with the orders of the Court including, as required, dispatching the Explanatory Memorandum to Talison Shareholders and Talison Optionholders and convening and holding the Scheme Meeting and the Option Scheme Meeting;

 

(o)                 (Obtain Bidder’s consent) before dispatch of the Scheme Booklet to Talison Shareholders, Talison must obtain the written consent of Bidder to inclusion of the Bidder Information in the Scheme Booklet in the form and context in which it appears (such consent not to be unreasonably withheld or delayed);

 

(p)                 (Update Explanatory Memorandum) if it becomes aware of information after the date of dispatch of the Explanatory Memorandum, which is required to be disclosed to Talison Shareholders or Talison Optionholders under any applicable Law, as expeditiously as practicable:

 

(i)                  inform Talison Shareholders and/or Talison Optionholders of the information in an appropriate and timely manner, and in accordance with applicable Law; and

 

(ii)                 to the extent it is reasonably practicable to do so, provide Bidder with drafts of any documents that it proposes to issue to Talison Shareholders and/or Talison Optionholders under this clause 4.1(p) , consult with Bidder in relation to the content of those drafts and (acting reasonably and in good faith) take into account any comments from Bidder and its Representatives on those drafts;

 

(q)                 (Keep informed) from the First Court Date until the Implementation Date, promptly inform Bidder if it becomes aware that the Explanatory Memorandum contains a statement which is misleading or deceptive in a material respect or contains a material omission;

 

(r)                  (Court approval application) if the resolutions submitted to the Scheme Meeting and the Option Scheme Meeting in relation to the Scheme and the Option Scheme respectively are approved by the majorities required under section 411(4)(a)(ii) of the Corporations Act and subject to all other Conditions (other than the Condition in clause 3.1(f)) being satisfied or waived in accordance with this agreement, apply (and, to the extent necessary, re-apply) to the Court for orders approving the Scheme and the Option Scheme;

 

(s)                 (Information) provide all information, or procure that the Talison Share Registry provides all information, to Bidder, in each case in a form reasonably requested by Bidder, about the Transaction and the Talison Shareholders and Talison Optionholders which Bidder reasonably requires in order to canvass agreement to the Scheme and the Option Scheme by Talison Shareholders and Talison Optionholders respectively;

 

(t)                  (Certificate) at or before the hearing on the Second Court Date, provide to the Court a certificate (or such other evidence as the Court may request) confirming (in

 

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respect of matters within its knowledge) whether or not the conditions set out in clauses 2.1(a) and 2.1(b) of the Scheme and of the Option Scheme (respectively) have been satisfied.  Talison must provide a draft of that certificate to Bidder by 5.00 pm on the Business Day prior to the Second Court Date;

 

(u)                                                 (Implementation of Scheme) if the Conditions to the Scheme are satisfied or waived:

 

(i)                                                    lodge with ASIC an office copy of the orders approving the Scheme in accordance with section 411(10) of the Corporations Act as soon as practicable after such office copy is received but in any event no later than 5.00 pm on the Business Day after the date on which the Court makes those orders or such other Business Day as Talison and Bidder agree in writing;

 

(ii)                                                 use reasonable endeavours to procure that TSX suspends trading in Talison Shares promptly following the Scheme becoming Effective;

 

(iii)                                             close the Talison Share Register as at the Record Date and determine entitlements to the Scheme Consideration in accordance with the Scheme;

 

(iv)                                             provide to Bidder all information about the Scheme Shareholders that Bidder reasonably requires in order for Bidder Subsidiary to provide, or procure the provision of, the Scheme Consideration in accordance with the Scheme;

 

(v)                                                subject to Bidder satisfying its obligations under clause 5.1(b), on the Implementation Date (or as soon as practicable thereafter) register all transfers of Scheme Shares to Bidder Subsidiary in accordance with the Scheme; and

 

(vi)                                             promptly do all other things contemplated by or necessary to give effect to the Scheme and the orders of the Court approving the Scheme; and

 

(v)                                                 (Implementation of Option Scheme) if the Conditions to the Option Scheme are satisfied or waived:

 

(i)                                                    lodge with ASIC an office copy of the orders approving the Option Scheme in accordance with section 411(10) of the Corporations Act as soon as practicable after such office copy is received but in any event no later than 5.00 pm on the Business Day after the date on which the Court makes those orders or such other Business Day as Talison and Bidder agree in writing;

 

(ii)                                                 close the Talison Option Register as at the Record Date and determine entitlements to the Option Scheme Consideration in accordance with the Option Scheme;

 

(iii)                                             promptly pass all board resolutions necessary to allow the transfer of the Talison Options in accordance with the Option Scheme;

 

(iv)                                             provide to Bidder all information about the Scheme Optionholders that Bidder reasonably requires in order for Bidder Subsidiary to provide, or procure the provision of, the Option Scheme Consideration in accordance with the Option Scheme;

 

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(v)                                                 subject to Bidder satisfying its obligations under clause 5.2(b), on the Implementation Date (or as soon as practicable thereafter) register all transfers of Scheme Options to Bidder Subsidiary in accordance with the Option Scheme; and

 

(vi)                                              promptly do all other things contemplated by or necessary to give effect to the Option Scheme and the orders of the Court approving the Option Scheme; and

 

(w)                                              (Other things necessary) promptly do all other things reasonably within its power to lawfully give effect to the Scheme and the Option Scheme.

 

4.2                                               Bidder’s obligations

 

Bidder must take all steps reasonably necessary to assist Talison to implement the Scheme and the Option Scheme as soon as is reasonably practicable and so as to complete the Transaction substantially in accordance with the Timetable (unless otherwise agreed by the parties acting reasonably and in good faith), and in particular Bidder must:

 

(a)                                                  (draft of the Bidder Information) provide to Talison a draft of the Bidder Information as soon as reasonably practicable after the date of this agreement and consult with Talison in relation to the content of drafts of the Bidder Information and (acting reasonably and in good faith) take into account any comments from Talison and its Representatives on those drafts;

 

(b)                                                  (final form of Bidder Information) provide to Talison the Bidder Information in a form appropriate for inclusion in the Explanatory Memorandum;

 

(c)                                                   (review Explanatory Memorandum) review the drafts of the Explanatory Memorandum provided by Talison and provide comments on those drafts promptly and in good faith;

 

(d)                                                  (Due diligence and verification) undertake appropriate due diligence and verification processes in relation to the Bidder Information, and provide to Talison all evidence of such processes as may be reasonably requested;

 

(e)                                                   (Independent Expert) subject to the Independent Expert entering into arrangements with Bidder as to confidentiality in a form reasonably acceptable to Bidder, promptly provide all assistance and information reasonably requested by the Independent Expert to enable it to prepare its report for inclusion in the Explanatory Memorandum;

 

(f)                                                    (Approval of Bidder Information) as soon as reasonably practicable after receipt from Talison of the draft of the Explanatory Memorandum that Talison proposes to dispatch to Talison Shareholders and Talison Optionholders, either:

 

(i)                                                     confirm in writing to Talison that the Bidder Information (other than to the extent it consists of information relating to Talison that was provided by or on behalf of Talison) in the form and context in which it appears in the draft of the Explanatory Memorandum is in all material respects, not misleading or deceptive in any material respect and does not contain any material omission and is in a form appropriate for dispatch to the Talison Shareholders and Talison Optionholders (subject to the approval of the Court); or

 

(ii)                                                 provide to Talison the changes required to ensure that the Bidder Information (other than to the extent it consists of information relating to

 

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Talison that was provided by or on behalf of Talison) in the form and context in which it appears in the Explanatory Memorandum is not misleading or deceptive in any material respect and does not contain any material omission and is in a form appropriate for dispatch to the Talison Shareholders and Talison Optionholders (subject to the approval of the Court);

 

(g)                                                 (Keep Talison informed) promptly inform Talison if it becomes aware from the First Court Date until the Implementation Date that the Bidder Information (other than to the extent that it consists of information relating to Talison that was provided by or on behalf of Talison) in the form and context in which it appears in the Explanatory Memorandum contains a material misrepresentation, is or has become misleading or deceptive in any material respect or contains any material omission, and provide such further or new information as is required to ensure that such information is no longer misleading or deceptive in any material respect or contains any material omission;

 

(h)                                                 (Deed Poll) no later than the Business Day prior to the First Court Date, enter into the Deed Poll and the Option Scheme Deed Poll and deliver the executed versions to Talison;

 

(i)                                                    (Second Court Hearing) procure that it is represented by counsel at the Court hearing convened for the purposes of section 411(4)(b) of the Corporations Act, at which, through its counsel, Bidder will undertake (if requested by the Court) to do all such things and take all such steps within its power as may be reasonably necessary in order to ensure the fulfilment of its obligations under this agreement and the Scheme and Option Scheme;

 

(j)                                                    (Certificate) at or before the hearing on the Second Court Date, provide to the Court a certificate (or such other evidence as the Court may request) confirming (in respect of matters within its knowledge) whether or not the conditions (set out in clauses 2.1(a) and 2.1(b) of the Scheme and of the Option Scheme (respectively) have been satisfied.  Bidder must provide a draft of that certificate to Talison by 5:00 pm on the Business Day prior to the Second Court Date;

 

(k)                                                 (Implementation of Scheme) if the Scheme becomes Effective, procure that Bidder Subsidiary provides the Aggregate Scheme Consideration on the Implementation Date in accordance with clause 5.1(b) and the terms of the Scheme;

 

(l)                                                    (Implementation of Option Scheme) if the Option Scheme becomes Effective, procure that Bidder Subsidiary provides the Aggregate Option Scheme Consideration on the Implementation Date in accordance with clause 5.2(b) and the terms of the Option Scheme; and

 

(m)                                             (Other things necessary) promptly do all other things reasonably within its power to lawfully give effect to the Scheme and the Option Scheme.

 

4.3                                               Dispute as to Explanatory Memorandum

 

If, after a reasonable period of consultation, the parties, each acting reasonably and in good faith, are unable to agree on the form or content of the Explanatory Memorandum, then:

 

(a)                                                  if the disagreement relates to the form or content of the Bidder Information (or any information solely derived from, or prepared solely in reliance on, the Bidder Information), Talison will, acting in good faith, make such amendments to that information in the Explanatory Memorandum as Bidder may reasonably require; and

 

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(b)                                                  if the disagreement relates to the form or content of the Talison Information (or any information solely derived from, or prepared solely in reliance on, information provided by or on behalf of Talison), Talison will, acting in good faith, decide the final form of that information in the Explanatory Memorandum.

 

4.4                                               Reconstitution of Talison Board

 

On the Implementation Date, but subject to Bidder Subsidiary having provided the Scheme Consideration and the Option Scheme Consideration in accordance with clause 5.1(b) and clause 5.2(b), Talison must:

 

(a)                                                  cause the appointment to the Talison Board and to the boards of each Subsidiary of Talison of such number of persons as nominated by Bidder, subject to those persons being appointed having provided a consent to act as directors of the relevant companies;

 

(b)                                                  procure that all Talison Directors and the directors of each subsidiary of Talison (other than, in each case, those that may be nominated in writing by Bidder and those appointed pursuant to clause 4.4(a)) resign from the Talison Board and the board of each subsidiary of Talison; and

 

(c)                                                   procure that the service contracts for all Talison Directors and the directors of each Subsidiary of Talison (other than, in each case, those that may be nominated in writing by Bidder and those appointed pursuant to clause 4.4(a)) terminate with effect from the Implementation Date.

 

4.5                                               Responsibility statement

 

The Explanatory Memorandum will contain a responsibility statement to the effect that:

 

(a)                                                  Bidder is responsible for the Bidder Information contained in the Explanatory Memorandum (other than to the extent that it consists of information relating to the Talison Group that was provided by or on behalf of Talison); and

 

(b)                                                  Talison is responsible for the Talison Information contained in the Explanatory Memorandum.

 

5.                                                      Scheme Consideration and Option Scheme Consideration

 

5.1                                               Bidder’s covenant in respect of the Scheme Consideration

 

(a)                                                  Subject to the Scheme becoming Effective, Bidder covenants and agrees in favour of Talison (in Talison’s own right and separately as trustee for each of the Scheme Shareholders) that in consideration of the transfer to Bidder Subsidiary of each Scheme Share held by a Scheme Shareholder under the terms of the Scheme, Bidder will procure that Bidder Subsidiary:

 

(i)                                                     accepts that transfer; and

 

(ii)                                                  provides, or procure the provision of, the Scheme Consideration to that Scheme Shareholder for each of their Scheme Shares in accordance with the terms of the Scheme.

 

(b)                                                  Before the Scheme Shares are to be transferred to Bidder Subsidiary under the Scheme, Bidder Subsidiary must, at or prior to 12:00 noon on the Implementation Date, deposit an amount equal to the Aggregate Scheme Consideration in cleared

 

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funds into the Trust Account.  Bidder must procure that Bidder Subsidiary makes such deposit.

 

5.2                                               Bidder’s covenant in respect of the Option Consideration

 

(a)                                                  Subject to the Option Scheme becoming Effective, Bidder covenants and agrees in favour of Talison (in Talison’s own right and separately as trustee for each of the Scheme Optionholders) that in consideration of the transfer to Bidder Subsidiary of each Scheme Option held by a Scheme Optionholder under the terms of the Option Scheme, Bidder will procure that Bidder Subsidiary:

 

(i)                                                    accepts that transfer; and

 

(ii)                                                 provides, or procure the provision of, the Option Scheme Consideration to that Scheme Optionholder for each of their Scheme Options in accordance with the terms of the Option Scheme.

 

(b)                                                 Before the Scheme Options are to be transferred to Bidder Subsidiary under the Option Scheme, Bidder Subsidiary must, at or prior to 12:00 noon on the Implementation Date, deposit an amount equal to the Aggregate Option Scheme Consideration in cleared funds into the Trust Account.  Bidder must procure that Bidder Subsidiary makes such deposit.

 

6.                                                      Treatment of Talison Warrants, LTIP Shares and Special Voting Share

 

6.1                                               Warrant Commitments

 

(a)                                                  The parties must each use their best endeavours to ensure that, as soon as reasonably practicable and, in any event, by the First Court Date, each Talison Warrantholder enters into a Warrant Commitment in a form reasonably acceptable to Bidder.  To avoid doubt:

 

(i)                                                    the satisfaction of this clause 6.1 is not a condition of the Scheme; and

 

(ii)                                                 if a Talison Warrantholder has not entered into a Warrant Commitment by the date prescribed by this clause 6.1, the parties must continue to use their best endeavours to ensure that the Talison Warrantholder does so as soon as practicable thereafter.

 

(b)                                                 If, by the First Court Date, all Talison Warrantholders have not either entered into a Warrant Commitment or exercised all of their Talison Warrants, the parties agree that, if so requested by Bidder, the Record Date will be 5:00pm (Perth time) on 4 December 2012.

 

6.2                                               Talison obligations in respect of Talison Warrants

 

(a)                                                  Talison undertakes to grant any consent or approval and use its best endeavours to take any further action as may be required in connection with any proposed transaction under a Warrant Commitment, including by:

 

(i)                                                    issuing Talison Shares, and entering such Talison Shares in the Talison Share Register, promptly upon the due exercise of a Talison Warrant (and in any event prior to the Record Date); and

 

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(ii)                                                 doing such things as may be reasonably necessary in order to give effect to any cancellation of Talison Warrants that may be contemplated by a Warrant Commitment.

 

(b)                                                 Without derogating from clause 6.2(a), whenever a Talison Warrant is validly exercised (whether pursuant to a Warrant Commitment or otherwise), Talison must ensure that a Talison Share is issued to the person that exercised the Talison Warrant such that the person is registered as the holder of the Talison Share in the Talison Share Register before the Record Date.

 

(c)                                                  From the date of this agreement up to and including the Implementation Date, Talison shall not cause or permit any amendment of the terms of any Talison Warrants without the consent of Bidder.

 

6.3                                               LTIP Shares

 

(a)                                                 Until the First Court Date, the parties must use their best endeavours to investigate structures for dealing with, or making arrangements in relation to, the LTIP Shares in an efficient or desirable manner (from Bidder’s perspective) (Structure).

 

(b)                                                 Subject to clause 6.3(c), if a Structure is identified by Bidder as being desirable for implementation, the parties will negotiate in good faith the necessary amendments to the Scheme and/or the Option Scheme, and if necessary this agreement, so as to give effect to the Structure, and otherwise do all things necessary to give effect to the Structure.

 

(c)                                                  Talison will not be required to do anything to implement the Structure if it would:

 

(i)                                                    have an adverse effect on any member of the Talison Group (other than the Trustee in its capacity as trustee of the LTIP Trust) or the Transaction or the prospects for its implementation; or

 

(ii)                                                 result in a requirement to obtain any additional approvals not contemplated in clause 3.1.

 

(d)                                                 Whenever a Talison Option is validly exercised after the date of this agreement:

 

(i)                                                    Talison will notify the Trustee that it wishes the Trustee to settle such exercise by delivering a LTIP Share to the person that exercised the Talison Option, subject only to the Trustee holding a LTIP Share at the relevant time (to avoid doubt, the LTIP Shares must be used to settle valid exercises of Talison Options to the fullest extent possible); and

 

(ii)                                                 without derogating from clause 6.3(d)(i), Talison must ensure that a Talison Share is transferred or issued to the person that exercised the Talison Option such that the person is registered as the holder of the Talison Share in the Talison Share Register before the Record Date.

 

6.4                                               Special Voting Share

 

Prior to the Implementation Date, Talison will use its best endeavours to procure that Computershare Trust Company of Canada gives a legally binding commitment to do all things necessary after the Implementation Date to transfer the Special Voting Share to Bidder (or otherwise as directed by Bidder) or to facilitate the cancellation of the Special Voting Share.

 

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7.                                                      Conduct of business and co-operation

 

7.1                                               Conduct of Talison’s business

 

(a)                                                 Subject to clause 7.1(b), from the date of this agreement up to and including the Implementation Date, Talison must:

 

(i)                                                    procure that each member of the Talison Group:

 

A.                                                   conducts its businesses and operations in the ordinary and usual course and substantially consistent (subject to any applicable Law) with the manner in which each such business and operation is conducted prior to the date of this agreement and in a manner consistent in all material respects with the Budget; and

 

B.                                                   conducts its businesses and operations in accordance with all applicable Laws in all material respects; and

 

C.                                                   use reasonable endeavours to obtain consents from third parties to any change of control provision which Bidder reasonably requests in contracts or arrangements to which a member of the Talison Group is a party; and

 

(ii)                                                 ensure that no Prescribed Occurrence occurs.

 

(b)                                                 The obligations of Talison under clause 7.1(a) do not apply to any action undertaken by Talison:

 

(i)                                                    in relation to any matter required to be done or procured by Talison or another member of the Talison Group pursuant to, or which is otherwise expressly permitted by, the Transaction Documents;

 

(ii)                                                 for which the Bidder has provided its prior written consent (such consent not to be unreasonably withheld or delayed);

 

(iii)                                             which arises as result of court or Regulatory Authority order, injunction or undertaking or otherwise required in order to comply with applicable Law;

 

(iv)                                             which is in accordance with contractual obligations that existed as at the date of this agreement, provided such obligations have been fairly disclosed in the Due Diligence Material; or

 

(v)                                                in accordance with clause 7.3.

 

(c)                                                  For the avoidance of doubt, nothing in this clause 7.1 restricts the ability of Talison to respond to a Competing Proposal.

 

7.2                                               Requests for access

 

From the date of this agreement to the Implementation Date, Talison will in good faith, on request from Bidder (and must procure that each of its Related Bodies Corporate), provide to Bidder reasonable access at reasonable times to:

 

(a)                                                 members of the Talison Board or senior management and to such other personnel of the Talison Group as are requested by Bidder (acting reasonably); and

 

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(b)                                                  records, books, documents, financial statements/accounts and premises of the Talison Group, unless the provision of any such access is prohibited by law or by the terms of any confidentiality undertaking provided by Talison to a third party prior to the date of this agreement,

 

in all cases only for proper purposes, which purposes shall include:

 

(c)                                                  Bidder preparing for implementation of the Transaction; and

 

(d)                                                 Bidder obtaining an understanding, or furthering its understanding, of the Talison Group in order to plan for the period following implementation of the Transaction.

 

7.3                                               GAM Arrangements

 

(a)                                                 Notwithstanding anything else in this agreement, a member of the Talison Group may enter into legally binding and definitive agreements with GAM to give effect to the matters contemplated in the Shared Services Term Sheet provided that such agreements are not inconsistent in a material respect with the provisions contemplated by the Shared Services Term Sheet.

 

(b)                                                 Notwithstanding anything else in this agreement, Talison and its Representatives may negotiate in good faith the terms of legally binding and definitive agreements with GAM to give effect to the matters contemplated in the Circuit MOU provided that no member of the Talison Group may execute any such agreements without the prior consent of Bidder (consent not to be unreasonably withheld).

 

(c)                                                  Talison will use its best endeavours to ensure that the Subleases are executed by the parties thereto prior to the Implementation Date.  Talison may proceed to negotiate the terms of the Subleases, and may cause the Subleases to be executed by the relevant Talison Group Member, without Bidder’s consent provided that the Subleases are on terms no less favourable to Talison than the draft Subleases disclosed to Bidder as part of the Due Diligence Material.

 

(d)                                                 To avoid doubt, anything done by Talison in accordance with this clause 7.3 shall not constitute a Prescribed Occurrence or a breach of any Talison Warranty.

 

7.4                                               Cooperation

 

From the date of this agreement to the Implementation Date, Talison must promptly provide reasonable cooperation to Bidder and its Representatives (and must procure that each of its Subsidiaries promptly provides such cooperation), for the purposes of:

 

(a)                                                 the implementation of the Transaction; and

 

(b)                                                 assisting Bidder to:

 

(i)                                                    plan for the integration of the Talison Group and the Bidder Group following the implementation of the Scheme;

 

(ii)                                                 engage with Talison’s transactional banking and derivative instrument counterparties for the purposes of obtaining consents, managing the prepayment or repayment of those counterparties on or about the Implementation Date and/or the termination of any contractual arrangements with any such counterparty; and

 

(iii)                                             prepare for any filings that may be required to be made by Bidder with the U.S. Securities and Exchange Commission after the Implementation

 

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Date, including by providing such information as may be reasonably required by Bidder to make such filings.

 

8.                                                     Recommendation, intentions and announcements

 

8.1                                               Talison Board Recommendation and Voting Intention

 

(a)                                                  Talison must ensure that the Announcement and the Explanatory Memorandum state (on the basis of confirmations made to Talison by each Talison Director) that each Talison Director:

 

(i)                                                    recommends that Talison Shareholders vote in favour of the Scheme and Talison Optionholders vote in favour of the Option Scheme (Recommendation); and

 

(ii)                                                 intends to cause any Talison Shares and Talison Options in which they have a Relevant Interest to be voted in favour of the Scheme and the Option Scheme respectively (Voting Intention),

 

which statements must not be qualified in any way other than by words to the effect of “in the absence of a Superior Proposal” and (in the case of the Announcement only) “subject to the Independent Expert concluding that the Scheme is in the best interests of Talison Shareholders”.

 

(b)                                                 Bidder acknowledges that each Talison Director may, subject to the terms of this agreement, publicly (or otherwise) withdraw, change or in any way qualify their Recommendation or Voting Intention if:

 

(i)                                                    a Superior Proposal is made; or

 

(ii)                                                 the Independent Expert concludes in the Independent Expert’s Report (either in its initial report or any subsequent update of its report) that the Scheme is not in the best interests of the Talison Shareholders.

 

8.2                                               Confirmation

 

Talison represents and warrants to Bidder that each Talison Director has confirmed their agreement not to do anything inconsistent with their Recommendation and Voting Intention (including withdrawing, changing or in any way qualifying their Recommendation or Voting Intention) other than in the circumstances referred to in clauses 8.1(b)(i) and 8.1(b)(ii).

 

8.3                                               Announcement

 

(a)                                                 Immediately after the execution of this agreement Talison must publicly announce the Transaction in the form of the announcement approved by Bidder (acting reasonably) prior to the execution of this agreement (Announcement).

 

(b)                                                 To the extent reasonably practicable and subject to clause 14.4, any announcement of the Transaction by Bidder will be in a form approved by Talison (acting reasonably).

 

(c)                                                  Talison and Bidder agree to co-operate and consult in good faith in the preparation of any announcements, presentations or briefings regarding the Transaction.

 

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9.                                                      Exclusivity arrangements

 

9.1                                               No shop

 

During the Exclusivity Period, Talison must not, and must ensure that its Representatives do not directly or indirectly solicit, invite, initiate any Competing Proposal or any inquiry, expression of interest, offer, proposal, negotiations or discussions by or with any Third Party in relation to, or that may reasonably be expected to lead to the making of, an actual or potential Competing Proposal, or communicate any intention to any person to do any of those things.

 

9.2                                               No talk and no due diligence

 

During the Exclusivity Period, Talison must not, and must ensure that its Representatives do not, except with the prior written consent of Bidder, directly or indirectly:

 

(a)                                                 enter into, continue or participate in any negotiations or discussions with, or accept or enter into, or offer to accept or enter into, any agreement, arrangement or understanding with, any Third Party in relation to, or that may reasonably be expected to lead to, a Competing Proposal;

 

(b)                                                 make available to any Third Party, or permit any Third Party to receive, any non-public information relating to any member of the Talison Group in connection with such Third Party formulating, developing or finalising, or assisting in the formulation, development or finalisation of, a Competing Proposal; or

 

(c)                                                  communicate any intention to any person to do anything referred to in this clause 9.2,

 

unless the Talison Board determines, in good faith and having taken advice from the external legal and financial advisers of the Talison Board, that the Competing Proposal is, or may reasonably be expected to lead to, a Superior Proposal and where failing to do so would be reasonably likely to constitute a breach of their fiduciary or statutory duties and provided that the Competing Proposal was not solicited, invited or initiated by Talison or its Representatives in contravention of clause 9.1.

 

9.3                                               Notice of Competing Proposal

 

During the Exclusivity Period, Talison must promptly notify Bidder if it or any of its Representatives receives a bona fide expression of interest, offer or proposal from any person (Rival Bidder) which is or may reasonably be expected to lead to a Competing Proposal.  Such notification will include the price and material conditions contemplated in the offer or proposal from the Rival Bidder, but not the identity of the Rival Bidder.

 

9.4                                               Matching right

 

Without limitation to any other part of this agreement, Talison must not enter into a binding implementation agreement which relates to a Competing Proposal (or any other agreement in relation to a Competing Proposal which provides for the payment of a break fee (or similar payment) to a Third Party) (Binding Agreement) and ensure that each member of the Talison Board does not change its Recommendation or Voting Intention as a consequence of receiving a Competing Proposal, unless Talison has:

 

(a)                                                  notified Bidder in writing of the material terms of the Competing Proposal, including the identity of the Third Party making the Competing Proposal (it being acknowledged by the parties that the information subject to the notification is

 

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subject to the Confidentiality Deed and will only be disclosed to those Representatives of Bidder that have a genuine need to know);

 

(b)                                                  confirmed to Bidder its intention to enter into the Binding Agreement; and

 

(c)                                                   provided Bidder with 5 clear Business Days to submit a written proposal to revise the Transaction.

 

If Bidder submits a written proposal to revise the Transaction within the period in paragraph (c), Talison must ensure that the Talison Board considers in good faith, and receives advice from Talison’s external legal and financial advisers in relation to, whether the proposed revisions would make the revised Transaction at least as favourable to Talison Shareholders as the Competing Proposal.  If it would, the parties must each use best endeavours to, as soon as practicable, agree the necessary amendments to this agreement, and take all other necessary steps, to give effect to the change to the Transaction.

 

9.5                                               Normal provision of information

 

Nothing in this clause 9 prevents Talison from:

 

(a)                                                 providing information to its Representatives;

 

(b)                                                 providing information to any Regulatory Authority;

 

(c)                                                  providing information to its auditors, advisers, financiers, customers, joint venturers and suppliers acting in that capacity in the ordinary course of business;

 

(d)                                                 providing information required to be provided by law or any Regulatory Authority; or

 

(e)                                                  making presentations to brokers, portfolio investors, analysts and other Third Parties in the ordinary course of business.

 

10.                                               Talison Break Fee

 

10.1                                        Payment of costs

 

(a)                                                  Talison and Bidder believe that the Scheme and the Transaction will provide benefits to Talison and its shareholders and Bidder, and acknowledge that if the parties enter into this agreement and the Scheme and the Transaction are subsequently not implemented, Bidder will incur significant costs.

 

(b)                                                  In the circumstances referred to in clause 10.1(a):

 

(i)                                                     Bidder requested that provision be made for the Talison Break Fee, without which it would not have entered into this agreement; and

 

(ii)                                                  the Talison Board believes that it is appropriate to agree to the Talison Break Fee in order to secure Bidder’s participation.

 

(c)                                                   Talison and Bidder acknowledge that the Talison Break Fee is intended by the parties to be strictly compensatory in nature and represents a reasonable estimate of the compensation so as to compensate Bidder for the following:

 

(i)                                                     advisory costs (including costs of advisors);

 

(ii)                                                  financing costs;

 

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(iii)                                               costs of management and directors’ time;

 

(iv)                                              out of pocket expenses; and

 

(v)                                                 reasonable opportunity costs in pursuing the Transaction or not pursuing other alternative acquisitions or strategic initiatives.

 

10.2                                        Talison Break Fee payable

 

(a)                                                  Subject to clause 10.3, Talison must pay Bidder the Talison Break Fee, without withholding or set off, in the following circumstances:

 

(i)                                                     if a Competing Proposal is announced or made before the date on which this agreement is terminated and, within 6 months from the date of this agreement, the Third Party who announced or made the Competing Proposal or any Associate of that Third Party:

 

A.                                                    completes, implements or consummates that Competing Proposal (or a Competing Proposal which is substantially similar); or

 

B.                                                    without limiting clause 10.2(a)(i)A, acquires (either alone or in aggregate) a Relevant Interest in more than 50% of Talison Shares or Control of Talison;

 

(ii)                                                  if any Talison Director changes, withdraws or modifies their Recommendation or Voting Intention, except where the Independent Expert concludes (either in its initial report or any subsequent update of its report, and other than because of the existence of a Superior Proposal) that the Scheme is not in the best interests of Talison Shareholders;

 

(iii)                                               if, before the date on which this agreement is terminated, any Talison Director recommends that Talison Shareholders accept, vote in favour of or otherwise support a Competing Proposal which is announced or made after the date of this agreement;

 

(iv)                                              if Bidder has terminated this agreement pursuant to any of clauses 15.2(b)(i) to 15.2(b)(iii); or

 

(v)                                                 a Prescribed Occurrence occurs which, alone or together with one or more other Prescribed Occurrences or breaches of this agreement by Talison, represents a material breach of this agreement or would be likely to have a material adverse effect on the business of the Talison Group.

 

(b)                                                  Talison must pay Bidder the Talison Break Fee without withholding or set off within 5 Business Days of receiving a written demand from Bidder for payment of the Talison Break Fee made after the occurrence of an event referred to in clause 10.2(a), failing which the due amount shall be subject to interest payable by Talison to Bidder at a rate of 3% above the Reserve Bank of Australia’s published overnight cash rate, from the 10th Business day after Bidder’s demand was made, until payment of the amount referred to in clause 10.2(a) (plus interest payable under this clause) has been received by Bidder.

 

10.3                                        Talison Break Fee not payable

 

Despite any other term of this agreement:

 

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(a)                                                  the Talison Break Fee will not be payable to Bidder if the Scheme becomes Effective; and

 

(b)                                                  the Talison Break Fee is only payable once.

 

10.4                                        Compliance with law

 

If a court or the Australian Takeovers Panel determines that any part of the Talison Break Fee:

 

(a)                                                  constitutes, or would if performed constitute:

 

(i)                                                     a breach of the fiduciary or statutory duties of the Talison Board; or

 

(ii)                                                  unacceptable circumstances within the meaning of the Corporations Act; or

 

(b)                                                  would, if paid, be unlawful for any reason,

 

then Talison will not be obliged to pay such part of the Talison Break Fee and, if the Talison Break Fee has already been paid, then Bidder must within 5 Business Days after receiving written demand from Talison refund that part of the Talison Break Fee to Talison.

 

10.5                                        Other claims

 

The maximum aggregate amount which Talison is required to pay in relation to a breach of this agreement is the Talison Break Fee, and in no event will the aggregate liability of Talison under or in connection with this agreement exceed the Talison Break Fee.

 

11.                                               Bidder Break Fee

 

11.1                                        Payment of costs

 

(a)                                                  Talison and Bidder believe that the Scheme and the Transaction will provide benefits to Talison and its shareholders, and Bidder, and acknowledge that if the parties enter into this agreement and the Scheme and the Transaction are subsequently not implemented, Talison will incur significant costs.

 

(b)                                                  In the circumstances referred to in clause 11.1(a):

 

(i)                                                     Talison requested that provision be made for the Bidder Break Fee, without which it would not have entered into this agreement; and

 

(ii)                                                  the Bidder Board believes that it is appropriate to agree to the Bidder Break Fee in order to secure Talison’s participation.

 

(c)                                                   Talison and Bidder acknowledge that the Bidder Break Fee is intended by the parties to be strictly compensatory in nature and represents a reasonable estimate of the compensation so as to compensate Talison for the following:

 

(i)                                                     advisory costs (including costs of advisors);

 

(ii)                                                  costs of management and directors’ time;

 

(iii)                                               out of pocket expenses; and

 

(iv)                                              reasonable opportunity costs in pursuing the Transaction or not pursuing other alternative acquisitions or strategic initiatives.

 

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11.2                                        Bidder Break Fee payable

 

(a)                                                  Subject to clause 11.3, Bidder must pay Talison the Bidder Break Fee, without withholding or set off, if Bidder is in material breach of this agreement (including a Bidder Warranty) and the circumstances giving rise to the breach have not been remedied by the end of the period specified in clause 15.3(a)(ii)A and Talison terminates this agreement as a result.

 

(b)                                                  Bidder must pay Talison the Bidder Break Fee without withholding or set off within 5 Business Days of receiving a written demand from Talison for payment of the Bidder Break Fee made in the circumstances contemplated in clause 11.2(a) , failing which, the due amount shall be subject to interest payable by Bidder to Talison at a rate of 3% above the Reserve Bank of Australia’s published overnight cash rate, from the 10th Business day after Talison’s demand was made, until payment of the amount referred to in clause 11.2(a) (plus interest payable under this clause) has been received by Talison.

 

11.3                                       Bidder Break Fee not payable

 

Despite any other term of this agreement:

 

(a)                                                  the Bidder Break Fee will not be payable to Talison if the Scheme becomes Effective; and

 

(b)                                                  the Bidder Break Fee is only payable once.

 

11.4                                        Compliance with law

 

If a court determines that any part of the Bidder Break Fee would, if paid, be unlawful for any reason, then Bidder will not be obliged to pay such part of the Bidder Break Fee and, if the Bidder Break Fee has already been paid, then Talison must within 5 Business Days after receiving written demand from Bidder refund that part of the Bidder Break Fee to Bidder.

 

11.5                                        Other claims

 

The maximum aggregate amount which Bidder is required to pay in relation to a breach of this agreement is the Bidder Break Fee, and in no event will the aggregate liability of Bidder under or in connection with this agreement exceed the Bidder Break Fee.

 

12.                                               Liability of directors and employees

 

12.1                                        Liability of directors and employees

 

Each party releases all rights against, and agrees that it will not make any claim against, each past or present director and employee of the other party in relation to information provided to the first party or otherwise in relation to the transactions contemplated by this agreement to the extent that such director or employee has acted in good faith and has not engaged in wilful misconduct.

 

12.2                                        Directors’ and officers’ insurance

 

Subject to the Scheme becoming Effective, Talison must by no later than the Implementation Date arrange for the cover provided under the Policy to be amended so as to provide run off cover in accordance with the terms of the Policy for a 7 year period from the end of the term of the Policy, and pay all premiums required so as to ensure that insurance cover is provided under the Policy on those terms until that date.

 

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12.3                                        Obligations in relation to directors’ and officers’ insurance

 

From the Implementation Date, Talison must not:

 

(a)                                                  vary or cancel the Policy; or

 

(b)                                                  unless required under the Policy, commit any act or omission that may prejudice any claim by a director or officer of Talison under the Policy as extended pursuant to clause 12.2 above.

 

13.                                               Representations, warranties and indemnities

 

13.1                                        Representations and warranties by Bidder

 

Bidder represents and warrants to Talison (on its own behalf and separately as trustee for each of the Talison Indemnified Parties):

 

(a)                                                  on each date from the date of this agreement until (and including) the Second Court Date that:

 

(i)                                                     it is a company properly incorporated and validly existing under the laws of its place of incorporation;

 

(ii)                                                  Bidder has full corporate power and lawful authority to execute and deliver the Transaction Documents to which Bidder is party and to perform or cause to be performed its obligations under such Transaction Documents;

 

(iii)                                               the Transaction Documents to which Bidder is party constitute legal, valid and binding obligations on it and do not conflict with or result in a breach of or default under:

 

A.                                                    the constitution or equivalent constituent documents of Bidder or any of its Subsidiaries; or

 

B.                                                    any writ, order or injunction, judgment, law, rule or regulation to which Bidder or any of its Subsidiaries is party, or by which Bidder or any of its Subsidiaries is bound; and

 

(iv)                                              other than as expressly contemplated by clause 3, no regulatory approvals are required to be obtained by Bidder Group in order for it to execute and perform its obligations under the Transaction Documents to which it is a party;

 

(b)                                                  on each date from the date of this agreement until (and including) the Implementation Date that none of the following events has occurred in relation to Bidder:

 

(i)                                                     a receiver, receiver and manager, liquidator, provisional liquidator, administrator or trustee is appointed in respect of Bidder or any of its assets or anyone else is appointed who (whether or not as agent for Bidder) is in possession, or has control, of any of the Bidder’s assets for the purpose of enforcing an Encumbrance;

 

(ii)                                                  an application is made to court or a resolution is passed or an order is made for the winding up or dissolution of Bidder;

 

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(iii)                                               Bidder proposes or takes any steps to implement a scheme of arrangement or other compromise or arrangement with its creditors or any class of them; or

 

(iv)                                              Bidder stops paying its debts when they become due or is declared or taken under any applicable Law to be insolvent or Bidder’s board of directors resolves that it is, or is likely to become at some future time, insolvent.

 

(c)                                                   on the First Court Date and the Second Court Date:

 

(i)                                                     the Bidder Information has been prepared (other than to the extent that it consists of information relating to the Talison Group that was provided by or on behalf of Talison) and included in the Explanatory Memorandum in good faith and on the understanding that Talison and its directors, officers and employees have relied on that information for the purposes of considering and approving the Talison Information in the Explanatory Memorandum and that the Independent Expert has relied on the information for the purposes of preparing the Independent Expert’s Report;

 

(ii)                                                  the Bidder Information complies in all material respects with relevant Laws (including the Corporations Act, relevant Regulatory Guides and Canadian Securities Law), and includes all information regarding Bidder, its Related Bodies Corporate and the Scheme Consideration and Option Scheme Consideration that is required by the Corporations Act, Regulatory Guides and Canadian Securities Law to be included in the Explanatory Memorandum, including all the information that would be required under sub-sections 636(1)(c), (f), (h), (i), (k), (l) and (m) of the Corporations Act to be included in a bidder’s statement if Bidder Subsidiary were offering the Scheme Consideration and Option Scheme Consideration as consideration under a takeover bid;

 

(iii)                                               the Bidder Information (other than to the extent that it consists of information relating to the Talison Group that was provided by or on behalf of Talison, or has been extracted from announcements made by Talison to the public regarding the Talison Group) in the form and context in which it appears in the Explanatory Memorandum does not contain a material misrepresentation or is not otherwise misleading or deceptive in any material respect and does not contain any material omission;

 

(iv)                                              Bidder has complied in all material respects with its obligations under clause 4.2(g);

 

(v)                                                 as at 8:00 am on the Second Court Date, Bidder will have sufficient cash on its balance sheet, or financial commitments available to it on an unconditional basis (other than conditions relating to the approval of the Court and related procedural matters or documentary requirements which, by their terms or nature, can only be satisfied or performed after the Second Court Date), to ensure that the Scheme Consideration and Option Scheme Consideration is paid to Scheme Shareholders and Scheme Optionholders (as applicable) in accordance with the terms of this agreement, the Scheme, the Option Scheme, the Deed Poll and the Option Deed Poll (as applicable); and

 

36

 

(vi)                                              Bidder will have available to it on the Implementation Date sufficient cash amounts (including debt facilities) to ensure that the Scheme Consideration and Option Scheme Consideration is paid to Scheme Shareholders and Scheme Optionholders (as applicable) in accordance with the terms of this agreement, the Scheme, the Option Scheme, the Deed Poll and the Option Deed Poll (as applicable); and

 

(d)                                                  no shareholder approval of Bidder is required to complete the Transaction.

 

13.2                                        Qualification of Bidder Warranties

 

The Bidder Warranties and the indemnity under clause 13.3, are qualified and Bidder shall not be in breach of a Bidder Warranty to the extent that the fact, matter, circumstance or act giving rise to the breach of a Bidder Warranty:

 

(a)                                                  has been fairly disclosed in writing to Talison prior to entry into this agreement;

 

(b)                                                  was required to be done by Bidder under the Transaction Documents; or

 

(c)                                                   was approved by Talison in writing (prior to the fact, matter, circumstance or act occurring).

 

13.3                                        Bidder indemnity

 

(a)                                                  Bidder acknowledges that in entering into this agreement Talison and the Talison Indemnified Parties have relied on the Bidder Warranties.

 

(b)                                                  Subject to clause 11.5, Bidder indemnifies Talison (on its own behalf and separately as trustee for each of the Talison Indemnified Parties) against any loss suffered or incurred by reason of any breach of any of the Bidder Warranties.

 

13.4                                        Representations and warranties by Talison

 

Talison represents and warrants to Bidder (on its own behalf and separately as trustee for each of the Bidder Indemnified Parties):

 

(a)                                                  on each date from the date of this agreement until (and including) the Second Court Date:

 

(i)                                                     it is a company properly incorporated and validly existing under the laws of its place of incorporation;

 

(ii)                                                  the execution and delivery by Talison of the Transaction Documents to which Talison is party has been properly authorised by all necessary corporate action and Talison has full corporate power and lawful authority to execute and deliver such Transaction Documents and to perform or cause to be performed its obligations under such Transaction Documents;

 

(iii)                                               the Transaction Documents to which Talison is party constitute legal, valid and binding obligations on it and do not conflict with or result in a breach of or default under:

 

A.                                                    the constitution or equivalent constituent documents of Talison or any of its Subsidiaries; or

 

37

 

B.                                                    any writ, order or injunction, judgment, law, rule or regulation to which Talison or any of its Subsidiaries is party, or by which Talison or any of its Subsidiaries is bound;  and

 

(iv)                                              other than as expressly contemplated by clause 3, no shareholder or Regulatory Authority approvals are required to be obtained by the Talison Group in order for Talison to execute and perform its obligations under the Transaction Documents to which it is a party;

 

(b)                                                  that as at the date of this agreement, there are 112,446,801 Talison Shares on issue, 6,382,536 Talison Options having the exercise prices set out in Schedule 2 (Current Talison Options) on issue and 246,878 Talison Warrants (Current Talison Warrants) on issue and Talison has not issued (and is not required to issue) any other securities, instruments or rights which are still outstanding (or may become outstanding) and which may convert into Talison securities other than in connection with the satisfaction of Current Talison Options or Current Talison Warrants;

 

(c)                                                   on the First Court Date and the Second Court Date:

 

(i)                                                     the Talison Information has been prepared and included in the Explanatory Memorandum in good faith;

 

(ii)                                                  the Talison Information in the Explanatory Memorandum does not contain a statement which is misleading or deceptive in any material respect and does not contain any material omission;

 

(iii)                                               the Talison Information complies in all material respects with relevant laws (including the Corporations Act, relevant Regulatory Guides and Canadian Securities Laws); and

 

(iv)                                              Talison has complied in all material respects with its obligations under clause 4.1(q);

 

(d)                                                  on the date of this agreement, the First Court Date, the Scheme Meeting and the Second Court Date:

 

(i)                                                     following the making by Talison of an announcement to the public pursuant to clause 8.3 and assuming the filing of a material change report within 10 days of this agreement, Talison has complied in all material respects with its disclosure obligations under Canadian Securities Laws;

 

(ii)                                                  all documents filed by Talison with SEDAR are complete and accurate and not misleading in any material respect and no amendments have been made to any agreements filed with SEDAR other than as disclosed in the Due Diligence Materials;

 

(iii)                                               Talison has not intentionally withheld from Bidder any information in relation to the Talison Group or its assets which Talison knows is material to the value of Talison; and

 

(iv)                                              the Due Diligence Materials have been provided to Bidder in good faith and are accurate in all material respects,

 

(e)                                                   in the period between the date of this agreement and the Second Court Date, no member of the Talison Group:

 

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(i)                                                     has incurred any indebtedness under any bank facility or other arrangement providing financial accommodation of any description other than under existing facilities in place at the date of this agreement or leasing of cars or equipment in the ordinary course of the business; and

 

(ii)                                                  other than as a consequence of the Transaction, no event has occurred which would entitle any counterparties to any Talison bank facility to require the repayment of any borrowings of the Talison Group which are repayable on demand or require any borrowings of the Talison Group to be repaid before their due date for any reason;

 

(f)                                                    on the date of this agreement, Talison’s draft management accounts for the 12 months ended 30 June 2012 in the form disclosed to Bidder prior to the date of this agreement are materially accurate and not misleading in any material respect and have been prepared in accordance with AIFRS;

 

(g)                                                   on the date of this agreement, the Trustee:

 

(i)                                                     is the registered holder of 4,299,367 Talison Shares (LTIP Shares)  and holds all of the LTIP Shares as trustee of the LTIP Trust and on and subject to the terms of the Trust Deed;

 

(ii)                                                  will not, at any time prior to implementation of the Scheme:

 

A.                                                    in any way deal or attempt or purport to deal in or with any Trust Shares except for dealings involving the transfer of Trust Shares pursuant to clause 5.1 of the Trust Deed; or

 

B.                                                    directly or indirectly acquire, apply or subscribe for or agree to acquire, apply or subscribe for any Talison Shares;

 

(h)                                                  no amendments to the Trust Deed will be made or agreed at any time prior to the Implementation Date;

 

(i)                                                      to the best of Talison’s knowledge, as at the date of this agreement and each date up to the Implementation Date, no member of the Talison Group or any of their Officers or agents have directly or indirectly taken any action that would violate, or cause the Bidder to violate, the United States Foreign Corrupt Practices Act of 1977 (FCPA), if applicable, or any other anti-corruption or anti-bribery law or regulations applicable to them (collectively with the FCPA, the Anti-corruption Laws) and there has been no investigation or request for information from a Talison Group member by any Regulatory Authority in relation to Anti-corruption Laws; and

 

(j)                                                     to the best of Talison’s knowledge, as at the date of this agreement and each date up to the Implementation Date, no member of the Talison Group or any of their Officers or agents have directly taken any action that would make the Talison Group or any of their Representatives subject to any sanctions administered by the Office of Foreign Assets Control of the United States Department of the Treasury (OFAC) and there has been no investigation or request for information from a Talison Group member by OFAC.

 

13.5                                        Qualification of Talison Warranties

 

The Talison Warranties and the indemnity under clause 13.6, are qualified and Talison shall not be in breach of a Talison Warranty to the extent that the fact, matter, circumstance or act giving rise to the breach of a Talison Warranty:

 

39

 

(a)                                                  has been fairly disclosed in the Due Diligence Material or Talison’s public filings with SEDAR regarding the Talison Group prior to entry into this agreement;

 

(b)                                                  was required to be done by Talison under the Transaction Documents; or

 

(c)                                                   was approved by Bidder in writing (prior to the fact, matter, circumstance or act occurring).

 

13.6                                        Talison indemnity

 

(a)                                                  Talison acknowledges that in entering into this agreement Bidder and the Bidder Indemnified Parties have relied on the Talison Warranties.

 

(b)                                                  Subject to clause 10.5, Talison indemnifies Bidder (on its own behalf and separately as trustee for each of the Bidder Indemnified Parties) against any loss suffered or incurred by reason of any breach of any of the Talison Warranties.

 

13.7                                        Notifications

 

Each party will promptly advise the other in writing if it becomes aware of any fact, matter or circumstance which constitutes or may constitute a breach of any of the representations or warranties given by it under this clause 13.

 

13.8                                        Status of representations and warranties

 

Each representation and warranty in this clause 13:

 

(a)                                                  is severable;

 

(b)                                                  subject to clause 13.8(c), will survive the termination of this agreement;

 

(c)                                                   will expire and be terminated on the Implementation Date; and

 

(d)                                                  is given with the intent that liability thereunder will not be confined to breaches which are discovered prior to the date of termination of this agreement.

 

13.9                                        Status and enforcement of indemnities

 

(a)                                                  Each indemnity in this agreement is a continuing obligation, separate and independent from the other obligations of the parties, and survives termination, completion or expiration of this agreement.

 

(b)                                                  It is not necessary for a party to incur expense or to make any payment before enforcing a right of indemnity conferred by this agreement.

 

13.10                                 Acknowledgements

 

Each party acknowledges that, subject only to the rights which that party has under clause 10 or clause 11 (as appropriate), any breach of any Talison Warranty or any Bidder Warranty (as appropriate) will only give that party a right to terminate this agreement in accordance with clause 15.2 or clause 15.3 (as appropriate) and will not give rise to any other right to make a claim, demand or cause of action against the other party in respect of a breach of a Talison Warranty or a Bidder Warranty (as appropriate) for damages or loss under the law of contract, tort or otherwise and that party unconditionally and irrevocably waives any right which it may have otherwise had to make such claim, demand or cause of action.

 

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14.                Confidentiality and communications

 

14.1             Confidentiality Deed

 

(a)                 Each party acknowledges and agrees that it continues to be bound by the Confidentiality Deed after the date of this agreement.

 

(b)                 The parties acknowledge and agree that the terms of this agreement will prevail over the terms of the Confidentiality Deed to the extent of any inconsistency.

 

14.2             Survival of obligations

 

The rights and obligations of the parties under the Confidentiality Deed survive termination of this agreement.

 

14.3             Disclosure on termination of agreement

 

The parties agree that, if this agreement is terminated under clause 15, any party may disclose:

 

(a)                 the fact that this agreement has been terminated, where such disclosure is required by the relevant listing rules or is in the reasonable opinion of that party required to ensure that the market in its securities is properly informed; and

 

(b)                 the fact that this agreement has been terminated to ASIC.

 

14.4             Required disclosure

 

Nothing in this agreement or the Confidentiality Deed prevents Bidder from making a public announcement in relation to the Scheme and/or Option Scheme if disclosure of that information is required to be made by law or the rules of any Regulatory Authority provided that the Bidder will use its best endeavours (to the extent permitted by law) to provide a draft of any announcement to Talison prior to its release.

 

15.                Termination

 

15.1             Limited termination events

 

This agreement may only be terminated by either party in the circumstances contemplated by clauses 15.2 and 15.3, or if the parties agree in writing to terminate this agreement.

 

15.2             Termination by Bidder

 

Bidder may terminate this agreement at any time before 8.00 am on the Second Court Date:

 

(a)                 in accordance with clause 3.7; or

 

(b)                 by notice in writing to Talison if:

 

(i)                  Talison is in material breach of any clause of this agreement (other than clause 8 or the Talison Warranties), provided that Bidder is only entitled to terminate if it has given notice to Talison setting out the relevant circumstances and stating an intention to terminate and the relevant circumstances have continued to exist 5 Business Days (or any shorter period ending at 5.00 pm on the day one Business Day before the Second Court Date) from the time such notice is received by Talison;

 

(ii)                 Talison is in breach of clause 8;

 

41

 

(iii)                                               there is a material breach of any of the Talison Warranties;

 

(iv)                                              a Prescribed Occurrence occurs;

 

(v)                                                 any Talison Director publicly changes or withdraws their Recommendation or Voting Intention or publicly recommends a Competing Proposal, for any reason, whether or not permitted to do so under this agreement; or

 

(vi)                                              if the Scheme has not become Effective by the End Date, or becomes incapable, for any reason of becoming Effective by the End Date.

 

15.3             Termination by Talison

 

Talison may terminate this agreement:

 

(a)                 at any time before 8.00 am on the Second Court Date:

 

(i)                  in accordance with clause 3.7; or

 

(ii)                 by notice in writing to Bidder if:

 

A.                                                    Bidder is in material breach of any clause of this agreement (other than the Bidder Warranties) provided that Talison is only entitled to terminate if it has given notice to Bidder setting out the relevant circumstances and stating an intention to terminate and the relevant circumstances have continued to exist 5 Business Days (or any shorter period ending at 5.00 pm on the day one Business Day before the Second Court Date) from the time such notice is received by Bidder; or

 

B.                                                    if a majority of the Talison Board publicly changes or withdraws their Recommendation or Voting Intention or publicly recommends a Superior Proposal, but only where such change, withdrawal or recommendation occurs or is made in accordance with the rights and obligations of Talison and the Talison Board pursuant to the terms of this agreement; or

 

C.                                                    there is a material breach of any of the Bidder Warranties.

 

(b)                 at any time if there is a material breach of the Bidder Warranty in clause 13.1(c)(v) and 13.1(c)(vi).

 

(c)                 if the Scheme has not become Effective by the End Date, or becomes incapable, for any reason of becoming Effective by the End Date

 

15.4             Effect of termination

 

If this agreement is terminated:

 

(a)                 the provisions of this agreement shall cease to have effect except for the provisions of clauses 1, 10, 11, 12.1, 13.10, 14, 15.4, 15.5 and 16 to 20 (inclusive) which will survive termination; and

 

(b)                 each party retains the rights it has against the others in respect of any breach of this agreement occurring before termination.

 

42

 

15.5             Remedies

 

(a)                 The parties acknowledge that damages may not be a sufficient remedy for breach of this agreement.  Specific performance, injunctive relief or any other remedies which would otherwise be available in equity or law are available as a remedy for a breach or threatened breach of this agreement by any party, notwithstanding the ability of the other party to terminate this agreement or seek damages for such a breach or threatened breach or to demand payment of a break fee except in relation to any breach or threatened breach of the warranties in clauses 13.1(c)(v) and 13.1(c)(vi).

 

(b)                 Neither party (Restrained Party) will be considered to be in breach of this agreement (including for the purposes of clauses 15.2(b)(i), 15.2(b)(ii) or 15.3(a)(ii)A), and no party may make a claim against the Restrained Party for breach of this agreement, in circumstances where the Restrained Party is prevented by an order of an Australian court from performing an obligation under this agreement.

 

16.                Notices

 

16.1             How notice to be given

 

Each communication (including each notice, consent, approval, request and demand) under or in connection with this agreement:

 

(a)                 may be given by personal service, post or facsimile or email;

 

(b)                 must be in writing;

 

(c)                 must be addressed as follows (or as otherwise notified by that party to each other party from time to time):

 

	
(i)
    	
 
    	
if   to Talison:
    	
Talison   Lithium Limited
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Address:
    	
Level 4, 37 St Georges Terrace
    
	
 
    	
 
    	
 
    	
Perth, Western Australia 6000
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Fax number:
    	
+61 8 9202 1144;
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Attention:
    	
Chief Executive Officer
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Email:
    	
Peter.Oliver@talisonlithium.com
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
with a copy in each case to:
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Email:
    	
hlewis@claytonutz.com
    
	
 
    	
 
    	
 
    	
 
    
	
(ii)
    	
 
    	
if   to Bidder:
    	
Rockwood   Holdings, Inc.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Address:
    	
100 Overlook Center
    
	
 
    	
 
    	
 
    	
Princeton, New   Jersey, 08540
    
	
 
    	
 
    	
 
    	
United States of   America
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Email:
    	
triordan@roscksp.com;   rzatta@rocksp.com;
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Attention:
    	
Attention: Thomas   J. Riordan
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
with a copy in each case to:
    

 

43

 

	
 
    	
 
    	
Email:
    	
pcook@gtlaw.com.au; dclee@gtlaw.com.au
    

 

(d)                 (in the case of personal service, post or facsimile) must be signed by the party making it or (on that party’s behalf) by the solicitor for, or any attorney, director, secretary or authorised agent of, that party; and

 

(e)                 (in the case of email) must be in pdf or other format that is a scanned image of the original of the communication, including a handwritten signature, and be attached to an email that states that the attachment is a communication under this agreement; and

 

(f)                 must be delivered by hand or posted by prepaid post to the address, sent by fax to the number, or sent by email to the email address, of the addressee, in accordance with this clause 16.1.

 

16.2             When notice taken to be received

 

Each communication (including each notice, consent, approval, request and demand) under or in connection with this agreement is taken to be received by the addressee:

 

(a)                 (in the case of prepaid post sent to an address in the same country) on the third day after the date of posting;

 

(b)                 (in the case of prepaid post sent to an address in another country) on the fifth day after the date of posting by airmail;

 

(c)                 (in the case of fax) at the time in the place to which it is sent equivalent to the time shown on the transmission confirmation report produced by the fax machine from which it was sent; and

 

(d)                 (in the case of delivery by hand) on delivery; and

 

(e)                 (in the case of email) unless the party sending the email knows or reasonably ought to suspect that the email and the attached communication were not delivered to the addressee’s domain specified in the email address notified for the purposes of clause 16.1, 24 hours after the email was sent,

 

but if the communication would otherwise be taken to be received on a day that is not a working day or after 5.00 pm, it is taken to be received at 9.00 am on the next working day (“working day” meaning a day that is not a Saturday, Sunday or public holiday and on which banks are open for business generally, in the place to which the communication is posted, sent or delivered).

 

17.                GST

 

17.1             Interpretation

 

(a)                 Except where the context suggests otherwise, and subject to clause 17.1(b), terms used in this clause have the meanings given to those terms by the A New Tax System (Goods and Services Tax) Act 1999 (as amended from time to time).

 

(b)                 “Input tax credit” has the meaning given by the A New Tax System (Goods and Services Tax) Act 1999 and a reference to an input tax credit entitlement of an entity includes an input tax credit for an acquisition made by that entity but to which another member of the same GST group is entitled.

 

44

 

(c)                 Any part of a supply that is treated as a separate supply for GST purposes (including attributing GST payable to tax periods) will be treated as a separate supply for the purposes of this clause.

 

(d)                 Any consideration for a supply that is specified to be inclusive of GST must not be taken into account in calculating the GST payable in relation to that supply for the purpose of this clause.

 

17.2             Reimbursements and similar payments

 

Any payment or reimbursement required to be made under this agreement that is calculated by reference to a cost, expense, or other amount paid or incurred will be limited to the total cost, expense or amount less the amount of any input tax credit to which an entity is entitled for the acquisition to which the cost, expense or amount relates.

 

17.3             GST payable

 

(a)                 If GST is payable in relation to a taxable supply made under or in connection with this agreement then any party (Recipient) that is required to provide consideration to another party (Supplier) for that supply must, subject to clause 17.1(d), pay an additional amount to the Supplier equal to the amount of that GST at the same times as other consideration is to be provided for that supply.

 

(b)                 No payment of any amount pursuant to clause 17.3(a) is required until the Supplier has provided a valid tax invoice to the Recipient.

 

(c)                 Where additional amounts are payable between parties to this agreement pursuant to clause 17.3(a), amounts so payable, to the extent they are equivalent in amount, shall be set off against each other as if paid and each party shall be obliged only to provide the tax invoice referred to in clause 17.3(b) no later than the time at which any consideration is to be first provided for that supply.

 

(d)                 If the GST payable in relation to a supply made under or in connection with this agreement varies from the additional amount paid by the Recipient under clause 17.3(a) then the Supplier must promptly issue an adjustment note to the Recipient and will provide a corresponding refund or credit to, or will be entitled to receive the amount of that variation from, the Recipient.  Any payment, credit or refund under this paragraph is deemed to be a payment, credit or refund of the additional amount payable under clause 17.3(a).

 

18.                Entire agreement

 

The Transaction Documents and the Confidentiality Deed constitute the entire agreement between the parties in relation to their subject matter and supersede all previous agreements and understandings between the parties in relation to their subject matter.

 

19.                General

 

19.1             No representation or reliance

 

(a)                 Each party acknowledges that no party (nor any person acting on its behalf) has made any representation or other inducement to it to enter into this agreement, except for representations or inducements expressly set out in this agreement and (to the maximum extent permitted by law) all other representations, warranties and conditions implied by statute or otherwise in relation to any matter relating to this

 

45

 

agreement, the circumstances surrounding the parties’ entry into it and the transactions contemplated by it are expressly excluded.

 

(b)                 Each party acknowledges and confirms that it does not enter into this agreement in reliance on any representation or other inducement by or on behalf of any other party, except for any representation or inducement expressly set out in this agreement.

 

19.2                                        Amendments

 

This agreement may only be varied by a document signed by or on behalf of each party.

 

19.3                                        Assignment

 

A party may not assign, novate or otherwise transfer any of its rights or obligations under this agreement without the prior written consent of the other party.

 

19.4                                        Consents

 

Unless this agreement expressly provides otherwise, a consent under this agreement may be given or withheld in the absolute discretion of the party entitled to give the consent and to be effective must be given in writing.

 

19.5                                        Costs

 

Except as otherwise provided in this agreement, each party must pay its own costs and expenses in connection with negotiating, preparing, executing and performing each Transaction Document.

 

19.6                                        Counterparts

 

This agreement may be executed in any number of counterparts and by the parties on separate counterparts.  Each counterpart constitutes an original of this agreement, and all together constitute one agreement.

 

19.7                                        Further acts and documents

 

Each party must promptly do all further acts and execute and deliver all further documents (in form and content reasonably satisfactory to that party) required by law or reasonably requested by another party to give effect to this agreement.

 

19.8                                       No merger

 

A party’s rights and obligations do not merge on completion of any transaction under this agreement.

 

19.9                                        Severance

 

If any provision or part of a provision of this agreement is held or found to be void, invalid or otherwise unenforceable (whether in respect of a particular party or generally), it will be deemed to be severed to the extent that it is void or to the extent of violability, invalidity or unenforceability, but the remainder of that provision will remain in full force and effect.

 

19.10                                 Waivers

 

Without limiting any other provision of this agreement, the parties agree that:

 

46

 

(a)                 failure to exercise or enforce, or a delay in exercising or enforcing, or the partial exercise or enforcement of, a right, power or remedy provided by law or under this agreement by a party does not preclude, or operate as a waiver of, the exercise or enforcement, or further exercise or enforcement, of that or any other right, power or remedy provided by law or under this agreement;

 

(b)                 a waiver given by a party under this agreement is only effective and binding on that party if it is given or confirmed in writing by that party; and

 

(c)                 no waiver of a breach of a term of this agreement operates as a waiver of another breach of that term or of a breach of any other term of this agreement.

 

20.                                               Governing law, jurisdiction and service of process

 

20.1                                        Governing law

 

This agreement is governed by the law applying in Western Australia.

 

20.2                                        Jurisdiction

 

Each party irrevocably:

 

(a)                 submits to the non exclusive jurisdiction of the courts of Western Australia, Commonwealth courts having jurisdiction in that state and the courts competent to determine appeals from those courts, with respect to any proceedings that may be brought at any time relating to this agreement; and

 

(b)                 waives any objection it may now or in the future have to the venue of any proceedings, and any claim it may now or in the future have that any proceedings have been brought in an inconvenient forum, if that venue falls within clause 20.2(a).

 

47

 

Schedule 1

Timetable

 

	
Event
    	
 
    	
Date
    
	
First   Court Date
    	
 
    	
September 2012
    
	
Scheme   Meeting and Option Meeting
    	
 
    	
October 2012
    
	
Second   Court Date
    	
 
    	
November 2012
    
	
Effective   Date
    	
 
    	
November 2012
    
	
Implementation   Date
    	
 
    	
November 2012
    

 

48

 

Schedule 2

Talison Options

 

	
Exercise Price
    	
 
    	
Number of Talison Options
    	
 
    
	
C$
    	
0.57
    	
 
    	
124,555
    	
 
    
	
C$
    	
1.69
    	
 
    	
320,283
    	
 
    
	
C$
    	
1.86
    	
 
    	
9,889
    	
 
    
	
C$
    	
3.50
    	
 
    	
5,404,809
    	
 
    
	
C$
    	
3.65
    	
 
    	
239,000
    	
 
    
	
C$
    	
3.79
    	
 
    	
50,000
    	
 
    
	
C$
    	
3.82
    	
 
    	
70,000
    	
 
    
	
C$
    	
4.13
    	
 
    	
147,000
    	
 
    
	
C$
    	
4.60
    	
 
    	
17,000
    	
 
    
	
Total
    	
 
    	
6,382,536
    	
 
    

 

49

 

Executed as an agreement.

 

 

	
Executed by
    Talison Lithium Limited
   ACN 140 122 078 in accordance with section 127 of the   Corporations Act 2001 (Cth):
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
/s/ Peter Robinson
    	
 
    	
/s/ Peter Oliver
    
	
Signature of director
    	
 
    	
Signature of company secretary/director
    
	
 
    	
 
    	
 
    
	
Peter Charles Robinson
    	
 
    	
Peter Oliver
    
	
Full name of director
    	
 
    	
Full name of director
    

 

 

	
Signed for and on behalf of
    Rockwood Holdings, Inc. by its duly authorised signatory in the presence of:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
/s/ Peter Oliver
    	
 
    	
/s/ Seifi Ghasemi
    
	
Signature of witness
    	
 
    	
Signature of authorised signatory
    
	
 
    	
 
    	
 
    
	
Peter R Oliver
    	
 
    	
Seifi Ghasemi
    
	
Full name of witness
    	
 
    	
Full name of authorised signatory
    

 

 

Annexure A 
 Scheme

 

 

 

Scheme of Arrangement

Pursuant to section 411 of the Corporations Act

 

Talison Lithium Limited

 

Talison

 

The holders of fully paid ordinary shares in 
 Talison Lithium Limited

 

Clayton Utz

Lawyers

Level 27 QV.1  250 St Georges Terrace Perth WA 6000 Australia

GPO Box P1214  Perth WA 6844

T +61 8 9426 8000  F +61 8 9481 3095

 

www.claytonutz.com

 

Our reference 60067/17196/80123998

 

ii

 

	
Contents
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
1.
    	
Definitions   and interpretation
    	
i
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
1.1
    	
Definitions
    	
i
    
	
 
    	
1.2
    	
Interpretation
    	
iii
    
	
 
    	
1.3
    	
Business Day
    	
iv
    
	
 
    	
 
    	
 
    	
 
    
	
2.
    	
Conditions
    	
iv
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
2.1
    	
Conditions to this Scheme
    	
iv
    
	
 
    	
2.2
    	
Certificates in relation to   Conditions
    	
iv
    
	
 
    	
2.3
    	
Termination of Scheme   Implementation Agreement
    	
v
    
	
 
    	
 
    	
 
    	
 
    
	
3.
    	
Scheme
    	
v
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
3.1
    	
Effective Date of Scheme
    	
v
    
	
 
    	
3.2
    	
End Date
    	
v
    
	
 
    	
 
    	
 
    	
 
    
	
4.
    	
Implementation   of Scheme
    	
v
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
4.1
    	
Lodgement
    	
v
    
	
 
    	
4.2
    	
Transfer of Scheme Shares
    	
v
    
	
 
    	
4.3
    	
Provision of Scheme   Consideration
    	
vi
    
	
 
    	
 
    	
 
    	
 
    
	
5.
    	
Scheme   Consideration
    	
vi
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
5.1
    	
Satisfaction of payment   obligation
    	
vi
    
	
 
    	
5.2
    	
Payment to Scheme   Shareholders
    	
vi
    
	
 
    	
5.3
    	
Joint holders
    	
vii
    
	
 
    	
5.4
    	
Unclaimed moneys
    	
vii
    
	
 
    	
 
    	
 
    	
 
    
	
6.
    	
Dealings in   Talison Shares
    	
vii
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
6.1
    	
Determination of Scheme   Shareholders
    	
vii
    
	
 
    	
6.2
    	
Talison Share Register
    	
vii
    
	
 
    	
6.3
    	
Information to be made   available to Bidder
    	
vii
    
	
 
    	
6.4
    	
Effect of share certificates   and holding statements
    	
viii
    
	
 
    	
6.5
    	
No disposals after Record   Date
    	
viii
    
	
 
    	
6.6
    	
Listing and trading of   Talison Shares
    	
viii
    
	
 
    	
 
    	
 
    	
 
    
	
7.
    	
General   provisions
    	
viii
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
7.1
    	
Effect of Scheme
    	
viii
    
	
 
    	
7.2
    	
Appointment of agent and   attorney
    	
viii
    
	
 
    	
7.3
    	
Enforcement of Deed Poll
    	
viii
    
	
 
    	
7.4
    	
Scheme Shareholders’   agreement and consent
    	
viii
    
	
 
    	
7.5
    	
Transfer with clear title   and warranty by Scheme Shareholders
    	
ix
    
	
 
    	
7.6
    	
Title to Scheme Shares
    	
ix
    
	
 
    	
7.7
    	
Appointment of BidCo as sole   proxy
    	
ix
    
	
 
    	
7.8
    	
Alterations or conditions
    	
x
    
	
 
    	
7.9
    	
Notices
    	
x
    
	
 
    	
7.10
    	
Further assurances
    	
x
    
	
 
    	
7.11
    	
Stamp duty
    	
x
    
	
 
    	
7.12
    	
Fees and charges
    	
x
    
	
 
    	
7.13
    	
Governing law
    	
x
    
	
 
    	
7.14
    	
Limitation of liability
    	
x
    

 

i

 

Scheme of Arrangement made under section 411 of the Corporations Act 2001 (Commonwealth)

 

Parties                              Talison Lithium Limited ACN 140 122 078  of Level 4, 37 St Georges Terrace, Perth, Western Australia (Talison)

 

Each Scheme Shareholder

 

Recitals

 

C.                 Talison is a public company incorporated in the state of Western Australia and is listed on the TSX.

 

D.                 Rockwood Holdings, Inc. (Bidder) is a corporation registered in the United States of America and is listed on the NYSE.

 

E.                  [·] (BidCo) is a [·].

 

F.                  Talison and Bidder have entered into a Scheme Implementation Agreement dated 23 August 2012 (Scheme Implementation Agreement) pursuant to which, amongst other things, Talison has agreed to propose this Scheme to Talison Shareholders, and each of Talison and Bidder has agreed to take certain steps to give effect to this Scheme.

 

G.                 If this Scheme becomes Effective, then:

 

(c)                 all of the Scheme Shares will be transferred to BidCo and the Scheme Consideration will be provided to the Scheme Shareholders in accordance with the provisions of this Scheme; and

 

(d)                 Talison will enter the name and address of BidCo in the Talison Share Register as the holder of all of the Scheme Shares.

 

H.                 Bidder and BidCo have entered into the Deed Poll for the purpose of, in the case of BidCo, covenanting in favour of Scheme Shareholders to perform the obligations contemplated of it under this Scheme, and, in the case of Bidder, procuring that BidCo performs the obligations contemplated of it under this Scheme.

 

1.                  Definitions and interpretation

 

1.1                Definitions

 

In this Scheme, unless the contrary intention appears or the context requires otherwise:

 

ASIC means the Australian Securities and Investments Commission.

 

BidCo has the meaning given in Recital C.

 

Bidder has the meaning given in Recital B.

 

Business Day means a day that is not a Saturday, Sunday or public holiday and on which banks are open for business generally in Perth, Western Australia and Princeton, New Jersey.

 

Condition means a condition to this Scheme set out in clause 2.1.

 

Corporations Act means the Corporations Act  2001 (Cth).

 

 

Court means the Federal Court of Australia or such other court of competent jurisdiction as Talison and Bidder agree in writing.

 

Deed Poll means the deed poll dated [·] executed by Bidder and BidCo in favour of the Scheme Shareholders.

 

Effective means the coming into effect, pursuant to section 411(10) of the Corporations Act, of the order of the Court made under section 411(4)(b) of the Corporations Act in relation to this Scheme.

 

Effective Date means the date on which this Scheme becomes Effective.

 

Encumbrance means a mortgage, charge, pledge, lien, encumbrance, security interest, title retention, preferential right, trust arrangement, contractual right of set-off, or any other security agreement or arrangement in favour of any person, whether registered or unregistered, including any Security Interest.

 

End Date means 31 January 2013 or such later date as is agreed by Talison and Bidder in writing.

 

Implementation Date means the date which is 3 Business Days after the Record Date, or such other date as Talison and Bidder agree in writing.

 

NYSE means the New York Stock Exchange.

 

Option Scheme means the scheme of arrangement under Part 5.1 of the Corporations Act between Talison and the holders of options to subscribe for fully paid ordinary shares in Talison, as contemplated in the Scheme Implementation Agreement.

 

Record Date means:

 

(a)                 if no date is set pursuant to clause 6.1(b) of the Scheme Implementation Agreement, 5.00 pm (Perth time) on the date which is 5 Business Days after the Effective Date;

 

(b)                 if a time and date is set pursuant to clause 6.1(b) of the Scheme Implementation Agreement, that time and date; or

 

(c)                 in each case, such other date agreed in writing between Talison and Bidder.

 

Registered Address means, in relation to a Talison Shareholder, the address of that Talison Shareholder shown in the Talison Share Register as at the Record Date.

 

Related Body Corporate has the meaning given in section 9 of the Corporations Act.

 

Scheme means the scheme of arrangement under Part 5.1 of the Corporations Act between Talison and Scheme Shareholders as set out in this document, subject to any alterations or conditions made or required by the Court pursuant to section 411(6) of the Corporations Act and approved in writing by Bidder and Talison.

 

Scheme Consideration means the consideration to be provided to Scheme Shareholders under the terms of this Scheme, being C$6.50 cash for each Scheme Share.

 

Scheme Implementation Agreement has the meaning given in Recital D.

 

Scheme Meeting means the meeting of Talison Shareholders ordered by the Court in relation to this Scheme convened under section 411(1) of the Corporations Act.

 

Scheme Share means each Talison Share on issue as at the Record Date.

 

 

Scheme Shareholder means each person registered in the Talison Share Register as the holder of Scheme Shares as at the Record Date.

 

Scheme Transfer means one or more proper instruments of transfer in respect of the Scheme Shares for the purposes of section 1071B of the Corporations Act, which may be or include a master transfer of all or part of the Scheme Shares.

 

Second Court Date means the first day of hearing of an application made to the Court for an order pursuant to section 411(4)(b) of the Corporations Act approving this Scheme or, if the hearing of such application is adjourned for any reason, means the first day of the adjourned hearing.

 

Security Interest has the meaning given in section 12 of the Personal Property Securities Act 2009 (Cth).

 

Talison Share means a fully paid ordinary share in the capital of Talison.

 

Talison Share Register means the register of members of Talison maintained by or on behalf of Talison in accordance with section 168(1) of the Corporations Act.

 

Talison Shareholder means a person who is registered in the Talison Share Register as a holder of Talison Shares.

 

TSX means the Toronto Stock Exchange.

 

1.2                Interpretation

 

In this Scheme headings are for convenience only and do not affect interpretation and, unless the contrary intention appears:

 

(a)                 a word importing the singular includes the plural and vice versa, and a word of any gender includes the corresponding words of any other gender;

 

(b)                 the word including or any other form of that word is not a word of limitation;

 

(c)                 if a word or phrase is given a defined meaning, any other part of speech or grammatical form of that word or phrase has a corresponding meaning;

 

(d)                 a reference to a person includes an individual, the estate of an individual, a corporation, an authority, an association or parties in a joint venture, a partnership and a trust;

 

(e)                 a reference to a party includes that party’s executors, administrators, successors and permitted assigns, including persons taking by way of novation and, in the case of a trustee, includes any substituted or additional trustee;

 

(f)                 a reference to a document (including this agreement) is to that document as varied, novated, ratified or replaced from time to time;

 

(g)                 a reference to a party, clause, schedule, exhibit, attachment, or annexure is a reference to a party, clause, schedule, exhibit, attachment, or annexure to or of this agreement, and a reference to this agreement includes all schedules, exhibits, attachments, and annexures to it;

 

(h)                 a reference to an agency or body if that agency or body ceases to exist or is reconstituted, renamed or replaced or has its powers or function removed (obsolete body), means the agency or body which performs most closely the functions of the obsolete body;

 

 

(i)                  a reference to a statute includes any regulations or other instruments made under it (delegated legislation) and a reference to a statute or delegated legislation or a provision of either includes consolidations, amendments, re-enactments and replacements;

 

(j)                  a reference to C$ or Canadian  dollar is to Canadian currency;

 

(k)                 if a word or phrase is not given a defined meaning in clause 1.1 but is defined in or for the purposes of the Corporations Act, it has the same meaning when used in this agreement;

 

(l)                  a reference to a date or time is to that date or time in Perth, Western Australia; and

 

(m)               this Scheme must not be construed adversely to a party just because that party prepared it or caused it to be prepared.

 

1.3                Business Day

 

Except where otherwise expressly provided, where under this Scheme the day on which any act, matter or thing is to be done is a day other than a Business Day, such act, matter or thing shall be done on the immediately following Business Day.

 

2.                  Conditions

 

2.1                Conditions to this Scheme

 

This Scheme is conditional upon, and will have no force or effect until, the satisfaction of each of the following conditions, and the provisions of clauses 3, 4 and 5 will not come into effect unless and until each of these conditions has been satisfied:

 

(a)                 as at 8.00 am on the Second Court Date each of the conditions set out in clause 3.1 of the Scheme Implementation Agreement (other than the conditions relating to the approval of the Court set out in clauses 3.1(f) and 3.1(g) of the Scheme Implementation Agreement) have been satisfied or waived in accordance with the terms of the Scheme Implementation Agreement;

 

(b)                 as at 8.00 am on the Second Court Date neither the Scheme Implementation Agreement nor the Deed Poll has been terminated;

 

(c)                 the Court approves this Scheme and the Option Scheme under section 411(4)(b) of the Corporations Act with or without such alterations as are acceptable to Bidder and Talison;

 

(d)                 such other conditions made or required by the Court under section 411(6) of the Corporations Act in relation to this Scheme as are acceptable to Bidder and Talison have been satisfied; and

 

(e)                 the coming into effect, pursuant to section 411(10) of the Corporations Act, of the orders of the Court made under section 411(4)(b) of the Corporations Act (and, if applicable, section 411(6) of the Corporations Act) in relation to this Scheme.

 

2.2                Certificates in relation to Conditions

 

(a)                 At or before the Court hearing on the Second Court Date, Talison and Bidder will each provide to the Court a certificate (or such other evidence as the Court may request) confirming (in respect of matters within their knowledge) whether or not 

 

 

the Conditions set out in clauses 2.1(a) and 2.1(b) of this Scheme have been satisfied.

 

(b)                 The certificates given by Talison and Bidder constitute conclusive evidence that the relevant Conditions have been satisfied.

 

2.3                Termination of Scheme Implementation Agreement

 

Without limiting any rights under the Scheme Implementation Agreement, in the event that the Scheme Implementation Agreement is terminated in accordance with its terms before 8.00 am on the Second Court Date, Talison, Bidder and BidCo are each released from:

 

(a)                 any further obligation to take steps to implement this Scheme; and

 

(b)                 any liability with respect to this Scheme.

 

3.                  Scheme

 

3.1                Effective Date of Scheme

 

Subject to clause 3.2, this Scheme will take effect on and from the Effective Date.

 

3.2                End Date

 

This Scheme will lapse and be of no further force or effect if the Effective Date has not occurred on or before the End Date.

 

4.                  Implementation of Scheme

 

4.1                Lodgement

 

If the Conditions (other than the Condition in clause 2.1(e)) are satisfied, Talison must lodge with ASIC in accordance with section 411(10) of the Corporations Act an office copy of the Court orders approving this Scheme as soon as practicable after such office copy is received, and in any event by no later than 5.00 pm on the Business Day after the date on which the Court makes those orders (or such other Business Day as Talison and Bidder agree in writing).

 

4.2                Transfer of Scheme Shares

 

On the Implementation Date:

 

(a)                 subject to the provision of the Scheme Consideration in the manner contemplated by clause 5.1, all of the Scheme Shares will, together with all rights and entitlements attaching to the Scheme Shares, be transferred to BidCo without the need for any further act by any Scheme Shareholder (other than acts performed by Talison as attorney or agent for Scheme Shareholders under this Scheme), by:

 

(i)                  Talison delivering to BidCo a duly completed and executed Scheme Transfer (executed by Talison (as transferor) as the attorney and agent of each Scheme Shareholder under clause 7.2); and

 

(ii)                 BidCo duly executing the Scheme Transfer (as transferee) and delivering it to Talison for registration; and

 

(b)                 as soon as possible after receipt of the Scheme Transfer under clause 4.2(a)(ii), Talison must enter, or procure the entry of, the name and address of BidCo in the Talison Share Register as the holder of all of the Scheme Shares.

 

 

4.3                Provision of Scheme Consideration

 

BidCo will provide (or procure the provision of) the Scheme Consideration in accordance with clause 5.1.

 

5.                  Scheme Consideration

 

5.1                Satisfaction of payment obligation

 

BidCo will, before 12.00 noon on the Implementation Date, deposit in cleared funds the aggregate Scheme Consideration payable to all Scheme Shareholders into a Canadian dollar denominated trust account nominated by Talison (the details of which must be notified by Talison to BidCo not less than 5 Business Days prior to the Implementation Date), such amount to be held on trust by Talison or a depositary appointed by Talison for the Scheme Shareholders (except that any interest on the amount will be for the account of BidCo).

 

5.2                Payment to Scheme Shareholders

 

(a)                 Subject to clauses 5.1 and 5.3, Talison will pay or procure the payment of the Scheme Consideration to each Scheme Shareholder on the Implementation Date by:

 

(i)                  delivery or effecting the delivery to each Scheme Shareholder by pre-paid airmail post at their Registered Address a pre printed cheque drawn on a bank considered appropriate by Talison in the name of that Scheme Shareholder for the Scheme Consideration payable to that Scheme Shareholder in accordance with this Scheme; or

 

(ii)                 depositing or procuring the deposit into a bank account with any Australian ADI (as defined in the Corporations Act) or an equivalent financial institution in an overseas jurisdiction notified to Talison by the Scheme Shareholder prior to the Implementation Date the Scheme Consideration payable to that Scheme Shareholder in accordance with this Scheme.

 

(b)                 The cheques sent by Talison, or a depositary appointed by Talison, pursuant to clause 5.2(a) may be drawn, and the deposit made, at the discretion of Talison, in Canadian dollars, in Australian dollars or in the local currency of the country in which the relevant Scheme Shareholder’s Registered Address appears on the Talison Share Register as at the Record Date.

 

(c)                 Talison is authorised to effect any conversion of the Scheme Consideration in such manner as it deems appropriate (acting reasonably) and to deduct any costs, charges or expenses associated with such conversion from the amount paid to the relevant Scheme Shareholder.

 

(d)                 Talison, or a depositary appointed by Talison, must deduct and withhold from any amount payable to any person as a consequence of this Scheme, such amounts as Talison determines, acting reasonably, are required to be deducted and withheld with respect to such payments under any applicable law.

 

(e)                 To the extent that amounts are so withheld, such withheld amounts shall be treated for all purposes under this Scheme as having been paid to the person in respect of which such deduction and withholding was made, provided that such withheld amounts are actually remitted to the appropriate taxing agency.

 

 

5.3                Joint holders

 

In the case of Scheme Shares held in joint names, any cheque required to be paid to Scheme Shareholders will be payable to the joint holders and will be forwarded to the holder whose name appears first in the Talison Share Register as at the Record Date.

 

5.4                Unclaimed moneys

 

In the event that Talison believes that a Scheme Shareholder is not known at the Scheme Shareholder’s Registered Address, Talison may credit the amount payable to the relevant Scheme Shareholder to a separate bank account of Talison to be held on trust by Talison, or a depositary appointed by Talison, for the Scheme Shareholder until the Scheme Shareholder claims the amount or the amount is dealt with in accordance with any applicable unclaimed money legislation (except that any interest accruing on the amount will be for the account of BidCo).  An amount credited to the account is to be treated as having been paid to the Scheme Shareholder when credited to the account.  Talison must maintain records of the amounts paid, the persons who are entitled to the amounts and any transfer of the amounts.

 

6.                  Dealings in Talison Shares

 

6.1                Determination of Scheme Shareholders

 

For the purposes of establishing who are Scheme Shareholders, dealings in Talison Shares will be recognised by Talison provided that:

 

(a)                 in the case of dealings of the type to be effected on the TSX, the transferee is registered in the Talison Share Register as the holder of the relevant Talison Shares at or before the Record Date; and

 

(b)                 in all other cases, registrable transfers or transmission applications in respect of those dealings are received at the place where the Talison Share Register is kept at or before the Record Date,

 

and Talison will not accept for registration, or recognise for the purpose of establishing who are Scheme Shareholders, any transmission application or transfer in respect of Talison Shares received after the Record Date.

 

6.2                Talison Share Register

 

Talison will, until the Scheme Consideration has been deposited into the account nominated by Talison pursuant to clause 5.1 and BidCo has been entered in the Talison Share Register as the holder of all of the Scheme Shares, maintain, or procure the maintenance of, the Talison Share Register in accordance with the provisions of this clause 6 and the Talison Share Register in this form and the terms of this Scheme will solely determine entitlements to the Scheme Consideration.

 

6.3                Information to be made available to Bidder

 

Talison must procure that as soon as practicable following the Record Date (and, in any event, no later than 24 hours thereafter), details of the names, registered addresses and holdings of Talison Shares of every Scheme Shareholder shown in the Talison Share Register as at the Record Date are made available to BidCo in electronic form or such other form as reasonably requested by Bidder prior to the Record Date.

 

 

6.4                                               Effect of share certificates and holding statements

 

As from the time at which the Scheme Consideration is deposited into the account nominated by Talison pursuant to clause 5.1, all share certificates and holding statements for the Scheme Shares will cease to have effect as documents of title, and each entry on the Talison Share Register at that time and date (other than entries in respect of BidCo and its successors in title) will cease to have any effect other than as evidence of entitlement to the Scheme Consideration.

 

6.5                                               No disposals after Record Date

 

If this Scheme becomes Effective, a Scheme Shareholder, and any person claiming through that Scheme Shareholder, must not dispose of or purport or agree to dispose of any Scheme Shares or any interest in them after the Record Date.

 

6.6                                               Listing and trading of Talison Shares

 

(a)                 Application will be made to suspend trading in Talison Shares on the TSX as at the close of trading (Toronto time) on the Effective Date.

 

(b)                 On or before the Implementation Date, Talison will apply to delist the Talison Shares from the TSX, provided that delisting may not occur before implementation of the Scheme.

 

7.                                                      General provisions

 

7.1                                               Effect of Scheme

 

This Scheme binds Talison and all of the Scheme Shareholders (including those who did not attend the Scheme Meeting or who did not vote at that meeting or who voted against this Scheme at that meeting) and, to the extent permitted by law, overrides the constitution of Talison.

 

7.2                                               Appointment of agent and attorney

 

On this Scheme becoming Effective, each Scheme Shareholder, without the need for any further act, is deemed to have irrevocably appointed Talison as its agent and attorney for the purpose of:

 

(a)                 executing any document or form or doing any other act necessary to give effect to the terms of this Scheme including, without limitation, the execution of the Scheme Transfer; and

 

(b)                 enforcing the Deed Poll against Bidder and BidCo,

 

and Talison accepts such appointment.  Talison, as agent and attorney of each Scheme Shareholder, may sub-delegate its functions, authorities or powers under this clause 7.2 to all or any of its directors and officers (jointly, severally, or jointly and severally).

 

7.3                                               Enforcement of Deed Poll

 

Talison undertakes in favour of each Scheme Shareholder that it will enforce the Deed Poll against Bidder and BidCo on behalf of and as agent and attorney for the Scheme Shareholders.

 

7.4                                               Scheme Shareholders’ agreement and consent

 

Each Scheme Shareholder irrevocably:

 

 

(a)                 agrees to the transfer of its Scheme Shares, together with all rights and entitlements attaching to those Scheme Shares, to BidCo in accordance with the terms of this Scheme and agrees to the variation, cancellation or modification of the rights attached to their Scheme Shares constituted by or resulting from this Scheme;

 

(b)                 consents to Talison and BidCo doing all things and executing all deeds, instruments, transfers or other documents as may be necessary, incidental or expedient to the implementation and performance of this Scheme; and

 

(c)                 acknowledges that this Scheme binds all Scheme Shareholders.

 

7.5                                               Transfer with clear title and warranty by Scheme Shareholders

 

(a)                 To the extent permitted by law, the Scheme Shares transferred to BidCo under this Scheme will be transferred free from all mortgages, charges, liens, Encumbrances and interests of third parties of any kind, whether legal or otherwise.

 

(b)                 Each Scheme Shareholder is deemed to have warranted to Talison, in its own right and for the benefit of BidCo, that all their Scheme Shares (including any rights and entitlements attaching to those shares) will, at the date of the transfer of them to BidCo, be fully paid and free from all mortgages, charges, liens, Encumbrances and interests of third parties of any kind, whether legal or otherwise, and restrictions on transfer of any kind, and that they have full power and capacity to sell and to transfer their Scheme Shares to BidCo under this Scheme.

 

7.6                                               Title to Scheme Shares

 

On and from the Implementation Date, BidCo will be beneficially entitled to the Scheme Shares transferred to it under this Scheme pending registration by Talison of BidCo in the Talison Share Register as the holder of the Scheme Shares.

 

7.7                                               Appointment of BidCo as sole proxy

 

From the time at which the Scheme Consideration is provided in accordance with clause 5.1 until Talison registers BidCo as the holder of all of the Scheme Shares in the Talison Share Register, each Scheme Shareholder:

 

(a)                 appoints BidCo as attorney and agent (and directs BidCo in each capacity) to appoint any director, officer, secretary or agent nominated by BidCo as its sole proxy and where applicable, corporate representative, to attend shareholders’ meetings of Talison, exercise the votes attaching to the Scheme Shares registered in its name and sign any shareholders resolution;

 

(b)                 undertakes not to otherwise attend or vote at any of those meetings or sign any resolutions, whether in person, by proxy or by corporate representative (other than pursuant to this clause 7.7(a);

 

(c)                 must take all other actions in the capacity of the registered holder of Scheme Shares as BidCo directs; and

 

(d)                 acknowledges and agrees that in exercising the powers conferred in clause 7.7(a), BidCo and any director, officer, secretary or agent nominated by BidCo under that clause may act in the best interests of BidCo as the intended registered holder of the Scheme Shares.

 

 

7.8                                               Alterations or conditions

 

Talison may, by its counsel or solicitors, and with the consent of BidCo, consent on behalf of all persons concerned, including a Scheme Shareholder, to any alteration or condition to this Scheme which the Court thinks fit to make or impose.

 

7.9                                               Notices

 

(a)                 Where a notice, transfer, transmission application, direction or other communication referred to in this Scheme is sent by post to Talison, it will for all purposes be deemed to be received on the date (if any) on which it is actually received at Talison’s registered office (and it will not be deemed to be received in the ordinary course of post) or at the place where the Talison Share Register is kept.

 

(b)                 The accidental omission to give notice of the Scheme Meeting to any Talison Shareholder, or the non-receipt of such a notice by any Talison Shareholder, will not, unless ordered by the Court, invalidate this Scheme or the proceedings at the Scheme Meeting.

 

7.10                                        Further assurances

 

(a)                 Each of the Scheme Shareholders consents to Talison doing all things necessary or incidental to give full effect to the implementation of this Scheme and the transactions contemplated by it.

 

(b)                 Talison must do all things and execute all documents necessary to give full effect to this Scheme and the transactions contemplated by it.

 

7.11                                        Stamp duty

 

BidCo will pay any duty (under the Duties Act 2008 (WA) or otherwise) payable on the transfer by Scheme Shareholders of the Scheme Shares to BidCo.

 

7.12                                        Fees and charges

 

Talison must pay all filing, application or similar fees due in relation to this Scheme.

 

7.13                                        Governing law

 

This Scheme is governed by the laws of the State of Western Australia.  Each party irrevocably and unconditionally submits, in connection with this Scheme, to the non-exclusive jurisdiction of the Court and any courts which have jurisdiction to hear appeals from the Court and waives any right to object to any proceedings being brought in these courts.

 

7.14                                        Limitation of liability

 

None of Talison, Bidder nor BidCo nor any director, officer or secretary of any of them is liable for anything done or omitted to be done in the performance of this Scheme or the Deed Poll in good faith.

 

 

Annexure B 
  Deed Poll

 

 

 

Deed Poll
 (in respect of the Scheme)

 

Rockwood Holdings, Inc.

Bidder

 

[·]

BidCo

 

In favour of each Scheme Shareholder

 

Clayton Utz

Lawyers

Level 27 QV.1  250 St Georges Terrace  Perth  WA  6000  Australia

GPO Box P1214  Perth  WA  6844

T +61 8 9426 8000  F +61 8 9481 3095

 

www.claytonutz.com

 

Our reference 60067/17196/80123998

 

 

Contents

 

	
1.
    	
Definitions   and interpretations
    	
2
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
1.1
    	
Definitions
    	
2
    
	
 
    	
1.2
    	
Interpretation
    	
2
    
	
 
    	
1.3
    	
Nature of deed poll
    	
2
    
	
 
    	
 
    	
 
    	
 
    
	
2.
    	
Condition
    	
3
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
2.1
    	
Condition
    	
3
    
	
 
    	
2.2
    	
Termination
    	
3
    
	
 
    	
2.3
    	
Consequences of termination
    	
3
    
	
 
    	
 
    	
 
    	
 
    
	
3.
    	
Obligation to   pay Scheme Consideration
    	
3
    
	
 
    	
 
    	
 
    	
 
    
	
4.
    	
Warranties
    	
3
    
	
 
    	
 
    	
 
    	
 
    
	
5.
    	
Continuing   obligations
    	
4
    
	
 
    	
 
    	
 
    	
 
    
	
6.
    	
General
    	
4
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
6.1
    	
Notices
    	
4
    
	
 
    	
6.2
    	
Duty
    	
5
    
	
 
    	
6.3
    	
Waiver
    	
5
    
	
 
    	
6.4
    	
Variation
    	
6
    
	
 
    	
6.5
    	
Cumulative rights
    	
6
    
	
 
    	
6.6
    	
Assignment
    	
6
    
	
 
    	
6.7
    	
Further action
    	
6
    
	
 
    	
6.8
    	
Governing law and   jurisdiction
    	
6
    

 

i

 

	
Deed poll made on
    	
2012   
    

 

	
Parties
    	
 
    	
Rockwood Holdings, Inc.  of 100 Overlook Center, Princeton, New Jersey, 08540, United States of   America (Bidder)
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
[·] of [·] (BidCo)
    
	
 
    	
 
    	
 
    
	
In favour of
    	
 
    	
Each Scheme Shareholder
    

 

Recitals

 

I.                                                        Talison and Bidder have entered into a Scheme Implementation Agreement dated [•] August 2012 (Scheme Implementation Agreement) to provide for the implementation of the Scheme and the Option Scheme.

 

J.                                                        The effect of the Scheme will be that BidCo acquires all of the Scheme Shares from Scheme Shareholders in exchange for the Scheme Consideration.

 

K.                                                   Each of Bidder and BidCo is entering into this deed poll to covenant in favour of Scheme Shareholders that, in the case of BidCo, it will observe and perform the obligations contemplated of it under the Scheme, and, in the case of Bidder, that it will procure that BidCo observes and performs the obligations contemplated of it under the Scheme.

 

8.                                                      Definitions and interpretations

 

8.1                                               Definitions

 

In this deed poll:

 

(a)                 Scheme means the proposed scheme of arrangement under Part 5.1 of the Corporations Act between Talison and the Scheme Shareholders, as contemplated by the Scheme Implementation Agreement; and

 

(b)                 capitalised terms have the meanings given to them in the Scheme or the Scheme Implementation Agreement (as applicable), unless the context requires otherwise.

 

8.2                                               Interpretation

 

Clause 1.5 of the Scheme Implementation Agreement applies to the interpretation of this deed poll, except that references to “this agreement” are to be read as references to “this deed poll”.

 

8.3                                               Nature of deed poll

 

Each of Bidder and BidCo acknowledges that:

 

(a)                 this deed poll may be relied on and enforced by any Scheme Shareholder in accordance with its terms even though the Scheme Shareholders are not party to it; and

 

(b)                 under the Scheme, each Scheme Shareholder irrevocably appoints Talison as its agent and attorney to enforce this deed poll against Bidder and BidCo.

 

 

9.                                                      Condition

 

9.1                                               Condition

 

The obligations of each of Bidder and BidCo under this deed poll are subject to the Scheme becoming Effective.

 

9.2                                               Termination

 

Unless Talison, Bidder and BidCo agree otherwise, if the Scheme Implementation Agreement is terminated or the Scheme does not become Effective on or before the End Date, the obligations of each of Bidder and BidCo under this deed poll automatically terminate and the terms of this deed poll will be of no further force or effect.

 

9.3                                               Consequences of termination

 

If this deed poll is terminated under clause 9.2 then, in addition and without prejudice to any other rights, powers or remedies available to it:

 

(a)                 each of Bidder and BidCo is released from its obligations to further perform this deed poll except those obligations under clause 13.2; and

 

(b)                 each Scheme Shareholder retains the rights they have against Bidder and/or BidCo (as the case may be) in respect of any breach of this deed poll which occurs before termination.

 

10.                                               Obligation to pay Scheme Consideration

 

Subject to clause 9:

 

(a)                                                  BidCo undertakes in favour of each Scheme Shareholder that it will:

 

(i)                  deposit the aggregate amount of the Scheme Consideration payable to all Scheme Shareholders in cleared funds into the trust account nominated by Talison in accordance with clause 5.1 of the Scheme; and

 

(ii)                 undertake all other actions attributed to it under the Scheme,

 

in accordance with the Scheme; and

 

(b)                                                  Bidder undertakes in favour of each Scheme Shareholder that it will procure that BidCo observes and performs all obligations contemplated of BidCo under the Scheme in accordance with the Scheme.

 

11.                                               Warranties

 

(a)                                                  Bidder represents and warrants that:

 

(i)                  it is a corporation validly existing under the laws of its place of registration;

 

(ii)                 the execution and delivery by it of this deed poll has been (or prior to the Scheme becoming Effective, will be) properly authorised by all necessary corporate action and it has full corporate power and lawful authority to perform or cause to be performed its obligations under this

 

 

deed poll and to carry out or cause to be carried out the transactions contemplated by this deed poll; and

 

(iii)                this deed poll will constitute legally valid and binding obligations on it enforceable in accordance with its terms (subject to any necessary stamping) and does not conflict with or result in a breach of a default under:

 

A.                                                    its constituent documents; or

 

B.                                                    any writ, order or injunction, judgment, law, rule or regulation to which it is party, or by which it is bound.

 

(b)                                                  BidCo represents and warrants that:

 

(i)                  BidCo is a [·];

 

(ii)                 the execution and delivery by it of this deed poll has been (or prior to the Scheme becoming Effective, will be) properly authorised by all necessary action and it has full power and lawful authority to perform or cause to be performed its obligations under this deed poll and to carry out or cause to be carried out the transactions contemplated by this deed poll; and

 

(iii)                this deed poll will constitute legally valid and binding obligations on it enforceable in accordance with its terms (subject to any necessary stamping) and does not conflict with or result in a breach of a default under:

 

A.                                                    its constituent or equivalent documents; or

 

B.                                                    any writ, order or injunction, judgment, law, rule or regulation to which it is party, or by which it is bound.

 

12.                                               Continuing obligations

 

This deed poll is irrevocable and, subject to clause 9, remains in full force and effect until:

 

(a)                 each of Bidder and BidCo has fully performed its obligations under this deed poll; or

 

(b)                 the earlier termination of this deed poll under clause 9.2.

 

13.                                              General

 

13.1                                        Notices

 

(a)                                                  All notices or other communication to Bidder or BidCo in respect of this deed poll must be:

 

(i)                  in writing;

 

(ii)                 signed by the sender or by a person duly authorised by the sender;

 

(iii)                addressed in the manner and delivered or sent by prepaid ordinary post to the address, or sent by fax to the fax number, relevantly described below:

 

 

	
Address:
    	
 
    	
100 Overlook Center Princeton,
   New Jersey, 08540
   United States of America
    
	
 
    	
 
    	
 
    
	
Facsimile:
    	
 
    	
+1 609 734-6406
    
	
 
    	
 
    	
 
    
	
For the attention of:
    	
 
    	
Thomas J. Riordan
    
	
 
    	
 
    	
 
    
	
With a copy to:
    	
 
    	
Gilbert + Tobin
    
	
 
    	
 
    	
 
    
	
Address:
    	
 
    	
2 Park Street, Sydney, 2000 Australia
    
	
 
    	
 
    	
 
    
	
Facsimile:
    	
 
    	
+61 2 9263 4111
    
	
 
    	
 
    	
 
    
	
For the attention of:
    	
 
    	
Peter Cook and David Clee
    

 

(b)                                                  Any notice or other communication given in accordance with clause 13.1(a) will be deemed to have been duly given as follows:

 

(i)                  if delivered by hand, on delivery at the address of the addressee, unless that delivery is made on a non-Business Day, or after 5.00 pm on a Business Day, in which case that communication will be deemed to be received at 9.00 am on the next Business Day;

 

(ii)                 if sent by pre-paid mail, on the third Business Day after posting; and

 

(iii)                if sent by facsimile, at the local time (in the place of receipt of the facsimile) which then equates to the time at which that facsimile is sent as shown on the transmission report which is produced by the machine from which that facsimile is sent and which confirms transmission of that facsimile in its entirety, unless that local time is a non-Business Day, or after 5.00 pm on a Business Day, in which case that communication will be deemed to be received at 9.00 am on the next Business Day.

 

13.2                                        Duty

 

BidCo will:

 

(a)                 pay or procure the payment of all transaction duties and any related fines and penalties in respect of this deed poll, the performance of this deed poll and each transaction effected by or made under this deed poll (including in connection with the transfer of Scheme Shares to BidCo in accordance with the terms of the Scheme); and

 

(b)                 indemnify each Scheme Shareholder against any liability arising from failure to comply with clause 13.2(a).

 

13.3                                        Waiver

 

(a)                 Waiver of any right arising from a breach of this deed poll or of any right, power, authority, discretion or remedy arising upon default under this deed poll must be in writing and signed by the party granting the waiver.

 

(b)                 A failure or delay in exercise, or partial exercise, of:

 

(i)                                                     a right arising from a breach of this deed poll; or

 

 

(ii)                                                  a right, power, authority, discretion or remedy created or arising upon default under this deed poll,

 

does not result in a waiver of that right, power, authority, discretion or remedy.

 

(c)                                                   A party is not entitled to rely on a delay in the exercise or non-exercise of a right, power, authority, discretion or remedy arising from a breach of this deed poll or on a default under this deed poll as constituting a waiver of that right, power, authority, discretion or remedy.

 

(d)                                                  A party may not rely on any conduct of another party as a defence to the exercise of a right, power, authority, discretion or remedy by that other party.

 

(e)                                                   This clause 13.3 may not itself be waived except in writing.

 

13.4                                        Variation

 

This deed poll may be amended only by another deed poll entered into by Bidder and BidCo, and then only if the amendment is agreed to by Talison and, if after the First Court Date, the Court indicates that the amendment would not preclude approval of the Scheme.

 

13.5                                        Cumulative rights

 

The rights, powers and remedies of Bidder, BidCo and each Scheme Shareholder under this deed poll are cumulative and do not exclude any other rights, powers or remedies provided by the law independently of this deed poll.

 

13.6                                        Assignment

 

The rights and obligations of each of Bidder and BidCo and the rights of each Scheme Shareholder under this deed poll are personal and must not be assigned, charged or otherwise dealt with at law or in equity.

 

13.7                                        Further action

 

Bidder and BidCo will promptly do all things and execute and deliver all further documents required by law to give effect to this deed poll and the transactions contemplated by it.

 

13.8                                        Governing law and jurisdiction

 

(a)                                                  This deed poll is governed by the laws of the state of Western Australia.

 

(b)                                                  Each of Bidder and BidCo irrevocably and unconditionally submits to the non-exclusive jurisdiction of the courts of the state of Western Australia for any proceedings in connection with this deed poll and waives any right it may have to object to an action being brought in those courts including by claiming that the action has been brought in an inconvenient forum.

 

 

Executed as a deed poll.

 

 

	
Executed by 
    Rockwood Holdings, Inc. 
    in   accordance with its constituent documents and the laws of the place of its   incorporation or registration, and in the presence of:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Signature of [·]
    	
 
    	
 
    	
Signature of [·]
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Name of [·]
    	
 
    	
 
    	
Name of [·]
    

 

 

	
Executed by 
    [·]:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Signature of [·]
    	
 
    	
 
    	
Signature of [·]
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Name of [·]
    	
 
    	
 
    	
Name of [·]
    

 

 

Annexure C 
 Option Scheme

 

 

 

Scheme of Arrangement

Pursuant to section 411 of the Corporations Act

 

Talison Lithium Limited

 

Talison

 

The holders of options to subscribe for fully paid ordinary shares in 
 Talison Lithium Limited

 

Clayton Utz

Lawyers

Level 27 QV.1  250 St Georges Terrace Perth WA 6000  Australia

GPO Box P1214  Perth WA 6844

T +61 8 9426 8000  F +61 8 9481 3095

 

www.claytonutz.com

 

Our reference 60067/17196/80123998

 

ii

 

Contents

 

	
1.
    	
Definitions   and interpretation
    	
2
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
1.1
    	
Definitions
    	
2
    
	
 
    	
1.2
    	
Interpretation
    	
4
    
	
 
    	
1.3
    	
Business Day
    	
5
    
	
 
    	
 
    	
 
    	
 
    
	
2.
    	
Conditions
    	
5
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
2.1
    	
Conditions to this Option   Scheme
    	
5
    
	
 
    	
2.2
    	
Certificates in relation to   Conditions
    	
6
    
	
 
    	
2.3
    	
Termination of Scheme   Implementation Agreement
    	
6
    
	
 
    	
 
    	
 
    	
 
    
	
3.
    	
Option Scheme
    	
6
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
3.1
    	
Effective Date of Option   Scheme
    	
6
    
	
 
    	
3.2
    	
End Date
    	
6
    
	
 
    	
 
    	
 
    	
 
    
	
4.
    	
Implementation   of Option Scheme
    	
6
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
4.1
    	
Lodgement
    	
6
    
	
 
    	
4.2
    	
Transfer of Scheme Options
    	
6
    
	
 
    	
4.3
    	
Provision of Option Scheme   Consideration
    	
7
    
	
 
    	
 
    	
 
    	
 
    
	
5.
    	
Option Scheme   Consideration
    	
7
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
5.1
    	
Satisfaction of payment   obligation
    	
7
    
	
 
    	
5.2
    	
Payment to Scheme   Optionholders
    	
7
    
	
 
    	
5.3
    	
Joint holders
    	
8
    
	
 
    	
5.4
    	
Unclaimed moneys
    	
8
    
	
 
    	
 
    	
 
    	
 
    
	
6.
    	
Exercise of   Talison Options
    	
8
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
6.1
    	
Issue of Talison Shares
    	
8
    
	
 
    	
6.2
    	
Talison Option Register
    	
8
    
	
 
    	
6.3
    	
Information to be made   available to Bidder
    	
9
    
	
 
    	
6.4
    	
Effect of option   certificates
    	
9
    
	
 
    	
6.5
    	
No disposals after Record   Date
    	
9
    
	
 
    	
 
    	
 
    	
 
    
	
7.
    	
General   provisions
    	
9
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
7.1
    	
Effect of Option Scheme
    	
9
    
	
 
    	
7.2
    	
Appointment of agent and   attorney
    	
9
    
	
 
    	
7.3
    	
Enforcement of Deed Poll
    	
9
    
	
 
    	
7.4
    	
Scheme Optionholders’   agreement and consent
    	
10
    
	
 
    	
7.5
    	
Transfer with clear title   and warranty by Scheme Optionholders
    	
10
    
	
 
    	
7.6
    	
Title to Scheme Options
    	
10
    
	
 
    	
7.7
    	
BidCo directions
    	
10
    
	
 
    	
7.8
    	
Alterations or conditions
    	
10
    
	
 
    	
7.9
    	
Notices
    	
10
    
	
 
    	
7.10
    	
Further assurances
    	
11
    
	
 
    	
7.11
    	
Stamp duty
    	
11
    
	
 
    	
7.12
    	
Fees and charges
    	
11
    
	
 
    	
7.13
    	
Governing law
    	
11
    
	
 
    	
7.14
    	
Limitation of liability
    	
11
    

 

i

 

Scheme of Arrangement made under section 411 of the Corporations Act 2001 (Commonwealth)

 

Parties                                                                                        Talison Lithium Limited ACN 140 122 078  of Level 4, 37 St Georges Terrace, Perth, Western Australia (Talison)

 

Each Scheme Optionholder

 

Recitals

 

L.                                                     Talison is a public company incorporated in the state of Western Australia and listed onthe TSX.

 

M.                                                 Rockwood Holdings, Inc. (Bidder) is a corporation registered in the United States of America and is listed on the NYSE.

 

N.                                                    [·] (BidCo) is a [·].

 

O.                                                    Talison and Bidder have entered into a Scheme Implementation Agreement dated 23 August 2012 (Scheme Implementation Agreement) pursuant to which, amongst other things, Talison has agreed to propose this Option Scheme to Talison Optionholders, and each of Talison and Bidder has agreed to take certain steps to give effect to this Option Scheme.

 

P.                                                      If this Option Scheme becomes Effective, then:

 

(a)                                                  all of the Scheme Options will be transferred to BidCo and the Option Scheme Consideration will be provided to the Scheme Optionholders in accordance with the provisions of this Option Scheme; and

 

(b)                                                  Talison will enter the name and address of BidCo in the Talison Option Register as the holder of all of the Scheme Options.

 

Q.                                                    Bidder and BidCo have entered into the Deed Poll for the purpose of, in the case of BidCo, covenanting in favour of Scheme Optionholders to perform the obligations contemplated of it under this Option Scheme, and, in the case of Bidder, procuring that BidCo performs the obligations contemplated of it under this Option Scheme.

 

14.                                               Definitions and interpretation

 

14.1                                        Definitions

 

In this Option Scheme, unless the contrary intention appears or the context requires otherwise:

 

ASIC means the Australian Securities and Investments Commission.

 

BidCo has the meaning given in Recital C.

 

Bidder has the meaning given in Recital B.

 

Business Day means a day that is not a Saturday, Sunday or public holiday and on which banks are open for business generally in Perth, Western Australia and Princeton, New Jersey.

 

Condition means a condition to this Option Scheme set out in clause 2.1.

 

Corporations Act means the Corporations Act  2001 (Cth).

 

2

 

Court means the Federal Court of Australia or such other court of competent jurisdiction as Talison and Bidder agree in writing.

 

Deed Poll means the deed poll dated [·] executed by Bidder and BidCo in favour of the Scheme Optionholders.

 

Effective means, when used in relation to this Option Scheme, the coming into effect, pursuant to section 411(10) of the Corporations Act, of the order of the Court made under section 411(4)(b) (and, if applicable, section 411(6)) of the Corporations Act in relation to this Option Scheme.

 

Effective Date means the date on which the Option Scheme becomes Effective.

 

Encumbrance means a mortgage, charge, pledge, lien, encumbrance, security interest, title retention, preferential right, trust arrangement, contractual right of set-off, or any other security agreement or arrangement in favour of any person, whether registered or unregistered, including any Security Interest.

 

End Date means 31 January 2013 or such later date as is agreed by Talison and Bidder in writing.

 

Implementation Date means the date which is 3 Business Days after the Record Date, or such other date as Talison, Bidder and BidCo agree in writing.

 

NYSE means the New York Stock Exchange.

 

Option Scheme means the scheme of arrangement under Part 5.1 of the Corporations Act between Talison and Scheme Optionholders as set out in this document, subject to any alterations or conditions made or required by the Court pursuant to section 411(6) of the Corporations Act and approved in writing by Bidder and Talison.

 

Option Scheme Consideration means the consideration to be provided to Scheme Optionholders under the terms of this Option Scheme, being for each Scheme Option C$6.50 cash less the exercise price for that Scheme Option.

 

Option Scheme Meeting means the meeting of Talison Optionholders ordered by the Court in relation to this Option Scheme convened under section 411(1) of the Corporations Act.

 

Record Date means:

 

(a)                                                  if no date is set pursuant to clause 6.1(b) of the Scheme Implementation Agreement, 5.00 pm (Perth time) on the date which is 5 Business Days after the Effective Date;

 

(b)                                                  if a time and date is set pursuant to clause 6.1(b) of the Scheme Implementation Agreement, that time and date; or

 

(c)                                                   in each case, such other time and date agreed in writing between Talison and Bidder.

 

Registered Address means, in relation to a Talison Optionholder, the address of that Talison Optionholder shown in the Talison Option Register as at the Record Date.

 

Related Body Corporate has the meaning given in section 9 of the Corporations Act.

 

Scheme Implementation Agreement has the meaning given in Recital D.

 

Scheme Option means each Talison Option on issue as at the Record Date.

 

3

 

Scheme Optionholder means each person registered in the Talison Option Register as the holder of Scheme Options.

 

Scheme Transfer means one or more proper instruments of transfer in respect of the Scheme Options for the purposes of section 1071B of the Corporations Act, which may be or include a master transfer of all or part of the Scheme Options.

 

Second Court Date means the first day of hearing of an application made to the Court for an order pursuant to section 411(4)(b) of the Corporations Act approving this Option Scheme or, if the hearing of such application is adjourned for any reason, means the first day of the adjourned hearing.

 

Security Interest has the meaning given in section 12 of the Personal Property Securities Act 2009 (Cth).

 

Share Scheme means the scheme of arrangement under Part 5.1 of the Corporations Act between Talison and the holders of shares in Talison, as contemplated in the Scheme Implementation Agreement.

 

Talison Option means an option to subscribe for Talison Share.

 

Talison Option Register means the register of optionholders of Talison maintained by or on behalf of Talison in accordance with section 168(1) of the Corporations Act.

 

Talison Optionholder means a person who is registered in the Talison Option Register as a holder of Talison Options.

 

Talison Share means an ordinary share in the capital of Talison.

 

TSX means the Toronto Stock Exchange.

 

14.2                                        Interpretation

 

In this Option Scheme headings are for convenience only and do not affect interpretation and, unless the contrary intention appears:

 

(a)                                                  a word importing the singular includes the plural and vice versa, and a word of any gender includes the corresponding words of any other gender;

 

(b)                                                  the word including or any other form of that word is not a word of limitation;

 

(c)                                                   if a word or phrase is given a defined meaning, any other part of speech or grammatical form of that word or phrase has a corresponding meaning;

 

(d)                                                  a reference to a person includes an individual, the estate of an individual, a corporation, an authority, an association or parties in a joint venture, a partnership and a trust;

 

(e)                                                   a reference to a party includes that party’s executors, administrators, successors and permitted assigns, including persons taking by way of novation and, in the case of a trustee, includes any substituted or additional trustee;

 

(f)                                                    a reference to a document (including this agreement) is to that document as varied, novated, ratified or replaced from time to time;

 

(g)                                                   a reference to a party, clause, schedule, exhibit, attachment, or annexure is a reference to a party, clause, schedule, exhibit, attachment, or annexure to or of this agreement, and a reference to this 

 

4

 

agreement includes all schedules, exhibits, attachments, and annexures to it;

 

(h)                                                  a reference to an agency or body if that agency or body ceases to exist or is reconstituted, renamed or replaced or has its powers or function removed (obsolete body), means the agency or body which performs most closely the functions of the obsolete body;

 

(i)                                                      a reference to a statute includes any regulations or other instruments made under it (delegated legislation) and a reference to a statute or delegated legislation or a provision of either includes consolidations, amendments, re-enactments and replacements;

 

(j)                                                     a reference to C$ or Canadian  dollar is to Canadian currency;

 

(k)                                                  if a word or phrase is not given a defined meaning in clause 1.1 but is defined in or for the purposes of the Corporations Act, it has the same meaning when used in this agreement;

 

(l)                                                      a reference to a date or time is to that date or time in Perth, Western Australia; and

 

(m)                                              this Option Scheme must not be construed adversely to a party just because that party prepared it or caused it to be prepared.

 

14.3                                        Business Day

 

Except where otherwise expressly provided, where under this Option Scheme the day on which any act, matter or thing is to be done is a day other than a Business Day, such act, matter or thing shall be done on the immediately following Business Day.

 

15.                                               Conditions

 

15.1                                        Conditions to this Option Scheme

 

This Option Scheme is conditional upon, and will have no force or effect until, the satisfaction of each of the following conditions, and the provisions of clauses 3, 4 and 5 will not come into effect unless and until each of these conditions has been satisfied:

 

(a)                                                  as at 8.00 am on the Second Court Date each of the conditions set out in clause 3.2 of the Scheme Implementation Agreement (other than the condition relating to the approval of the Court and the condition relating to the Effectiveness of the Share Scheme, as set out in clause 3.2(d) and clause 3.2(b) respectively of the Scheme Implementation Agreement) have been satisfied or waived in accordance with the terms of the Scheme Implementation Agreement;

 

(b)                                                  as at 8.00 am on the Second Court Date neither the Scheme Implementation Agreement nor the Deed Poll has been terminated;

 

(c)                                                   the Court approves this Option Scheme and the Share Scheme under section 411(4)(b) of the Corporations Act with or without such alterations as are acceptable to Bidder and Talison;

 

(d)                                                  such other conditions made or required by the Court under section 411(6) of the Corporations Act in relation to this Option Scheme as are acceptable to Bidder and Talison have been satisfied; and

 

5

 

(e)                                                   the coming into effect, pursuant to section 411(10) of the Corporations Act, of the orders of the Court made under section 411(4)(b) of the Corporations Act (and, if applicable, section 411(6) of the Corporations Act) in relation to this Option Scheme and the Share Scheme.

 

15.2                                        Certificates in relation to Conditions

 

(a)                                                  At or before the Court hearing on the Second Court Date, Talison and Bidder will each provide to the Court a certificate (or such other evidence as the Court may request) confirming (in respect of matters within their knowledge) whether or not all of the Conditions set out in clause 15.1(a) and 15.1(b) of this Option Scheme have been satisfied.

 

(b)                                                  The certificates given by Talison and Bidder constitute conclusive evidence that the conditions have been satisfied.

 

15.3                                        Termination of Scheme Implementation Agreement

 

Without limiting any rights under the Scheme Implementation Agreement, in the event that the Scheme Implementation Agreement is terminated in accordance with its terms before 8.00 am on the Second Court Date, Talison, Bidder and BidCo are each released from:

 

(a)                                                  any further obligation to take steps to implement this Option Scheme; and

 

(b)                                                  any liability with respect to this Option Scheme.

 

16.                                               Option Scheme

 

16.1                                        Effective Date of Option Scheme

 

Subject to clause 3.2, this Option Scheme will take effect on and from the Effective Date.

 

16.2                                        End Date

 

This Option Scheme will lapse and be of no further force or effect if the Effective Date has not occurred on or before the End Date.

 

17.                                               Implementation of Option Scheme

 

17.1                                        Lodgement

 

If the Conditions (other than the Condition in clause 15.1(e)) are satisfied, Talison must lodge with ASIC in accordance with section 411(10) of the Corporations Act an office copy of the Court order approving this Option Scheme as soon as practicable after such office copy is received, and in any event by no later than 5.00 pm on the Business Day after the date on which the Court makes those orders (or such other Business Day as Talison and Bidder agree in writing).

 

17.2                                        Transfer of Scheme Options

 

On the Implementation Date:

 

(a)                                                  subject to the provision of the Option Scheme Consideration in the manner contemplated by clause 18.1, all of the Scheme Options will, together with all rights and entitlements attaching to the Scheme Options, be transferred to BidCo without the need for any further act by any Scheme Optionholder (other than acts performed

 

6

 

by Talison as attorney or agent for Scheme Optionholders under this Option Scheme), by:

 

(i)                  Talison delivering to BidCo a duly completed and executed Scheme Transfer (executed by Talison (as transferor) as the attorney and agent of each Scheme Optionholder under clause 20.2); and

 

(ii)                 BidCo executing the Scheme Transfer (as transferee) and delivering it to Talison for registration; and

 

(b)                 as soon as possible after receipt of the Scheme Transfer under clause 17.2(a)(ii), Talison must enter, or procure the entry of, the name and address of BidCo in the Talison Option Register as the holder of all of the Scheme Options.

 

17.3                                        Provision of Option Scheme Consideration

 

BidCo will provide (or procure the provision of) the Option Scheme Consideration in accordance with clause 18.1.

 

18.                                               Option Scheme Consideration

 

18.1                                        Satisfaction of payment obligation

 

BidCo will, before 12.00 noon on the Implementation Date, deposit in cleared funds the aggregate Option Scheme Consideration payable to all Scheme Optionholders into Canadian dollar denominated account nominated by Talison (the details of which must be notified by Talison or a depositary appointed by Talison to BidCo not less than 5 Business Days prior to the Implementation Date), such amount to be held on trust by Talison for the Scheme Optionholders (except that any interest on the amount will be for the account of BidCo).

 

18.2                                        Payment to Scheme Optionholders

 

(a)                 Subject to clauses 5.1 and 5.3, Talison will pay or procure the payment of the Option Scheme Consideration to each Scheme Optionholder on the Implementation Date by:

 

(i)                  delivery or effecting the delivery to each Scheme Optionholder by pre-paid airmail post at their Registered Address a pre-printed cheque drawn on a bank considered appropriate by Talison in the name of that Scheme Optionholder for the Option Scheme Consideration payable to that Scheme Optionholder in accordance with this Option Scheme; or

 

(ii)                 depositing or procuring the deposit into a bank account with any Australian ADI (as defined in the Corporations Act) or an equivalent financial institution in an overseas jurisdiction notified to Talison by the Scheme Optionholder prior to the Implementation Date the Option Scheme Consideration payable to that Scheme Optionholder in accordance with this Option Scheme.

 

(b)                 The cheques sent by Talison, or a depositary appointed by Talison, under this clause may be drawn, and the deposit made, at the discretion of Talison, in Canadian dollars, in Australian dollars or in the local currency of the country in which the relevant Scheme Optionholder’s Registered Address appears on the Talison Option Register as at the Record Date.

 

(c)                 Talison is authorised to effect any conversion of the Option Scheme Consideration in such manner as it deems appropriate (acting reasonably) and to deduct any costs,

 

7

 

charges or expenses associated with such conversion from the amount paid to the relevant Scheme Optionholder.

 

(d)                 Talison, or a depositary appointed by Talison, must deduct and withhold from any amount payable to any person as a consequence of this Option Scheme, such amounts as Talison determines, acting reasonably, are required to be deducted and withheld with respect to such payments under any applicable law.

 

(e)                 To the extent that amounts are so withheld, such withheld amounts shall be treated for all purposes under this Option Scheme as having been paid to the person in respect of which such deduction and withholding was made, provided that such withheld amounts are actually remitted to the appropriate taxing agency.

 

18.3                                        Joint holders

 

In the case of Scheme Options held in joint names, any cheque required to be paid to Scheme Optionholders will be payable to the joint holders and will be forwarded to the holder whose name appears first in the Talison Option Register as at the Record Date.

 

18.4                                        Unclaimed moneys

 

In the event that Talison believes that a Scheme Optionholder is not known at the Scheme Optionholder’s Registered Address, Talison may credit the amount payable to the relevant Scheme Optionholder to a separate bank account of Talison to be held on trust by Talison, or a depositary appointed by Talison, for the Scheme Optionholder until the Scheme Optionholder claims the amount or the amount is dealt with in accordance with any applicable unclaimed money legislation (except that any interest accruing on the amount will be for the account of BidCo). An amount credited to the account is to be treated as having been paid to the Scheme Optionholder when credited to the account.  Talison must maintain records of the amounts paid, the persons who are entitled to the amounts and any transfer of the amounts.

 

19.                                               Exercise of Talison Options

 

19.1                                        Issue of Talison Shares

 

(a)                 Talison will issue Talison Shares in accordance with any valid notice of exercise of a Talison Option which is received on or before 12.00 noon on the Business Day prior to the Record Date.

 

(b)                 Talison will not accept for registration or recognise for any purpose any notice of exercise of a Talison Option received after 12.00 noon on the Business Day prior to the Record Date and, after such time, the Talison Options shall not be capable of exercise notwithstanding any terms on which such Talison Options were granted.

 

(c)                 Each Scheme Optionholder acknowledges and agrees that, without limiting clauses 19.1(a) and 19.1(b), where a Talison Share is issued to a Talison Optionholder pursuant to the exercise of a Talison Option, that Talison Share shall be transferred to BidCo under the Share Scheme and the Talison Optionholder shall be bound by the terms of the Share Scheme in respect of any and all Talison Shares held as at the record date for the Share Scheme.

 

19.2                                        Talison Option Register

 

Talison will, until the Option Scheme Consideration has been deposited into the account nominated by Talison pursuant to clause 18.1 and BidCo has been entered in the Talison Option Register as the holder of all of the Scheme Options, maintain, or procure the

 

8

 

maintenance of, the Talison Option Register in accordance with the provisions of this clause 19 and the Talison Option Register in this form and the terms of this Option Scheme will solely determine entitlements to the Option Scheme Consideration.

 

19.3                                        Information to be made available to Bidder

 

Talison must procure that as soon as practicable following the Record Date (and, in any event, no later than 24 hours thereafter), details of the names, registered addresses and holdings of Talison Options of every Scheme Optionholder shown in the Talison Option Register as at the Record Date are made available to BidCo in electronic form or such other form as reasonably requested by Bidder prior to the Record Date.

 

19.4                                        Effect of option certificates

 

As from the time at which the Option Scheme Consideration is deposited into the account nominated by Talison pursuant to clause 18.1, all option certificates for the Scheme Options will cease to have effect as documents of title, and each entry on the Talison Option Register at that time and date (other than entries in respect of BidCo and its successors in title)will cease to have any effect other than as evidence of entitlement to the Option Scheme Consideration.

 

19.5                                        No disposals after Record Date

 

If this Option Scheme becomes Effective, a Scheme Optionholder, and any person claiming through that Scheme Optionholder, must not dispose of or purport or agree to dispose of any Scheme Options or any interest in them after the Record Date.

 

20.                                               General provisions

 

20.1                                        Effect of Option Scheme

 

This Option Scheme binds Talison and all of the Scheme Optionholders (including those who did not attend the Option Scheme Meeting or who did not vote at that meeting or who voted against this Option Scheme at that meeting) and, to the extent permitted by law, overrides the constitution of Talison and the terms of the Talison Options.

 

20.2                                        Appointment of agent and attorney

 

On this Scheme becoming Effective, each Scheme Optionholder, without the need for any further act, is deemed to have irrevocably appointed Talison as its agent and attorney for the purpose of:

 

(a)                 executing any document or form or doing any other act necessary to give effect to the terms of this Option Scheme including, without limitation, the execution of the Scheme Transfer; and

 

(b)                 enforcing the Deed Poll against Bidder and BidCo,

 

and Talison accepts such appointment.  Talison, as agent and attorney of each Scheme Optionholder, may sub-delegate its functions, authorities or powers under this clause 20.2 to all or any of its directors and officers (jointly, severally, or jointly and severally).

 

20.3                                        Enforcement of Deed Poll

 

Talison undertakes in favour of each Scheme Optionholder that it will enforce the Deed Poll against Bidder and BidCo on behalf of and as agent and attorney for the Scheme Optionholders.

 

9

 

20.4                                        Scheme Optionholders’ agreement and consent

 

Each Scheme Optionholder irrevocably:

 

(a)                 agrees to the transfer of its Scheme Options, together with all rights and entitlements attaching to those Scheme Options, to BidCo in accordance with the terms of this Option Scheme and agrees to the variation, cancellation or modification of the rights attached to their Scheme Options constituted by or resulting from this Option Scheme;

 

(b)                 consents to Talison and BidCo doing all things and executing all deeds, instruments, transfers or other documents as may be necessary, incidental or expedient to the implementation and performance of this Option Scheme; and

 

(c)                 acknowledges that this Option Scheme binds all of the Scheme Optionholders.

 

20.5                                        Transfer with clear title and warranty by Scheme Optionholders

 

(a)                 To the extent permitted by law, the Scheme Options transferred to BidCo under this Option Scheme will be transferred free from all mortgages, charges, liens, Encumbrances and interests of third parties of any kind, whether legal or otherwise.

 

(b)                 Each Scheme Optionholder is deemed to have warranted to Talison, in its own right and for the benefit of BidCo, that all their Scheme Options (including any rights and entitlements attaching to those options) will, at the date of the transfer of them to BidCo, be free from all mortgages, charges, liens, Encumbrances and interests of third parties of any kind, whether legal or otherwise, and restrictions on transfer of any kind, and that they have full power and capacity to sell and to transfer their Scheme Options to BidCo under this Option Scheme.

 

20.6                                        Title to Scheme Options

 

On and from the Implementation Date, BidCo will be beneficially entitled to the Scheme Options transferred to it under this Option Scheme pending registration by Talison of BidCo in the Talison Option Register as the holder of the Scheme Options.

 

20.7                                        BidCo directions

 

From the time at which the Option Scheme Consideration is provided in accordance with clause 18.1 until Talison registers BidCo as the holder of all of the Scheme Options in the Talison Option Register, each Scheme Optionholder must take all actions in the capacity of the registered holder of Talison Options as BidCo directs.

 

20.8                                        Alterations or conditions

 

Talison may, by its counsel or solicitors, and with the consent of Bidder and BidCo, consent on behalf of all persons concerned, including a Scheme Optionholder, to any alteration or condition to this Option Scheme which the Court thinks fit to make or impose.

 

20.9                                        Notices

 

(a)                 Where a notice, transfer, transmission application, direction or other communication referred to in this Scheme is sent by post to Talison, it will for all purposes be deemed to be received on the date (if any) on which it is actually received at Talison’s registered office (and it will not be deemed to be received in the ordinary course of post) or at the place where the Talison Option Register is kept.

 

10

 

(b)                 The accidental omission to give notice of the Option Scheme Meeting to any Talison Optionholder, or the non-receipt of such a notice by any Talison Optionholder, will not, unless ordered by the Court, invalidate the Option Scheme or the proceedings at the Option Scheme Meeting.

 

20.10                                 Further assurances

 

(a)                 Each of the Scheme Optionholders consents to Talison doing all things necessary or incidental to give full effect to the implementation of this Option Scheme and the transactions contemplated by it.

 

(b)                 Talison must do all things and execute all documents necessary to give full effect to this Option Scheme and the transactions contemplated by it.

 

20.11                                 Stamp duty

 

BidCo will pay any duty (under the Duties Act 2008 (WA) or otherwise) payable on the transfer by Scheme Optionholders of the Scheme Options to BidCo.

 

20.12                                 Fees and charges

 

Talison must pay all filing, application or similar fees due in relation to this Option Scheme.

 

20.13                                 Governing law

 

This Option Scheme is governed by the laws of the State of Western Australia.  Each party irrevocably and unconditionally submits, in connection with this Scheme, to the non-exclusive jurisdiction of the Court and any courts which have jurisdiction to hear appeals from the Court and waives any right to object to any proceedings being brought in these courts.

 

20.14                                 Limitation of liability

 

None of Talison, Bidder nor BidCo nor any director, officer, secretary of any of them is liable for anything done or omitted to be done in the performance of this Option Scheme or the Deed Poll in good faith.

 

11

 

Annexure D

Option Scheme Deed Poll

 

 

 

Deed Poll
 (in respect of the Option Scheme)

 

Rockwood Holdings, Inc.

Bidder

 

[·]

BidCo

 

In favour of each Scheme Optionholder

 

Clayton Utz

Lawyers

Level 27 QV.1  250 St Georges Terrace  Perth  WA  6000  Australia

GPO Box P1214  Perth  WA  6844

T +61 8 9426 8000  F +61 8 9481 3095

 

www.claytonutz.com

 

Our reference 60067/16697/80108485

 

 

Contents

 

	
1.
    	
Definitions   and interpretations
    	
2
    
	
 
    	
 
    	
 
    
	
 
    	
1.1
    	
Definitions
    	
2
    
	
 
    	
1.2
    	
Interpretation
    	
2
    
	
 
    	
1.3
    	
Nature of deed poll
    	
2
    
	
 
    	
 
    	
 
    	
 
    
	
2.
    	
Condition
    	
 
    	
3
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
2.1
    	
Condition
    	
3
    
	
 
    	
2.2
    	
Termination
    	
3
    
	
 
    	
2.3
    	
Consequences of termination
    	
3
    
	
 
    	
 
    	
 
    	
 
    
	
3.
    	
Obligation to   pay Option Scheme Consideration
    	
3
    
	
 
    	
 
    	
 
    
	
4.
    	
Warranties
    	
3
    
	
 
    	
 
    	
 
    
	
5.
    	
Continuing   obligations
    	
4
    
	
 
    	
 
    	
 
    
	
6.
    	
General
    	
 
    	
4
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
6.1
    	
Notices
    	
4
    
	
 
    	
6.2
    	
Duty
    	
5
    
	
 
    	
6.3
    	
Waiver
    	
5
    
	
 
    	
6.4
    	
Variation
    	
6
    
	
 
    	
6.5
    	
Cumulative rights
    	
6
    
	
 
    	
6.6
    	
Assignment
    	
6
    
	
 
    	
6.7
    	
Further action
    	
6
    
	
 
    	
6.8
    	
Governing law and   jurisdiction
    	
6
    

 

i

 

	
Option Scheme Deed poll   made on
    	
 
    	
2012
    

 

Parties                               Rockwood Holdings, Inc. of 100 Overlook Center, Princeton, New Jersey, 08540, United States of America (Bidder)

 

[·] of [·] (BidCo)

 

In favour of                     Each  Scheme Optionholder

 

Recitals

 

R.                 Talison and Bidder have entered into a Scheme Implementation Agreement dated [·] 2012 (Scheme Implementation Agreement) to provide for the implementation of the Scheme and the Option Scheme.

 

S.                  The effect of the Option Scheme which will be that BidCo acquires all of the Scheme Options from Scheme Optionholders in exchange for the Option Scheme Consideration.

 

T.                  Each of Bidder and BidCo is entering into this deed poll to covenant in favour of Scheme Optionholders that, in the case of BidCo, it will observe and perform the obligations contemplated of it under the Option Scheme, and, in the case of Bidder, that it will procure that BidCo observes and performs the obligations contemplated of it under the Option Scheme.

 

21.                Definitions and interpretations

 

21.1             Definitions

 

In this deed poll:

 

(a)                 Option  Scheme means the proposed scheme of arrangement under Part 5.1 of the Corporations Act between Talison and the Scheme Optionholders as contemplated by the Scheme Implementation Agreement; and

 

(b)                 capitalised terms have the meanings given to them in the Option Scheme or the Scheme Implementation Agreement (as applicable), unless the context requires otherwise.

 

21.2             Interpretation

 

Clause 1.5 of the Scheme Implementation Agreement applies to the interpretation of this deed poll, except that references to “this agreement” are to be read as references to “this deed poll”.

 

21.3             Nature of deed poll

 

Each of Bidder and BidCo acknowledges that:

 

(a)                 this deed poll may be relied on and enforced by any Scheme Optionholder in accordance with its terms even though the Scheme Optionholders are not party to it; and

 

(b)                 under the Option Scheme, each Scheme Optionholder irrevocably appoints Talison as its agent and attorney to enforce this deed poll against Bidder and BidCo.

 

2

 

22.                Condition

 

22.1             Condition

 

The obligations of each of Bidder and BidCo under this deed poll are subject to the Option Scheme becoming Effective.

 

22.2             Termination

 

If the Scheme Implementation Agreement is terminated or the Option Scheme does not become Effective on or before the End Date, the obligations of each of Bidder and BidCo under this deed poll automatically terminate and the terms of this deed poll will be of no further force or effect.

 

22.3             Consequences of termination

 

If this deed poll is terminated under clause 9.2 then, in addition and without prejudice to any other rights, powers or remedies available to it:

 

(a)                 each of Bidder and BidCo is released from its obligations to further perform this deed poll except those obligations under clause 26.2; and

 

(b)                 each Scheme Optionholder retains the rights they have against Bidder and/or BidCo (as the case may be) in respect of any breach of this deed poll Bidder which occurs before termination.

 

23.                Obligation to pay Option Scheme Consideration

 

Subject to clause 9:

 

(a)                 BidCo undertakes in favour of each Scheme Optionholder that it will:

 

(i)                  deposit the aggregate amount of the Option Scheme Consideration payable to all Scheme Optionholders in cleared funds into the trust account nominated by Talison in accordance with clause 5.1 of the Option Scheme; and

 

(ii)                 undertake all other actions attributed to it under the Option Scheme,

 

in accordance with the Option Scheme; and

 

(b)                 Bidder undertakes in favour of each Scheme Optionholder that it will procure that BidCo observes and performs all obligations contemplated of BidCo under the Option Scheme in accordance with the Option Scheme.

 

24.               Warranties

 

(a)                 Bidder represents and warrants that:

 

(i)                  it is a corporation validly existing under the laws of its place of registration;

 

(ii)                 the execution and delivery by it of this deed poll has been (or, prior to the Option Scheme becoming Effective, will be) properly authorised by all necessary corporate action and it has full corporate power and lawful authority to perform or cause to be performed its obligations under this 

 

3

 

deed poll and to carry out or cause to be carried out the transactions contemplated by this deed poll; and

 

(iii)                this deed poll will constitute legally valid and binding obligations on it enforceable in accordance with its terms (subject to any necessary stamping) and does not conflict with or result in a breach of a default under:

 

A.                  its constituent documents; or

 

B.                  any writ, order or injunction, judgment, law, rule or regulation to which it is party, or by which it is bound.

 

(b)                 BidCo represents and warrants that:

 

(i)                  BidCo is a [·];

 

(ii)                 the execution and delivery by it of this deed poll has been (or prior to the Scheme becoming Effective, will be) properly authorised by all necessary action and it has full power and lawful authority to perform or cause to be performed its obligations under this deed poll and to carry out or cause to be carried out the transactions contemplated by this deed poll; and

 

(iii)                this deed poll will constitute legally valid and binding obligations on it enforceable in accordance with its terms (subject to any necessary stamping) and does not conflict with or result in a breach of a default under:

 

A.                  its constituent or equivalent documents; or

 

B.                  any writ, order or injunction, judgment, law, rule or regulation to which it is party, or by which it is bound.

 

25.                Continuing obligations

 

This deed poll is irrevocable and, subject to clause 9, remains in full force and effect until:

 

(a)                 each of Bidder and BidCo has fully performed its obligations under this deed poll; or

 

(b)                 the earlier termination of this deed poll under clause 9.2.

 

26.                General

 

26.1             Notices

 

(a)                 All notices or other communication to Bidder or BidCo in respect of this deed poll must be:

 

(i)                  in writing;

 

(ii)                 signed by the sender or by a person duly authorised by the sender;

 

(iii)                addressed in the manner and delivered or sent by prepaid ordinary post to the address, or sent by fax to the fax number, relevantly described below:

 

4

 

	
Address:
    	
 
    	
100 Overlook Center 
   Princeton, New Jersey, 08540 
   United States of America
    
	
 
    	
 
    	
 
    
	
Facsimile:
    	
 
    	
+1 609 734-6406
    
	
 
    	
 
    	
 
    
	
Attentions:
    	
 
    	
Thomas J. Riordan
    
	
 
    	
 
    	
 
    
	
With a copy to:
    	
 
    	
Gilbert + Tobin
    
	
 
    	
 
    	
 
    
	
Address:
    	
 
    	
2 Park Street, Sydney, 2000 
   Australia
    
	
 
    	
 
    	
 
    
	
Facsimile:
    	
 
    	
+61 2 9263 4111
    
	
 
    	
 
    	
 
    
	
Attention:
    	
 
    	
Peter Cook and David Clee
    

 

(b)                 Any notice or other communication given in accordance with clause 26.1(a) will be deemed to have been duly given as follows:

 

(i)                  if delivered by hand, on delivery at the address of the addressee, unless that delivery is made on a non-Business Day, or after 5.00 pm on a Business Day, in which case that communication will be deemed to be received at 9.00 am on the next Business Day;

 

(ii)                 if sent by pre-paid mail, on the third Business Day after posting; and

 

(iii)                if sent by facsimile, at the local time (in the place of receipt of the facsimile) which then equates to the time at which that facsimile is sent as shown on the transmission report which is produced by the machine from which that facsimile is sent and which confirms transmission of that facsimile in its entirety, unless that local time is a non-Business Day, or after 5.00 pm on a Business Day, in which case that communication will be deemed to be received at 9.00 am on the next Business Day.

 

26.2             Duty

 

BidCo will:

 

(a)                 pay or procure the payment of all transaction duties and any related fines and penalties in respect of this deed poll, the performance of this deed poll and each transaction effected by or made under this deed poll (including in connection with the transfer of Scheme Options to BidCo in accordance with the terms of the Option Scheme); and

 

(b)                 indemnify each Scheme Optionholder against any liability arising from failure to comply with clause 13.2(a).

 

26.3             Waiver

 

(a)                 Waiver of any right arising from a breach of this deed poll or of any right, power, authority, discretion or remedy arising upon default under this deed poll must be in writing and signed by the party granting the waiver.

 

(b)                 A failure or delay in exercise, or partial exercise, of:

 

(i)                  a right arising from a breach of this deed poll; or

 

5

 

(ii)                 a right, power, authority, discretion or remedy created or arising upon default under this deed poll,

 

does not result in a waiver of that right, power, authority, discretion or remedy.

 

(c)                 A party is not entitled to rely on a delay in the exercise or non-exercise of a right, power, authority, discretion or remedy arising from a breach of this deed poll or on a default under this deed poll as constituting a waiver of that right, power, authority, discretion or remedy.

 

(d)                 A party may not rely on any conduct of another party as a defence to the exercise of a right, power, authority, discretion or remedy by that other party.

 

(e)                 This clause 26.3 may not itself be waived except in writing.

 

26.4             Variation

 

This deed poll may be amended only by another deed poll entered into by Bidder and BidCo, and then only if the amendment is agreed to by Talison and, if after the First Court Date,  the Court indicates that the amendment would not preclude approval of the Option Scheme.

 

26.5             Cumulative rights

 

The rights, powers and remedies of Bidder, BidCo and each Scheme Optionholder under this deed poll are cumulative and do not exclude any other rights, powers or remedies provided by the law independently of this deed poll.

 

26.6             Assignment

 

The rights and obligations of each of Bidder and BidCo and the rights of each Scheme Optionholder under this deed poll are personal and must not be assigned, charged or otherwise dealt with at law or in equity.

 

26.7             Further action

 

Bidder and BidCo will promptly do all things and execute and deliver all further documents required by law to give effect to this deed poll and the transactions contemplated by it.

 

26.8             Governing law and jurisdiction

 

(a)                 This deed poll is governed by the laws of the state of Western Australia.

 

(b)                 Each of Bidder and BidCo irrevocably and unconditionally submits to the non-exclusive jurisdiction of the courts of the state of Western Australia for any proceedings in connection with this deed poll and waives any right it may have to object to an action being brought in those courts including by claiming that the action has been brought in an inconvenient forum.

 

6

 

Executed as a deed poll.

 

 

	
Executed by 
    Rockwood Holdings, Inc. 
    in   accordance with its constituent documents and the laws of the place of its   incorporation or registration, and in the presence of:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Signature of [·]
    	
 
    	
Signature of [·]
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Name of [·]
    	
 
    	
Name of [·]
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Executed by 
    [·]:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Signature of [·]
    	
 
    	
Signature of [·]
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Name of [·]
    	
 
    	
Name of [·]
    

 

7Exhibit 4.1

 

EXECUTION COPY

 

NOTES AND WARRANTS PURCHASE AGREEMENT

 

This Notes and Warrants
Purchase Agreement (this “Agreement”) is made and entered into as of August 24, 2012, by and among
ChinaCast Education Corporation, a Delaware corporation (the “Company”), Fir Tree Value Master Fund,
L.P. (“Fir Tree Value”), Fir Tree Capital Opportunity Master Fund, L.P. (“Fir Tree
Capital” and, collectively with Fir Tree Value, “Fir Tree”), Lake Union Capital TE Fund, LP
(“Lake Union Capital TE”), MRMP Managers LLC (“MRMP”), Harkness Trust
(“Harkness”), Ashford Capital Partners, L.P. (“Ashford”), Anvil Investment Associates,
L.P. (“Anvil”), Columbia Pacific Opportunity Fund, L.P. (“Col-Pac”), Special Situations
Fund III QP, L.P. (“SSF III”), Special Situations Cayman Fund, L.P. (“SSF Cayman”),
Parsifal Partners LLC (“Parsifal”), Park Financial Corporation (“Park”), Derek
Feng, Doug Woodrum, Daniel Tseung, Stephen Markscheid, Allen R. DeCotiis, Alan N. Colner, Fred Tarter, Sanford M. Schwartz, Stamps
Family Partnership III, LP (“Stamps”), Peter Keane, Howard S. Berl Trust and Michael Berl (each
of Fir Tree Value, Fir Tree Capital, Lake Union Capital TE, MRMP, Harkness, Ashford, Anvil, Col-Pac, SSF III, SSF
Cayman, Parsifal, Park, Derek Feng, Doug Woodrum, Daniel Tseung, Allen R. DeCotiis, Alan N. Colner, Fred Tarter, Sanford M.
Schwartz, Stamps, Peter Keane, Howard S. Berl Trust and Michael Berl, individually, a
“Purchaser” and collectively, the “Purchasers”), and Lake Union Capital Fund, LP
(“Lake Union Capital”).

 

RECITALS

 

WHEREAS, Fir Tree Value, Fir Tree Capital,
Lake Union Capital, Lake Union Capital TE, MRMP, Harkness, Ashford, Anvil and Col-Pac (collectively, the “Existing Purchasers”)
and the Company are party to (a) a Notes and Warrants Purchase Agreement, dated as of April 10, 2012 (the “Existing Agreement”),
pursuant to which the Company sold the notes and warrants described therein to the Existing Purchasers on April 10, 2012, and (b)
a Borrowing Notice and Acknowledgement, dated as of May 18, 2012 (the “Borrowing Notice”), pursuant to which
the Company sold the notes and warrants described therein to the Existing Purchasers on May 18, 2012.

 

WHEREAS, the Company is seeking additional
financing from the Purchasers for the purposes set out in a mutually agreed upon schedule of proceeds.

 

WHEREAS, the Company and each Purchaser
is executing and delivering this Agreement in reliance upon the exemption from securities registration afforded by Section 4(2)
of the Securities Act of 1933, as amended (the “1933 Act”), and Rule 506 of Regulation D (“Regulation
D”) as promulgated by the United States Securities and Exchange Commission (the “SEC”) under the 1933
Act.

 

WHEREAS, the Company has authorized certain
promissory notes of the Company, in substantially the form attached hereto as Exhibit A (each, a “Note,”
and collectively, the “Notes”).

 

WHEREAS, each Purchaser wishes to purchase,
and the Company wishes to sell, upon the terms and conditions stated in this Agreement, that aggregate principal amount of Notes
as set forth opposite such Purchaser’s name in Annex I attached hereto.

 

WHEREAS, in consideration for such Notes,
the Company shall issue to each Purchaser warrants as set forth opposite such Purchaser’s name in Annex I attached
hereto, in substantially the form attached hereto as Exhibit B (the “Warrants”) exercisable for shares
of the Company’s common stock (the “Common Stock”), pursuant to the terms of this Agreement. The shares
of Common Stock issuable upon exercise of the Warrants are referred to herein as the “Warrant Shares.”

 

WHEREAS, contemporaneously with the Closing
(as hereinafter defined), the Company, the Purchasers and Lake Union Capital will enter into a registration rights agreement (the
“Registration Rights Agreement”) substantially in the form attached hereto as Exhibit C.

 

Whereas,
in consideration for the Existing Purchasers providing their consent to the transactions contemplated under this Agreement, the
Company has agreed to (a) change from $1.00 to $0.40 the exercise price for all warrants sold to the Existing Purchasers under
the Existing Agreement and the Borrowing Notice (the “Existing Warrants”), (b) provide the same anti-dilution
adjustments with respect to warrants sold to the Existing Purchasers under the Existing Agreement and the Borrowing Notice as provided
to the Purchasers hereunder, and (c) increase the number of Existing Warrants issuable to the Existing Purchasers such that each
Existing Purchaser will receive one warrant for every $1.00 of notes sold to such Existing Purchaser under the Existing Agreement
and the Borrowing Notice.

 

    	1

    	 

    
 

WHEREAS, the Notes, the Warrants and the
Warrant Shares collectively are referred to herein as “Securities”.

 

NOW, THEREFORE, in consideration of the
premises and the agreements set forth below, and for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties agree as follows:

 

article
1 

Purchase and Sale;
Closing

 

Section
1.1    Sale and Purchase.
Subject to the terms and conditions of this Agreement, the Company hereby agrees to sell, transfer and assign to each Purchaser
the aggregate principal amount of the Note set opposite such Purchaser’s name in Annex I
attached hereto, and each Purchaser hereby agrees to purchase from the Company the aggregate principal amount of the Note set opposite
such Purchaser’s name in Annex I attached hereto. 

 

Section
1.2    Purchase Price.
At the Closing (as hereinafter defined) or such other date that is mutually agreed by the parties hereto, upon delivery to such
Purchaser of such Purchaser’s Note, duly executed by the Company and registered in the name of the Purchaser or the Purchaser’s
nominee, Purchaser shall pay to the Company the U.S. dollar amount set opposite such Purchaser’s name in Annex I
attached hereto by wire transfer of immediately available U.S. dollar funds to the bank account designated in writing by the Company
to each Purchaser prior to the Closing.

 

Section
1.3    The Closings.
The closing (the “Closing”) of the purchase and sale of the
Notes shall occur on August 24, 2012, or such other date that is mutually agreed by the parties hereto (the “Closing
Date”). The Closing shall take place remotely via the exchange of documents
and signatures or at such location as may be mutually acceptable by the parties.

 

Section
1.4    Securities Act Exemption.
The sale of the Securities to the Purchasers will be made without registration under the 1933 Act, in reliance upon the exemption
afforded by Section 4(2) of the 1933 Act or pursuant to other available exemptions from the registration requirements of the 1933
Act and in reliance on similar exemptions under state securities or “blue sky” laws.

 

Section
1.5    Other Agreements.
Concurrently with or immediately following the Closing, the Company shall execute and deliver the Note(s) and Warrant(s) set forth
opposite such Purchaser’s name in Annex I hereto. The Notes, the Warrants,
this Agreement and the Registration Rights Agreement are collectively referred to herein as the “Transaction Documents.”
Contemporaneously with the Closing, each of the Company, the Purchasers and Lake Union Capital shall execute and deliver the Registration
Rights Agreement.

 

    	2

    	 

    
 

Section
1.6    Consents.
Each of the Existing Purchasers hereby consents to the Company’s sale and issuance of the Notes, Warrants and Warrant Shares
to the Purchasers pursuant to this Agreement and the related rights under this Agreement and the Registration Rights Agreement.
In connection with the transactions contemplated under this Agreement (a) each of the Existing Purchasers hereby waives the Company’s
obligation to comply with the provisions of Section 6 of the Notes issued pursuant to the Existing Agreement and the Borrowing
Notice solely with respect to Debt (as defined in such Notes) incurred pursuant to this Agreement, (b) the Company, each of the
Purchasers and each of the Existing Purchasers hereby agree that (i) the notes sold pursuant to this Agreement, the Existing Agreement
and the Borrowing Notice shall be treated as one series (the “Notes Series”)
and (A) any and all pre-payments on such notes shall be applied pro rata across the notes in the Notes Series that are then outstanding,
(ii) except as provided in the foregoing clause (i), any and all payments of principal and interest any note shall be applied pro
rata across the notes in the same Notes Tranche, (iii) the terms of the notes in the Notes Series may be amended, waived or modified
by the parties to such notes (provided, however, that (x) without the prior written consent of the holders of each
of the notes in the Notes Series, no waiver, modification or amendment shall be effective that would (1) reduce the amount of,
or delay payment of, any prepayment premium on any note in the Notes Series, (2) waive a default in the payment of any prepayment
premium on any note in the Notes Series, (3) permit any principal amount repaid under any note in the Notes Series to be reborrowed,
(4) impair the rights of any holder of any note in the Notes Series to receive payments of principal of or interest on such a note
on or after the due date therefor or to institute suit for the enforcement of any payment on any such note, (5) render any amount
payable in respect of any note in the Notes Series payable in a currency other than U.S. dollars or (6) affect any provision of
any note concerning the amendment thereof or pro rata payment requirements applicable thereto (other than any provision solely
relating to pro rata payments among holders of notes in the same Notes Tranche), (y) without the prior written consent of the holders
of each of the notes in the applicable Notes Tranche, no waiver, modification or amendment shall be effective that would (1) extend
the maturity date of any note in the Notes Tranche, (2) reduce the amount of, or delay payment of, any principal of or premium
or interest on any note in the Notes Tranche, (3) waive a default in the payment of principal of or premium or interest on any
note in the Notes Tranche or (4) affect any provision of any note in the Notes Tranche relating to pro rata payments among holders
of notes in the Notes Tranche, and (z) the Company shall notify all holders of any notes in a Note Series of any waiver, modification
or amendment of any note in such Note Series and if such waiver, modification or amendment is materially favorable to the applicable
holder, offer to make the same waiver, modification or amendment with respect to each note in the Note Series), (iv) the definition
of “Permitted Debt” in the notes in the Notes Series may permit debt existing or arising under any note in the Notes
Series and (v) an event of default under any note in the Notes Series shall constitute an event of default under each note in the
Notes Series, (c) each of the Existing Purchasers hereby waives any default or event of default under the notes included in the
Notes Series to the extent arising prior to the date hereof and (d) the Company and each of the Existing Purchasers hereby agree
that any and all rights and obligations relating to the registration of any securities of the Company as set forth in the Existing
Agreement and the Borrowing Notice or otherwise shall be terminated concurrently with the execution of the Registration Rights
Agreement and all existing breaches or violations of such rights and obligations relating to such registration are waived by the
Company and each of the Existing Purchasers. For purposes of the foregoing, “Notes Tranche”
means notes in the Notes Series having the same date of issuance, interest payment dates and maturity date.

 

    	3

    	 

    
 

article
2

Representations and Warranties of the Purchasers

 

Each Purchaser hereby severally makes the
following representations and warranties, each of which is true and correct on the date hereof.

 

Section
2.1    Existence and Power.
The Purchaser either (i) is duly organized and validly existing under the laws of the jurisdiction of its organization and has
the power, authority and capacity to execute and deliver this Agreement, to perform its obligations hereunder, and to consummate
the transactions contemplated hereby, or (ii) is a natural person.

 

Section
2.2    No Conflict.
The execution and delivery of this Agreement by the Purchaser, and the performance by the Purchaser of the transactions contemplated
hereby, do not and will not (i) if the Purchaser is a legal entity and not a natural person, constitute a default or violation
under the organizational and/or management documents of the Purchaser, or (ii) conflict with or violate any laws, judgments, orders
or decrees applicable to the Purchaser or by which its properties or assets are bound, except for such breaches, conflicts, defaults,
rights or violations which would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
As used in this Agreement, the term “Material Adverse Effect”
shall mean, in respect of a party, a material adverse effect on the ability of such party to perform its obligations under the
Transaction Documents to which it may be a party.

 

Section
2.3    Valid and Enforceable Agreement;
Authorization. This Agreement has been duly executed and delivered by the Purchaser
and constitutes a legal, valid and binding obligation of the Purchaser, enforceable against the Purchaser in accordance with its
terms, except that such enforcement may be subject to (a) bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting or relating to enforcement of creditors’ rights generally, and (b) general principles of equity.

 

Section
2.4    No Public Sale or Distribution.  Such
Purchaser is (i) acquiring its (or his) Note, (ii) its (or his) Warrants and (iii) upon exercise of its (or his) Warrants will
acquire its (or his) Warrant Shares issuable upon exercise of such Warrants, in each case, for its (or his) own account (or in
connection with, or pursuant to, one or more participation agreements by such Purchaser with, and for the benefit of, one or more
funds or managed accounts that are “accredited investors” (as defined in Rule 501(a) of Regulation D) that are managed
by the investment manager of such Purchaser) and not with a view towards, or for resale in connection with, the public sale or
distribution thereof in violation of the 1933 Act. Such Purchaser is acquiring the Securities hereunder in the ordinary course
of its (or his) business.  Such Purchaser does not presently have any agreement or understanding, directly or indirectly,
with any Person to distribute any of the Securities.

 

Section
2.5    Accredited Investor Status.  Such
Purchaser is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D.

 

Section
2.6    Reliance on Exemptions.  Such
Purchaser understands that the Securities are being offered and sold to it in reliance on specific exemptions from the registration
requirements of United States federal and state securities laws and that the Company is relying in part upon the truth and accuracy
of, and such Purchaser’s compliance with, the representations, warranties, agreements, acknowledgments and understandings
of such Purchaser set forth herein in order to determine the availability of such exemptions and the eligibility of such Purchaser
to acquire the Securities.

 

Section
2.7    Information.  Such
Purchaser and such Purchaser’s advisors, if any, have been furnished with all materials relating to the business, finances
and operations of the Company and materials relating to the offer and sale of the Securities that have been requested by such Purchaser.  Such
Purchaser and such Purchaser’s advisors, if any, have been afforded the opportunity to ask questions of and receive answers
from the Company and to obtain any additional information which the Company possesses or can acquire without undue effort or expense,
and all such questions have been answered to the satisfaction of such Purchaser.  Neither such inquiries nor any other
due diligence investigations conducted by such Purchaser or such Purchaser’s advisors, if any, or its representatives shall
modify, amend or affect such Purchaser’s right to rely on the Company’s representations and warranties contained herein.  Such
Purchaser understands that such Purchaser’s investment in the Securities involves a high degree of risk.  Such
Purchaser has sought such accounting, legal and tax advice as such Purchaser has considered necessary to make an informed investment
decision with respect to such Purchaser’s acquisition of the Securities. 

 

    	4

    	 

    
 

Section
2.8    No Governmental Review.  Such
Purchaser understands that no United States federal or state agency or any other government or governmental agency has passed on
or made any recommendation or endorsement of the Securities or the fairness or suitability of the investment in the Securities
nor have such authorities passed upon or endorsed the merits of the offering of the Securities.

 

Section
2.9    Transfer or Resale.  Such
Purchaser understands: (i) the Securities are “restricted securities” under the federal securities laws and have not
been and are not being registered under the 1933 Act or any state securities laws, and may not be offered for sale, sold, assigned
or transferred unless (A) subsequently registered thereunder, (B) such sale, assignment or transfer is made in accordance with
Rule 144 or Rule 144A promulgated under the 1933 Act, as amended, (or a successor rule thereto) (collectively, “Rule
144”), (C) pursuant to an exemption or qualification under applicable securities
laws, or (D) such Purchaser shall have delivered to the Company an opinion of counsel, in a form reasonably satisfactory to the
Company, to the effect that such Securities to be sold, assigned or transferred may be sold, assigned or transferred pursuant to
an exemption from such registration; and (ii) except as set forth in the Registration Rights Agreement, neither the Company nor
any other Person is under any obligation to register the Securities under the 1933 Act or any state securities laws or to comply
with the terms and conditions of any exemption thereunder.  

 

Section
2.10   Legends.  Such Purchaser understands that the
certificates or other instruments representing such Purchaser’s Note and Warrants and, until such time as the resale of
such Purchaser’s Warrant Shares have been registered under the 1933 Act, the stock certificates representing such
Purchaser’s Warrant Shares, except as set forth below, shall bear any legend as required by the “blue sky”
laws of any state and a restrictive legend in substantially the following form (and a stop-transfer order may be placed
against transfer of such stock certificates):

 

NEITHER THE ISSUANCE AND SALE OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 (AS AMENDED, THE “ACT”) OR UNDER THE SECURITIES LAWS OF ANY STATE. THE SECURITIES MAY NOT BE TRANSFERRED,
SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, (B) COMPLIANCE
WITH RULE 144 OR RULE 144A PROMULGATED UNDER THE ACT (OR A SUCCESSOR RULE THERETO), (C) AN EXEMPTION OR QUALIFICATION UNDER APPLICABLE
SECURITIES LAWS OR (D) AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED. ANY
ATTEMPT TO TRANSFER, SELL, PLEDGE OR HYPOTHECATE THIS SECURITY IN VIOLATION OF THESE RESTRICTIONS SHALL BE VOID.

 

    	5

    	 

    
 

Section
2.11   General Solicitation.  Such Purchaser is not purchasing
the Securities as a result of any advertisement, article, notice or other communication regarding the Securities published in
any newspaper, magazine or similar media or broadcast over television or radio or presented at any seminar.

 

 

article
3

Representations and Warranties of the Company

 

The Company hereby makes the following representations
and warranties, each of which is true and correct on the date hereof.

 

Section
3.1    Existence and Power.
The Company is an entity duly incorporated or otherwise organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization (as applicable), with the requisite power and authority to own and use its properties
and assets and to carry on its business as currently conducted. The Company has the requisite power and authority to execute and
deliver the Transaction Documents, to perform its obligations thereunder and consummate the transactions contemplated thereby.

 

Section
3.2    Capitalization.
Annex II sets forth (a) the authorized capital stock of the Company as of
the date hereof; (b) the number of shares of capital stock issued and outstanding as of the date set forth therein; (c) the number
of warrants sold to the Existing Purchasers pursuant to the Existing Agreement and the Borrowing Notice (after taking into account
the increase described in the penultimate recital to this Agreement); and (d) to the knowledge of the Company based on its periodic
reports filed with the SEC, the number of outstanding options, warrants or other rights to purchase shares of capital stock of
the Company. Except pursuant to the Registration Rights Agreement and the other agreements described in Annex III,
no Person has the right to require the Company to register any securities of the Company under the 1933 Act, whether on a demand
basis or in connection with the registration of securities of the Company for its own account or for the account of any other securityholder.
No Person is entitled to pre-emptive or similar statutory or contractual rights with respect to any securities of the Company.
Except as expressly provided in the penultimate recital to this Agreement and as otherwise may be provided by the Existing Agreement
and the Borrowing Notice, the issuance and sale of the Securities hereunder will not result in the adjustment of the exercise,
conversion, exchange or reset price of any outstanding security.

 

Section
3.3    Valid and Enforceable Agreements;
Authorization. Each of this Agreement and the Registration Rights Agreement has been
duly executed and delivered by the Company and constitutes a legal, valid and binding obligation of the Company, enforceable against
the Company in accordance with its terms, except that such enforcement may be subject to (a) bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting or relating to enforcement of creditors’ rights generally, and (b) general
principles of equity.

 

Section
3.4    Valid Issuance of the Securities.
The Securities, when issued and delivered in accordance with the terms and for the consideration set forth in this Agreement, will
constitute legal and binding obligations of the Company, be validly issued and free of restrictions on transfer other than restrictions
on transfer under this Agreement, the Note(s), the Warrants or the Warrant Shares, applicable state and federal securities laws
and liens or encumbrances created by or imposed by the Purchaser, and enforceable against the Company in accordance with their
terms, except that such enforcement may be limited by (a) bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting or relating to enforcement of creditors’ rights generally, and (b) general principles of equity. The
Warrant Shares have been duly reserved for issuance, and upon issuance in accordance with the terms of the Warrants will be validly
issued, fully paid and nonassessable and free of restrictions on transfer other than restrictions on transfer under this Agreement,
the Warrants or the Warrant Shares, applicable federal and state securities laws and liens or encumbrances created by or imposed
by the Purchaser.

 

    	6

    	 

    
 

Section
3.5    Consents.
The execution, delivery and performance by the Company of the Transaction Documents and the offer, issuance and sale of the Securities
require no consent of, action by or in respect of, or filing with, any person, governmental body, agency, or official except (a)
such as will be obtained or made by the Company under the 1933 Act and applicable state securities laws and except such as may
be required by federal and state securities laws with respect to the Company’s obligations under the Registration Rights
Agreement or (b) as will have been obtained or made contemporaneously with or prior to the Closing. 

 

Section
3.6    No Conflicts.
The execution, delivery and performance of the Transaction Documents by the Company and the issuance and sale of the Securities
will not (i) conflict with or result in a breach or violation of (a) any of the terms and provisions of, or constitute a default
under the Company’s Certificate of Incorporation or the Company’s Bylaws, both as in effect on the date hereof, or
(b) any statute, rule, regulation or order of any governmental agency or body or any court, domestic or foreign, having jurisdiction
over the Company, any Subsidiary or any of their respective assets or properties, or (ii) conflict with, or constitute a material
default (or an event that with notice or lapse of time or both would become a material default) under, result in the creation of
any material lien, encumbrance or other adverse claim upon any of the properties or assets of the Company or any Subsidiary or
give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both)
of, any material contract, agreement, instrument or understanding to which, to the knowledge of the Company, the Company or any
Subsidiary is a party or by which any of them are bound or as to which any of their respective assets are subject. An entity shall
be deemed to be a “Subsidiary” of another person if such person directly or indirectly owns, beneficially or of record,
an amount of voting securities of other interests in such entity that is sufficient to enable such person to elect at leased a
majority of the members of such entity’s board of directors or other governing body, or at least 50% of the outstanding equity
or financial interests of such entity.

 

Section
3.7    Certain Reports.
All of the disclosures in the Company’s Current Reports on Form 8-K filed with the SEC, commencing with the report filed
on March 23, 2012, through and including the business day immediately prior to the execution and delivery of this Agreement (the
“8-Ks”) were, as of the respective dates of such filings (or,
if amended subsequent thereto, as of the date of the last such amendment of such filings), true and correct descriptions, in all
material respects, of the matters purported to be described therein. Each agreement, contract, instrument or other document filed
as an exhibit to any such 8-K is a true, correct and complete copy thereof.

 

Section
3.8    Brokers and Finders.
No Person will have, as a result of the transactions contemplated by the Transaction Documents, any valid right, interest or claim
against or upon the Company, any Subsidiary or a Purchaser for any commission, fee or other compensation pursuant to any agreement,
arrangement or understanding entered into by or on behalf of the Company.

 

Section
3.9    No General Solicitation.  Neither
the Company, nor any of its Subsidiaries or affiliates, nor any Person acting on its or their behalf, has engaged in any form of
general solicitation or general advertising (within the meaning of Regulation D) in connection with the offer or sale of the Securities.  

 

Section
3.10   No Integrated Offering.  None of the Company, its Subsidiaries,
any of their affiliates, and any Person acting on their behalf has, directly or indirectly, made any offers or sales of any security
or solicited any offers to buy any security, under circumstances that would require registration of the issuance of any of the
Securities under the 1933 Act, whether through integration with prior offerings or otherwise.

 

    	7

    	 

    
 

Section
3.11      Valid
Private Placement. Assuming the accuracy of the representations and warranties of
the Purchasers in Article 2 hereof, the offer and sale of the Securities to the Purchasers as contemplated hereby is exempt from
the registration requirements of the 1933 Act.

 

Section
3.12      Disclosures.
Neither the Company nor any Person acting on its behalf has provided any Purchaser, its agents or counsel with any information
that constitutes or might constitute material, non-public information, other than the terms of the transactions contemplated hereby,
except for information provided to one or more of the Purchasers pursuant to a separate confidentiality agreement entered between
the Company and each of such Purchasers. As a result, Purchasers who have elected not to receive material non-public information
are relying on the Company’s public filings.

 

Section
3.13      No
Default. There is no default or event of default existing under any note sold pursuant
to the Existing Agreement or the Borrowing Notice, except as have been waived in accordance with the terms hereof and thereof.

 

article
4 

Covenants of the Company

 

Section
4.1            
Use of Proceeds.  The Company shall use the proceeds from
the sale of the Securities solely for the purposes set out in a mutually agreed upon schedule of proceeds.

 

Section
4.2            
Warrants. Concurrently with or immediately following the Closing,
the Company shall issue and deliver to each Purchaser the number of Warrants set forth opposite such Purchaser’s name in
Annex I attached hereto, in substantially the form attached hereto as Exhibit
B.

 

Section
4.3            
[Reserved]

 

Section
4.4            
Information Rights. So long as the Notes are outstanding, any Purchaser
holding the Notes shall have the right to receive (i) a weekly report detailing the use of the proceeds from the Notes issued pursuant
to this Agreement and (ii) any other information that the Purchasers may reasonably request.

 

Section
4.5            
Reservation of Common Stock. The Company shall at all times reserve
and keep available out of its authorized but unissued shares of Common Stock, solely for the purpose of providing for the exercise
of the Warrants, such number of shares of Common Stock as shall from time to time equal the number of Warrant Shares issuable pursuant
to the then-outstanding Warrants.

 

Section
4.6            
Removal of Legends. The legend specified in Section 2.10 above shall
be removed and the Company shall issue a certificate without such legend to the holder of the Securities upon which it is stamped
or issue to such holder by electronic delivery at the applicable balance account at The Depository Trust Company (“DTC”),
if (i) such Securities are registered for resale under the 1933 Act, (ii) in connection with a sale, assignment or other transfer,
such holder provides the Company with an opinion of counsel, in a form reasonably satisfactory to the Company, to the effect that
such sale, assignment or transfer of the Securities may be made without registration under the applicable requirements of the 1933
Act, or (iii) the Securities can be sold, assigned or transferred pursuant to Rule 144 or Rule 144A, if applicable, and the Purchaser
has provided the Company with a customary representation that Rule 144 or Rule 144A applies thereto. From and after the earlier
of such dates, upon a Purchaser’s written request, the Company shall promptly cause certificates evidencing the Purchaser’s
Securities to be replaced with certificates which do not bear such restrictive legends. Upon the earlier of (i) registration for
resale pursuant to the Registration Rights Agreement or (ii) the Warrant Shares becoming freely tradable by a non-affiliate pursuant
to Rule 144, the Company shall deliver to the transfer agent for the Common Stock (the “Transfer Agent”)
irrevocable instructions that the Transfer Agent shall reissue a certificate representing shares of Common Stock without legends
upon receipt by such Transfer Agent of the legended certificates for such shares, together with either (1) a customary representation
by the Purchaser that Rule 144 or Rule 144A applies to the shares of Common Stock represented thereby or (2) a statement by the
Purchaser that such Purchaser has sold the shares of Common Stock represented thereby in accordance with the Plan of Distribution
contained in the registration statement. When the Company is required to cause an unlegended certificate to replace a previously
issued legended certificate, if: (1) the unlegended certificate is not delivered to a Purchaser within three (3) Business Days
of submission by that Purchaser of a legended certificate and supporting documentation to the Transfer Agent as provided above
and (2) prior to the time such unlegended certificate is received by the Purchaser, the Purchaser, or any third party on behalf
of such Purchaser or for the Purchaser’s account, purchases (in an open market transaction or otherwise) shares of Common
Stock to deliver in satisfaction of a sale by the Purchaser of shares represented by such certificate (a “Buy-In”),
then the Company shall pay in cash to the Purchaser (for costs incurred either directly by such Purchaser or on behalf of a third
party) the amount by which the total purchase price paid for Common Stock as a result of the Buy-In (including brokerage commissions,
if any) exceeds the proceeds received by such Purchaser as a result of the sale to which such Buy-In relates. The Purchaser shall
provide the Company written notice indicating the amounts payable to the Purchaser in respect of the Buy-In, which notice shall
be final and binding on the Company and such Purchaser, absent manifest error.

 

    	8

    	 

    
 

Section
4.7            
Equal Treatment of Purchasers. No consideration shall be offered
or paid to any Person to amend or consent to a waiver or modification of any provision of any of the Transaction Documents unless
the same consideration is also offered to all of the parties to the Transaction Documents. For clarification purposes, this provision
constitutes a separate right granted to each Purchaser by the Company and negotiated separately by each Purchaser, and is intended
for the Company to treat the Purchasers as one class and shall not in any way be construed as the Purchasers acting in concert
or as a group with respect to the purchase, disposition or voting of Securities or otherwise.

 

article
5

[Reserved]

 

article
6

Miscellaneous Provisions

 

Section
6.1    Public Disclosure.
The parties will consult with each other before issuing, and provide each other the opportunity to review and comment upon and
use reasonable efforts to agree on any press release, filing with the SEC or public statement with respect to this Agreement and
the transactions contemplated hereby and under the other Transaction Documents, and will not issue any such press release or make
any filings with the SEC or any public statement prior to such consultation and (to the extent practical) agreement, except as
may be required by law or by rules and regulations of, or pursuant to any agreement of, a stock exchange or trading system. Each
party will not unreasonably withhold approval from the others with respect to any public disclosure. Notwithstanding the other
provisions of this Section 6.1, by 8:30 a.m. (New York City time) on the trading day immediately following the Closing Date, the
Company shall file a Form 8-K disclosing the consummation of the transactions contemplated by this Agreement. In addition, the
Company will make such other filings and notices in the manner and time required by the SEC.

 

    	9

    	 

    
 

Section
6.2    Notice.
Any notice provided for in this Agreement shall be in writing and shall be either personally delivered, or mailed first class mail
(postage prepaid) with return receipt requested or sent by reputable overnight courier service (charges prepaid):

 

(a)               
if to a Purchaser, to such Purchaser’s address and facsimile number set forth on the Annex I hereto,
with copies to such Purchaser’s representatives as set forth on Annex I hereto.

 

(b)              
if to the Company, at its address, as follows:

 

ChinaCast Education Corporation

Room 701A, Building A, Golden Eagle Mansion

80 Hanxiao Road, Pudong

Shanghai 200437 China

Attention: Doug Woodrum

Fax: +(86) 21 6105 3354*8004

 

     with a copy to (which shall not constitute
notice):

 

Fried, Frank, Harris, Shriver
& Jacobson

9th Floor, Gloucester Tower,
The Landmark,

15 Queen’s Road Central

Hong Kong

Attention: Doug Freeman

Fax: +(852) 3760 3611

 

 

A party may by notice to the other parties designate additional
or different addresses for subsequent notices or communications. Notices will be deemed to have been given hereunder when delivered
personally, three business days after deposit in the U.S. mail postage prepaid with return receipt requested and two business days
after deposit postage prepaid with a reputable overnight courier service for delivery on the next business day.

 

Section
6.3    Entire Agreement.
This Agreement and the other Transaction Documents embody the entire agreement and understanding of the parties hereto with respect
to the subject matter hereof and supersede all prior and contemporaneous oral or written agreements, representations, warranties,
contracts, correspondence, conversations, memoranda and understandings between or among the parties or any of their agents, representatives
or affiliates relative to such subject matter, including, without limitation, any term sheets, emails or draft documents.

 

Section
6.4    Assignment; Binding Agreement.
This Agreement and the various rights and obligations arising hereunder shall inure to the benefit of and be binding upon the parties
hereto and their successors and assigns.

 

Section
6.5    Counterparts.
This Agreement may be executed in multiple counterparts, and on separate counterparts, each of which shall be deemed an original,
but all of which taken together shall constitute one and the same instrument. Any counterpart or other signature hereupon delivered
by facsimile shall be deemed for all purposes as constituting good and valid execution and delivery of this Agreement by such party.

 

Section
6.6    Governing Law; Consent to Jurisdiction;
Waiver of Jury Trial. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK. Each of the parties hereto irrevocably submits to the exclusive jurisdiction of the courts
of the State of New York located in New York County and the United States District Court for the Southern District of New York
for the purpose of any suit, action, proceeding or judgment relating to or arising out of this Agreement, the other Transaction
Documents and the transactions contemplated hereby and thereby. Service of process in connection with any such suit, action or
proceeding may be served on each party hereto anywhere in the world by the same methods as are specified for the giving of notices
under this Agreement. Each of the parties hereto irrevocably consents to the jurisdiction of any such court in any such suit, action
or proceeding and to the laying of venue in such court. Each party hereto irrevocably waives any objection to the laying of venue
of any such suit, action or proceeding brought in such courts and irrevocably waives any claim that any such suit, action or proceeding
brought in any such court has been brought in an inconvenient forum. EACH OF THE PARTIES HERETO WAIVES ANY RIGHT TO REQUEST A TRIAL
BY JURY IN ANY LITIGATION WITH RESPECT TO THIS AGREEMENT. 

 

    	10

    	 

    
 

Section
6.7    No Third Party Beneficiaries or Other
Rights. Nothing herein shall grant to or create in any person not a party hereto,
or any such person’s dependents or heirs, any right to any benefits hereunder, and no such party shall be entitled to sue
any party to this Agreement with respect thereto.

 

Section
6.8    Waiver; Consent.
This Agreement may not be changed, amended, terminated, augmented, rescinded or discharged (other than in accordance with its terms),
in whole or in part, except by a writing executed by the parties hereto. No waiver of any of the provisions or conditions of this
Agreement or any of the rights of a party hereto shall be effective or binding unless such waiver shall be in writing and signed
by the party claimed to have given or consented thereto. Except to the extent otherwise agreed in writing, no waiver of any term,
condition or other provision of this Agreement, or any breach thereof shall be deemed to be a waiver of any other term, condition
or provision or any breach thereof, or any subsequent breach of the same term, condition or provision, nor shall any forbearance
to seek a remedy for any noncompliance or breach be deemed to be a waiver of a party’s rights and remedies with respect to
such noncompliance or breach.

 

Section
6.9    Word Meanings.
The words such as “herein”, “hereinafter”, “hereof”, and “hereunder” refer to this
Agreement as a whole and not merely to a subdivision in which such words appear unless the context otherwise requires. The singular
shall include the plural, and vice versa, unless the context otherwise requires. The masculine shall include the feminine and neuter,
and vice versa, unless the context otherwise requires.

 

Section
6.10   Further Assurances. The Purchasers, Lake Union Capital and the Company
each hereby agree to execute and deliver, or cause to be executed and delivered, such other documents, instruments and agreements,
and take such other actions, as a party hereto may reasonably request in connection with the transactions contemplated by this
Agreement.

 

Section
6.11   Costs and Expenses. The Purchasers, Lake Union Capital and the Company
shall each pay their own respective costs and expenses incurred in connection with the negotiation, preparation, execution and
performance of this Agreement, including, but not limited to, attorneys’ fees.

 

Section
6.12   Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.

 

Section
6.13   Severability. If any one or more of the provisions contained
herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be
affected or impaired thereby.

 

    	11

    	 

    
 

Section
6.14   Independent Nature of Purchasers’ Obligations and Rights. The
obligations of each Purchaser under any Transaction Document are several and not joint with the obligations of any other Purchaser,
and no Purchaser shall be responsible in any way for the performance of the obligations of any other Purchaser under any Transaction
Document. The decision of each Purchaser to purchase Securities pursuant to the Transaction Documents has been made by such Purchaser
independently of any other Purchaser. Nothing contained herein or in any Transaction Document, and no action taken by any Purchaser
pursuant thereto, shall be deemed to constitute the Purchasers as a partnership, an association, a joint venture or any other kind
of entity, or create a presumption that the Purchasers are in any way acting in concert or as a group with respect to such obligations
or the transactions contemplated by the Transaction Documents. Each Purchaser acknowledges that no other Purchaser has acted as
agent for such Purchaser in connection with making its investment hereunder and that no Purchaser will be acting as agent of such
Purchaser in connection with monitoring its investment in the Securities or enforcing its rights under the Transaction Documents.
Each Purchaser shall be entitled to independently protect and enforce its rights, including, without limitation, the rights arising
out of this Agreement or out of the other Transaction Documents, and it shall not be necessary for any other Purchaser to be joined
as an additional party in any proceeding for such purpose. The Company acknowledges that each of the Purchasers has been provided
with the same Transaction Documents for the purpose of closing a transaction with multiple Purchasers and not because it was required
or requested to do so by any Purchaser.

 

 

[REMAINDER OF PAGE INTENTIONALLY LEFT
BLANK]

 

    	12

    	 

    
 

IN WITNESS WHEREOF, each of the parties
hereto has caused this Agreement to be executed as of the date first above written.

 

 

	 	Fir Tree Value Master Fund, L.P. 	 
	 	 	 	 
	 	By: 	 /s/ Don McCarthy	 
	 	Name: 	 Don McCarthy	 
	 	Title: 	 CFO	 

 

 

	 	Fir Tree Capital Opportunity Master Fund,
L.P. 	 
	 	 	 	 
	 	By: 	  /s/ Don McCarthy	 
	 	Name: 	 Don McCarthy	 
	 	Title: 	 CFO	 

 

 

	 	Lake Union Capital Fund, LP 	 
	 	 	 	 
	 	By: 	 /s/ Michael Self	 
	 	Name: 	 Michael Self	 
	 	Title: 	 Managing Member of the General Partner	 

 

 

	 	Lake Union Capital TE Fund, LP 	 
	 	 	 	 
	 	By: 	 /s/ Michael Self	 
	 	Name: 	  Michael Self	 
	 	Title: 	  Managing Member of the General Partner	 

 

 

Signature Page to Notes and Warrants Purchase
Agreement

 

    	13

    	 

    
 

	 	MRMP Managers LLC	 
	 	 	 	 
	 	By: 	 /s/ Ned L. Sherwood	 
	 	Name: 	 Ned L. Sherwood 	 
	 	Title: 	 Investment Manager 	 

 

 

	 	Harkness Trust	 
	 	 	 	 
	 	By: 	 /s/ Theodore H. Ashford	 
	 	Name: 	  Theodore H. Ashford	 
	 	Title: 	  Trustee	 

 

 

	 	Ashford Capital Management, Inc. w/ discretion f.b.o. 
 Ashford Capital Partners, L.P.
	 	 	 	 
	 	By: 	 /s/ Theodore H. Ashford III	 
	 	Name: 	  Theodore H. Ashford III	 
	 	Title: 	  CEO & CIO Ashford Capital Mgt., Inc.	 

 

 

	 	Ashford Capital Management, Inc. w/ discretion f.b.o. 
 Anvil Investment Associates, L.P.
	 	 	 	 
	 	By: 	 /s/ Theodore H. Ashford III	 
	 	Name: 	  Theodore
    H. Ashford III	 
	 	Title: 	  CEO & CIO Ashford Capital Mgt., Inc.	 

 

 

 

Signature Page to Notes and Warrants Purchase
Agreement 

 

    	14

    	 

    
 

	 	Columbia Pacific Opportunity Fund, L.P.	 
	 	 	 	 
	 	By: 	 /s/ Alex Washburn	 
	 	Name: 	  Alex Washburn	 
	 	Title: 	  Manager	 

 

 

	 	Special Situations Fund III QP, L.P.	 
	 	 	 	 
	 	By: 	 /s/ David Greenhouse	 
	 	Name: 	 David Greenhouse	 
	 	Title: 	 Partner	 

 

 

	 	Special Situations Cayman Fund, L.P.	 
	 	 	 	 
	 	By: 	 /s/ David Greenhouse 	 
	 	Name: 	 David Greenhouse	 
	 	Title: 	 Partner	 

 

 

	 	Daniel Tseung	 
	 	  	 
	 	 	 	 
	 	/s/ Daniel Tseung 	 
	 	 	 	 

 

	 	Stephen Markscheid	 
	 	 	 
	 	 	 	 
	 	/s/ Stephen Markscheid	 
	 	 	 	 

 

 

Signature Page to Notes and Warrants Purchase
Agreement 

 

    	15

    	 

    
 

	 	Fred Tarter	 
	 	  	 
	 	 	 	 
	 	/s/ Fred Tarter	 
	 	 	 	 

 

	 	Peter Keane	 
	 	 	 
	 	 	 	 
	 	/s/ Peter Keane	 
	 	 	 	 

 

 

Signature Page to Notes and Warrants Purchase
Agreement 

 

    	16

    	 

    

 

	 	Derek Feng	 
	 	  	 
	 	 	 	 
	 	/s/ Derek Feng	 
	 	 	 	 

 

	 	Doug Woodrum	 
	 	 	 
	 	 	 	 
	 	/s/ Doug Woodrum	 
	 	 	 	 

 

 

Signature Page to Notes and Warrants Purchase
Agreement 

 

    	17

    	 

    
 

 

	 	Parsifal Partners LLC	 
	 	 	 	 
	 	By: 	 /s/ Kenneth Rilander 	 
	 	Name: 	 Kenneth Rilander	 
	 	Title: 	  	 

 

 

	 	Alan N. Colner	 
	 	  	 
	 	 	 	 
	 	/s/ Alan N. Colner	 
	 	 	 	 

 

	 	Sanford M. Schwartz	 
	 	 	 
	 	 	 	 
	 	/s/ Sanford M. Schwartz	 
	 	 	 	 

 

	 	Allen R. DeCotiis	 
	 	 	 
	 	 	 	 
	 	/s/ Allen R. DeCotiis	 
	 	 	 	 

 

 

Signature Page to Notes and Warrants Purchase
Agreement 

 

    	18

    	 

    
 

	 	Park Financial Corporation	 
	 	 	 	 
	 	By: 	 /s/ Jeffrey Swanson 	 
	 	Name: 	 Jeffrey Swanson	 
	 	Title: 	 VP 	 

 

 

Signature Page to Notes and Warrants Purchase
Agreement 

 

    	19

    	 

    
 

 

	 	Stamps Family Partnership III, LP	 
	 	 	 	 
	 	By: 	 /s/ E. R. Stamps	 
	 	Name: 	 E. R. Stamps	 
	 	Title: 	  	 

 

 

	 	Howard S. Berl Trust	 
	 	 	 	 
	 	By: 	 /s/ Howard S. Berl 	 
	 	Name: 	 Howard S. Berl	 
	 	Title: 	 Trustee for the Howard S. Berl Trust	 

 

 

	 	Michael Berl	 
	 	 	 
	 	 	 	 
	 	/s/ Michael Berl	 
	 	 	 	 

 

  

Signature Page to Notes and Warrants Purchase
Agreement 

 

    	20

    	 

    
 

 

	 	ChinaCast Education Corporation	 
	 	 	 	 
	 	By: 	 /s/ Doug Woodrum	 
	 	Name: 	 Doug Woodrum	 
	 	Title: 	 Chief Financial Officer	 

 

 

Signature Page to Notes and Warrants Purchase
Agreement 

 

    	21

    	 

    
 

Annex I

 

SCHEDULE OF PURCHASERS

 

	Purchaser	
        Principal Amount of 

Note

         
	Purchase 

Price	
        Number of

        Warrants
	
        Notice Address

         

	Fir Tree Value Master Fund, L.P.	$333,615.80	$333,615.80	333,616	 
	Fir Tree Capital Opportunity Master Fund, L.P.	$63,384.20	$63,384.20	63,384	
	Lake Union Capital TE Fund, LP	$90,000	$90,000	90,000	
        

         

	MRMP Managers LLC	$78,000	$78,000	78,000	
	Harkness Trust	$10,000	$10,000	10,000	
        

         

	Ashford Capital Partners, L.P.	$265,000	$265,000	265,000	
        

         

 

    	22

    	 

    
 

	Anvil Investment Associates, L.P.	$80,000	$80,000	80,000	
        

         

	Columbia Pacific Opportunity Fund, L.P.	$125,000	$125,000	125,000	
        

	Special Situations Fund III QP, L.P.	$320,000	$320,000	320,000	
        

         

	Special Situations Cayman Fund, L.P.	$180,000	$180,000	180,000	
         

	Parsifal Partners LLC	$100,000	$100,000	100,000	
        

         

	Park Financial Corporation	$100,000	$100,000	100,000	
        

         

	Daniel Tseung	$35,000	$35,000	35,000	
         

	Derek Feng	$35,000	$35,000	35,000	
         

	Doug Woodrum	$30,000	$30,000	30,000	
         

 

    	23

    	 

    
 

	Stephen Markscheid	$25,000	$25,000	25,000	
         

	Allen R. DeCotiis	$50,000	$50,000	50,000	
         

	Alan N. Colner	$30,000	$30,000	30,000	
         

	Fred Tarter	$25,000	$25,000	25,000	
         

	Sanford M. Schwartz	$25,000	$25,000	25,000	
         

	Stamps Family Partnership III, LP	$50,000	$50,000	50,000	
         

	Peter Keane	$50,000	$50,000	50,000	
         

	Howard
    S. Berl Trust	$25,000	$25,000	25,000	 
	Michael
    Berl	$25,000	$25,000	25,000	 
	 	 	 	 	 
	Total:	$2,150,000	$2,150,000	2,150,000	 

 

    	24

    	 

    
 

Annex II

 

Capitalization

 

(a)   
Authorized share capital

 

		·	Common Stock: US$0.0001 par value; 100,000,000 shares authorized

		·	Preferred Stock: US$0.0001 par value; 1,000,000 shares authorized

 

(b)  
Issue and outstanding shares as of 7/23/12*

 

		·	Common Stock: 50,066,906

		·	Preferred Stock: 0

 

(c)   
Warrants sold pursuant to the Existing Agreement and the Borrowing Notice**

 

		·	1,096,182 warrants sold pursuant to the Existing Agreement

		·	1,096,182 warrants sold pursuant to the Borrowing Notice

 

(d)  
Outstanding warrants, options and rights

 

		·	255,000 warrants described in note 18 to the Company’s consolidated financial statements for the years ended December
31, 2008, 2009 and 2010, included in the Company’s Form 10-K/A filed on February 24, 2012

		·	1,200,000 options described in note 17 to the Company’s consolidated financial statements for the years ended December
31, 2008, 2009 and 2010, included in the Company’s Form 10-K/A filed on February 24, 2012

 

 

 

 

 

 

 

 

*These amounts do not take into account stock grants or share
cancellations subsequent thereto.

** These amounts take into account the Company’s agreement
herein to issue one warrant for each US$1.00 of notes sold to an Existing Purchaser under the Existing Agreement and the Borrowing
Notice.

 

    	25

    	 

    
  

Annex III

 

Registration Rights

 

The registration rights provided under the Stock Purchase Agreement
dated April 29, 2010 between the Company and Wu Shi Xin, filed as Exhibit 10.1 to the Form 8-K dated May 5, 2010

 

Registration Rights Agreement between the Company and Fir Tree,
dated as of November 23, 2009, filed as Exhibit 10.1 to the Form 8-K dated November 25, 2009

 

The registration rights set forth in the Existing Agreement
and the Borrowing Notice

 

The registration rights set forth in the warrant issued to Roth
Capital Partners, LLC on November 18, 2008

 

    	26

    	 

    
 

EXHIBIT A

 

FORM OF NOTE

 

    	27

    	 

    
 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (AS AMENDED, THE “ACT”) OR UNDER THE SECURITIES LAWS OF ANY
STATE. THIS SECURITY MAY NOT BE TRANSFERRED, SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF (A) AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT, (B) COMPLIANCE WITH RULE 144 OR RULE 144A PROMULGATED UNDER THE ACT (OR A SUCCESSOR RULE
THERETO), (C) AN EXEMPTION OR QUALIFICATION UNDER APPLICABLE SECURITIES LAWS OR (D) AN OPINION OF COUNSEL, REASONABLY SATISFACTORY
TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED. ANY ATTEMPT TO TRANSFER, SELL, PLEDGE OR HYPOTHECATE THIS SECURITY IN VIOLATION
OF THESE RESTRICTIONS SHALL BE VOID.

 

 

PROMISSORY NOTE

 

FOR VALUE RECEIVED, and subject to the
terms and conditions set forth herein, CHINACAST EDUCATION CORPORATION, a Delaware entity (the “Borrower”),
hereby unconditionally promises to pay to the order of [Name of Noteholder] or its (or his) assigns (the “Noteholder”,
and together with the Borrower, the “Parties”), the principal amount of [AMOUNT
OF LOAN] (the “Loan”), together with all accrued interest thereon, as
provided in this Promissory Note (the “Note”).

 

This Note has been issued pursuant to the
Notes and Warrants Purchase Agreement, dated as of August 24, 2012, by and among the Company, the Noteholder and the other parties
thereto (the “Purchase Agreement”). For avoidance of doubt, this Note is one of a series and is subject to the
payment, prepayment and other provisions applicable to all holders of notes in the Note Series (as defined below) as set forth
in the Purchase Agreement.

 

1.     Definitions. Capitalized terms used herein shall have the meanings set forth in this Section 1

.

“April
2012 Purchase Agreement” means the Notes and Warrants Purchase Agreement, dated as of April 10, 2012, by and among
the Company [, the Noteholder] and the other parties thereto.

 

“Applicable
Rate” means the rate equal to twenty percent (20.0%) per annum.

 

    	28

    	 

    
 

“Borrower” has
the meaning set forth in the introductory paragraph.

 

“Borrowing Notice” means
the Borrowing Notice and Acknowledgment, dated as of May 18, 2012, by and among the Borrower [, the Noteholder] and the other parties
thereto, which was made in accordance with the April 2012 Purchase Agreement.

 

“Business
Day” means a day other than a Saturday, Sunday or other day on which commercial banks in New York City are
authorized or required by law or executive order to close.

 

“Debt” of the Borrower,
means all (a) indebtedness for borrowed money; (b) obligations for the deferred purchase price of property or services, except
trade payables arising in the ordinary course of business; (c) obligations evidenced by notes, bonds, debentures or other similar
instruments; (d) obligations as lessee under capital leases; (e) obligations in respect of any interest rate swaps, currency exchange
agreements, commodity swaps, caps, collar agreements or similar arrangements entered into by the Borrower providing for protection
against fluctuations in interest rates, currency exchange rates or commodity prices or the exchange of nominal interest obligations,
either generally or under specific contingencies; (f) obligations under acceptance facilities and letters of credit; and (g) guaranties,
endorsements (other than for collection or deposit in the ordinary course of business), and other contingent obligations to purchase,
to provide funds for payment, to supply funds to invest in any Person, or otherwise to assure a creditor against loss, in each
case, in respect of indebtedness set out in clauses (a) through (f) of a Person other than the Borrower.

 

“Default” means
any of the events specified in Section 7 which constitutes an Event of Default or which, upon the giving of notice, the
lapse of time, or both pursuant to Section 7 would, unless cured or waived, become an Event of Default.

 

“Event
of Default” has the meaning set forth in Section 7.

 

“Governmental
Authority” means the government of any nation or any political subdivision thereof, whether at the national,
state, territorial, provincial, municipal or any other level, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions
of, or pertaining to, government (including any supranational bodies such as the European Union or the European Central Bank).

 

“Law” as
to any Person, means any law (including common law), statute, ordinance, treaty, rule, regulation, policy or requirement of any
Governmental Authority and authoritative interpretations thereon, whether now or hereafter in effect, in each case, applicable
to or binding on such Person or any of such Person’s properties or to which such Person or any of such Person’s properties
is subject.

 

“Lien” means
any mortgage, pledge, hypothecation, encumbrance, lien (statutory or other), charge or other security interest.

 

    	29

    	 

    
 

“Loan” has
the meaning set forth in the introductory paragraph.

 

“Maturity
Date” means the earlier of (a) August 24, 2013, and (b) the date on which all amounts under this Note shall
become due and payable pursuant to Section 9.

 

“Note” has
the meaning set forth in the introductory paragraph.

 

“Noteholder” has
the meaning set forth in the introductory paragraph.

 

“Notes
Series” has the meaning set forth in Section 4.6.

 

“Parties” has
the meaning set forth in the introductory paragraph.

 

“Permitted
Debt”  means Debt (a) existing or arising under this Note or any other Series Note; (b) existing as of the
date of this Note; (c) indebtedness of the Company in an amount not to exceed $5.0 million outstanding at any one time in the aggregate
for the purposes permitted under Section 4.1 of the Purchase Agreement and upon the same terms as this Note; provided, however,
if the terms of such indebtedness are materially more favorable than the terms of this Note, then the Noteholder shall be entitled
to receive the same terms of such indebtedness with respect to this Note; and (d) indebtedness of the Company which is subordinated
to this Note.

 

“Person” means
any individual, corporation, limited liability company, trust, joint venture, association, company, limited or general partnership,
unincorporated organization, Governmental Authority or other entity.

 

“Series
Holder” means the holder of any Series Note.

 

“Series
Note” means any note included in the Notes Series (including this Note).

 

“Tranche
Holder” means the holder of any Tranche Note.

 

“Tranche
Note” means any Series Note having the same date of issuance, interest payment dates and maturity date as this
Note.

 

2.     
Final Payment Date; Optional Prepayments.

 

2.1      
Final Payment Date. The aggregate unpaid principal amount of the Loan, all accrued and unpaid interest and all other
amounts payable under this Note shall be due and payable on the Maturity Date.

 

2.2      
Optional Prepayment. The Borrower may prepay the Loan prior to the Maturity Date in whole or in part at any time
or from time to time by paying 102.5% of the principal amount to be prepaid together with accrued interest on the prepaid principal
amount to the date of prepayment; provided, however, that if the Loan is repaid in full prior to the Maturity Date, the
Borrower shall pay to the Noteholder an additional amount equal to the greater of (a) ten percent (10.0%) of the greatest aggregate
principal amount of the Loan at any time outstanding minus the sum of (i) all interest paid thereon plus (ii) any prepayment penalties
paid in accordance with the first clause of this sentence and (b) zero. No prepaid amount may be reborrowed.

 

    	30

    	 

    
 

3.     
Interest.

 

3.1      
Interest Rate. Except as otherwise provided herein, the outstanding principal amount of the Loan made hereunder shall
bear interest at the Applicable Rate from the date the Loan was made until the Loan is paid in full, whether at maturity, upon
acceleration, by prepayment or otherwise.

 

3.2      
Interest Payment Dates. Interest shall be payable semi-annually in arrears to the Noteholder with the first interest
payment due on February 24, 2013.

 

3.3      
Computation of Interest. All computations of interest shall be made on the basis of a year of 365 days, and the actual
number of days elapsed. Interest shall accrue on the Loan on the day on which the Loan is made, and shall not accrue on the Loan
for the day on which it is paid.

 

3.4      
Interest Rate Limitation. If at any time and for any reason whatsoever, the interest rate payable on the Loan shall
exceed the maximum rate of interest permitted to be charged by the Noteholder to the Borrower under applicable Law, such interest
rate shall be reduced automatically to the maximum rate of interest permitted to be charged under applicable Law.

 

4.     
Payment Mechanics.

 

4.1      
Manner of Payments. All payments of interest and principal shall be made in lawful money of the United States of
America no later than 12:00 PM Eastern time on the date on which such payment is due by wire transfer of immediately available
funds to the Noteholder’s account at a bank specified by the Noteholder in writing to the Borrower from time to time.

 

4.2      
Application of Payments. Subject in all respects to Section 4.6, all payments received in respect of this Note shall
be applied first to the payment of any fees or charges outstanding hereunder, second to any prepayment premium payable hereunder,
third to accrued interest, and fourth to the payment of the principal amount outstanding under this Note.

 

4.3      
Business Day Convention. Whenever any payment to be made hereunder shall be due on a day that is not a Business Day,
such payment shall be made on the next succeeding Business Day and such extension will be taken into account in calculating the
amount of interest payable under this Note.

 

    	31

    	 

    
 

4.4      
Evidence of Debt. The Noteholder is authorized to record on the grid attached hereto as Exhibit A the Loan made to
the Borrower and each payment or prepayment thereof. The entries made by the Noteholder shall, to the extent permitted by applicable
Law, be prima facie evidence of the existence and amounts of the obligations of the Borrower therein recorded; provided, however,
that the failure of the Noteholder to record such payments or prepayments, or any inaccuracy therein, shall not in any manner
affect the obligation of the Borrower to repay (with applicable interest) the Loan in accordance with the terms of this Note.

 

4.5      Rescission of Payments. If at any time any payment made by the Borrower under this Note is rescinded or must otherwise
be restored or returned upon the insolvency, bankruptcy or reorganization of the Borrower or otherwise, the Borrower’s obligation
to make such payment shall be reinstated as though such payment had not been made.

 

4.6      Notes Series.

 

(a)      
Notwithstanding anything to the contrary in this Note or any other Series Note, the Borrower and the Noteholder hereby agree
that this Note, together with any other notes sold pursuant to the Purchase Agreement and any notes sold pursuant to the April
2012 Purchase Agreement and any notes sold pursuant to the Borrowing Notice, shall be treated as one series (the “Notes
Series”).

 

(b)      
If this Note or any other Series Note is prepaid at any time prior to the maturity thereof, any amount received in respect
of such prepayment shall be applied pro rata across the Notes Series with respect to the outstanding principal amount of each Series
Note.

 

(c)       Except as provided in Section 4.6(b) above, if any payment of principal or interest is received on this Note or any
other Tranche Note, such payment shall be applied pro rata across the Tranche Notes with respect to the amount of principal or
interest, as applicable, then due and owing on each Tranche Note.

 

(d)     
Any amount received by the Noteholder that has not been applied pro rata in accordance with this Section 4.6 shall
be held in trust by the Noteholder for the benefit of the other Series Holders or Tranche Holders, as applicable, and promptly
paid to such Series Holders or Tranche Holders, as applicable, to the extent required by this Section 4.6. If one or more
of the other Series Holders or Tranche Holders, as applicable, shall have made a payment to the Noteholder under the provision
of the Series Note held by such Series Holder or Tranche Holder corresponding to this Section 4.6(d) (such payment, a “Pro
Rata Payment”), the Noteholder shall promptly distribute on an appropriate pro rata basis to such Series Holders or Tranche
Holders, as applicable, any portion of any payments of principal or interest it may receive following the receipt of one or more
Pro Rata Payments, on this Note that is in excess of the amount the Noteholder would have received if all payments of principal
or interest on each of the Series Notes had been made in compliance with Sections 4.6(b) and 4.6(c) of this Note
and the sections of any such other Series Notes corresponding to Section 4.6(b) and 4.6(c) of this Note.

 

    	32

    	 

    
 

5.     
Representations and Warranties. The Borrower hereby represents and warrants to the Noteholder on the date
hereof as follows:

 

5.1      
Power and Authority. The Borrower has the power and authority, and the legal right, to execute and deliver this Note
and to perform its obligations hereunder.

 

5.2      
Authorization; Execution and Delivery. The execution and delivery of this Note by the Borrower and the performance
of its obligations hereunder have been duly authorized by all necessary corporate action in accordance with all applicable Laws.
The Borrower has duly executed and delivered this Note.

 

5.3      
No Conflict or Result in Breach or Default. The execution, delivery and performance by the Borrower of this Note
will not conflict with or result in a breach of or default under any Law to which the Borrower is subject or any material agreement
to which, to the knowledge of the Borrower, the Borrower is a party.

 

6.     
Limitation on Indebtedness. Until all amounts outstanding under this Note have been repaid in full, the Company
shall not incur any Debt other than Permitted Debt.

 

7.     
Events of Default. The occurrence and continuance of any of the following shall constitute an Event of Default
hereunder:

 

7.1      
Failure to Pay. The Borrower fails to pay (a) any principal amount of the Loan when due or (b) interest or any other
amount when due and such failure continues for 30 business days after written notice to the Borrower.

 

7.2      
Bankruptcy.  

 

(a)      
the Borrower commences any case, proceeding or other action (i) under any existing or future Law relating to bankruptcy,
insolvency, reorganization, or other relief of debtors, seeking to have an order for relief entered with respect to it, or seeking
to adjudicate it as bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution,
composition or other relief with respect to it or its debts or (ii) seeking appointment of a receiver, trustee, custodian, conservator
or other similar official for it or for all or any substantial part of its assets, or the Borrower makes a general assignment for
the benefit of its creditors;

 

(b)      
there is commenced against the Borrower any case, proceeding or other action of a nature referred to in Section 7.2(a)
above which (i) results in the entry of an order for relief or any such adjudication or appointment or (ii) remains undismissed,
undischarged or unbonded for a period of 90 days; or

 

    	33

    	 

    
 

(c)      
there is commenced against the Borrower any case, proceeding or other action seeking issuance of a warrant of attachment,
execution or similar process against all or any substantial part of its assets which results in the entry of an order for any such
relief which has not been vacated, discharged, or stayed or bonded pending appeal within 90 days from the entry thereof.

 

7.3      
Representation or Warranty Proves to be False. Any representation or warranty made by Borrower in connection with
this Note shall prove to have been false in any material respect when made.

 

7.4      
Cross Default. There shall occur and be continuing any “Event of Default” under, and as defined in, any
other Series Note and such “Event of Default” shall continue after the grace period, if any, applicable thereto.

 

8.     
Notice of Event of Default. Borrower covenants and agrees that until this Note is paid in full it will promptly
after becoming aware of the occurrence of an Event of Default or an event, act or condition that, with notice or lapse of time
or both, would constitute an Event of Default, provide each Noteholder with a certificate of the chief executive officer or chief
financial officer of Borrower specifying the nature thereof and Borrower’s proposed response thereto.

 

9.     
Remedies. Upon the occurrence of any Event of Default and at any time thereafter during the continuance of
such Event of Default, the Noteholder may at the Noteholder’s option, by written notice to the Borrower (a) declare the entire
principal amount of this Note, together with all accrued interest thereon and all other amounts payable hereunder, immediately
due and payable; and/or (b) exercise any or all of the Noteholder’s rights, powers or remedies under applicable Law; provided,
however, that if an Event of Default described in Section 7.2 shall occur, the principal of and accrued interest on
the Loan shall become immediately due and payable without any notice, declaration or other act on the part of the Noteholder. Notwithstanding
anything to the contrary in this Note, the Noteholder shall have the right individually to enforce any of the Noteholder’s
rights, powers or remedies hereunder or under applicable Law without notice to, or the consent of, any other Series Holder.

 

10. 
Lost, Destroyed or Mutilated Note. Upon receipt of evidence reasonably satisfactory to the Borrower of the
loss, theft, destruction or mutilation of this Note, and upon delivery of an unsecured indemnity agreement from any Noteholder
reasonably satisfactory to the Borrower, or, in the case of any such mutilation, upon the surrender of such Note for cancellation
to the Borrower, the Borrower at its expense will execute and deliver to such Noteholder, in lieu thereof, a new Note of like tenor.
Any Note in lieu of which any such new Note has been so executed and delivered by the Borrower shall thereafter be deemed to be
not outstanding for any purpose.

 

    	34

    	 

    
 

11. 
Miscellaneous.

 

11.1  
Notices.  

 

(a)      
All notices, requests or other communications required or permitted to be delivered hereunder shall be delivered in writing,
in each case to the address specified below or to such other address as such Party may from time to time specify in writing in
compliance with this provision:

 

		(i)	If to the Borrower:

 

ChinaCast Education Corporation

Room 701A, Building A, Golden Eagle Mansion

80 Hanxiao Road, Pudong

Shanghai 200437 China

Attention: Doug Woodrum

Fax: +(86) 21 6105 3354*8004

 

		(ii)	If to the Noteholder:

 

[Address of Noteholder]

 

(b)      
Notices if (i) mailed by certified or registered mail or sent by hand or overnight courier service shall be deemed to have
been given when received; (ii) sent by facsimile during the recipient’s normal business hours shall be deemed to have been
given when sent (and if sent after normal business hours shall be deemed to have been given at the opening of the recipient’s
business on the next business day); and (iii) sent by e-mail shall be deemed received upon the sender’s receipt of an acknowledgment
from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other
written acknowledgment).

 

11.2  
Governing Law. This Note and any claim, controversy, dispute or cause of action (whether in contract or tort or otherwise)
based upon, arising out of or relating to this Note and the transactions contemplated hereby shall be governed by the laws of the
State of New York without giving effect to its principles or rules of conflict of laws to the extent such principles or rules would
require or permit the application of the laws of another jurisdiction.

 

11.3  
Submission to Jurisdiction.

 

(a)      
The Borrower hereby irrevocably and unconditionally (i) agrees that any legal action, suit or proceeding arising out of
or relating to this Note may be brought in the courts of the State of New York or of the United States of America for the Southern
District of New York and (ii) submits to the exclusive jurisdiction of any such court in any such action, suit or proceeding. Final
judgment against the Borrower in any action, suit or proceeding shall be conclusive and may be enforced in any other jurisdiction
by suit on the judgment.

 

    	35

    	 

    
 

(b)      
Nothing in this Section 11.3 shall affect the right of the Noteholder to (i) commence legal proceedings or otherwise
sue the Borrower in any other court having jurisdiction over the Borrower or (ii) serve process upon the Borrower in any manner
authorized by the laws of any such jurisdiction.

 

11.4  
Venue. The Borrower irrevocably and unconditionally waives, to the fullest extent permitted by applicable law, any
objection that it may now or hereafter have to the laying of venue of any action or proceeding arising out of or relating to this
Note in any court referred to in Section 11.3 and the defense of an inconvenient forum to the maintenance of such action
or proceeding in any such court.

 

11.5  
Waiver of Jury Trial. THE BORROWER HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY RELATING TO THIS NOTE OR THE TRANSACTIONS
CONTEMPLATED HEREBY WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY.

 

11.6  
Counterparts; Integration; Effectiveness. This Note and any amendments, waivers, consents or supplements hereto may
be executed in counterparts, each of which shall constitute an original, but all taken together shall constitute a single contract.
This Note constitutes the entire contract between the Parties with respect to the subject matter hereof and supersede all previous
agreements and understandings, oral or written, with respect thereto.

 

11.7  
Successors and Assigns. This Note or any of the rights hereunder may be assigned or transferred, in whole or from
time to time in part, by the Noteholder to one or more Persons, provided that such Noteholder complies with all laws applicable
thereto and provides written notice of assignment to the Borrower promptly after such assignment or transfer is effected. The Borrower
may not assign or transfer this Note or any of its rights hereunder without the prior written consent of the Noteholder. This Note
shall inure to the benefit of, and be binding upon, the Parties and their permitted assigns.

 

11.8  
Waiver of Notice. The Borrower hereby waives demand for payment, presentment for payment, protest, notice of payment,
notice of dishonor, notice of nonpayment, notice of acceleration of maturity and diligence in taking any action to collect sums
owing hereunder.

 

    	36

    	 

    
 

11.9  
Interpretation. For purposes of this Note (a) the words “include,” “includes” and “including”
shall be deemed to be followed by the words “without limitation”; (b) the word “or” is not exclusive; and
(c) the words “herein,” “hereof,” “hereby,” “hereto” and “hereunder”
refer to this Note as a whole. The definitions given for any defined terms in this Note shall apply equally to both the singular
and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. Unless the context otherwise requires, references herein: (x) to Schedules, Exhibits and Sections mean
the Schedules, Exhibits and Sections of this Note; (y) to an agreement, instrument or other document means such agreement, instrument
or other document as amended, supplemented and modified from time to time to the extent permitted by the provisions thereof; and
(z) to a statute means such statute as amended from time to time and includes any successor legislation thereto and any regulations
promulgated thereunder. This Note shall be construed without regard to any presumption or rule requiring construction or interpretation
against the party drafting an instrument or causing any instrument to be drafted.

 

11.10    Amendments and Waivers. No term of this Note, including any Default or Event of Default, may be waived, modified
or amended except by an instrument in writing signed by both parties; provided, however, that (a) without the prior
written consent of all Series Holders, no waiver, modification or amendment shall be effective that would (i) reduce the amount
of, or delay payment of, any prepayment premium on this Note, (ii) waive a default in the payment of any prepayment premium on
this Note, (iii) permit any principal amount repaid under this Note to be reborrowed, (iv) impair the rights of the Noteholder
to receive payments of principal of or interest on this Note on or after the due date therefor or to institute suit for the enforcement
of any payment on this Note, (v) permit any amount payable in respect of this Note to be paid in a currency other than U.S. dollars,
(vi) alter Section 4.2 or Section 4.6 (other than Section 4.6(c)) , (vii) amend the definitions of Series
Holders or Tranche Holders or (viii) alter this Section 11.10, and (b) without the prior written consent of all Tranche
Holders, no waiver modification or amendment shall be effective that would (i) extend the Maturity Date, (ii) reduce the amount
of, or delay payment of, any principal of, or premium or interest on, this Note, (iii) waive a default in the payment of principal
of, or premium or interest on, this Note or (iv) alter Section 4.6(c). Any waiver of the terms hereof shall be effective
only in the specific instance and for the specific purpose given.

 

11.11     Headings. The headings of the various Sections and subsections herein are for reference only and shall not define,
modify, expand or limit any of the terms or provisions hereof.

 

11.12     No Waiver; Cumulative Remedies. No failure to exercise and no delay in exercising on the part of the Noteholder,
of any right, remedy, power or privilege hereunder shall operate as a waiver thereof; nor shall any single or partial exercise
of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other
right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided are cumulative and not exclusive
of any rights, remedies, powers and privileges provided by law.

 

    	37

    	 

    
 

11.13     Severability. If any term or provision of this Note is invalid, illegal or unenforceable in any jurisdiction, such
invalidity, illegality or unenforceability shall not affect any other term or provision of this Note or invalidate or render unenforceable
such term or provision in any other jurisdiction.

 

11.14     Fees and Expense. The Borrower shall pay upon written demand all reasonable costs and expenses (including, without
limitation, reasonable attorneys’ fees) incurred by any Noteholder in enforcing the Noteholder’s interests under this
Note. Borrower agrees to indemnify the Noteholder and each of the Noteholder’s respective directors, officers, trustees,
employees and agents against, and to hold each of them harmless from, any actual losses, damages, claims, liabilities and related
expenses arising out of, in any way connected with or as a result of the execution, delivery, enforcement, performance, or administration
of this Note; provided that the foregoing indemnity shall not apply to any losses, damages, claims, liabilities or related
expenses (A) to the extent they have resulted from the wilful misconduct, bad faith or gross negligence of any Noteholder or any
director, officer, trustee, employee or agent of a Noteholder or (B) arising from a breach of the obligations of this Note by a
Noteholder or any director, officer, trustee, employee or agent of a Noteholder.

 

 

 

[SIGNATURE PAGE FOLLOWS]

 

    	38

    	 

    
 

IN WITNESS WHEREOF, the Borrower has executed
this Note as of August , 2012.

 

 

	 	
        CHINACAST EDUCATION CORPORATION

         

	 	
        By___________________________

         

        Name:

        Title:

 

    	39

    	 

    
 

Exhibit
A

Advances
and Payments on the Loan

 

	Date of Advance	Amount of Advance	Amount of Principal Paid	Unpaid Principal Amount of Note	Name of Person Making the Notation
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 

 

    	40

    	 

    
 

EXHIBIT B

 

FORM OF WARRANT

 

    	41

    	 

    
 

WARRANT

 

NEITHER THIS WARRANT
NOR THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (AS AMENDED, THE
“ACT”) OR UNDER THE SECURITIES LAWS OF ANY STATE. THE SECURITIES MAY NOT BE TRANSFERRED, SOLD, OFFERED FOR SALE, PLEDGED
OR HYPOTHECATED IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, (B) COMPLIANCE WITH RULE 144 OR RULE 144A
PROMULGATED UNDER THE ACT (OR A SUCCESSOR RULE THERETO), (C) AN EXEMPTION OR QUALIFICATION UNDER APPLICABLE SECURITIES LAWS OR
(D) AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED. ANY ATTEMPT TO TRANSFER,
SELL, PLEDGE OR HYPOTHECATE THIS SECURITY IN VIOLATION OF THESE RESTRICTIONS SHALL BE VOID.

 

	Warrant Certificate No.: [●]	Original Issue Date: August 24, 2012

  

[●]
Warrants

 

FOR VALUE RECEIVED, ChinaCast Education
Corporation, a Delaware corporation (the "Company"), hereby
certifies that [●], a [●], or its registered assigns (the "Holder")
is the owner of the number of warrants specified above, each of which entitles the Holder to purchase from the Company one duly
authorized, validly issued, fully paid and non-assessable share of Common Stock at a purchase price per share of U.S.$0.40 (subject
to adjustment as provided herein, the "Exercise Price"),
all subject to the terms, conditions and adjustments set forth below in this Warrant. Certain capitalized terms used herein are
defined in Section 1 hereof.

 

This Warrant has been issued pursuant to
the terms of one or more of the following agreements, as applicable, between the Company, the Holder and the other parties thereto:
(a) the Notes and Warrants Purchase Agreement, dated as of April 10, 2012, (b) the Borrowing Notice and Acknowledgement, dated
as of May 18, 2012, and (c) the Notes and Warrants Purchase Agreement, dated as of August 24, 2012 (each such agreement, a "Purchase
Agreement").

 

1.                 
Definitions. As used in this Warrant, the following terms have the respective meanings set forth below:

 

"Aggregate
Exercise Price" means an amount equal to the product of (a) the number of Warrant Shares in respect of which
this Warrant is then being exercised pursuant to Section 3 hereof, multiplied by (b) the Exercise Price in effect as of the Exercise
Date in accordance with the terms of this Warrant.

 

“Approved Stock Plan”
means any employee benefit plan or other issuance, employment agreement or option grant or similar agreement which has been approved
by the Board of the Company, pursuant to which the Company’s securities may be issued to any employee, consultant, officer
or director for services provided to the Company.

 

“Bloomberg” means Bloomberg
Financial Markets.

 

"Board" means
the board of directors of the Company.

 

    	42

    	 

    
 

"Business
Day" means any day, except a Saturday, Sunday or legal holiday, on which banking institutions in the city
of New York, New York are authorized or obligated by law or executive order to close.

 

“Closing Bid Price” and
“Closing Sale Price” means, for any security as of any date, the last closing bid price and last closing trade
price, respectively, for such security on all domestic securities exchanges on which the Common Stock at the time may be listed,
as reported by Bloomberg, or, if such securities exchanges begin to operate on an extended hours basis and does not designate the
closing bid price or the closing trade price, as the case may be, then the last bid price or the last trade price, respectively,
of such security prior to 4:00:00 p.m., New York time, as reported by Bloomberg, or if the foregoing do not apply, the last closing
bid price or last trade price, respectively, of such security in the over-the-counter market on the electronic bulletin board for
such security as reported by Bloomberg, or, if no closing bid price or last trade price, respectively, is reported for such security
by Bloomberg, the average of the bid prices, or the ask prices, respectively, of any market makers for such security as reported
in the “pink sheets” by Pink Sheets LLC (formerly the National Quotation Bureau, Inc.). If the Closing Bid Price or
the Closing Sale Price cannot be calculated for a security on a particular date on any of the foregoing bases, the Closing Bid
Price or the Closing Sale Price, as the case may be, of such security on such date shall be the fair market value as mutually determined
by the Company and the Holder. All such determinations to be appropriately adjusted for any stock dividend, stock split, stock
combination or other similar transaction during the applicable calculation period.

 

"Common
Stock" means the common stock, U.S.$0.0001 par value per share, of the Company, and any capital stock into
which such Common Stock shall have been converted, exchanged or reclassified following the date hereof.

 

"Company" has
the meaning set forth in the preamble.

 

"Convertible
Securities" means any securities (directly or indirectly) convertible into or exchangeable for Common Stock,
but excluding Options.

 

“Excluded Securities”
means: (i) capital stock, Options or Convertible Securities issued to directors, officers, employees or consultants of the Company
in connection with their service as directors of the Company, their employment by the Company or their retention as consultants
by the Company pursuant to an Approved Stock Plan, (ii) shares of Common Stock issued upon the conversion or exercise of Options
or Convertible Securities that were issued and outstanding on the date immediately preceding the Original Issue Date, provided
such securities are not amended after the Original Issue Date to increase the number of shares of Common Stock issuable thereunder
or to lower the exercise or conversion price thereof, (iii) securities issued pursuant to the Purchase Agreement and securities
issued upon the exercise or conversion of those securities, (iv) shares of Common Stock issued or issuable by reason of a dividend,
stock split or other distribution on shares of Common Stock (but only to the extent that such a dividend, split or distribution
results in an adjustment in the Warrant Price pursuant to the other provisions of this Warrant), and (v) capital stock, Options
or Convertible Securities issued as consideration for an acquisition or strategic transaction approved by a majority of the disinterested
directors of the Company, provided that any such issuance shall only be a Person (or to the equityholders of a Person) which is,
itself or through its subsidiaries, an operating company or an owner of an asset in a business synergistic with the business of
the Company and shall provide to the Company additional benefits in addition to the investment of funds, but shall not, for the
purposes of this clause (v), include a transaction in which the Company is issuing securities primarily for the purpose of raising
capital or to an entity whose primary business is investing in securities.

 

    	43

    	 

    
 

"Exercise
Date" means, for any given exercise of this Warrant, the date on which the conditions to such exercise as
set forth in Section 3 shall have been satisfied at or prior to 5:00 p.m., New York City time, on a Business Day, including, without
limitation, the receipt by the Company of the Exercise Notice, the Warrant and the Aggregate Exercise Price.

 

"Exercise
Notice" has the meaning set forth in Section 3(a)(i).

 

"Exercise
Period" has the meaning set forth in Section 2.

 

"Exercise
Price" has the meaning set forth in the preamble.

 

"Fair
Market Value" means, as of any particular date: (a) the volume weighted average of the closing sales prices
of the Common Stock for such day on all domestic securities exchanges on which the Common Stock may at the time be listed; (b)
if there have been no sales of the Common Stock on any such exchange on any such day, the average of the highest bid and lowest
asked prices for the Common Stock on all such exchanges at the end of such day; (c) if on any such day the Common Stock is not
listed on a domestic securities exchange, the closing sales price of the Common Stock as quoted on the OTC Bulletin Board or similar
quotation system or association for such day; or (d) if there have been no sales of the Common Stock on the OTC Bulletin Board
or similar quotation system or association on such day, the average of the highest bid and lowest asked prices for the Common Stock
quoted on the OTC Bulletin Board or similar quotation system or association at the end of such day; in each case, averaged over
twenty (20) consecutive Business Days ending on the Business Day immediately prior to the day as of which "Fair Market Value"
is being determined; provided, that if the Common Stock is listed on any domestic securities exchange, the term "Business
Day" as used in this sentence means Business Days on which such exchange is open for trading. If at any time the Common Stock
is not listed on any domestic securities exchange or quoted on the OTC Bulletin Board or similar quotation system or association,
the "Fair Market Value" of the Common Stock shall be the fair market value per share as determined jointly by the Board
and the Holder; provided, that if the Board and the Holder are unable to agree on the fair market value per share of the
Common Stock within a reasonable period of time (not to exceed 10 Business Days from the Company’s receipt of the Exercise
Notice), such fair market value shall be determined by a nationally recognized investment bank, accounting or valuation firm mutually
agreed upon by the Board and the Company. The determination of such firm shall be final and conclusive, and the fees and expenses
of such firm shall be borne equally by the Company and the Holder.

 

"Holder" has
the meaning set forth in the preamble.

 

"Options" means
any warrants or other rights or options to subscribe for or purchase Common Stock or Convertible Securities.

 

“Option Value” means
the value of an Option based on the Black and Scholes Option Pricing model obtained from the “OV” function on Bloomberg
determined as of the day prior to the public announcement of the applicable Option for pricing purposes and reflecting (i) a risk-free
interest rate corresponding to the U.S. Treasury rate for a period equal to the remaining term of the applicable Option as of the
applicable date of determination, (ii) an expected volatility equal to the greater of (a) 100% and (b) the 100 day volatility obtained
from the HVT function on Bloomberg as of the day immediately following the public announcement of the issuance of the applicable
Option, (iii) the underlying price per share used in such calculation shall be the highest Fair Market Value of the Common Stock
during the period beginning on the day prior to the execution of definitive documentation relating to the issuance of the applicable
Option and the public announcement of such issuance and (iv) a 360 day annualization factor.

 

    	44

    	 

    
 

"Original
Issue Date" means August 24, 2012.

 

"OTC
Bulletin Board" means the National Association of Securities Dealers, Inc. OTC Bulletin Board.

 

"Person" means
any individual, sole proprietorship, partnership, limited liability company, corporation, joint venture, trust, incorporated organization
or government or department or agency thereof.

 

"Purchase
Agreement" has the meaning set forth in the preamble.

 

“Required Holders” means,
as of any date, the holders of at least a majority of the Warrants outstanding as of such date.

 

“Trading Day” means any
day on which the Common Stock is traded on the domestic securities exchanges on which the Common Stock is at the time listed; provided
that “Trading Day” shall not include any day on which the Common Stock are scheduled to trade on such exchange or market
for less than 4.5 hours or any day that the Common Stock are suspended from trading during the final hour of trading on such exchange
or market (or if such exchange or market does not designate in advance the closing time of trading on such exchange or market,
then during the hour ending at 4:00:00 p.m., New York time).

 

"Warrant" means
this Warrant and all warrants issued upon division or combination of, or in substitution for, this Warrant.

 

"Warrant
Shares" means the shares of Common Stock or other capital stock of the Company then purchasable upon exercise
of this Warrant in accordance with the terms of this Warrant.

 

2.                 
Term of Warrant. Subject to the terms and conditions hereof, at any time or from time to time after the date
hereof and prior to 5:00 p.m., New York City time, on the fifth anniversary of the date hereof or, if such day is not a Business
Day, on the next preceding Business Day (the "Exercise Period"),
the Holder of this Warrant may exercise this Warrant for all or any part of the Warrant Shares purchasable hereunder (subject to
adjustment as provided herein).

 

3.                 
Exercise of Warrant.

 

(a)               
Exercise Procedure. This Warrant may be exercised from time to time on any Business Day during the Exercise Period,
for all or any part of the unexercised Warrant Shares, upon:

 

(i)                
surrender of this Warrant to the Company at its then principal executive offices (or an indemnification undertaking with
respect to this Warrant in the case of its loss, theft or destruction), together with an Exercise Notice in the form attached hereto
as Exhibit A (each, an "Exercise
Notice"), duly completed (including specifying the number of Warrant Shares to be purchased) and executed; and

 

(ii)              
payment to the Company of the Aggregate Exercise Price in accordance with Section 3(b).

 

(b)              
Payment of the Aggregate Exercise Price. Payment of the Aggregate Exercise Price shall be made, at the option of
the Holder as expressed in the Exercise Notice, by wire transfer of immediately available funds to an account designated in writing
by the Company, in the amount of such Aggregate Exercise Price.

 

    	45

    	 

    
 

(c)               
Cashless Exercise. Notwithstanding anything contained herein to the contrary, if a registration statement covering
the Warrant Shares that are the subject of the Exercise Notice (the “Unavailable Warrant Shares”), or an exemption
from registration, is not available for the resale of such Unavailable Warrant Shares, the Holder may, in its sole discretion,
exercise this Warrant in whole or in part and, in lieu of making the cash payment otherwise contemplated to be made to the Company
upon such exercise in payment of the Aggregate Exercise Price, elect instead to receive upon such exercise the “Net Number”
of shares of Common Stock determined according to the following formula (a “Cashless Exercise”):

 

	Net Number = (A x B) - (A x C)
	                                     B
	 
	For purposes of the foregoing formula:
	 
	A =	the total number of shares with respect to which this Warrant is then being exercised.
	 	 
	B =	the arithmetic average of the Closing Sale Prices of the shares of Common Stock for the five (5) consecutive Trading Days ending on the date immediately preceding the date of the Exercise Notice.
	 	 
	C =	the Exercise Price then in effect for the applicable Warrant Shares at the time of such exercise.

 

(i)                
Rule 144. For purposes of Rule 144(d) promulgated under the Securities Act, as in effect on the date hereof, assuming
the Holder is not an affiliate of the Company, it is intended that the Warrant Shares issued in a Cashless Exercise shall be deemed
to have been acquired by the Holder, and the holding period for the Warrant Shares shall be deemed to have commenced, on the date
this Warrant was originally issued pursuant to the Purchase Agreement.

 

(d)              
Disputes. In the case of a dispute as to the determination of the Exercise Price or the arithmetic calculation of
the Warrant Shares, the Company shall promptly issue to the Holder the number of Warrant Shares that are not disputed.

 

(e)               
Delivery of Stock Certificates. Upon receipt by the Company of the Exercise Notice, surrender of this Warrant and
payment of the Aggregate Exercise Price (in accordance with Section 3(a) or 3(c) hereof), the Company shall, as promptly as practicable,
and in any event within 10 Business Days thereafter, execute (or cause to be executed) and deliver (or cause to be delivered) to
the Holder a certificate or certificates representing the Warrant Shares issuable upon such exercise, together with cash in lieu
of any fraction of a share, as provided in Section 3(g) hereof. The stock certificate or certificates so delivered shall be, to
the extent possible, in such denomination or denominations as the exercising Holder shall reasonably request in the Exercise Notice
and shall be registered in the name of the Holder or, subject to compliance with Section 5 below, such other Person's name as shall
be designated in the Exercise Notice. This Warrant shall be deemed to have been exercised and such certificate or certificates
of Warrant Shares shall be deemed to have been issued, and the Holder or any other Person so designated to be named therein shall
be deemed to have become a holder of record of such Warrant Shares for all purposes, as of the Exercise Date.

 

    	46

    	 

    
 

(f)               
Company’s Failure to Timely Deliver Securities. If the Company shall fail for any reason or for no reason to
issue to the Holder within three (3) Business Days of the Exercise Date a certificate for the number of shares of Common Stock
to which the Holder is entitled and register such shares of Common Stock on the Company’s share register or to credit the
Holder’s balance account with DTC for such number of shares of Common Stock to which the Holder is entitled upon the Holder’s
exercise of this Warrant, and if on or after such Trading Day the Holder purchases (in an open market transaction or otherwise)
shares of Common Stock to deliver in satisfaction of a sale by the Holder of shares of Common Stock issuable upon such exercise
that the Holder anticipated receiving from the Company (a “Buy-In”), then the Company shall, within three (3)
Business Days after the Holder’s written request and in the Holder’s discretion, pay cash to the Holder (for costs
incurred either directly by such Holder or on behalf of a third party) the amount by which the total purchase price paid for Common
Stock as a result of the Buy-In (including brokerage commissions, if any) exceeds the proceeds received by such Holder as a result
of the sale to which such Buy-In relates. The Holder shall provide the Company written notice indicating the amounts payable to
the Holder in respect of the Buy-In, which notice shall be final and binding on the Company and such Holder, absent manifest error.

 

(g)               
Fractional Shares. The Company shall not be required to issue a fractional Warrant Share upon exercise of any Warrant.
As to any fraction of a Warrant Share that the Holder would otherwise be entitled to purchase upon such exercise, the Company shall
pay to such Holder an amount in cash (by wire transfer of immediately available funds) equal to the product of (i) such fraction
multiplied by (ii) the Fair Market Value of one Warrant Share on the Exercise Date.

 

(h)              
Delivery of New Warrant. Unless the purchase rights represented by this Warrant shall have expired or shall have
been fully exercised, the Company shall, at the time of delivery of the certificate or certificates representing the Warrant Shares
being issued in accordance with Section 3(e) hereof, deliver to the Holder a new Warrant evidencing the rights of the Holder to
purchase the unexpired and unexercised Warrant Shares called for by this Warrant. Such new Warrant shall in all other respects
be identical to this Warrant.

 

(i)                
Valid Issuance of Warrant and Warrant Shares; Payment of Taxes. With respect to the exercise of this warrant, the
Company hereby represents, covenants and agrees:

 

(i)                
This Warrant is, and any Warrant issued in substitution for or replacement of this Warrant shall be, upon issuance, duly
authorized and validly issued.

 

(ii)              
All Warrant Shares issuable upon the exercise of this Warrant pursuant to the terms hereof shall be, upon issuance, and
the Company shall take all such actions as may be necessary or appropriate in order that such Warrant Shares are, validly issued,
fully paid and non-assessable and free and clear of all taxes, liens and charges.

 

(iii)            
The Company shall use commercially reasonable efforts to take all such actions as may be necessary to ensure that all such
Warrant Shares are issued without violation by the Company of any applicable law or governmental regulation or any requirements
of any domestic securities exchange upon which shares of Common Stock or other securities constituting Warrant Shares may be listed
at the time of such exercise (except for official notice of issuance which shall be immediately delivered by the Company upon each
such issuance).

 

(iv)            
The Company shall pay all expenses in connection with, and all taxes and other governmental charges that may be imposed
with respect to, the issuance or delivery of Warrant Shares upon exercise of this Warrant; provided, that the Company shall
not be required to pay any tax or governmental charge that may be imposed with respect to any applicable withholding or the issuance
or delivery of the Warrant Shares to any Person other than the Holder, and no such issuance or delivery shall be made unless and
until the Person requesting such issuance has paid to the Company the amount of any such tax, or has established to the satisfaction
of the Company that such tax has been paid.

 

    	47

    	 

    
 

(j)                
Reservation of Shares. During the Exercise Period, the Company shall at all times reserve and keep available out
of its authorized but unissued Common Stock or other securities constituting Warrant Shares, solely for the purpose of issuance
upon the exercise of this Warrant, the maximum number of Warrant Shares issuable upon the exercise of this Warrant, and the par
value per Warrant Share shall at all times be less than or equal to the applicable Exercise Price. The Company shall not increase
the par value of any Warrant Shares receivable upon the exercise of this Warrant above the Exercise Price then in effect, and shall
take all such actions as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and
non-assessable shares of Common Stock upon the exercise of this Warrant.

 

4.                 
Adjustment of Exercise Price and Number of Warrant Shares. The Exercise Price and the number of Warrant Shares
shall be adjusted from time to time as follows:

 

(a)               
Adjustment upon Issuance of shares of Common Stock. If and whenever on or after the Original Issue Date, the Company
issues or sells, or in accordance with this Section 4 is deemed to have issued or sold, any shares of Common Stock (including the
issuance or sale of shares of Common Stock owned or held by or for the account of the Company, but excluding shares of Common Stock
deemed to have been issued by the Company in connection with any Excluded Securities (the “Additional Shares”))
for a consideration per share (the “New Issuance Price”) less than a price (the “Applicable Price”)
equal to the Exercise Price in effect immediately prior to such issue or sale or deemed issuance or sale (the foregoing a “Dilutive
Issuance”), then immediately after such Dilutive Issuance, the Exercise Price then in effect shall be reduced to a price
determined as follows:

 

	Adjusted Exercise Price = (A x B) + D
	                                                A+C
	 
	where
	 
	A =	the number of shares of Common Stock outstanding, including the Additional Shares deemed to be issued hereunder, immediately preceding the Dilutive Issuance;
	 	 
	B =	the Exercise Price in effect immediately preceding such Dilutive Issuance;
	 	 
	C =	the number of Additional Shares issued or deemed issued hereunder as a result of the Dilutive Issuance; and
	 	 
	D =	the aggregate consideration, if any, received or deemed to be received by the Company upon such Dilutive Issuance.

  

For purposes of determining
the adjusted Exercise Price under this Section 4(a), the following shall be applicable:

 

(i)                
Issuance of Options. If the Company in any manner grants any Options and the lowest price per share for which one
share of Common Stock is issuable upon the exercise of any such Option or upon conversion, exercise or exchange of any Convertible
Securities issuable upon exercise of any such Option is less than the Applicable Price, then such share of Common Stock shall be
deemed to be outstanding and to have been issued and sold by the Company at the time of the granting or sale of such Option for
such price per share. For purposes of this Section 4(a)(i), the “lowest price per share for which one share of Common Stock
is issuable upon exercise of such Options or upon conversion, exercise or exchange of such Convertible Securities issuable upon
exercise of any such Option” shall be equal to the sum of the lowest amounts of consideration (if any) received or receivable
by the Company with respect to any one share of Common Stock upon the granting or sale of the Option, upon exercise of the Option
and upon conversion, exercise or exchange of any Convertible Security issuable upon exercise of such Option less any consideration
paid or payable by the Company with respect to such one share of Common Stock upon the granting or sale of such Option, upon exercise
of such Option and upon conversion exercise or exchange of any Convertible Security issuable upon exercise of such Option. No further
adjustment of the Exercise Price or number of Warrant Shares shall be made upon the actual issuance of such shares of Common Stock
or of such Convertible Securities upon the exercise of such Options or upon the actual issuance of such shares of Common Stock
upon conversion, exercise or exchange of such Convertible Securities.

 

    	48

    	 

    
 

(ii)              
Issuance of Convertible Securities. If the Company in any manner issues or sells any Convertible Securities and the
lowest price per share for which one share of Common Stock is issuable upon the conversion, exercise or exchange thereof is less
than the Applicable Price, then such share of Common Stock shall be deemed to be outstanding and to have been issued and sold by
the Company at the time of the issuance or sale of such Convertible Securities for such price per share. For the purposes of this
Section 4(a)(ii), the “lowest price per share for which one share of Common Stock is issuable upon the conversion, exercise
or exchange thereof” shall be equal to the sum of the lowest amounts of consideration (if any) received or receivable by
the Company with respect to one share of Common Stock upon the issuance or sale of the Convertible Security and upon conversion,
exercise or exchange of such Convertible Security less any consideration paid or payable by the Company with respect to such one
share of Common Stock upon the issuance or sale of such Convertible Security and upon conversion, exercise or exchange of such
Convertible Security. No further adjustment of the Exercise Price or number of Warrant Shares shall be made upon the actual issuance
of such shares of Common Stock upon conversion, exercise or exchange of such Convertible Securities, and if any such issue or sale
of such Convertible Securities is made upon exercise of any Options for which adjustment of this Warrant has been or is to be made
pursuant to other provisions of this Section 4(a), no further adjustment of the Exercise Price or number of Warrant Shares shall
be made by reason of such issue or sale.

 

(iii)            
Change in Option Price or Rate of Conversion. If the purchase price provided for in any Options, the additional consideration,
if any, payable upon the issue, conversion, exercise or exchange of any Convertible Securities, or the rate at which any Convertible
Securities are convertible into or exercisable or exchangeable for shares of Common Stock increases or decreases at any time, the
Exercise Price and the number of Warrant Shares in effect at the time of such increase or decrease shall be adjusted to the Exercise
Price and the number of Warrant Shares which would have been in effect at such time had such Options or Convertible Securities
provided for such increased or decreased purchase price, additional consideration or increased or decreased conversion rate, as
the case may be, at the time initially granted, issued or sold. For purposes of this Section 4(a)(iii), if the terms of any Option
or Convertible Security that was outstanding as of the date of issuance of this Warrant are increased or decreased in the manner
described in the immediately preceding sentence, then such Option or Convertible Security and the shares of Common Stock deemed
issuable upon exercise, conversion or exchange thereof shall be deemed to have been issued as of the date of such increase or decrease.
No adjustment pursuant to this Section 4(a) shall be made if such adjustment would result in an increase of the Exercise Price
then in effect or a decrease in the number of Warrant Shares.

 

    	49

    	 

    
 

(iv)            
Calculation of Consideration Received. In case any Option is issued in connection with the issue or sale of other
securities of the Company, together comprising one integrated transaction, (x) the Options will be deemed to have been issued for
the Option Value of such Options and (y) the other securities issued or sold in such integrated transaction shall be deemed to
have been issued for the difference of (I) the aggregate consideration received by the Company less any consideration paid or payable
by the Company pursuant to the terms of such other securities of the Company, less (II) the Option Value. If any shares of Common
Stock, Options or Convertible Securities are issued or sold or deemed to have been issued or sold for cash, the consideration received
therefor will be deemed to be the net amount received by the Company therefor. If any shares of Common Stock, Options or Convertible
Securities are issued or sold for a consideration other than cash, the amount of such consideration received by the Company will
be the fair value of such consideration, except where such consideration consists of securities, in which case the amount of consideration
received by the Company will be the Closing Sale Price of such security on the date of receipt. If any shares of Common Stock,
Options or Convertible Securities are issued to the owners of the non-surviving entity in connection with any merger in which the
Company is the surviving entity, the amount of consideration therefor will be deemed to be the fair value of such portion of the
net assets and business of the non-surviving entity as is attributable to such shares of Common Stock, Options or Convertible Securities,
as the case may be. The fair value of any consideration other than cash or securities will be determined jointly by the Company
and the Required Holders. If such parties are unable to reach agreement within ten (10) days after the occurrence of an event requiring
valuation (the “Valuation Event”), the fair value of such consideration will be determined within five (5) Trading
Days after the tenth (10th) day following the Valuation Event by an independent, reputable appraiser jointly selected by the Company
and the Required Holders. The determination of such appraiser shall be final and binding upon all parties absent manifest error
and the fees and expenses of such appraiser shall be borne by the Company.

 

(v)              
Record Date. If the Company takes a record of the holders of shares of Common Stock for the purpose of entitling
them (A) to receive a dividend or other distribution payable in shares of Common Stock, Options or in Convertible Securities or
(B) to subscribe for or purchase shares of Common Stock, Options or Convertible Securities, then such record date will be deemed
to be the date of the issue or sale of the shares of Common Stock deemed to have been issued or sold upon the declaration of such
dividend or the making of such other distribution or the date of the granting of such right of subscription or purchase, as the
case may be.

 

(b)              
Adjustment to Exercise Price and Number of Warrant Shares Upon Dividend, Subdivision or Combination of Common Stock.
If the Company shall, at any time or from time to time after the Original Issue Date, (i) pay a dividend or make any other distribution
upon the Common Stock or any other capital stock of the Company payable in shares of Common Stock or in Options or Convertible
Securities, or (ii) subdivide or reclassify (in either case by any stock split, recapitalization or otherwise) its outstanding
shares of Common Stock into a greater number of shares, the Exercise Price in effect immediately prior to any such dividend, distribution
or subdivision shall be proportionately reduced and the number of Warrant Shares issuable upon exercise of this Warrant shall be
proportionately increased. If the Company at any time combines or reclassifies (in either case by combination, reverse stock split
or otherwise) its outstanding shares of Common Stock into a smaller number of shares, the Exercise Price in effect immediately
prior to such combination shall be proportionately increased and the number of Warrant Shares issuable upon exercise of this Warrant
shall be proportionately decreased. Any adjustment under this Section 4 shall become effective at the close of business on the
date the dividend, subdivision or combination becomes effective.

 

    	50

    	 

    
 

(c)               
Certificate as to Adjustment.

 

(i)                
As promptly as reasonably practicable following any adjustment of the Exercise Price, but in any event not later than 10
Business Days thereafter, the Company shall furnish to the Holder a certificate of an executive officer setting forth in reasonable
detail such adjustment and the facts upon which it is based and certifying the calculation thereof.

 

(ii)              
As promptly as reasonably practicable following the receipt by the Company of a written request by the Holder, but in any
event not later than 5 Business Days thereafter, the Company shall furnish to the Holder a certificate of an executive officer
certifying the Exercise Price then in effect and the number of Warrant Shares or the amount, if any, of other shares of stock,
securities or assets then issuable upon exercise of the Warrant.

 

(d)              
Notices. In the event:

 

(i)                
that the Company shall take a record of the holders of its Common Stock (or other capital stock or securities at the time
issuable upon exercise of the Warrant) for the purpose of entitling or enabling them to receive any dividend or other distribution,
to vote at a meeting (or by written consent), to receive any right to subscribe for or purchase any shares of capital stock of
any class or any other securities, or to receive any other security; or

 

(ii)              
of any capital reorganization of the Company, any reclassification of the Common Stock of the Company, any consolidation
or merger of the Company with or into another Person, or sale of all or substantially all of the Company's assets to another Person;
or

 

(iii)            
of the voluntary or involuntary dissolution, liquidation or winding-up of the Company;

 

then, and in each such case, the Company shall send or cause
to be sent to the Holder at least 15 days prior to the applicable record date or the applicable expected effective date, as the
case may be, for the event, a written notice specifying, as the case may be, (A) the record date for such dividend, distribution,
meeting or consent or other right or action, and a description of such dividend, distribution or other right or action to be taken
at such meeting or by written consent, or (B) the effective date on which such reorganization, reclassification, consolidation,
merger, sale, dissolution, liquidation or winding-up is proposed to take place, and the date, if any is to be fixed, as of which
the books of the Company shall close or a record shall be taken with respect to which the holders of record of Common Stock (or
such other capital stock or securities at the time issuable upon exercise of the Warrant) shall be entitled to exchange their shares
of Common Stock (or such other capital stock or securities) for securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or winding-up, and the amount per share and character of
such exchange applicable to the Warrant and the Warrant Shares.

 

5.                 
Transfer of Warrant. Subject to the transfer conditions referred to in the legend endorsed hereon, this Warrant
and all rights hereunder are transferable, in whole or in part, by the Holder without charge to the Holder, upon surrender of this
Warrant to the Company at its then principal executive offices with a properly completed and duly executed Assignment in the form
attached hereto as Exhibit B, together with funds sufficient to pay any transfer taxes
described in Section 3(i)(iv) in connection with the making of such transfer. Upon such compliance, surrender and delivery and,
if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees
and in the denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the
portion of this Warrant, if any, not so assigned and this Warrant shall promptly be cancelled.

 

    	51

    	 

    
 

6.                 
Holder Not Deemed a Stockholder; Limitations on Liability. Except as otherwise specifically provided herein,
prior to the issuance to the Holder of the Warrant Shares to which the Holder is then entitled to receive upon the due exercise
of this Warrant, the Holder shall not be entitled to vote or receive dividends or be deemed the holder of shares of capital stock
of the Company for any purpose, nor shall anything contained in this Warrant be construed to confer upon the Holder, as such, any
of the rights of a stockholder of the Company or any right to vote, give or withhold consent to any corporate action (whether any
reorganization, issue of stock, reclassification of stock, consolidation, merger, conveyance or otherwise), receive notice of meetings,
receive dividends or subscription rights, or otherwise. In addition, nothing contained in this Warrant shall be construed as imposing
any liabilities on the Holder to purchase any securities (upon exercise of this Warrant or otherwise) or as a stockholder of the
Company, whether such liabilities are asserted by the Company or by creditors of the Company.

 

7.                 
Replacement on Loss; Division and Combination.

 

(a)               
Replacement of Warrant on Loss. Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of this Warrant and upon delivery of an indemnity reasonably satisfactory to it (it being understood
that a written indemnification agreement or affidavit of loss of the Holder shall be a sufficient indemnity) and, in case of mutilation,
upon surrender of such Warrant for cancellation to the Company, the Company at its own expense shall execute and deliver to the
Holder, in lieu hereof, a new Warrant of like tenor and exercisable for an equivalent number of Warrant Shares as the Warrant so
lost, stolen, mutilated or destroyed; provided, that, in the case of mutilation, no indemnity shall be required if this
Warrant in identifiable form is surrendered to the Company for cancellation.

 

(b)              
Division and Combination of Warrant. Subject to compliance with the applicable provisions of this Warrant as to any
transfer or other assignment which may be involved in such division or combination, this Warrant may be divided or, following any
such division of this Warrant, subsequently combined with other Warrants, upon the surrender of this Warrant or Warrants to the
Company at its then principal executive offices, together with a written notice specifying the names and denominations in which
new Warrants are to be issued, signed by the respective Holders or their agents or attorneys. Subject to compliance with the applicable
provisions of this Warrant as to any transfer or assignment which may be involved in such division or combination, the Company
shall at its own expense execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants so surrendered in
accordance with such notice. Such new Warrant or Warrants shall be of like tenor to the surrendered Warrant or Warrants and shall
be exercisable in the aggregate for an equivalent number of Warrant Shares as the Warrant or Warrants so surrendered in accordance
with such notice.

 

8.                 
Compliance with the Act.

 

(a)               
Agreement to Comply with the Act; Legend. The Holder, by acceptance of this Warrant, agrees to comply in all respects
with the provisions of this Section 8 and the restrictive legend requirements set forth on the face of this Warrant and further
agrees that such Holder shall not offer, sell or otherwise dispose of this Warrant or any Warrant Shares to be issued upon exercise
hereof except under circumstances that will not result in a violation of the Securities Act of 1933, as amended (the "
Act"). This Warrant and all Warrant Shares issued upon exercise
of this Warrant (unless registered under the Act) shall be stamped or imprinted with a legend in substantially the following form:

 

“NEITHER THIS WARRANT
NOR THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (AS AMENDED, THE
“ACT”) OR UNDER THE SECURITIES LAWS OF ANY STATE. THE SECURITIES MAY NOT BE TRANSFERRED, SOLD, OFFERED FOR SALE, PLEDGED
OR HYPOTHECATED IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, (B) COMPLIANCE WITH RULE 144 OR RULE 144A
PROMULGATED UNDER THE ACT (OR A SUCCESSOR RULE THERETO), (C) AN EXEMPTION OR QUALIFICATION UNDER APPLICABLE SECURITIES LAWS OR
(D) AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED. ANY ATTEMPT TO TRANSFER,
SELL, PLEDGE OR HYPOTHECATE THIS SECURITY IN VIOLATION OF THESE RESTRICTIONS SHALL BE VOID.”

 

    	52

    	 

    
 

9.                 
No Impairment. The Company shall not, by amendment of its certificate of incorporation or through any consolidation,
merger, reorganization, transfer of assets, dissolution, issue or sale of securities or any other voluntary action, avoid or seek
to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying
out of all such terms and in the taking of all such action as may be necessary or appropriate in order to protect the rights of
the Holder of this Warrant against dilution or other impairment. Without limiting the generality of the foregoing, the Company
will (a) not permit the par value of any shares of stock receivable upon the exercise of this Warrant to exceed the amount payable
therefor upon such exercise, (b) take all such action as may be necessary or appropriate in order that the Company may validly
and legally issue fully paid and non-assessable shares of stock on the exercise of the Warrants from time to time outstanding and
(c) not take any action which results in any adjustment of the Exercise Price if the total number of shares of Common Stock issuable
after the action upon the exercise of all of the Warrants would exceed the total number of shares of Common Stock then authorized
by the Company’s certificate of incorporation and available for the purpose of issuance upon such exercise.

 

10.             
Exercise Price Dispute Resolution. In the case of a dispute as to the determination of the Exercise Price
or the arithmetic calculation of the Warrant Shares, the Company shall submit the disputed determinations or arithmetic calculations
via facsimile within two (2) Business Days of receipt of the Exercise Notice giving rise to such dispute, as the case may be, to
the Holder. If the Holder and the Company are unable to agree upon such determination or calculation of the Exercise Price or the
Warrant Shares within three Business Days of such disputed determination or arithmetic calculation being submitted to the Holder,
then the Company shall, within two (2) Business Days submit via facsimile (a) the disputed determination of the Exercise Price
to an independent, reputable investment bank selected by the Company and approved by the Holder, which approval shall not be unreasonably
withheld, or (b) the disputed arithmetic calculation of the Warrant Shares to the Company’s independent, outside accountant.
The Company shall cause the investment bank or the accountant, as the case may be, to perform the determinations or calculations
and notify the Company and the Holder of the results no later than ten Business Days from the time it receives the disputed determinations
or calculations. The prevailing party in any dispute resolved pursuant to this Section 10 shall be entitled to the full amount
of all reasonable expenses, including all costs and fees paid or incurred in good faith, in relation to the resolution of such
dispute. Such investment bank’s or accountant’s determination or calculation, as the case may be, shall be binding
upon all parties absent demonstrable error.

 

11.             
Warrant Register. The Company shall keep and properly maintain at its principal executive offices books for
the registration of the Warrant and any transfers thereof. The Company may deem and treat the Person in whose name the Warrant
is registered on such register as the Holder thereof for all purposes, and the Company shall not be affected by any notice to the
contrary, except any assignment, division, combination or other transfer of the Warrant effected in accordance with the provisions
of this Warrant.

 

12.             
Notices. All notices, requests, consents, claims, demands, waivers and other communications hereunder shall
be in writing and shall be deemed to have been given: (a) when delivered by hand (with written confirmation of receipt); (b) when
received by the addressee if sent by a nationally recognized overnight courier (receipt requested); (c) on the date sent by facsimile
or e-mail of a PDF document (with confirmation of transmission) if sent during normal business hours of the recipient, and on the
next Business Day if sent after normal business hours of the recipient; or (d) on the third day after the date mailed, by certified
or registered mail, return receipt requested, postage prepaid. Such communications must be sent to the respective parties at the
addresses indicated below (or at such other address for a party as shall be specified in a notice given in accordance with this
Section 10).

 

    	53

    	 

    
 

	If to the Company:	 	
        ChinaCast Education Corporation

        Room 701A, Building A, Golden Eagle Mansion

        80 Hanxiao Road, Pudong

        Shanghai 200437 China

        Attention: Doug Woodrum

        Fax: +(86) 21 6105 3354*8004

	 	 	 
	with a copy to (which shall not constitute notice):	 	
        Fried, Frank, Harris, Shriver & Jacobson

        9th Floor, Gloucester Tower, The Landmark,

        15 Queen’s Road Central

        Hong Kong

        Attention: Doug Freeman

        Fax: +(852) 3760 3611

	 	 	 
	If to the Holder:	 	
        [●]

        Facsimile:[●]

        E-mail: [●]

        Attention: [●]

	 	 	 
	with a copy to:	 	
        [●]

        Facsimile: [●]

        E-mail: [●]

        Attention: [●]

 

 

13.             
Cumulative Remedies. Except to the extent expressly provided in Section 6 to the contrary, the rights and
remedies provided in this Warrant are cumulative and are not exclusive of, and are in addition to and not in substitution for,
any other rights or remedies available at law, in equity or otherwise.

 

14.             
Equitable Relief. Each of the Company and the Holder acknowledges that a breach or threatened breach by such
party of any of its obligations under this Warrant would give rise to irreparable harm to the other party hereto for which monetary
damages would not be an adequate remedy and hereby agrees that in the event of a breach or a threatened breach by such party of
any such obligations, the other party hereto shall, in addition to any and all other rights and remedies that may be available
to it in respect of such breach, be entitled to equitable relief, including a restraining order, an injunction, specific performance
and any other relief that may be available from a court of competent jurisdiction.

 

15.             
Entire Agreement. This Warrant, together with the applicable Purchase Agreements the Holder is party to, constitutes
the sole and entire agreement of the parties to this Warrant with respect to the subject matter contained herein, and supersedes
all prior and contemporaneous understandings and agreements, both written and oral, with respect to such subject matter. In the
event of any inconsistency between the statements in the body of this Warrant and the applicable Purchase Agreements the Holder
is party to, the statements in the body of this Warrant shall control.

 

    	54

    	 

    
 

16.             
Successor and Assigns. This Warrant and the rights evidenced hereby shall be binding upon and shall inure
to the benefit of the Company and the Holder and the successors of the Company and the successors and permitted assigns of the
Holder. Such successors and/or permitted assigns of the Holder shall be deemed to be a Holder for all purposes hereunder.

 

17.             
No Third-Party Beneficiaries. This Warrant is for the sole benefit of the Company and the Holder and their
respective successors and, in the case of the Holder, permitted assigns and nothing herein, express or implied, is intended to
or shall confer upon any other Person any legal or equitable right, benefit or remedy of any nature whatsoever, under or by reason
of this Warrant.

 

18.             
Headings. The headings in this Warrant are for reference only and shall not affect the interpretation of this
Warrant.

 

19.             
Amendment and Modification; Waiver. Except as otherwise provided herein, this Warrant may only be amended,
modified or supplemented by an agreement in writing signed by the Company and the Holder, the successors of the Company and the
successors and permitted assigns of the Holder. No waiver by the Company or the Holder of any of the provisions hereof shall be
effective unless explicitly set forth in writing and signed by the party so waiving. No waiver by any party shall operate or be
construed as a waiver in respect of any failure, breach or default not expressly identified by such written waiver, whether of
a similar or different character, and whether occurring before or after that waiver. No failure to exercise, or delay in exercising,
any rights, remedy, power or privilege arising from this Warrant shall operate or be construed as a waiver thereof; nor shall any
single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or
the exercise of any other right, remedy, power or privilege.

 

20.             
Severability. If any term or provision of this Warrant is invalid, illegal or unenforceable in any jurisdiction,
such invalidity, illegality or unenforceability shall not affect any other term or provision of this Warrant or invalidate or render
unenforceable such term or provision in any other jurisdiction.

 

21.             
Governing Law, Consent to Jurisdiction; Waiver of Jury Trial. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. Each of the Company and the Holder irrevocably submits to the exclusive
jurisdiction of the courts of the State of New York located in New York County and the United States District Court for the Southern
District of New York for the purpose of any suit, action, proceeding or judgment relating to or arising out of this Agreement or
the other transactions contemplated hereby and thereby. Service of process in connection with any such suit, action or proceeding
may be served on each party hereto anywhere in the world by the same methods as are specified for the giving of notices under this
Agreement. Each of the Company and the Holder irrevocably consents to the jurisdiction of any such court in any such suit, action
or proceeding and to the laying of venue in such court. Each of the Company and the Holder irrevocably waives any objection to
the laying of venue of any such suit, action or proceeding brought in such courts and irrevocably waives any claim that any such
suit, action or proceeding brought in any such court has been brought in an inconvenient forum. EACH OF THE COMPANY AND THE HOLDER
WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO THIS AGREEMENT.

 

22.             
Counterparts. This Warrant may be executed in counterparts, each of which shall be deemed an original, but
all of which together shall be deemed to be one and the same agreement. A signed copy of this Warrant delivered by facsimile, e-mail
or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy
of this Warrant.

 

    	55

    	 

    
 

23.             
No Strict Construction. This Warrant shall be construed without regard to any presumption or rule requiring
construction or interpretation against the party drafting an instrument or causing any instrument to be drafted.

 

 

 

 

 

 

 

[SIGNATURE PAGE FOLLOWS]

 

    	56

    	 

    
 

IN WITNESS WHEREOF, the Company has duly
executed this Warrant on the Original Issue Date.

 

 

	 	
        CHINACAST EDUCATION CORPORATION

         

         

	 	
        By: __________________________

         

        Name:

         

        Title:

 

    	57

    	 

    
 

EXHIBIT A

 

[Form
of EXERCISE NOTICE]

ChinaCast Education Corporation

WARRANT DATED AUGUST 24, 2012

 

The undersigned holder hereby exercises
the right to purchase _________________ shares of Common Stock (“Warrant Shares”) of ChinaCast
Education Corporation, a Delaware corporation (the “Company”), evidenced by the attached Warrant to purchase
Common Stock (the “Warrant”). Capitalized terms used herein and not otherwise defined shall have the respective
meanings set forth in the Warrant.

 

1. Form of Exercise Price. The Holder intends
that payment of the Exercise Price shall be made as:

 

____________a “Cash
Exercise” with respect to _________________ Warrant Shares; and/or

 

____________a “Cashless
Exercise” with respect to _______________ Warrant Shares.

 

2. Payment of Exercise Price. In the event that
the holder has elected a Cash Exercise with respect to some or all of the Warrant Shares to be issued pursuant hereto, the holder
shall pay the Aggregate Exercise Price in the sum of $___________________ to the Company in accordance with the terms of the Warrant.

 

3. Delivery of Warrant Shares. The Company shall
deliver to the holder __________ Warrant Shares in accordance with the terms of the Warrant and, after delivery of such Warrant
Shares, _____________ Warrant Shares remain subject to the Warrant.

 

	 	 	 
	 	 	 
	Dated: ________________, _____	 	Name of Holder:
	 	 	 
	 	 	(Print) ___________________________
	 	 	 
	 	 	By:______________________________
	 	 	Name:____________________________
	 	 	Title:_____________________________
	 	 	 
	 	 	(Signature must conform in all respects to name of holder as specified on the face of the Warrant)

 

    	58

    	 

    
 

EXHIBIT B

 

 

[Form
of ASSIGNMENT]

ChinaCast Education Corporation

WARRANT ORIGINALLY ISSUED AUGUST 24, 2012

WARRANT NO. [●]

 

(To assign the foregoing
Warrant, execute this form and supply required information. Do not use this form to purchase shares.)

 

FOR VALUE RECEIVED,
the foregoing Warrant and all rights evidenced thereby are hereby assigned to

 

	Name:	                                                                           
	 	(Please Print)
	 	 
	Address:	                                                                           
	 	(Please Print)
	 	 
	Dated: _______________ __, ______	 
	 	 
	Holder’s Signature:___________________________	 
	 	 
	Holder’s Address:___________________________	 

 

 

NOTE: The signature to this Form of Assignment
must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change whatever.
Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority
to assign the foregoing Warrant.

 

    	59

    	 

    
 

EXHIBIT C

 

FORM OF REGISTRATION RIGHTS AGREEMENT

 

 

    	60

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