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:

 

  

1

  

 

	  	
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 Florida, 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 March, 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.

  

13Purchase Contract

	  	
Contract No. CXCS-20100226

	  	
Place of Signing: Changxing , Zhejiang

Party A (Buyer): Changxing Chisen Electric Co., Ltd.

Party B (Supplier): Zhejiang Chisen Glass Co., Ltd.

After friendly consultation, the both Parties agree to come into and strictly abide by this Contract on components purchase.

1. Party B shall provide Party A with the following products:

	
Product Name

	  	
Specification

	  	
Unit

	  	
Quantity

	  	
Unit Price

(17% tax

included)

	  	
Total

amount

	  	
Delivery

date

	
AGM

Separate Plates

	
  

	
According to

the orders

	
  

	
Kg

	
  

	
According to

the orders

	
  

	
23.5 RMB/Kg

	
  

	  	
  

	
According to

the orders

2. Quality Warranty

Party B shall provide Party A with the products in compliance with Party A's quality and technical requirement.

3. Delivery

Party B shall deliver the products to site appointed by Party A and bear the expenses arising therefrom.

4. Acceptance Standard and Method

Party A shall inspect the goods in compliance with Party A’s technical standards and quality requirements. In case of any quantity or quality discrepancy, Party A is entitled to reject the goods and deduct the relevant amount for the defected goods accordingly.

5. Payment Terms

	
(1)

	
Party B shall deliver the products to Party A’s warehouse before the 25th day of the ordering month.

	
a)

	
Party A shall issue qualified goods inspection voucher to Party B;

	
b)

	
Party A shall issue warehouse voucher to Party B.

	
c)

	
Party A shall sign in acknowledgement of receipt for actual quantity received.

	
d)

	
VAT invoice with tax rate of 17% for products according to specification, quantity and amount listed in items a) b) c).

 

  

  

 

2) After Party A receiving the materials listed in Item (1) and Party A shall pay relevant amount to Party B between the 20th day and 25th day in the 4th month after recording the invoice of item (1) d) in Party A’s account. The same method should be applied to the payment terms of purchasing goods from the 25th day of this month to the 25th day of next month.

3) If Party B fails to deliver the (1) items to Party A before the 25th day of the ordering month, the payment should be delayed one month accordingly.

6. Breach Liabilities

Both Parties should strictly comply with the contract. Due to either party’s fault, if breaching the Contract, that party shall undertake the breach liability according to “The Contract Law of the People’s Republic of China”.

	
1)

	
If Party A failed to supply or short of supply to a large extent, Party A is not only entitled to terminate the contract, but also could indemnify Party B 2% of the aggregate amount of payment if caused impact on Party A’s production.

	
2)

	
Party A shall strictly comply with the technical standards and quality requirements, if Party A returned the goods due to serious quality problems, (goods is allowed to be returned only once), if the goods were returned twice, Party B should pay penalty of 1% of the total amount. If over 3 times, the penalty will be 2% of the total amount, and so forth. If the goods returned over 3 times in one month, Party A is entitled to come up with corrective measures, disqualify suppliers or reevaluate suppliers’ qualification. Damages will be directly deducted from Party B’s payment for goods or paid off by Party B in one week once the damages occurred.

	
3)

	
Due to the quality and quantity problem from Party B, which caused loss on Party A during the production and sale process, Party B shall take the full responsibility.

7. Dispute Settlement

Any dispute shall be solved through negotiation. If no settlement can be reached, the case in dispute shall be subjected to local People’s Court at the signing place of this Contract.

8. Miscellaneous

	
(1)

	
If Party A have any modifications on product specifications, Party A should notify Party B immediately in order to do adjustment to its safe storage. Party A shall periodically adjust products price in accordance with the raw material price fluctuation. If special circumstances exist, both parties should negotiate.

	
(2)

	
Party A is permitted to detain RMB100,000 as guarantee for the contract performance.

	
(3)

	
If either Party wants to terminate the Contract, the Contract may be terminated by that Party by giving notice in written form 60 days in advance. Party A should pay off all the bills to Party B in 180 days.

  

  

 

9. The Contract is made in duplicate, with each Party holding one original, and shall come into effect after being signed and sealed by the Parties. Fax is also effective.

	  	
Party A: Changxing Chisen Electric Co., Ltd. (seal)

	  	
Signature:

	  	
Date: March 8, 2010

	  	  
	  	
Party B: Zhejiang Chisen Glass Co., Ltd.

	  	
Signature:

	  	
Date: February 26, 2010

The valid term of this contract starts from March 8, 2010 to March 7, 2011.

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