Document:

Unassociated Document

THE REGISTERED HOLDER OF THIS WARRANT BY ITS ACCEPTANCE HEREOF, AGREES THAT IT WILL NOT SELL, TRANSFER, ASSIGN, PLEDGE OR HYPOTHECATE THIS WARRANT EXCEPT AS HEREIN PROVIDED (INCLUDING WITH RESPECT TO RESTRICTIONS ON TRANSFERS) FOR A PERIOD OF ONE HUNDRED EIGHTY DAYS FROM [_____], 2011 (THE “CLOSING DATE”) TO ANYONE OTHER THAN (I) NEWBRIDGE SECURITIES CORPORATION (“NEWBRIDGE”) OR AN UNDERWRITER OR A SELECTED DEALER  IN CONNECTION WITH THE INITIAL PUBLIC OFFERING IN THE UNITED STATES OF COMMON STOCKS OF CHISEN ELECTRIC CORPORATION (THE “OFFERING”), OR(II) A BONA FIDE OFFICER OR PARTNER OF NEWBRIDGE OR OF ANY SUCH UNDERWRITER OR SELECTED DEALER.

 

THIS WARRANT IS NOT EXERCISABLE PRIOR TO [_____], 2011. VOID AFTER 5:00 P.M., NEW YORK CITY TIME, ON [_____], 2016.

 

 

COMMON STOCK PURCHASE WARRANT

 

For the Purchase of Common Stock

 

of

 

Chisen Electric Corporation

 

1. Warrant. THIS CERTIFIES THAT, in consideration of funds duly paid by or on behalf of Newbridge (“Holder”), as registered owner of this Warrant, to Chisen Electric Corporation, a Nevada company (the “Company”), Holder is entitled, at any time or from time to time, from [  __  ], 2011 (the “Commencement Date”), and at or before 5:00 p.m., New York City time, on  [     _], 2016 (the ”Expiration Date”), but not thereafter, to subscribe for, purchase and receive, in whole or in part, up to [   __ ] shares of Common Stock of the Company, par value 0.001 per share (the “Warrants Shares”), subject to adjustment as provided in Section 6 below. If the Expiration Date is a Saturday or a Sunday or a day on which banking institutions are authorized by law to close in the United States, then this Warrant may be exercised on the next succeeding day which is not such a day in accordance with the terms herein. During the period ending on the Expiration Date, the Company agrees not to take any action that would terminate the Warrant. This Warrant is initially exercisable at US$[      _  ] per Share (165% of the price of the Shares sold in the Offering); provided, however, that upon the occurrence of any of the events specified in Section 6 below, the rights granted by this Warrant, including the exercise price per Share and the number of Shares to be received upon such exercise, shall be adjusted as therein specified. The term “Exercise Price” means the initial exercise price or the adjusted exercise price, depending on the context.

 

2. Exercise.

 

2.1 Exercise Form. In order to exercise this Warrant, the exercise form attached hereto (the “Notice of Exercise”) must be duly completed, executed and delivered to the Company, together with this Warrant and, subject to Section 2.2 below, payment of the Exercise Price for the Shares being purchased payable in cash by wire transfer of immediately available funds to an account designated by the Company or by certified check or official bank check. The mechanics of exercise are set forth in Section 2.4 below. If the subscription rights represented hereby shall not be exercised at or before 5:00 p.m., New York City time, on the Expiration Date, this Warrant shall become and be void without further force or effect, and all rights represented hereby shall cease and expire.

 

2.2 Cashless Exercise. If at the time of exercise of this Warrant there is no effective registration statement registering (or the prospectus contained therein is not available for) the issuance of the Shares being purchased and also at such time of exercise all of the Shares are not then registered for resale by the Holder into the market at market prices from time to time on an effective registration statement for use on a continuous basis (or the prospectus contained therein is not available for use), then, in lieu of exercising this Warrant by payment of cash by wire transfer of immediately available funds or certified check or official bank check payable to the order of the Company pursuant to Section 2.1 above, the Holder may elect to receive the number of shares equal to the value of this Warrant (or the portion thereof being exercised), by surrender of this Warrant to the Company, together with the Notice of Exercise, in which event the Company shall issue to the Holder that number of shares determined in accordance with the following formula:

 

  

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X

	  	
    =

	
    Y(A-B)

          A

	  	  	  	  	  
	  	
Where,

	
    X

	
    =

	
    The number of shares to be issued to the Holder;

	  	  	  	  	  
	  	  	
    Y

	
    =

	
    The number of shares for which the Warrants is being exercised;

	  	  	  	  	  
	  	  	
    A

	
    =

	
    The current fair market value of one share; and

	  	  	  	  	  
	  	  	
    B

	
    =

	
    The Exercise Price.

 

For purposes of this Section 2.2, the “fair market value” of a Share is defined as follows:

 

(i) if the Shares are traded on a U.S. securities exchange, the fair market value shall be deemed to be the average of the closing bid prices on such exchange over the thirty (30) day period ending three (3) days prior to the date of the Notice of Exercise being delivered to the Company in connection with the exercise of the Warrants (whether in whole or in part);

 

(ii) if the Shares are actively traded over-the-counter in the United States, the fair market value shall be deemed to be the average of the closing bid prices over the thirty (30) day period ending three (3) days prior to the date of the Notice of Exercise being delivered to the Company in connection with the exercise of the Warrants (whether in whole or in part); or

 

 (iii) if there is no active public market for the Shares in the United States, the fair market value shall be agreed by the Holder and the Board of Directors of the Company (the “Board”); provided, however, that if the Holder and the Board are unable to agree upon the fair market value then the Holder and the Board shall jointly select an appraiser who is experienced in such matters to determine the fair market value and the decision of the appraiser shall be final and conclusive; provided, further, that the fees and expenses of such appraiser shall be borne by the Company.

 

2.3 Legend. Each certificate for the Shares purchased under this Warrant shall bear a legend as follows, unless such Shares have been registered under the Securities Act of 1933, as amended (the “Act”):

 

“The securities represented by this certificate have not been registered under the Securities Act of 1933, as amended (the “Act”), or applicable U.S. state securities laws. Neither the securities nor any interest therein may be offered for sale, sold or otherwise transferred except pursuant to an effective registration statement under the Act, or pursuant to an exemption from registration under the Act and applicable U.S. state securities laws which, in the opinion of counsel to the Company, is available.”

 

2.4 Mechanics of Exercise.

 

2.4.1 Delivery of Certificates upon Exercise. Certificates representing the Shares shall be transmitted by the transfer agent of the Company to the Holder by crediting the account of the Holder’s prime broker with the Depository Trust Company through its Deposit Withdrawal Agent Commission (“DWAC”) system if the Company is a participant in such system and either (i) there is an effective registration statement permitting the issuance of such Shares to, or resale of such Shares by, the Holder, or (ii) this Warrant is being exercised via cashless exercise pursuant to Section 2.2 above, and otherwise by physical delivery to the address specified by the Holder in the Notice of Exercise within three (3) Business Days (as defined below) from the delivery to the Company of the Notice of Exercise, surrender of this Warrant (if required) and payment of the aggregate Exercise Price as set forth in Section 2.1 above (the “Warrants Shares Delivery Date”). If all or any portion of this Warrant is exercised at a time when there is an effective registration statement to cover the issuance or resale of the Shares or if the legend is not required under applicable securities laws, such Shares shall be issued free of all legends on or before the Warrant Share Delivery Date. This Warrrants shall be deemed to have been exercised on the first date on which the Notice of Exercise has been properly delivered to the Company and the Company has received the Exercise Price (or documentation of cashless exercise). The Shares shall be deemed to have been issued, and Holder or any other person so designated to be named therein shall be deemed to have become a holder of record of such Shares for all purposes, on the first date on which the Notice of Exercise has been properly delivered to the Company and the Company has received the Exercise Price (or documentation of cashless exercise).

 

  

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For purposes of this Warrant, “Business Day” means any day other than a Saturday, a Sunday or a legal holiday or a day on which banking institutions are authorized or obligated by law to close in New York City.

 

[2.4.2 Compensation for Buy-In on Failure to Timely Deliver Certificates upon Exercise. In addition to any other rights available to the Holder, if the Company fails to cause its transfer agent to transmit to the Holder a certificate or certificates representing the Shares pursuant to a Notice of Exercise on or before the Warrant Share Delivery Date pursuant to Section 2.4.1 above, and if after such date the Holder is required by its broker to purchase (in an open market transaction or otherwise) Shares to deliver in satisfaction of a sale by the Holder of the Shares which the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Company shall (i) pay in cash to the Holder the amount by which (a) the Holder’s total purchase price (including brokerage commissions, if any) for the Shares so purchased exceeds (b) the amount obtained by multiplying (A) the number of Shares that the Company was required to deliver to the Holder in connection with the exercise at issue times (B) the price at which the sell order giving rise to such purchase obligation was executed, and (ii) at the option of the Holder, either reinstate the portion of this Warrant and equivalent number of Shares for which such exercise was not honored or deliver to the Holder the number of Shares that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder. For example, if the Holder purchases Shares having a total purchase price of US$11,000 to cover a Buy-In with respect to an attempted exercise of Shares with an aggregate sale price giving rise to such purchase obligation of US$10,000, under clause (i) of the immediately preceding sentence, the Company shall be required to pay the Holder US$1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In, together with applicable confirmations and other evidence reasonably requested by the Company. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity, including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver certificates representing Shares upon exercise of this Warrant as required pursuant to the terms hereof. ]

 

2.5 Elimination of Fractional Interests. The Company shall not be required to issue certificates or script representing fractions of Shares upon the exercise of this Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company shall, at Newbridge’s election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price or round up to the next whole share.

 

3. Transfer.

 

3.1 General Restrictions. The registered Holder of this Warrant agrees by his, her or its acceptance hereof, that such Holder will not: (a) sell, transfer, assign, pledge or hypothecate this Warrant for a period of one hundred eighty (180) days from the Effective Date to anyone other than (i) Newbridge or an underwriter or a selected dealer participating in the Offering, or (ii) a bona fide officer or partner of Newbridge or of any such underwriter or selected dealer, in each case in accordance with Conduct Rule 5110(g)(1) of the Financial Industry Regulatory Authority, Inc. (“FINRA”); or (b) cause this Warrant or the securities issuable hereunder to be the subject of any hedging, short sale, derivative, put or call transaction that would result in the effective economic disposition of this Warrant or the securities hereunder, except as provided for in FINRA Rule 5110(g)(2); provided that any such transferee agrees to the restrictions set forth in clauses (a) and (b) above. On and after one hundred eighty (180) days from the Effective Date, transfers to others may be made subject to compliance with, or exemptions from, applicable securities laws. In order to make any permitted assignment, the Holder must deliver to the Company the assignment form attached hereto duly completed and executed, together with the Warrant and payment of all transfer taxes, if any, payable in connection therewith. The Company shall within two (2) Business Days transfer this Warrant on the books of the Company and shall execute and deliver a new Warrant or Warrant of like tenor to the appropriate assignee(s) expressly evidencing the right to purchase the aggregate number of Shares purchasable hereunder or such portion of such number as shall be contemplated by any such assignment.

 

3.2 Restrictions Imposed by the Act. The securities evidenced by this Warrant shall not be transferred unless and until: (i) the Company has received the opinion of counsel for the Holder that the securities may be transferred pursuant to an exemption from registration under the Act and applicable U.S. state securities laws, the availability of which is established to the reasonable satisfaction of the Company (the Company hereby agreeing that the opinion of outside counsel to Newbridge reasonably satisfactory to the Company shall be deemed satisfactory evidence of the availability of an exemption); or (ii) a registration statement or a post-effective amendment to any such registration statement relating to the offer and sale of such securities has been filed by the Company and declared effective by the Securities and Exchange Commission (the “Commission”) and compliance with applicable U.S. state securities law has been established.

 

  

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4. Registration Rights.

    4.1 Demand Registration. The Holder(s) shall have the right, for a period of five (5) years after the Closing commencing on the Commencement Date, to make one demand to have the Company register and the Company shall register all or any portion of the Shares underlying the Warrants (collectively, the “Registrable Securities”) in a registration statement at the Company’s expense (“Demand Registration Right”), provided that all or any portion of the Registrable Securities are not currently covered by a then effective registration statement. Notwithstanding the Holder’s exercise of the Demand Registration Right, the Holder shall have the right, for a period of five (5) years after the Closing commencing on the Commencement Date, to make additional demand to have the Company register and the Company shall register all or any portion of the Registrable Securities in a registration statement at Holder’s expense (“Additional Demand Registration Right”) , provided that all or any portion of the Registrable Securities are not currently covered by a then effective registration statement.

 

4.2 “Piggy-Back” Registration. The Holder(s) shall have the right, for a period of five (5) years commencing on the Commencement Date, to include all or any portion of the Registrable Securities as part of any other registration of securities filed by the Company in any jurisdiction at the Company’s expenses (other than in connection with a transaction contemplated by Rule 145(a) promulgated under the Act or pursuant to Form S-8 or any equivalent form). In the event of such a proposed registration, the Company shall furnish the Holder(s) of outstanding Registrable Securities with not less than thirty (30) days written notice prior to the proposed date of filing of such registration statement. Such notice to the Holder(s) shall continue to be given for each registration statement filed by the Company until such time as all of the Registrable Securities have been sold by the Holder(s). The Holder(s) shall exercise the “piggy-back” registration rights provided for herein by giving written notice within ten (10) days of the receipt of the Company’s notice of its intention to file a registration statement.

 

4.2 General Terms.

 

4.2.1 Indemnification. The Company shall indemnify the Holder(s) of the Registrable Securities to be sold pursuant to any registration statement hereunder and each person, if any, who controls such Holder(s) within the meaning of Section 15 of the Act or Section 20(a) of the Securities Exchange Act of 1934, as amended (“Exchange Act”), against all losses, claims, damages, expenses or liabilities (including all reasonable attorneys’ fees and other expenses reasonably incurred in investigating, preparing or defending against any claim whatsoever) (collectively, “Damages”) to which any of them may become subject under the Act, the Exchange Act or otherwise, arising from such registration statement to the same extent and with the same effect as the Company has agreed to indemnify the several underwriters in Section 8(a) of the Underwriting Agreement between Newbridge and the Company, dated as of [ __   ], 2011 (the “Underwriting Agreement”). The Holder(s) of the Registrable Securities to be sold pursuant to such registration statement, and their successors and assigns, shall severally, and not jointly, indemnify the Company, against all Damages to which they may become subject under the Act, the Exchange Act or otherwise arising from information furnished by or on behalf of such Holder(s), or their successors or assigns, in writing, for specific inclusion in such registration statement to the same extent and with the same effect as the several underwriters have agreed to indemnify the Company in Section 8(b) of the Underwriting Agreement. The Company acknowledges and agrees that such information furnished by or on behalf of such Holder(s) shall consist only of the name and address of such Holder(s) and the number of Registrable Securities included in such registration statement.

 

4.2.2 Exercise of Warrant. Nothing contained in this Section 4 shall be construed as requiring the Holder to exercise this Warrant prior to or after the initial filing of any registration statement or the effectiveness thereof.

 

4.2.3 Documents Delivered to Holders. The Company shall furnish to each underwriter participating in any of the foregoing offerings, if any, a signed counterpart, addressed to such underwriter with a copy to each Holder participating in such offering, of: (i) an opinion of counsel to the Company, dated the effective date of such registration statement (and, if such registration includes an underwritten public offering, an opinion dated the date of the closing under any underwriting agreement related thereto); and (ii) a “cold comfort” letter dated the effective date of such registration statement (and, if such registration includes an underwritten public offering, a letter dated the date of the closing under the underwriting agreement) signed by the independent public accountants who have issued a report on the Company’s financial statements included in such registration statement, in each case covering substantially the same matters with respect to such registration statement (and the prospectus included therein) and, in the case of such accountants’ letter, with respect to events subsequent to the date of such financial statements, as are customarily covered in opinions of issuer’s counsel and in accountants’ letters delivered to underwriters in underwritten public offerings of securities. The Company shall also: (a) deliver promptly to each Holder participating in the offering copies of all correspondence between the Commission or any securities regulatory authority, as the case may be, and the Company, its counsel or auditors and all memoranda relating to discussions with the Commission or its staff or any securities regulatory authority, as the case may be, with respect to the registration statement; and (b) permit each Holder and underwriter to do such investigation, upon reasonable advance notice, with respect to information contained in or omitted from the registration statement as it deems reasonably necessary to comply with applicable securities laws or rules of FINRA. Such investigation shall include access to books, records and properties and opportunities to discuss the business of the Company with its officers and independent auditors, all to such reasonable extent and at such reasonable times as any such Holder shall reasonably request.

 

  

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4.2.4 Underwriting Agreement. The Company shall enter into an underwriting agreement with Newbridge or other underwriter(s) if any, selected by any Holder(s) with Registrable Securities being registered pursuant to this Section 4. Such underwriting agreement shall be reasonably satisfactory in form and substance to the Company, each Holder and Newbridge or other underwriter (s) if any, and shall contain such representations, warranties and covenants by the Company and such other terms as are customarily contained in agreements of that type used by the managing underwriter. The Holder(s) shall be parties to any underwriting agreement relating to an underwritten sale of their Registrable Securities and may, at their option, require that any or all the representations, warranties and covenants of the Company to or for the benefit of such underwriters shall also be made to and for the benefit of such Holder(s). Such Holder(s) shall not be required to make any representations or warranties to or agreements with the Company or the underwriters except as they may relate to their Shares and their intended method(s) of distribution.

 

4.3.5 Documents to be Delivered by Holder(s). Each of the Holder(s) participating in any of the foregoing offerings shall furnish to the Company a completed and executed questionnaire provided by the Company requesting information customarily provided by selling security holders in connection with a registration statement in the United States within ten (10) days of receipt of such questionnaire.

 

5. New Warrant to be Issued.

 

5.1 Partial Exercise or Transfer. Subject to the restrictions in Section 3 above, this Warrant may be exercised or assigned in whole or in part. In the event of the exercise or assignment hereof in part only, upon surrender of this Warrant for cancellation, together with the duly executed Notice of Exercise or assignment form attached hereto and funds sufficient to pay any Exercise Price if exercised pursuant to Section 2.1 above, the Company shall cause to be delivered to the Holder without charge a new Warrant of like tenor to this Warrant in the name of the Holder evidencing the right of the Holder to purchase the number of Shares purchasable hereunder as to which this Warrant have not been exercised or assigned.

 

5.2 Lost Certificate. Upon receipt by the Company of evidence satisfactory to it of the loss, theft, destruction or mutilation of this Warrant and of reasonably satisfactory indemnification or the posting of a bond, the Company shall execute and deliver a new Warrant of like tenor and date. Any such new Warrant executed and delivered as a result of such loss, theft, mutilation or destruction shall constitute a substitute contractual obligation on the part of the Company.

 

6. Adjustments.

 

6.1 Adjustments to Exercise Price and Number of Securities. The Exercise Price and the number of Shares underlying the Warrant shall be subject to adjustment from time to time as hereinafter set forth.

 

6.1.1 Share Dividends; Split Ups. If, at any time after the hereof, the Company (i) pays a stock dividend or otherwise makes a distribution or distributions on the Shares or any other equity or equity equivalent securities payable in Shares, (ii) subdivides outstanding Shares into a larger number of shares, (iii) combines (including by way of reverse stock-split) outstanding Shares into a smaller number of shares, or (iv) issues by reclassification of Shares any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of Shares (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of Shares outstanding immediately after such event and the number of Shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain unchanged.

 

  

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6.1.2 Replacement of Securities upon Reorganization, etc. In the case of any reclassification or reorganization of the outstanding Shares other than a change covered by Sections 6.1.1 above or a change that solely affects the par value of such Shares, or in the case of any share reconstruction or amalgamation or consolidation of the Company with or into another corporation (other than a consolidation or share reconstruction or amalgamation in which the Company is the continuing corporation and that does not result in any reclassification or reorganization of the outstanding Shares), or in the case of any sale or conveyance to another corporation or entity of the property of the Company as an entirety or substantially as an entirety in connection with which the Company is dissolved, the Holder of this Warrant shall have the right thereafter (until the expiration of the right of exercise of this Warrant) to receive upon the exercise hereof, for the same aggregate Exercise Price payable hereunder immediately prior to such event, the kind and amount of shares of stock or other securities or property (including cash) receivable upon such reclassification, reorganization, share reconstruction or amalgamation, or consolidation, or upon a dissolution following any such sale or transfer, by a Holder of the number of Shares of the Company obtainable upon exercise of this Warrant immediately prior to such event; and if any reclassification also results in a change in Shares covered by Section 6.1.1 above, then such adjustment shall be made pursuant to Sections 6.1.1 above and this Section 6.1.2. The provisions of this Section 6.1.2 shall similarly apply to successive reclassifications, reorganizations, share reconstructions or amalgamations, or consolidations, sales or other transfers. Notwithstanding anything to the contrary in this Warrant, in the event of (i) an all cash transaction where the Company is not the survivor (the “Successor Entity”), (ii) a “Rule 13e-3 transaction” as defined in Rule 13e-3 under the Exchange Act where the Company is not the Successor Entity, or (iii) a transaction involving a person or entity not traded on a national securities exchange, including, but not limited to, The Nasdaq Global Select Market, The Nasdaq Global Market, The Nasdaq Capital Market or NYSE Amex where the Company is not the Successor Entity (collectively, a “Fundamental Transaction”), such Successor Entity shall, at the option of the Holder, exercisable at any time concurrently with, or within 30 days after, the consummation of the Fundamental Transaction, purchase this Warrant from the Holder by paying to the Holder an amount of cash equal to the Black Scholes Value (as defined below) of the remaining unexercised portion of this Warrant on the date of the consummation of such Fundamental Transaction.

 

For purposes of this Section 6.1.2, “Black Scholes Value” means the value of this Warrant based on the Black and Scholes Option Pricing Model obtained from the “OV” function on Bloomberg, L.P. (“Bloomberg”) determined as of the day of consummation of the applicable Fundamental Transaction for pricing purposes and reflecting (i) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the time between the date of the public announcement of the applicable Fundamental Transaction and the Termination Date, (ii) an expected volatility equal to the greater of 100% and the 100 day volatility obtained from the “HVT” function on Bloomberg as of the trading day immediately following the public announcement of the applicable Fundamental Transaction, (iii) the underlying price per Share used in such calculation shall be the sum of the price per Share being offered in cash, if any, plus the value of any non-cash consideration, if any, being offered in such Fundamental Transaction, and (iv) a remaining option time equal to the time between the date of the public announcement of the applicable Fundamental Transaction and the Expiration Date.

 

6.1.3 Changes in Form of Warrant. This form of Warrant need not be changed because of any change pursuant to this Section 6.1, and any Warrant(s) issued after such change may state the same Exercise Price and the same number of Shares as are stated in the Warrant initially issued pursuant to this Agreement. The acceptance by any Holder of the issuance of any new Warrant(s) reflecting a required or permissive change shall not be deemed to waive any rights to an adjustment occurring after the Commencement Date or the computation thereof.

 

6.2 Substitute Warrant. In the case of any consolidation of the Company with, or share reconstruction or amalgamation of the Company with or into, another corporation (other than a consolidation or share reconstruction or amalgamation which does not result in any reclassification or change of the outstanding Shares), the corporation formed by such consolidation or share reconstruction or amalgamation shall execute and deliver to the Holder a supplemental Warrant providing that the holder of such Warrant then outstanding or to be outstanding shall have the right thereafter (until the stated expiration of such Warrant) to receive, upon exercise of such Warrant, the kind and amount of shares of stock and other securities and property receivable upon such consolidation or share reconstruction or amalgamation, by a holder of the number of Shares of the Company for which such Warrant might have been exercised immediately prior to such consolidation, share reconstruction or amalgamation, sale or transfer. Such supplemental Warrant shall provide for adjustments which shall be identical to the adjustments provided for in this Section 6. The provision of this Section 6.2 shall similarly apply to successive consolidations or share reconstructions or amalgamations.

 

  

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7. Reservation and Listing. The Company shall at all times until the Expiration Date reserve and keep available out of its authorized Shares, solely for the purpose of issuance upon exercise of this Warrant, such number of Shares or other securities, properties or rights as shall be issuable upon the exercise hereof. The Company covenants and agrees that, upon exercise of this Warrant and payment of the Exercise Price therefor, in accordance with the terms hereby, all Shares and other securities issuable upon such exercise shall be duly and validly issued, fully paid and non-assessable and not subject to preemptive rights of any shareholder. As long as this Warrarnt shall be outstanding, the Company shall use its commercially reasonable efforts to cause all Shares issuable upon exercise hereof to be listed (subject to official notice of issuance) on all securities exchanges (or, if applicable, on the OTC Bulletin Board or any successor trading market) on which the Shares issued to the public in the Offering may then be listed and/or quoted.

 

8. Certain Notice Requirements.

 

8.1 Holder’s Right to Receive Notice. Nothing herein shall be construed as conferring upon the Holder the right to vote or consent or to receive notice as a shareholder for the election of directors or any other matter, or as having any rights whatsoever as a shareholder of the Company. If, however, at any time prior to the expiration of this Warrant and its exercise in full, any of the events described in Section 8.2 below shall occur, then, upon the occurrence of such events, the Company shall give written notice of such event at least fifteen (15) days prior to the date fixed as a record date or the date of closing the transfer books for the determination of the shareholders entitled to such dividend, distribution, conversion or exchange of securities or subscription rights, or entitled to vote on such proposed dissolution, liquidation, winding up or sale. Such notice shall specify such record date or the date of the closing of the transfer books, as the case may be. Notwithstanding the foregoing, the Company shall deliver to each Holder a copy of each notice given to the other shareholders of the Company at the same time and in the same manner that such notice is given to the shareholders. Any document describing any of the events described in Section 8.2 below and filed within the timeframe set forth above with the Commission pursuant to its EDGAR system shall be deemed to have been delivered to the Holder pursuant to this Section 8.1.

 

8.2 Events Requiring Notice. The Company shall be required to give the notice described in this Section 8 upon one or more of the following events: (i) the Company shall take a record of the holders of its Shares for the purpose of entitling them to receive a dividend or distribution payable otherwise than in cash, or a cash dividend or distribution payable otherwise than out of retained earnings, as indicated by the accounting treatment of such dividend or distribution on the books of the Company; (ii) the Company shall offer to all the holders of its Shares any additional shares of capital stock of the Company or securities convertible into or exchangeable for shares of capital stock of the Company, or any option, right or warrant to subscribe therefore; (iii) the Company shall effect a dissolution, liquidation or winding up of its business and affairs (other than in connection with a consolidation or share reconstruction or amalgamation) or the Company shall propose a sale of all or substantially all of its property, assets and business; or (iv) the Company shall propose to consummate a Fundamental Transaction.

 

8.3 Notice of Change in Exercise Price. The Company shall, promptly after an event requiring a change in the Exercise Price pursuant to Section 6 above, send notice to the Holder(s) of such event and change (a “Price Notice”). The Price Notice shall describe the event causing the change and the method of calculating the same and shall be certified as being true and accurate by the Chief Financial Officer of the Company.

 

8.4 Transmittal of Notices. All notices, requests, consents and other communications under this Warrant shall be in writing and shall be deemed to have been duly made when hand delivered, sent by facsimile transmission and confirmed or mailed by express mail or private courier service: (i) if to the registered Holder of the Warrant, to the facsimile number and/or address of such Holder as shown on the books of the Company; or (ii) if to the Company, to the following facsimile number and/or address or to such other address as the Company may designate by written notice to the Holders:

 

  

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Chisen Electric Corporation

Jingyi Road, Changxing Economic Development Zone, Changxing County, Zhejiang Province,

The People’s Republic of China

Attn: Liu Chuanjie, Chief Financial Officer

Phone No.: (86) 572-6267666

Fax No.: +972-3-611-4514

 

With a copy to:

K&L Gates LLP

200 South Biscayne Boulevard, Suite 3900

Miami, Florida 33131-2399

Attn: Clayton E. Parker, Esq.

Telephone: (305) 539-3306

Facsimile: (305) 358-7095

 

9. Miscellaneous.

 

9.1 Amendments. The Company and Newbridge may from time to time supplement or amend this Warrant without the approval of any other Holder(s) in order to cure any ambiguity, to correct or supplement any provision contained herein that may be defective or inconsistent with any other provisions herein, or to make any other provisions in regard to matters or questions arising hereunder that the Company and Newbridge may deem necessary or desirable and that the Company and Newbridge deem shall not adversely affect the interest of the Holder(s). All other modifications or amendments shall require the written consent of and be signed by the party against whom enforcement of the modification or amendment is sought.

 

9.2 Headings. The headings contained herein are for the sole purpose of convenience of reference, and shall not in any way limit or affect the meaning or interpretation of any of the terms or provisions of this Warrant.

 

9.3. Entire Agreement. This Warrant (together with the other agreements and documents being delivered pursuant to or in connection with this Warrant) constitutes the entire agreement of the parties hereto with respect to the subject matter hereof, and supersedes all prior agreements and understandings of the parties, oral and written, with respect to the subject matter hereof.

 

9.4 Binding Effect. This Warrant shall inure solely to the benefit of, and shall be binding upon, the Holder and the Company and their permitted assignees, respective successors, legal representative and assigns, and no other person shall have or be construed to have any legal or equitable right, remedy or claim under or in respect of or by virtue of this Warrant or any provisions herein contained.

 

9.5 Governing Law; Submission to Jurisdiction; Consent to Service of Process.

 

9.5.1 Governing Law; Submission to Jurisdiction. This Warrant shall be governed by and construed and enforced in accordance with the laws of the State of Nevada, without giving effect to conflict of laws principles thereof. The Company hereby agrees that any action, proceeding or claim against it arising out of, or relating in any way to, this Warrant shall be brought and enforced in the Florida Supreme Court, County of Broward, or in the United States District Court for the Southern District of Florida, and irrevocably submits to such jurisdiction, which jurisdiction shall be exclusive. The Company hereby waives any objection to such exclusive jurisdiction and that such courts represent an inconvenient forum. Any process or summons to be served upon the Company may be served by transmitting a copy thereof by registered or certified mail, return receipt requested, postage prepaid, addressed to it at the address set forth in Section 8 above. Such mailing shall be deemed personal service and shall be legal and binding upon the Company in any action, proceeding or claim. The Company and the Holder agree that the prevailing party(ies) in any such action shall be entitled to recover from the other party(ies) all of its reasonable attorneys’ fees and expenses relating to such action or proceeding and/or incurred in connection with the preparation therefore.

 

9.5.2 Consent to Service of Process. The Company irrevocably appoints Corporation Vcorp Services, LLC, 1811 Silverside Road, Wilmington, DE 19810, as its agent for service of process in any suit, action or proceeding described in Section 9.5.1 above and agrees that service of process in any such suit, action or proceeding may be made upon it at the office of such agent. The Company waives, to the fullest extent permitted by law, any other requirements of or objections to personal jurisdiction with respect thereto. The Company represents and warrants that such agent has agreed to act as its agent for service of process, and the Company agrees to take any and all action, including the filing of any and all documents and instruments, that may be necessary to continue such appointment in full force and effect.

 

  

8

  

 

9.6 Waiver, etc. The failure of the Company or the Holder to at any time enforce any of the provisions of this Warrant shall not be deemed or construed to be a waiver of any such provision, nor to in any way affect the validity of this Warrant or any provision hereof or the right of the Company or any Holder to thereafter enforce each and every provision of this Warrant. No waiver of any breach, non-compliance or non-fulfillment of any of the provisions of this Warrant shall be effective unless set forth in a written instrument executed by the party or parties against whom or which enforcement of such waiver is sought; and no waiver of any such breach, non-compliance or non-fulfillment shall be construed or deemed to be a waiver of any other or subsequent breach, non-compliance or non-fulfillment.

 

9.7 Execution in Counterparts. This Warrant may be executed in one or more counterparts, and by the different parties hereto in separate counterparts, each of which shall be deemed to be an original, but all of which taken together shall constitute one and the same agreement, and shall become effective when one or more counterparts has been signed by each of the parties hereto and delivered to each of the other parties hereto. Such counterparts may be delivered by facsimile transmission or other electronic transmission.

 

9.8 Exchange Agreement. As a condition of the Holder’s receipt and acceptance of this Warrant, Holder agrees that, at any time prior to the complete exercise of this Warrant by Holder, if the Company and Newbridge enter into an agreement (“Exchange Agreement”) pursuant to which they agree that all outstanding Warrants will be exchanged for securities or cash or a combination of both, then the Holder shall agree to such exchange and become a party to the Exchange Agreement.

 

9.9. Remedies. The Holder shall be entitled to enforce its rights under this Warrant specifically to recover damages and costs (including reasonable attorneys’ fees) for any breach of any provision of this Warrant and to exercise all other rights existing in its favor. The parties hereto acknowledge and agree that money damages are not an adequate remedy for any breach of the provisions of this Warrant and that the Holder is entitled to specific performance and/or other injunctive relief (without posting any bond or deposit) in order to enforce or prevent any violation of the provisions of this Warrant.

 

[Signature page follows.]

 

  

9

  

 

IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by its duly authorized officer as of the [    ] day of May, 2011.

 

 

	 	
Chisen Electric Corporation

	 
	 	 	 	 
	
 

	
By: 

	   	 
	 	
Name:   

	 	 
	 	
Title:

	 	 

 

  

10

  

 

NOTICE OF EXERCISE

 

Date: [    ], [        ], 20[    ]

 

The undersigned hereby elects irrevocably to exercise the Warrant for [    ] Shares of Chisen Electric Corporation and hereby makes payment of US$[        ] (at the rate of US$[        ] per Share) in payment of the Exercise Price pursuant thereto. Please issue the Shares as to which the Warrant is exercised in accordance with the instructions given below and, if applicable, a new Warrant representing the number of Shares for which the Warrant has not been exercised.

 

or

 

The undersigned hereby elects irrevocably to convert its right to purchase [    ] Shares under the Warrant for [    ] Shares, as determined in accordance with the following formula:

 

	  	
X

	  	
    =

	
    Y(A-B)

          A

	  	  	  	  	  
	  	
Where,

	
    X

	
    =

	
    The number of Shares to be issued to the Holder;

	  	  	  	  	  
	  	  	
    Y

	
    =

	
    The number of Shares for which the Warrant is being exercised;

	  	  	  	  	  
	  	  	
    A

	
    =

	
    The current fair market value of one Share; and

	  	  	  	  	  
	  	  	
    B

	
    =

	
    The Exercise Price.

 

The undersigned agrees and acknowledges that the calculation set forth above is subject to confirmation by the Company and any disagreement with respect to the calculation shall be resolved by the Company in its sole discretion.

 

Please issue the Shares as to which this Warrant is exercised in accordance with the instructions given below and, if applicable, a new Warrant representing the number of Shares for which this Warrant has not been converted.

 

Capitalized terms used in this Notice of Exercise and not defined herein shall have the meanings given to such terms in the Warrant.

 

Signature

 

 

Signature Guaranteed

  

11

  

 

INSTRUCTIONS FOR REGISTRATION OF SECURITIES

 

Name (Print in Block Letters):

 

Address:

 

NOTICE: The signature to this form must correspond with the name as written upon the face of the Warrant without alteration or enlargement or any change whatsoever, and must be guaranteed by a bank, other than a savings bank, or by a trust company or by a firm having membership on a registered national securities exchange.

  

12

  

 

ASSIGNMENT FORM

 

ASSIGNMENT

 

(To be executed by the registered Holder to effect a transfer of the within Warrant):

 

FOR VALUE RECEIVED, [            ] does hereby sell, assign and transfer unto [            ] the right to purchase Shares of Chisen Electric Corporation (“Company”) evidenced by the Warrant and does hereby authorize the Company to transfer such right on the books of the Company.

 

Date: [    ], [        ], 20[  ]

 

Signature

 

 

Signature Guaranteed

 

NOTICE: The signature to this form must correspond with the name as written upon the face of the within Warrant without alteration or enlargement or any change whatsoever, and must be guaranteed by a bank, other than a savings bank, or by a trust company or by a firm having membership on a registered national securities exchange.

  

13Unassociated Document

 

 

Contract of Guarantee of Maximum Amount

 

 

 

 

China Construction Bank

 

Zhejiang Branch

 

 

 

 

  

  

  

 

Contract No.: 6472009992011036

 

 

Guarantor (Party A): Xu Kecheng

 

Type of the Identity Credential:ID card

 

Number of the Credential: 330522196208244514

 

Domicile: Zhicheng Township  Changxing County Zhejiang Province Zip Code: 313100

 

Facsimile:                                Tel.: 0572-6267326

 

 

 

Lender (Party B): China Construction Bank Corporation Changxing Sub-branch

 

Domicile: No. 18, West Xianqian Street, Zhicheng Township, Changxing County Zip Code: 313100

 

Person in Charge: WANG Wei

 

Facsimile:                                Tel.: 0572-6030900

 

  

  

  

Whereas Party B, for consecutively handling the following A ,B and E credit business for Changxing Chisen Electric Co., Ltd. (hereinafter “Borrower”), during the period commencing from March 31, 2011 to March 30, 2014 (hereinafter “the Term of the Master Contract”), will (and/or has) entered into a Renminbi loan contract, Foreign Exchange Loan Contract, Bank Acceptance Agreement, the Contract of Issuing a Letter of Credit, the Agreement of Issuing a Letter of Guarantee and/or other documents of a legal nature (referred to as the “Master Contract” under the above contracts, agreements and/or other documents of a legal nature signed during the Term of the Master Contract) with Borrower.

 

    A. granting Renminbi/foreign exchange loan;

 

B. acceptance of commercial bill of exchange;

 

C. issuing a letter of credit;

 

D. issuing a letter of guarantee;

 

E. other credit business: intentionally left blank herein           .

 

Party A is willing to provide the maximum amount guarantee for the series of debts of Borrower under the Master Contract. In accordance with the related laws, regulations and rules, Party A and Party B hereby agree through consultation to enter into this contract for mutual compliance and implementation.

 

Article 1 Scope of Guarantee and Maximum Amount under the Guarantee

 

1. The scope of guarantee hereof is all the liabilities under the Master Contract, including but not limited to the principal, interest (including the compound interest and penalty interest), liquidated damage, damages, other amount that Borrower shall pay to Party B (including but not limited to the related handling charge, communication fee, miscellaneous fees and the related bank fees that the beneficiary under the letter of credit refuses to undertake), any and all the fees incurred to Party B arising from the realization of Lender’s right and guarantee right (including but not limited to litigation fees, arbitration fees, fees for preservation of properties, travelling expenses, enforcement fees, appraisal fees, auction fees, public notarization fees, service fees, public announcement fees and attorney’s fees).

 

2 The balance of the principal under the Master Contract that is not more than (currency) Renminbi (in words) One hundred and seventy Million only; and provided that Party A fulfils its guarantee responsibilities pursuant to this Contract, the maximum of the principal that it guarantees shall be deducted according to the amount of the principal that Party A settles.

 

3. Even the loan, advances, interests and fees under the Master Contract or any other debts of Party B are actually formed is beyond the Term of the Master Agreement, they shall be within the scope of guarantee hereof. The expiration date for the performance of the obligation under the Master Contract will not be limited to the expiration date of the Term of the Master Contract.

 

Article 2 Method of Guarantee

 

The guarantee provided by Party A hereunder shall be the guarantee with several and joint liability.

 

Article 3 Term of Guarantee

 

1. The Term of Guarantee hereunder shall be respectively calculated according to the single credit business that Party B handles for Borrower, namely, starting from the date on which the Master Contract for the single credit business is signed until the two years after the expiration date of the term for performing the obligations of Borrower under the said Master Contract.

 

2. Where Party B and Borrower reach an agreement regarding the extension of the term for Borrower’s performing the obligations under the Master Contract, the Term of Guarantee shall last for the two years as from the expiration date of the term for performing the obligations as stipulated in the extension agreement. The extension of the term has not to be subject to the consent of Guarantor, who shall still undertake a joint and several liability for the guarantee.

 

3. Provided that Party B announces to advance the maturity of the Debt in case of the occurrence of any event as stipulated in the laws and regulations or in the Master Contract, the Term of Guarantee shall last for the two years upon the earlier maturity of the Debt.

 

  

  

  

 

Article 4 Independence of the Guarantee Contract

 

The validity of this Contract is independent from the Master Contract. Failure to establish, ineffective, invalidity, partial invalidity, revocation or rescinded of the Master Contract shall not affect the effectiveness of this Contract. If the Master Contract is determined as not established, ineffective, invalid or partially invalid, or revoked or rescinded, Party A shall be jointly and severally liable for the debts arising from Borrower returning the property or compensating the losses.

 

Article 5 Amendment of the Master Contract

 

1. Party A agrees that Party B and the Borrower, while concluding master contract or amend it (including but not limited to renewal of the period of repaying debts, or increase of the principal of Lender’s rights), need not to notify Party A and that Party A shall still undertake guarantee liabilities within the maximum amount and guarantee scope as specified herein.

 

2. The guarantee liabilities of Party A shall not be mitigated due to any one of the following events:

 

(1)           Restructuring, consolidation, merger, division, increase or decrease of the registered capital, joint venture, joint operation, change of the name of Party B or Borrower;

 

(2)           Party B entrusts a third party to fulfill its obligations under the Master Contract.

 

3. Where the Lender’s rights under the Master Contract are transferred, the guarantee hereunder shall be transferred therewith.

 

4. Where the transfer of Lender’s rights or debts under the Master Contract is ineffective, invalid, revoked or rescinded, Party A shall still undertake a joint and several guarantee liability to Party B as specified herein.

 

Article 6 Responsibility of Guarantee

 

1. if the debts under the Master Contract matures or Party B announces the debts are matured in advance pursuant to the provisions of the Master Contract or the law, where Borrower fails to fully fulfill the debts on time or Borrower violates other provisions of the Master Contract, Party A shall undertake the guarantee liability within the Scope of Guarantee. If Party A fails to pay in time, it shall pay penalty to Party B according to 0.5 ‰ of the delayed amount as of date the debts is past due. In such case, Party A’s guarantee responsibility and the total penalty amount described above shall not be limited to the maximum amount stipulated in this contract.

 

2. No matter whether Party B has other guarantee for the debts under the Master Contract (including but not limited to such guarantee methods: guarantee, mortgage, pledge, letter of guarantee or standby letter of credit), no matter when it is established, whether it is valid, whether Party B files a claim against other guarantors, whether a third party agrees to undertake the whole or partial debts under the Master Contract, or whether other guarantee is provided by Borrower itself, the guarantee liability of Party A hereunder shall not be mitigated or exempted, Party B may directly require Party A to undertake the guarantee liability within its scope of guarantee as stipulated herein and Party A shall not raise any objection.

 

3. In the event that the Lender’s rights under the Master Contract fail to be fully settled after Party A undertakes the guarantee liability, Party A undertakes that, its claims to the right of subrogation or the right to seek compensation against other Borrower or guarantor shall not cause any harm to the interest of Party B and agrees that the settlement of the debts under the Master Contract is superior to the fulfillment of Party A’s right of subrogation or the right to seek compensation.

 

To be more specific, prior to the full settlement of Party B’s Lender’s rights:

 

(1) Party A agrees not to claim for the right of subrogation or the right to seek compensation against other Borrower or guarantor; if for any reason whatsoever, Party A fulfils the above rights, the amount it obtains shall be first used to settle the outstanding Lender’s right of Party B;

 

  

  

  

 

(2) Provided that the debts under the Master Contract has a security for things, Party A agrees not to file any claim for the security thing or the amount obtained from the disposal thereof, which shall be first used to settle the outstanding Lender’s right of Party B;

 

(3) Provided that Borrower or other guarantor provides counter-guarantee for Party A, the amount that Party A obtains based on the above counter-guarantee shall be first used to settle the outstanding Lender’s right of Party B.

 

4. Party A has been fully aware of the interest rate risks. Provided that Party B adjusts the interest rate level, the method of calculating or settling the interests pursuant to the provisions of the Master Contract or the change to the interest policy of the State, which results in the increase of the interest, penalty interest or compound interest that Borrower shall repay, Party A shall be jointly and severally liable for the increased part.

 

5. Provided that in addition to the debts under the Master Contract, Borrower has other due debts to Party B, Party B shall be entitled to first allocate and collect the amount in Renminbi or other currency from the account that Borrower opens in the China Construction Bank system to settle any due debt. The guarantee liability of Party A shall not be mitigated or exempted thereby.

 

Article 7 Other Obligations of Party A

 

1. Party A shall supervise the use of the loan by Borrower (including the purposes), and accept the supervision of Party B on the capital, property and operation status of Party A, provide such information, documents and materials as the financial statements according to the request of Party B and ensure its accuracy, authenticity, integrity and validity thereof. Without the written consent of Party B, Party A shall not provide guarantee for a third party that is beyond its capacity;

 

2. In case of any of the following: Party A  having nationality, domicile and marital status changes, suffering from heavy diseases, being involved in major legal dispute, administrative or criminal sanctions, severe difficulties or financial deterioration, or losing or probably losing the guarantee capacity for any reason, Party A shall immediately inform Party B in writing and carry out the undertaking, transfer or commitment of the guarantee liability hereunder or provide a new guarantee for the performance of the Master Contract to be acknowledged by Party B.

 

3. In the event that there is any change to such aspects as the name, legal representative (responsible person), domicile, scope of business, registered capital or the articles of association of the company (enterprise) of Party A, Party A shall inform Party B in writing within thirty (30) working days upon the change and attach the related materials changed.

 

Article 8 Miscellaneous

 

1. Allocation and Collection of Payables

 

With respect to all the payables of Party A hereunder, Party B shall be entitled to allocate and collect the corresponding amount in Renminbi or other currency from the bank account that Party A opens in the China Construction Bank system, without informing Party A in advance. Where the procedures regarding settlement and sale of foreign exchange or purchase/sale of foreign exchange is required, Party A shall be obliged to assist Party B in this regard and the foreign exchange rate risks shall be undertaken by Party A.

 

2. Use of Party A’s Information

 

Party A agrees Party B to inquire about the credit status of Party A in the credit database established under the approval of the People’s Bank of China or credit competent authority or inquire the related entity or department and agrees Party B to provide Party A’s information to the credit database established under the approval of the People’s Bank of China or credit authority.

 

  

  

  

 

3. Public Announcement and Collection

 

With respect to the defaults of Party A, Party B shall be entitled to notify the related department or entity and to make public announcements for collection through the news media.

 

4. Evidence of Party A’s Records

 

Unless there is reliable and definite evidence to the contrary, the internal accounting records of Party B regarding the principal, interest, fees and re-payment records, documents, voucher prepared or kept by Party B that are generated during such business procedures as withdrawal, re-payment, interest payment that Borrower goes through and the records and vouchers of the loan-collection by Party B shall all constitute the definite evidence to prove the Lender’s right relationship under the Master Agreement. Party A shall not raise any objection only on the ground that the aforesaid records, accounts, documents and vouchers are unilaterally prepared or kept by Party B.

 

5. Reservations of Rights

 

Party B’s rights hereunder shall not affect and exclude any other rights it shall be entitled to pursuant to the laws, regulations and other contracts. Any tolerance, grace for any default or delay, or preference or suspension in exercising any right hereunder shall not be deemed as a waiver of the rights and interests hereunder or permission or approval of any breaches, nor shall it affect, prevent or obstruct continuous exercise of such right or any other right or result in Party B’s assumption of obligations and responsibilities to Party A.

 

In the event that Party B fails to or delays in exercising any right under the Master Contract or fails to exhaust any remedy under the Master Contract, the guarantee responsibility of Party A hereunder shall not be mitigated or exempted. However, provided that Party B exempts the debts under the Master Contract, the guarantee responsibility of Party A hereunder shall be mitigated or exempted accordingly.

 

6. Dissolution or Bankruptcy of Borrower

 

Where Party A obtain the information that Borrower enters into dissolution or bankruptcy procedure, Party A shall inform Party B to file claims. In the meantime, it shall take part in the dissolution or bankruptcy procedure promptly and exercise the right to recourse first. Provided that Party A knows or should know Borrower enters into dissolution or bankruptcy procedures but fails to first exercise the right to recourse promptly, the losses thereof shall be solely undertaken by Party A.

 

Notwithstanding the provisions in the second sub-paragraph of the fifth paragraph of this clause, during the bankruptcy procedure of Borrower, in the event that Party B enters into a reconciliation agreement with Borrower or agrees to the re-construction plan, Party B’s rights hereunder shall not be damaged due to the reconciliation agreement or re-construction plan and the guarantee responsibility of Party A shall not be mitigated or exempted. Party A shall not use the conditions as stipulated in the reconciliation agreement or reconstruction plan to oppose the rights and claims of Party B. With respect to the part of the Lender’s rights that Party B makes compromises to Borrower in the reconciliation agreement or the re-construction plan and hence is not settled, Party B shall still be entitled to request Party A to continuously settle.

 

7. Dissolution or Bankruptcy of Party A

 

Where Party A becomes dissolved or bankrupt, even if the Lender’s rights of Party B under the Master Contract are not expired, Party B shall be entitled to take part in the liquidation or bankruptcy procedures of Party A and file claims.

 

8. Where there is a change to the correspondence address or contact of Party A, Party A shall immediately notify Party B. Any losses arising from failure to notify Party B promptly shall be solely undertaken by Party A.

 

9. Settlement of Disputes

 

Any dispute arising from the performance of this Contract may be settled through negotiations, failing which, it shall be settled in the 1st way as follows.

 

(1)           Bring a lawsuit before the people’s court at Party B’s location.

 

  

  

  

 

(2)           Submit to intentionally left blank Arbitration Commission (the place of arbitration is intentionally left blank) for arbitration in accordance with rules in effect at the time of applying for arbitration. The arbitration award shall be final and binding upon both parties.

 

During the litigation or arbitration, the provisions of this Contract that are not in dispute shall continue to be implemented.

 

10. Conditions for the Effectiveness of this Contract

 

The Contract shall come into force as soon as being signed or sealed by Party A’s legal representative (principal) or authorized agent and Party B’s principal or authorized agent.

 

11. This Contract is in triplicate.

 

12. Other Provisions

 

Within the period of the Contract, if the contracts and agreement and other legal instruments concluded for the Lender’s rights and debts between Party B and the Borrower “Changxing Chisen Electric Co., Ltd. are not guaranteed by the Contract, they shall be explained in such contracts and agreement and other legal instruments.

 

Article 9 Representation and Warranty of Party A

 

1. Party A clearly knows the business scope and scope of authorization of Party B.

 

2. Party A has already read all the clauses of this contract and the Master Contract. Upon Party A’s request, Party B has already explained the clauses of this Contract and the Master Contract. Party A is completely aware of and fully understands the meaning and the corresponding legal consequences of the clauses of this Contract and the Master Contract.

 

3. Party A has the legal qualification to be Guarantor. The Guarantee provided by Party A hereunder complies with the provisions of the law, administrative regulations, rules and articles of association or internal constitutional documents of Party A, and has already obtained the approval of the company’s internal competent body and/or the State’s competent authority. Any liabilities arising from the lack of Party A in the right to sign this Contract shall be undertaken by Party A, including but not limited to full compensation for the losses that Party B suffered thereby.

 

4. Party A acknowledges that it fully understands the conditions of Borrower’s assets, debts, operation, credit and credibility, whether Borrower has the subject qualification and authority to sign the Master Contract and all the contents of the Master Contract.

 

 

Party A (Company’s seal):

 

Legal Representative (Person in Charge) or Authorized Agent (Signature): /s/ Authorized Person

 

March 31, 2011

 

 

Party B (Company’s seal):

 

Person in Charge or Authorized Agent (Signature):  /s/ Authorized Person

 

March 31, 2011

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