Document:

Jinhao Motor Company - Exhibit 4.1 - Filed by newsfilecorp.com

Exhibit 4.1

NEITHER THESE SECURITIES NOR THE SHARES OF COMMON STOCK
ISSUABLE PURSUANT HERETO HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), AND, ACCORDINGLY, NEITHER THESE SECURITIES NOR ANY SUCH
SHARES OF COMMON STOCK MAY BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY. THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT SECURED BY SUCH SECURITIES. 

JINHAO MOTOR COMPANY 

COMMON STOCK PURCHASE WARRANT 

	Initial Holder: 	Original Issue Date: September 2, 2010
    
	
	No. of Shares Subject to Warrant:
      

	  	Exercise Price Per Share: $ 
	  	
    Expiration Time: 5:00 p.m.,
      Hong Kong time, on September 1, 2013 

	  

          Jinhao
Motor Company, a Nevada corporation (the “Company”), hereby certifies
that, for value received, the Initial Holder shown above, or its permitted
registered assigns (the “Holder”), is entitled to purchase from the
Company up to the number of shares of its common stock, par value $0.001 per
share (the “Common Stock”), shown above (each such share, a “Warrant
Share” and all such shares, the “Warrant Shares”) at the exercise
price shown above (as may be adjusted from time to time as provided herein, the
“Exercise Price”), at any time and from time to time on or after original
issue date indicated above (the “Original Issue Date”) and through and
including the expiration time shown above (the “Expiration Time”), and
subject to the following terms and conditions: 

          This
Warrant is being issued pursuant to a Securities Purchase Agreement, dated
August 11, 2010 (the “SPA”), by and between the Company, the Holder
and the other parties thereto, pursuant to which the Holder purchased units
consisting of shares of the Company’s Series A Redeemable Convertible Preferred
Stock. 

          1.
Definitions. In addition to the terms defined elsewhere in this Warrant,
capitalized terms that are not otherwise defined herein have the meanings given
to such terms in the SPA. 

          2.
List of Warrant Holders. The Company shall register this Warrant, upon
records to be maintained by the Company for that purpose (the “Warrant
Register”), in the name of the record Holder (which shall include the Holder
or, as the case may be, any registered transferee or assignee to which this
Warrant is permissibly transferred or assigned hereunder from time to time). The
Company may deem and treat the registered Holder of this Warrant as the absolute
owner hereof for the purpose of any exercise hereof or any distribution to the
Holder, and for all other purposes, absent actual notice to the contrary. 

1 

          3.
Restrictions on Transfer. The Holder of this Warrant by acceptance hereof
agrees that the transfer of this Warrant or the Warrant Shares may not occur
except in compliance with federal and state securities laws.

          4.
Exercise and Duration of Warrant. 

                    (a)
All or any part of this Warrant shall be exercisable by the registered Holder at
any time and from time to time on or after the Original Issue Date and through
and including the Expiration Time. At the Expiration Time, the portion of this
Warrant not exercised prior thereto shall be and become void and of no value and
this Warrant shall be terminated and shall no longer be outstanding. 

                    (b)
The Holder may exercise this Warrant by delivering to the Company: (i) an
exercise notice, in the form attached hereto (the “Exercise Notice”),
completed and duly signed, and (ii) payment by wire transfer of immediately
available funds to an account designated by the Company of the Exercise Price
for the number of Warrant Shares as to which this Warrant is being exercised
(unless cashless exercise shall have been elected in accordance with the
provisions of Section 4(c) hereof). The date such items are delivered to the
Company (as determined in accordance with the notice provisions hereof) is an
“Exercise Date.” The Holder shall be required to deliver the original
Warrant (or any replacement Warrant(s) that may have been subsequently issued)
in order to effect an exercise hereunder. Execution and delivery of the Exercise
Notice shall have the same effect as cancellation of the original Warrant and
any such replacement Warrant(s) that may have been subsequently issued, and the
issuance of a new Warrant evidencing the right to purchase the remaining number
of Warrant Shares. 

                    (c)
Notwithstanding any provisions herein to the contrary, in lieu of exercising
this Warrant by payment of cash, the Holder may exercise this Warrant by a
cashless exercise and shall receive the number of Warrant Shares equal to an
amount (as determined below) by surrender of this Warrant at the principal
office of the Company together with the properly endorsed Exercise Notice in
which event the Company shall issue to the Holder a number of Warrant Shares
computed using the following formula: 

	  	X 	= 	Y (B-A) 
	  	  	  	    B 
	  	  	  	  
	Where 	X 	= 	the number of Warrant Shares to
      be issued to the Holder. 
	  	  	  	  
		
      Y 
	
      = 
	
      the number of Warrant Shares purchasable upon exercise of
      all of the Warrant or, if only a portion of the Warrant is being
  

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	 	 	 	exercised, the
      portion of the Warrant being exercised. 
	 	 	 	 
	 	A	= 	the Exercise Price. 
	 	 	 	 
		B 	= 	the Fair Market Value immediately
      preceding the date of the Exercise Notice. 

“Fair Market Value” means (a) if the Common Stock is
then listed or quoted on a national trading market, the volume weighted average
price of the Common Stock for the 20 Trading Days preceding such Exercise Date
(b) if the Common Stock is not then listed or quoted on a national trading
market and if prices for the Common Stock are then quoted on the OTC Bulletin
Board, the volume weighted average price of the Common Stock for the 20 Trading
Days preceding such Exercise Date on the OTC Bulletin Board, (c) if the Common
Stock is not then listed or quoted on the OTC Bulletin Board and if prices for
the Common Stock are then reported in the “Pink Sheets” published by Pink
Sheets, LLC (or a similar organization or agency succeeding to its functions of
reporting prices), the average bid price per share of the Common Stock for the
20 Trading Days preceding such Determination Date as so reported, or (d) in all
other cases, the value of the Common Stock as determined in good faith by the
Company’s Board of Directors and the Holder. “Trading Day” shall mean a
date on which the Company’s Common Stock trades on its principal trading
market.

                    (d)
The Company will not close its stockholder books or records in any manner which
prevents the timely exercise of this Warrant pursuant to the terms hereof. 

          5.
Delivery of Warrant Shares. 

                    (a)
Upon exercise of this Warrant, the Company shall promptly (but in no event later
than three (3) Trading Days after the Exercise Date) issue or cause to be issued
and cause to be delivered to or upon the written order of the Holder and in such
name or names as the Holder may designate, a certificate for the Warrant Shares
issuable upon such exercise, free of restrictive legends. The Holder, or any
Person permissibly so designated by the Holder to receive Warrant Shares, shall
be deemed to have become the holder of record of such Warrant Shares as of the
Exercise Date. The Company shall, upon the written request of the Holder, use
its best efforts to deliver, or cause to be delivered, Warrant Shares hereunder
electronically through the Depository Trust and Clearing Corporation
(“DTCC”) or another established clearing corporation performing similar
functions, if available; provided, that, the Company may, but will not be
required to, change its transfer agent if its current transfer agent cannot
deliver Warrant Shares electronically through DTCC or another established
clearing corporation performing similar functions, if available. If as of the
time of exercise the Warrant Shares constitute restricted or control securities,
the Holder, by exercising, agrees not to resell them except in compliance with
all applicable securities laws. 

                    (b)
To the extent permitted by law, the Company’s obligations to issue and deliver
Warrant Shares in accordance with the terms hereof are absolute and
unconditional, irrespective of any action or inaction by the Holder to enforce
the same, any waiver or consent with respect to any provision hereof, the
recovery of any judgment against any Person or any action to enforce the same,
or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder or any other Person
of any obligation to the Company or any violation or alleged violation of law by
the Holder or any other Person, and irrespective of any other circumstance that
might otherwise limit such obligation of the Company to the Holder in connection
with the issuance of Warrant Shares. 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 of Common Stock upon exercise of the Warrant as
required pursuant to the terms hereof. 

3 

                    (c)
If the Company fails to cause its transfer agent to transmit to the Holder a
certificate or the certificates (or, if electronically, a book-entry position)
representing the Warrant Shares pursuant to the terms hereof by applicable
delivery date, then the Holder will have the right to rescind such exercise.

          6.
Forced Exercise.      (a) Anytime on or
after the nine (9) month anniversary of the Original Issue Date, in the event
that the volume weighted average price of the Common Stock as reported by the
applicable trading market shall equal or exceed two hundred percent (200%) of
the Exercise Price (subject to adjustment for any stock splits, combinations or
similar events with respect to the Common Stock after the Original Issue Date)
per share for twenty (20) consecutive Trading Days with an average daily trading
volume of at least 100,000 shares, the Company shall, at anytime thereafter,
with thirty (30) day written notice (the date of such notice, the “Forced
Conversion Date”), be entitled to require the Holder to immediately exercise
the Warrant, at the Exercise Price, for up to one-half of the Warrant Shares
then covered by the Warrant on the Forced Conversion Date and the Holder shall
exercise the Warrant upon Company’s request. For the avoidance of doubt, the
Holder may exercise the Warrant by a cashless exercise as set forth in Section
4(c). 

                    (b)
After such date that the Common Stock is registered under Section 12(b) or 12(g)
of the Exchange Act, the Company shall not require the exercise of, and the
Holder shall not be forced to exercise, this Warrant, pursuant to Section 6(a),
to the extent that after giving effect to such issuance after exercise, the
Holder (together with the Holder’s Affiliates, and any other person or entity
acting as a group together with the Holder or any of the Holder’s Affiliates),
would, solely as a result of the forced exercise, beneficially own in excess of
the Beneficial Ownership Limitation (as defined below). For purposes of the
foregoing sentence, the number of shares of Common Stock beneficially owned by
the Holder and its Affiliates shall include the number of shares of Common Stock
issuable upon exercise of this Warrant, but shall exclude the number of shares
of Common Stock which would be issuable upon (A) exercise of the remaining,
nonexercised portion of this Warrant beneficially owned by the Holder or any of
its Affiliates and (B) exercise or conversion of the unexercised or nonconverted
portion of any other securities of the Company (including, without limitation,
any other Common Stock Equivalents (as defined in the SPA)) subject to a
limitation on conversion or exercise analogous to the limitation contained
herein beneficially owned by the Holder or any of its affiliates. Except as set
forth in the preceding sentence, for purposes of this Section 6(b), beneficial
ownership shall be calculated in accordance with Section 13(d) of the Exchange
Act and the rules and regulations promulgated thereunder, it being acknowledged
by the Holder that the Company is not representing to the Holder that such
calculation is in compliance with Section 13(d) of the Exchange Act and the
Holder is solely responsible for any schedules required to be filed in accordance therewith. To the extent that the limitation
contained in this Section 6(b) applies, the determination of whether this
Warrant is exercisable (in relation to other securities owned by the Holder
together with any Affiliates) and of which portion of this Warrant is
exercisable shall be in the sole discretion of the Holder. The Company shall
have no obligation but shall have the right to verify or confirm the accuracy of
such determination. In addition, a determination as to any group status as
contemplated above shall be determined in accordance with Section 13(d) of the
Exchange Act and the rules and regulations promulgated thereunder. For purposes
of this Section 6(b), in determining the number of outstanding shares of Common
Stock, a Holder may rely on the number of outstanding shares of Common Stock as
reflected in the most recent of the following: (A) the Company’s most recent
Form 10-Q or Form 10-K, (B) a more recent public announcement by the Company or
(C) any other notice by the Company or the Company’s transfer agent setting
forth the number of shares of Common Stock outstanding. Upon the written or oral
request of a Holder, the Company shall within two Business Days confirm orally
and in writing to the Holder the number of shares of Common Stock then
outstanding. In any case, the number of outstanding shares of Common Stock shall
be determined after giving effect to the conversion or exercise of securities of
the Company, including this Warrant, by the Holder or its Affiliates since the
date as of which such number of outstanding shares of Common Stock was reported.
The “Beneficial Ownership Limitation” shall be 4.99% of the number of shares of
the Common Stock outstanding immediately after giving effect to the issuance of
shares of Common Stock issuable upon exercise of this Warrant. The Holder, may
provide notice to the Company, to increase or decrease the Beneficial Ownership
Limitation, provided that the Beneficial Ownership Limitation shall be no less
than 4.99% of the number of shares of the Common Stock outstanding immediately
after giving effect to the issuance of shares of Common Stock upon exercise of
this Warrant held by the Holder and the provisions of this Section 6. Any such
increase or decrease shall be effective on the date of notice. The provisions of
this paragraph shall be construed and implemented in a manner otherwise than in
strict conformity with the terms of this Section 6(b) to correct this paragraph
(or any portion hereof) which may be defective or inconsistent with the intended
Beneficial Ownership Limitation herein contained or to make changes or
supplements necessary or desirable to properly give effect to such limitation.
The limitations contained in this paragraph shall apply to a successor holder of
this Warrant. 

4 

          7.
Charges, Taxes and Expenses. Issuance and delivery of certificates (or,
if electronically, a book-entry position) representing the Warrant Shares shall
be made without charge to the Holder for any issue or transfer tax, withholding
tax, transfer agent fee or other incidental tax or expense in respect of the
issuance of such certificates, all of which taxes and expenses shall be paid by
the Company; provided, however, that the Company shall not be required to
pay any tax that may be payable in respect of any transfer involved in the
registration of any certificates for Warrant Shares or the Warrants in a name
other than that of the Holder or its permitted transferees and assignees. The
Holder shall be responsible for all other tax liability that may arise as a
result of holding or transferring this Warrant or receiving Warrant Shares upon
exercise hereof. 

          8.
Replacement of Warrant. If this Warrant is mutilated, lost, stolen or
destroyed, the Company shall issue or cause to be issued in exchange and
substitution for and upon cancellation hereof, or in lieu of and substitution
for this Warrant, a replacement Warrant, but only upon receipt of evidence or
confirmation of such loss, theft or destruction, and customary and reasonable
indemnity, if requested. Applicants for a replacement Warrant under such circumstances shall also comply with such other reasonable
regulations and procedures and pay such other reasonable third-party costs as
the Company may prescribe. If a replacement Warrant is requested as a result of
a mutilation of this Warrant, then the Holder shall deliver such mutilated
Warrant to the Company as a condition precedent to the Company’s obligation to
issue the replacement Warrant. 

5 

          9.
Reservation of Warrant Shares. The Company covenants that it will at all
times reserve and keep available out of the aggregate of its authorized but
unissued and otherwise unreserved Common Stock, solely for the purpose of
enabling it to issue Warrant Shares upon exercise of this Warrant as herein;
provided, that, the number of Warrant Shares that are then
issuable and deliverable upon the exercise of this entire Warrant, free from
preemptive rights or any other contingent purchase rights of persons other than
the Holder (taking into account the adjustments and restrictions of Section 10).
The Company covenants that all Warrant Shares so issuable and deliverable shall,
upon issuance and the payment of the applicable Exercise Price in accordance
with the terms hereof, be duly and validly authorized, issued and fully paid and
nonassessable. 

          10.
Certain Adjustments to Exercise Price. The Exercise Price and number of
Warrant Shares issuable upon exercise of this Warrant are subject to adjustment
from time to time as set forth in this Section 10. 

                    (a)
Adjustments for Stock Splits and Combinations and Stock Dividends. If the
Company shall at any time or from time to time after the date hereof, effect a
stock split or combination of the outstanding Common Stock or pay a stock
dividend in shares of Common Stock, then the Exercise Price shall be
proportionately adjusted. Any adjustments under this Section 10(a) shall be
effective at the close of business on the date the stock split or combination
becomes effective or the date of payment of the stock dividend, as applicable.

                    (b)
Merger Sale, Reclassification, etc. In case of any: (i) consolidation or
merger (including a merger in which the Company is the surviving entity), (ii)
sale or other disposition of all or substantially all of the Company’s assets or
distribution of property to shareholders (other than distributions payable out
of earnings or retained earnings), or reclassification, change or conversion of
the outstanding securities of the Company or of any reorganization of the
Company (or any other corporation the stock or securities of which are at the
time receivable upon the exercise of this Warrant) or any similar corporate
reorganization on or after the date hereof, then and in each such case the
Holder of this Warrant, upon the exercise hereof at any time thereafter shall be
entitled to receive, in lieu of the stock or other securities and property
receivable upon the exercise hereof prior to such consolidation, merger, sale or
other disposition, reclassification, change, conversion or reorganization, the
stock or other securities or property to which such Holder would have been
entitled upon such consummation if such Holder had exercised this Warrant
immediately prior thereto. 

                    (c)
Anti-Dilution Adjustments in Variable Rate Transactions. If the Company
enters into a Variable Rate Transaction (as defined in the Investors Rights
Agreement dated August [__], 2010 by and between the Company and the parties
thereto, the “IRA”), despite the prohibition thereon in the IRA, the
Company shall be deemed to have issued Common Stock or Common Stock Equivalents
at the lowest possible conversion or exercise price at which such securities may be converted or exercised. The Exercise Price
shall be adjusted pursuant to the Certificate of Designation of Series A
Redeemable Convertible Preferred Stock (the “Certificate of Designation”)
to the extent such Variable Rate Transaction constitutes a dilutive issuance of
Additional Shares of Common Stock (as defined in the Certificate of
Designation). 

6 

                    (d)
Adjustment to Notice. Whenever the Exercise Price is adjusted pursuant to
any provision of this Section 10, the Company shall promptly provide the Holder
a notice setting forth the Exercise Price after such adjustment and setting
forth a brief statement of the facts requiring such adjustment. 

          11.
No Fractional Shares. No fractional Warrant Shares will be issued in
connection with any exercise of this Warrant. In lieu of any fractional shares
that would otherwise be issuable, the Company shall pay cash equal to the
product of such fraction multiplied by the closing price of the Company’s Common
Stock as reported by the applicable trading market on the Exercise Date.

          12.
Notices. Any and all notices or other communications or deliveries
hereunder (including, without limitation, any Exercise Notice) shall be
delivered in accordance with the procedures set forth in Section 6.4 of the SPA.

          13.
Warrant Agent. The Company shall serve as warrant agent under this
Warrant. Upon thirty (30) days’ notice to the Holder, the Company may appoint a
new warrant agent. Any corporation into which the Company or any new warrant
agent may be merged or any corporation resulting from any consolidation to which
the Company or any new warrant agent shall be a party or any corporation to
which the Company or any new warrant agent transfers substantially all of its
corporate trust or shareholders services business shall be a successor warrant
agent under this Warrant without any further act. Any such successor warrant
agent shall promptly cause notice of its succession as warrant agent to be
mailed (by first class mail, postage prepaid) to the Holder at the Holder’s last
address as shown on the Warrant Register. 

          14.
Miscellaneous. 

                    (a)
This Warrant shall be binding on and inure to the benefit of the parties hereto
and their respective successors and assigns. Subject to the preceding sentence,
nothing in this Warrant shall be construed to give to any person other than the
Company and the Holder any legal or equitable right, remedy or cause of action
under this Warrant. This Warrant may be amended only in writing signed by the
Company and the Holder, or their successors and assigns. 

                    (b)
All questions concerning the construction, validity, enforcement and
interpretation of this Warrant shall be governed by and construed and enforced
in accordance with the internal laws of the State of New York, without regard to
the principles of conflicts of law thereof. Any dispute, controversy or claim
arising out of or relating to this Warrant or the transactions contemplated
hereof, or the breach, termination or invalidity thereof, shall be settled by
arbitration in Hong Kong under the UNCITRAL Arbitration Rules in accordance with
the Hong Kong International Arbitration Centre Procedures for the Administration
of International Arbitration in force at the date hereof. The place of the
arbitration shall be Hong Kong and the language of the arbitration shall be
English. There shall be only one arbitrator. 

7 

                    (c)
The headings herein are for convenience only, do not constitute a part of this
Warrant and shall not be deemed to limit or affect any of the provisions hereof.

                    (d)
In case any one or more of the provisions of this Warrant shall be invalid or
unenforceable in any respect, the validity and enforceability of the remaining
terms and provisions of this Warrant shall not in any way be affected or
impaired thereby and the parties will attempt in good faith to agree upon a
valid and enforceable provision which shall be a commercially reasonable
substitute therefore, and upon so agreeing, shall incorporate such substitute
provision in this Warrant. 

                    (e)
Prior to exercise of this Warrant, the Holder hereof shall not, by reason of by
being a Holder, be entitled to any rights of a stockholder with respect to the
Warrant Shares. 

                    (f)
No provision hereof, in the absence of any affirmative action by Holder to
exercise this Warrant to purchase Warrant Shares, and no enumeration herein of
the rights or privileges of Holder, shall give rise to any liability of Holder
for the purchase price of any Common Stock or as a stockholder of the Company,
whether such liability is asserted by the Company or by creditors of the
Company. 

[Signature Page Follows] 

8 

          IN
WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by
its authorized officer as of the date first indicated above. 

JINHAO MOTOR COMPANY 

 

By:
_________________________________
       
Name: Tsoi Chak Shing 
        Title:
Chief Executive Director 

Signature Page 
Warrant 

JINHAO MOTOR COMPANY 

EXERCISE NOTICE 

Ladies and Gentlemen: 

The undersigned, pursuant to the provisions set forth in the
attached Warrant hereby irrevocably elects to purchase ____________Warrant
Shares covered by such Warrant, and is providing, herewith, the aggregate
purchase price for such shares. Capitalized terms used herein and not otherwise
defined herein have the respective meanings set forth in the Warrant. 

The undersigned intends that payment of the Warrant Price shall
be made as (check one): 

Cash Exercise _______                                   Cashless
  Exercise_______

If the Holder has elected a Cash Exercise, the Holder shall pay
the sum of $________by certified or official bank check (or via wire transfer)
to the Company in accordance with the terms of the Warrant. 

If the Holder has elected a Cashless Exercise, a certificate
shall be issued to the Holder for the number of shares equal to the whole number
portion of the product of the calculation set forth below, which is ___________.
The Company shall pay a cash adjustment in respect of the fractional portion of
the product of the calculation set forth below in an amount equal to the product
of the fractional portion of such product and the VWAP of one share of Common
Stock on the date of exercise, which product is ____________. 

X = Y (B- A)

            B

Where: 

The number of Warrant Shares to be
issued to the Holder __________________(“X”). 

The number of Warrant Shares
purchasable upon exercise of all of the Warrant or, if only a portion of the
Warrant is being exercised, the portion of the Warrant being exercised
___________________________(“Y”). 

The Exercise Price ______________(“A”).

The 5-day average Fair Market Value of
one share of Common Stock _______________________(“B”). 

[Signature Page to Exercise Notice Follows]

Pursuant to this Exercise Notice, the Company shall deliver to
  the Holder the number of Warrant Shares determined in accordance with the terms
  of the Warrant and, in lieu of any fractional shares, cash. 

 

	Dated: _____________________________	 	HOLDER: 
	  	 	 	  
	 	 	 	 
	  	 	Print name 
	 	 	 	 
	  	 	By: 	 
	 	 	 	 
	  	 	Title: 	 

 

 

 

Signature Page 
Warrant 

JINHAO MOTOR COMPANY 

FORM OF ASSIGNMENT 
To be completed and signed only
upon transfer of Warrant 

FOR VALUE RECEIVED, the undersigned hereby sells,
assigns and transfers unto _________________ the right represented by the within
Warrant to purchase _________________ shares of Common Stock to which the within
Warrant relates and appoints __________________ attorney to transfer said right
on the books of the Company with full power of substitution in the premises.

	Dated: _____________________________	 	TRANSFEROR: 
	  	 	 	  
	 	 	 	 
	  	 	Print name 
	 	 	 	 
	  	 	By: 	 
	 	 	 	 
	  	 	Title: 	 
	 	 	 	 
	 	 	 	 
	  	 	TRANSFEREE: 
	 	 	 	 
	 	 	 	 
	  	 	Print name 
	 	 	 	 
	  	 	By: 	 
	 	 	 	 
	  	 	Title: 	  
	 	 	 	 
	WITNESS: 	 	 	  
	  	 	Address of Transferee: 
	 	 	 	 
	Print name 	 	 	  
	 	 	 	 
	 	 	 	 

Signature Page 
WarrantJinhao Motor Company - Exhibit 4.2 - Filed by newsfilecorp.com

Exhibit 4.2

NEITHER THESE SECURITIES NOR THE SHARES OF COMMON STOCK
ISSUABLE PURSUANT HERETO HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), AND, ACCORDINGLY, NEITHER THESE SECURITIES NOR ANY SUCH
SHARES OF COMMON STOCK MAY BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY. THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT SECURED BY SUCH SECURITIES. 

JINHAO MOTOR COMPANY 

COMMON STOCK PURCHASE WARRANT 

	Initial Holder: Hudson Securities, Inc. 	Original Issue Date: September 2, 2010
    
	
	No. of Shares Subject to Warrant:
      514,290 

	 	Exercise Price Per Share: $4.50 
	 	 

          Jinhao
Motor Company, a Nevada corporation (the “Company”), hereby certifies
that, for value received, the Initial Holder shown above, or its permitted
registered assigns (the “Holder”), is entitled to purchase from the
Company up to the number of shares of its common stock, par value $0.001 per
share (the “Common Stock”), shown above (each such share, a “Warrant
Share” and all such shares, the “Warrant Shares”) at the exercise
price shown above (as may be adjusted from time to time as provided herein, the
“Exercise Price”), at any time and from time to time on or after original
issue date indicated above and through and including the Expiration Time (as
defined below), and subject to the following terms and conditions. For purpose
of this Warrant, the term “Expiration Time” shall mean latest to occur
of: (1) five (5) years following the closing of the issuance by Company of the
Series A Convertible Redeemable Stock; (2) five (5) years following the date
when the Company becomes a publicly traded entity and (3) the expiration date of
that certain Common Stock Warrant issued by the Company to DBS Nominees
(Private) Limited dated as of the Closing pursuant to that certain Securities
Purchase Agreement, dated August 11, 2010, among the Company, its major
shareholder and subsidiaries, and the investors of the Company for the sale and
purchase of the Company’s Series A Redeemable Convertible Preferred Stock
(“SPA”): 

          1.
Definitions. In addition to the terms defined elsewhere in this Warrant,
capitalized terms that are not otherwise defined herein have the meanings given
to such terms in the SPA. 

1 

          2.
List of Warrant Holders. The Company shall register this Warrant, upon
records to be maintained by the Company for that purpose (the “Warrant
Register”), in the name of the record Holder (which shall include the Holder
or, as the case may be, any registered transferee or assignee to which this
Warrant is permissibly transferred or assigned hereunder from time to time). The
Company may deem and treat the registered Holder of this Warrant as the absolute
owner hereof for the purpose of any exercise hereof or any distribution to the
Holder, and for all other purposes, absent actual notice to the contrary. 

          3.
Restrictions on Transfer. The Holder of this Warrant by acceptance hereof
agrees that the transfer of this Warrant or the Warrant Shares may not occur
except in compliance with federal and state securities laws.

          4.
Exercise and Duration of Warrant. 

                    (a)
All or any part of this Warrant shall be exercisable by the registered Holder at
any time and from time to time on or after the Original Issue Date and through
and including the Expiration Time. At the Expiration Time, the portion of this
Warrant not exercised prior thereto shall be and become void and of no value and
this Warrant shall be terminated and shall no longer be outstanding. 

                    (b)
The Holder may exercise this Warrant by delivering to the Company: (i) an
exercise notice, in the form attached hereto (the “Exercise Notice”),
completed and duly signed, and (ii) payment by wire transfer of immediately
available funds to an account designated by the Company of the Exercise Price
for the number of Warrant Shares as to which this Warrant is being exercised
(unless cashless exercise shall have been elected in accordance with the
provisions of Section 4(c) hereof). The date such items are delivered to the
Company (as determined in accordance with the notice provisions hereof) is an
“Exercise Date.” The Holder shall be required to deliver the original
Warrant (or any replacement Warrant(s) that may have been subsequently issued)
in order to effect an exercise hereunder. Execution and delivery of the Exercise
Notice shall have the same effect as cancellation of the original Warrant and
any such replacement Warrant(s) that may have been subsequently issued, and the
issuance of a new Warrant evidencing the right to purchase the remaining number
of Warrant Shares. 

                    (c)
Notwithstanding any provisions herein to the contrary, in lieu of exercising
this Warrant by payment of cash, the Holder may exercise this Warrant by a
cashless exercise and shall receive the number of Warrant Shares equal to an
amount (as determined below) by surrender of this Warrant at the principal
office of the Company together with the properly endorsed Exercise Notice in
which event the Company shall issue to the Holder a number of Warrant Shares
computed using the following formula: 

	  	X 	= 	Y (B-A) 
	  	  	  	     B 
	 	 	 	 
	Where 	X 	= 	the number of Warrant Shares to
      be issued to the Holder. 
	 	 	 	 
	  	Y 	= 	the number of Warrant Shares
      purchasable upon exercise of all 

2 

				
      of the Warrant or, if only a portion of the Warrant is
      being exercised, the portion of the Warrant being exercised. 

	
       
	
       
		
       

	
       
	
      A
	
      =
	
      the Exercise Price. 

	
       
	
       
		
       

		
      B 
	
      = 
	
      the Fair Market Value immediately preceding the date of
      the Exercise Notice. 

“Fair Market Value” means (a) if the Common Stock is
then listed or quoted on a national trading market, the volume weighted average
price of the Common Stock for the 20 Trading Days preceding such Exercise Date
(b) if the Common Stock is not then listed or quoted on a national trading
market and if prices for the Common Stock are then quoted on the OTC Bulletin
Board, the volume weighted average price of the Common Stock for the 20 Trading
Days preceding such Exercise Date on the OTC Bulletin Board, (c) if the Common
Stock is not then listed or quoted on the OTC Bulletin Board and if prices for
the Common Stock are then reported in the “Pink Sheets” published by Pink
Sheets, LLC (or a similar organization or agency succeeding to its functions of
reporting prices), the average bid price per share of the Common Stock for the
20 Trading Days preceding such Determination Date as so reported, or (d) in all
other cases, the value of the Common Stock as determined in good faith by the
Company’s Board of Directors and the Holder. “Trading Day” shall mean a
date on which the Company’s Common Stock trades on its principal trading
market.

                    (d)
The Company will not close its stockholder books or records in any manner which
prevents the timely exercise of this Warrant pursuant to the terms hereof. 

          5.
Delivery of Warrant Shares. 

                    (a)
Upon exercise of this Warrant, the Company shall promptly (but in no event later
than three (3) Trading Days after the Exercise Date) issue or cause to be issued
and cause to be delivered to or upon the written order of the Holder and in such
name or names as the Holder may designate, a certificate for the Warrant Shares
issuable upon such exercise, free of restrictive legends. The Holder, or any
Person permissibly so designated by the Holder to receive Warrant Shares, shall
be deemed to have become the holder of record of such Warrant Shares as of the
Exercise Date. The Company shall, upon the written request of the Holder, use
its best efforts to deliver, or cause to be delivered, Warrant Shares hereunder
electronically through the Depository Trust and Clearing Corporation
(“DTCC”) or another established clearing corporation performing similar
functions, if available; provided, that, the Company may, but will not be
required to, change its transfer agent if its current transfer agent cannot
deliver Warrant Shares electronically through DTCC or another established
clearing corporation performing similar functions, if available. If as of the
time of exercise the Warrant Shares constitute restricted or control securities,
the Holder, by exercising, agrees not to resell them except in compliance with
all applicable securities laws. 

                   (b)
To the extent permitted by law, the Company’s obligations to issue and deliver
Warrant Shares in accordance with the terms hereof are absolute and
unconditional, irrespective of any action or inaction by the Holder to enforce
the same, any waiver or consent with respect to any provision hereof, the
recovery of any judgment against any Person or any action to enforce the same, or any setoff, counterclaim,
recoupment, limitation or termination, or any breach or alleged breach by the
Holder or any other Person of any obligation to the Company or any violation or
alleged violation of law by the Holder or any other Person, and irrespective of
any other circumstance that might otherwise limit such obligation of the Company
to the Holder in connection with the issuance of Warrant Shares. 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 of Common Stock upon
exercise of the Warrant as required pursuant to the terms hereof. 

3 

                    (c)
If the Company fails to cause its transfer agent to transmit to the Holder a
certificate or the certificates (or, if electronically, a book-entry position)
representing the Warrant Shares pursuant to the terms hereof by applicable
delivery date, then the Holder will have the right to rescind such exercise.

          6.
Charges, Taxes and Expenses. Issuance and delivery of certificates (or,
if electronically, a book-entry position) representing the Warrant Shares shall
be made without charge to the Holder for any issue or transfer tax, withholding
tax, transfer agent fee or other incidental tax or expense in respect of the
issuance of such certificates, all of which taxes and expenses shall be paid by
the Company; provided, however, that the Company shall not be required to
pay any tax that may be payable in respect of any transfer involved in the
registration of any certificates for Warrant Shares or the Warrants in a name
other than that of the Holder or its permitted transferees and assignees. The
Holder shall be responsible for all other tax liability that may arise as a
result of holding or transferring this Warrant or receiving Warrant Shares upon
exercise hereof. 

          7.
Replacement of Warrant. If this Warrant is mutilated, lost, stolen or
destroyed, the Company shall issue or cause to be issued in exchange and
substitution for and upon cancellation hereof, or in lieu of and substitution
for this Warrant, a replacement Warrant, but only upon receipt of evidence or
confirmation of such loss, theft or destruction, and customary and reasonable
indemnity, if requested. Applicants for a replacement Warrant under such
circumstances shall also comply with such other reasonable regulations and
procedures and pay such other reasonable third-party costs as the Company may
prescribe. If a replacement Warrant is requested as a result of a mutilation of
this Warrant, then the Holder shall deliver such mutilated Warrant to the
Company as a condition precedent to the Company’s obligation to issue the
replacement Warrant. 

          8.
Reservation of Warrant Shares. The Company covenants that it will at all
times reserve and keep available out of the aggregate of its authorized but
unissued and otherwise unreserved Common Stock, solely for the purpose of
enabling it to issue Warrant Shares upon exercise of this Warrant as herein;
provided, that, the number of Warrant Shares that are then
issuable and deliverable upon the exercise of this entire Warrant, free from
preemptive rights or any other contingent purchase rights of persons other than
the Holder (taking into account the adjustments and restrictions of Section 10).
The Company covenants that all Warrant Shares so issuable and deliverable shall,
upon issuance and the payment of the applicable Exercise Price in accordance
with the terms hereof, be duly and validly authorized, issued and fully paid and
nonassessable. 

4 

          9.
Certain Adjustments to Exercise Price. The Exercise Price and number of
Warrant Shares issuable upon exercise of this Warrant are subject to adjustment
from time to time as set forth in this Section 10. 

                    (a)
Adjustments for Stock Splits and Combinations and Stock Dividends. If the
Company shall at any time or from time to time after the date hereof, effect a
stock split or combination of the outstanding Common Stock or pay a stock
dividend in shares of Common Stock, then the Exercise Price shall be
proportionately adjusted. Any adjustments under this Section 10(a) shall be
effective at the close of business on the date the stock split or combination
becomes effective or the date of payment of the stock dividend, as applicable.

                    (b)
Merger Sale, Reclassification, etc. In case of any: (i) consolidation or
merger (including a merger in which the Company is the surviving entity), (ii)
sale or other disposition of all or substantially all of the Company’s assets or
distribution of property to shareholders (other than distributions payable out
of earnings or retained earnings), or reclassification, change or conversion of
the outstanding securities of the Company or of any reorganization of the
Company (or any other corporation the stock or securities of which are at the
time receivable upon the exercise of this Warrant) or any similar corporate
reorganization on or after the date hereof, then and in each such case the
Holder of this Warrant, upon the exercise hereof at any time thereafter shall be
entitled to receive, in lieu of the stock or other securities and property
receivable upon the exercise hereof prior to such consolidation, merger, sale or
other disposition, reclassification, change, conversion or reorganization, the
stock or other securities or property to which such Holder would have been
entitled upon such consummation if such Holder had exercised this Warrant
immediately prior thereto. 

                    (c)
Anti-Dilution Adjustments in Variable Rate Transactions. If the Company
enters into a Variable Rate Transaction (as defined in the Investors Rights
Agreement dated August [__], 2010 by and between the Company and the parties
thereto, the “IRA”), despite the prohibition thereon in the IRA, the
Company shall be deemed to have issued Common Stock or Common Stock Equivalents
at the lowest possible conversion or exercise price at which such securities may
be converted or exercised. The Exercise Price shall be adjusted pursuant to the
Certificate of Designation of Series A Redeemable Convertible Preferred Stock
(the “Certificate of Designation”) to the extent such Variable Rate
Transaction constitutes a dilutive issuance of Additional Shares of Common Stock
(as defined in the Certificate of Designation). 

                    (d)
Adjustment to Notice. Whenever the Exercise Price is adjusted pursuant to
any provision of this Section 10, the Company shall promptly provide the Holder
a notice setting forth the Exercise Price after such adjustment and setting
forth a brief statement of the facts requiring such adjustment. 

          10.
No Fractional Shares. No fractional Warrant Shares will be issued in
connection with any exercise of this Warrant. In lieu of any fractional shares
that would otherwise be issuable, the Company shall pay cash equal to the
product of such fraction multiplied by the closing price of the Company’s Common
Stock as reported by the applicable trading market on the Exercise Date.

          11.
Notices. Any and all notices or other communications or deliveries
hereunder (including, without limitation, any Exercise Notice) shall be
delivered in accordance with the procedures set forth in Section 6.4 of the SPA. 

5 

          12.
Warrant Agent. The Company shall serve as warrant agent under this
Warrant. Upon thirty (30) days’ notice to the Holder, the Company may appoint a
new warrant agent. Any corporation into which the Company or any new warrant
agent may be merged or any corporation resulting from any consolidation to which
the Company or any new warrant agent shall be a party or any corporation to
which the Company or any new warrant agent transfers substantially all of its
corporate trust or shareholders services business shall be a successor warrant
agent under this Warrant without any further act. Any such successor warrant
agent shall promptly cause notice of its succession as warrant agent to be
mailed (by first class mail, postage prepaid) to the Holder at the Holder’s last
address as shown on the Warrant Register. 

          13.
Miscellaneous. 

                    (a)
This Warrant shall be binding on and inure to the benefit of the parties hereto
and their respective successors and assigns. Subject to the preceding sentence,
nothing in this Warrant shall be construed to give to any person other than the
Company and the Holder any legal or equitable right, remedy or cause of action
under this Warrant. This Warrant may be amended only in writing signed by the
Company and the Holder, or their successors and assigns. 

                    (b)
All questions concerning the construction, validity, enforcement and
interpretation of this Warrant shall be governed by and construed and enforced
in accordance with the internal laws of the State of New York, without regard to
the principles of conflicts of law thereof. Any dispute, controversy or claim
arising out of or relating to this Warrant or the transactions contemplated
hereof, or the breach, termination or invalidity thereof, shall be settled by
arbitration in Hong Kong under the UNCITRAL Arbitration Rules in accordance with
the Hong Kong International Arbitration Centre Procedures for the Administration
of International Arbitration in force at the date hereof. The place of the
arbitration shall be Hong Kong and the language of the arbitration shall be
English. There shall be only one arbitrator. 

                    (c)
The headings herein are for convenience only, do not constitute a part of this
Warrant and shall not be deemed to limit or affect any of the provisions hereof.

                    (d)
In case any one or more of the provisions of this Warrant shall be invalid or
unenforceable in any respect, the validity and enforceability of the remaining
terms and provisions of this Warrant shall not in any way be affected or
impaired thereby and the parties will attempt in good faith to agree upon a
valid and enforceable provision which shall be a commercially reasonable
substitute therefore, and upon so agreeing, shall incorporate such substitute
provision in this Warrant. 

                    (e)
Prior to exercise of this Warrant, the Holder hereof shall not, by reason of by
being a Holder, be entitled to any rights of a stockholder with respect to the
Warrant Shares. 

                    (f)
No provision hereof, in the absence of any affirmative action by Holder to
exercise this Warrant to purchase Warrant Shares, and no enumeration herein of
the rights or privileges of Holder, shall give rise to any liability of Holder
for the purchase price of any Common Stock or as a stockholder of the Company,
whether such liability is asserted by the Company or by creditors of the Company. 

6 

[Signature Page Follows] 

7 

          IN
WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by
its authorized officer as of the date first indicated above. 

JINHAO MOTOR COMPANY 

 

By:  /s/Tsoi Chak Shing

        Name: Tsoi Chak Shing

        Title: Director 

Jinhao Motor Company – Warrant (Hudson) 

JINHAO MOTOR COMPANY 

EXERCISE NOTICE 

Ladies and Gentlemen: 

The undersigned, pursuant to the provisions set forth in the
attached Warrant hereby irrevocably elects to purchase ____________ Warrant
Shares covered by such Warrant, and is providing, herewith, the aggregate
purchase price for such shares. Capitalized terms used herein and not otherwise
defined herein have the respective meanings set forth in the Warrant. 

The undersigned intends that payment of the Warrant Price shall
be made as (check one): 

Cash Exercise
_______                         Cashless
Exercise_______

If the Holder has elected a Cash Exercise, the Holder shall pay
the sum of $________ by certified or official bank check (or via wire transfer)
to the Company in accordance with the terms of the Warrant. 

If the Holder has elected a Cashless Exercise, a certificate
shall be issued to the Holder for the number of shares equal to the whole number
portion of the product of the calculation set forth below, which is ___________.
The Company shall pay a cash adjustment in respect of the fractional portion of
the product of the calculation set forth below in an amount equal to the product
of the fractional portion of such product and the VWAP of one share of Common
Stock on the date of exercise, which product is ____________. 

X = Y (B- A)

            B

Where: 

The number of Warrant Shares to be
issued to the Holder __________________(“X”). 

The number of Warrant Shares
purchasable upon exercise of all of the Warrant or, if only a portion of the
Warrant is being exercised, the portion of the Warrant being exercised
___________________________(“Y”). 

The Exercise Price ______________(“A”).

The 5-day average Fair Market Value of
one share of Common Stock _______________________(“B”). 

[Signature Page to Exercise Notice Follows]

Pursuant to this Exercise Notice, the Company shall deliver to
the Holder the number of Warrant Shares determined in accordance with the terms
of the Warrant and, in lieu of any fractional shares, cash. 

	Dated: _____________________________	 	HOLDER: 
	 	 	 	 
	  	 	 	  
	  	 	Print name 
	 	 	 	 
	  	 	By: 	   
	 	 	 	 
	  	 	Title: 	   

Signature Page 
Warrant 

JINHAO MOTOR COMPANY 

FORM OF ASSIGNMENT 
To be completed and signed only
upon transfer of Warrant 

FOR VALUE RECEIVED, the undersigned hereby sells,
assigns and transfers unto _________________ the right represented by the within
Warrant to purchase _________________ shares of Common Stock to which the within
Warrant relates and appoints __________________
attorney to transfer said
right on the books of the Company with full power of substitution in the
premises. 

	Dated: 	 	TRANSFEROR: 
	  	 	 	  
	 	 	 	 
	  	 	Print name 
	 	 	 	 
	  	 	By: 	   
	 	 	 	 
	  	 	Title: 	   
	 	 	 	 
	 	 	 	 
	  	 	TRANSFEREE: 
	 	 	 	 
	 	 	 	 
	  	 	Print name 
	 	 	 	 
	  	 	By: 	   
	 	 	 	 
	  	 	Title: 	   
	 	 	 	 
	WITNESS: 	 	 	  
	  	 	Address of Transferee: 
	 	 	 	 
	Print name 	 	 	  
	 	 	 	 
	 	 	 	 

Signature Page 
Warrant

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