UNIT PURCHASE OPTION For the Purchase of 350,000 Units Of CHINA GROWTH ALLIANCE LTD.
Exhibit
4.6
THE
REGISTERED HOLDER OF THIS PURCHASE OPTION BY ITS ACCEPTANCE HEREOF, AGREES
THAT
IT WILL NOT SELL, TRANSFER OR ASSIGN THIS PURCHASE OPTION EXCEPT AS HEREIN
PROVIDED AND THE REGISTERED HOLDER OF THIS PURCHASE OPTION AGREES THAT IT WILL
NOT SELL, TRANSFER, ASSIGN, PLEDGE OR HYPOTHECATE THIS PURCHASE OPTION FOR
A
PERIOD OF ONE HUNDRED EIGHTY DAYS FOLLOWING THE EFFECTIVE DATE (DEFINED BELOW)
TO ANYONE OTHER THAN (I) ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, INCORPORATED (“▇▇▇▇▇▇”) OR AN
UNDERWRITER OR A SELECTED DEALER IN CONNECTION WITH THE OFFERING, OR (II) A
BONA FIDE OFFICER OR PARTNER OF ▇▇▇▇▇▇ OR OF ANY SUCH UNDERWRITER OR SELECTED
DEALER.
THIS
PURCHASE OPTION IS NOT EXERCISABLE PRIOR TO THE LATER OF THE CONSUMMATION BY
CHINA GROWTH ALLIANCE LTD. OF A SHARE RECONSTRUCTION OR AMALGAMATION, CAPITAL
STOCK EXCHANGE, ASSET ACQUISITION OR OTHER SIMILAR BUSINESS COMBINATION
(“BUSINESS COMBINATION”) (AS DESCRIBED MORE FULLY IN THE COMPANY’S REGISTRATION
STATEMENT (DEFINED HEREIN) OR
, 2008 [180 DAYS FROM DATE OF PROSPECTUS]. VOID AFTER 5:00 P.M. EASTERN
TIME, ,
2013 [FIVE YEARS THE FROM DATE OF THE PROSPECTUS].
UNIT
PURCHASE OPTION
For
the Purchase of
350,000
Units
Of
| 1. |
Purchase
Option.
|
THIS CERTIFIES THAT, in consideration of $100 duly paid by or on behalf of
(“Holder”),
as registered owner of this Purchase Option, to China Growth Alliance Ltd.
(the
“Company”),
Holder is entitled, at any time or from time to time upon the later of the
consummation of a Business Combination or
, 2008 [180
days from date of prospectus]
(the “Commencement
Date”),
and at or before 5:00 p.m., Eastern Time,
, 2013 [five
years from date of prospectus]
(the “Expiration
Date”),
but not thereafter, to subscribe for, purchase and receive, in whole or in
part,
up to Three Hundred Fifty Thousand (350,000) units (the “Units”)
of the Company, each Unit consisting of:
(i)
one sub-unit, the contents of which are not separable (the “Sub-Unit”),
with
each Sub-Unit being comprised of one ordinary share of the Company, par value
$.0005 per share (the “Ordinary
Shares”)
and
one Class B warrant of the Company (the “Class
B Warrants”);
and
(ii) one Class A warrant of the Company (the “Class
A Warrants”
and
together with the Class B Warrants, the “Warrants”),
with
each Class A Warrant allowing the holder thereof to purchase one Ordinary Share,
and with every two Class B Warrants to automatically convert into one (1)
separable Class A Warrant upon a Business Combination. Each Class A Warrant
will
become exercisable upon the later of the consummation of a Business Combination
or [ ], 2009, one year from the
effective date (the “Effective
Date”)
of the Company’s Registration Statement on Form F-1 (as amended, the
“Registration
Statement”)
pursuant to which Units are offered for sale to the public (the “Offering”).
Each Warrant is the same as the warrant included in the Units being registered
for sale to the public by way of the Registration Statement (the “Public
Warrants”)
except that the Warrants included in the Purchase Option have an exercise price
of $7.50 per share (125% of the exercise price of the Public Warrants), subject
to adjustment as provided in Section 6 hereof. If the Expiration Date is a
day on which banking institutions are authorized by law to close, then this
Purchase Option 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 Purchase Option. This Purchase Option is initially exercisable at $10.00
per
Unit (125% of the price of the Units sold in the Offering) so purchased;
provided, however, that upon the occurrence of any of the events specified
in
Section 6 hereof, the rights granted by this Purchase Option, including the
exercise price per Unit and the number of Units (and Sub-Units, Ordinary Shares
and Warrants) to be received upon such exercise, shall be adjusted as therein
specified. The term “Exercise
Price”
shall mean the initial exercise price or the adjusted exercise price, depending
on the context.
| 2. | Exercise. |
2.1 Exercise
Form.
In order to exercise this Purchase Option, the exercise form attached hereto
must be duly executed and completed and delivered to the Company, together
with
this Purchase Option and payment of the Exercise Price for the Units 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.
If the subscription rights represented hereby shall not be exercised at or
before 5:00 p.m., Eastern time, on the Expiration Date, this Purchase Option
shall become and be void without further force or effect, and all rights
represented hereby shall cease and expire.
2.2 Legend.
Each certificate for the securities purchased under this Purchase Option shall
bear a legend as follows unless such securities 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 state law. 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 state law which, in the opinion of
counsel to the Company, is available.”
2
| 2.3 |
Cashless
Exercise.
|
2.3.1 Determination
of Amount.
In lieu of the payment of the Exercise Price multiplied by the number of Units
for which this Purchase Option is exercisable (and in lieu of being entitled
to
receive Sub-Units, Ordinary Shares and Warrants) in the manner required by
Section 2.1, the Holder shall have the right (but not the obligation) to
convert any exercisable but unexercised portion of this Purchase Option into
Units (the “Conversion
Right”)
as follows: upon exercise of the Conversion Right, the Company shall deliver
to
the Holder (without payment by the Holder of any of the Exercise Price in cash)
that number of Units equal to the quotient obtained by dividing (x) the
“Value” (as defined below) of the portion of the Purchase Option being converted
by (y) the Current Market Price (as defined below) of a Unit. The
“Value”
of the portion of the Purchase Option being converted shall equal the remainder
derived from subtracting (a) (i) the Exercise Price multiplied by
(ii) the number of Units underlying the portion of this Purchase Option
being converted from (b) the Current Market Price of a Unit multiplied by
the number of Units underlying the portion of the Purchase Option being
converted. The “Current
Market Price”
of a Unit shall mean (i) if the Unit is listed on a national securities
exchange or quoted on the Nasdaq Global Market, Nasdaq Capital Market or OTC
Bulletin Board, the average closing price of a Unit for thirty (30) trading
days immediately preceding the date of determination of the Current Market
Price
in the principal trading market for the Unit as reported by the exchange, Nasdaq
or the Financial Industry Regulatory Authority, Inc. (“FINRA”),
as the case may be; (ii) if the Unit is not listed on a national securities
exchange or quoted on the Nasdaq Global Market, Nasdaq Capital Market or the
OTC
Bulletin Board, but is traded in the residual over-the-counter market, the
closing bid price for the Unit on the last trading day preceding the date in
question for which such quotations are reported by the Pink Sheets, LLC or
similar publisher of such quotations; and (iii) if the fair market value of
the Unit cannot be determined pursuant to clause (i) or (ii) above,
such price as the Board of Directors of the Company (the “Board”)
shall determine, in good faith.
2.3.2 Mechanics
of Cashless Exercise.
The Cashless Exercise Right may be exercised by the Holder on any business
day
on or after the Commencement Date and not later than the Expiration Date by
delivering the Purchase Option with a duly executed exercise form attached
hereto with the cashless exercise section completed to the Company, exercising
the Cashless Exercise Right and specifying the total number of Units the Holder
will purchase pursuant to such Cashless Exercise Right.
2.4 Warrant
Exercise.
Any
warrants underlying the Units shall be issued pursuant to and subject to the
terms and conditions set forth in the Warrant Agreement, dated as of
______________, 2008, between the Company and American Stock Transfer &
Trust Company, acting as Warrant Agent (the “Warrant
Agreement”);
provided, that the exercise price of the Warrants underlying this Purchase
Option
shall be
as set forth herein.
2.5 Effective
Registration Statement.
The
Warrants underlying this Purchase Option are exercisable only during those
periods of time in which the Company maintains the effectiveness of the
Registration Statement.
3
| 3. |
Transfer.
|
3.1 General
Restrictions.
The registered Holder of this Purchase Option agrees by his, her or its
acceptance hereof, that such Holder will not: (a) sell, transfer, assign, pledge
or hypothecate this Purchase Option for a period of one hundred eighty (180)
days following the Effective Date to anyone other than: (i) ▇▇▇▇▇▇ or an
underwriter or a selected dealer participating in the Offering, or (ii) a
bona fide officer or partner of ▇▇▇▇▇▇ or of any such underwriter or selected
dealer, in each case in
accordance with FINRA Conduct Rule 2710(g)(1) or (b) cause this Purchase Option
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 Purchase Option or the Securities hereunder, except
as provided for in FINRA Rule 2710(g)(2).
On and after 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 executed and completed, together with the Purchase Option and
payment of all transfer taxes, if any, payable in connection therewith. The
Company shall within five business days transfer this Purchase Option on the
books of the Company and shall execute and deliver a new Purchase Option or
Purchase Options of like tenor to the appropriate assignee(s) expressly
evidencing the right to purchase the aggregate number of Units 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 Purchase Option 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 state securities laws, the
availability of which is established to the reasonable satisfaction of the
Company (the Company hereby agreeing that the opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ LLP
shall be deemed satisfactory evidence of the availability of an exemption),
or
(ii) a registration statement or a post-effective amendment to the
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 state securities law has been
established.
| 4. | New Purchase Options to be Issued. |
4.1 Partial
Exercise or Transfer.
Subject to the restrictions in Section 3 hereof, this Purchase Option 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 Purchase Option for
cancellation, together with the duly executed exercise or assignment form and
funds sufficient to pay any Exercise Price and/or transfer tax if exercised
pursuant to Section 2.1 hereto, the Company shall cause to be delivered to
the Holder without charge a new Purchase Option of like tenor to this Purchase
Option in the name of the Holder evidencing the right of the Holder to purchase
the number of Units purchasable hereunder as to which this Purchase Option
has
not been exercised or assigned.
4.2 Lost
Certificate.
Upon receipt by the Company of evidence satisfactory to it of the loss, theft,
destruction or mutilation of this Purchase Option and of reasonably satisfactory
indemnification or the posting of a bond, the Company shall execute and deliver
a new Purchase Option of like tenor and date. Any such new Purchase Option
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.
4
| 5. | Registration Rights. |
| 5.1 | Demand Registration. |
5.1.1 Grant
of Right.
The Company, upon written demand (“Demand
Notice”)
of the Holder(s) of at least 51% of the Purchase Options and/or the underlying
Units and/or the underlying securities (“Majority
Holders”),
agrees to register, on one occasion, all of the then outstanding Units, and/or
the Sub-Units, and/or the Class A Warrants, and/or the Ordinary Shares
underlying the Sub-Units and Warrants, all underlying such Purchase Options
(collectively, the “Registrable
Securities”)
as requested by the Majority Holders in the Demand Notice, provided that no
such
registration will be required unless the Holders request registration of an
aggregate of at least 51% of the outstanding Registrable Securities. On such
occasion, the Company will file a new registration statement or a post-effective
amendment to the Registration Statement covering the Registrable Securities
within sixty days after receipt of the Demand Notice and use its best efforts
to
have such registration statement or post-effective amendment declared effective
as soon as possible thereafter. The demand for registration may be made at
any
time during a period of four years beginning on the first anniversary of the
Effective Date. The Company covenants and agrees to give written notice of
its
receipt of any Demand Notice by any Holder(s) to all other registered Holders
of
the Purchase Options and/or the Registrable Securities within ten days from
the
date of the receipt of any such Demand Notice, who shall have five days from
the
receipt of such Notice in which to notify the Company of their desire to have
their Registrable Securities included in the Registration
Statement.
5.1.2 Terms.
The Company shall bear all fees and expenses attendant to registering the
Registrable Securities, including the reasonable expenses of any legal counsel
selected by the Holders to represent them in connection with the sale of the
Registrable Securities, but the Holders shall pay any and all underwriting
commissions, if any. The Company agrees to use its commercially reasonable
efforts if required to qualify or register the Registrable Securities in such
States as are reasonably requested by the Majority Holder(s); provided, however,
that in no event shall the Company be required to register the Registrable
Securities in a State in which such registration would cause: (i) the
Company to be obligated to qualify to do business in such State or execute
a
general consent to service of process, or would subject the Company to taxation
as a foreign corporation doing business in such jurisdiction or (ii) the
principal shareholders of the Company to be obligated to escrow their shares
of
capital stock of the Company. The Company shall cause any registration statement
or post-effective amendment filed pursuant to the demand rights granted under
Section 5.1.1 to remain effective for a period of twelve consecutive months
from the effective date of such registration statement or post-effective
amendment or until the Holders have completed the distribution of the
Registrable Securities included in the Registration Statement, whichever occurs
first.
5.1.3 Deferred
Filing.
If: (i) in the good faith judgment of the Board, filing a registration
statement pursuant to Section 5.1 would be seriously detrimental to the
Company and the Board concludes, as a result, that it is essential to defer
the
filing of such registration statement at such time, and (ii) the Company
shall furnish to such Holders a certificate signed by the President of the
Company stating that in the good faith judgment of the Board it would be
materially detrimental to the Company for such registration statement to be
filed in the near future and that it is, therefore, essential to defer the
filing of such registration statement, then the Company shall have the right
to
defer such filing on two occasions for an aggregate of not more than one hundred
and twenty (120) days in any twelve-month period.
5
| 5.2 |
“Piggy-Back”
Registration.
|
5.2.1 Grant
of Right.
In addition to the demand right of registration, the Holders of the Purchase
Options shall have the right for a period of seven years commencing on the
Effective Date, to include the Registrable Securities as part of any other
registration of securities filed by the Company (other than in connection with
a
transaction contemplated by Rule 145(a) promulgated under the Act or pursuant
to
Form S-8 or any successor or equivalent form); provided, however, that if,
in
the written opinion of the Company’s managing underwriter or underwriters, if
any, for such offering, the inclusion of the Registrable Securities, when added
to the securities being registered by the Company or the selling shareholder(s),
will exceed the maximum amount of the Company’s securities which can be
marketed: (i) at a price reasonably related to their then current market
value, and (ii) without materially and adversely affecting the entire
offering, then the Company will still be required to include the Registrable
Securities, but may require the Holders to agree, in writing, to delay the
sale
of all or any portion of the Registrable Securities for a period of 90 days
from the effective date of the offering, provided, further, that if the sale
of
any Registrable Securities is so delayed, then the number of securities to
be
sold by all shareholders in such public offering shall be apportioned pro rata
among all such selling shareholders, including all holders of the Registrable
Securities, according to the total amount of securities of the Company owned
by
said selling shareholders, including all holders of the Registrable
Securities.
5.2.2 Terms.
The Company shall bear all fees and expenses attendant to registering the
Registrable Securities, including the expenses of any legal counsel selected
by
the Holders to represent them in connection with the sale of the Registrable
Securities, but the Holders shall pay any and all underwriting commissions.
In
the event of such a proposed registration, the Company shall furnish the then
Holders of outstanding Registrable Securities with not less than ten business
days written notice prior to the proposed date of filing of such registration
statement. Such notice to the Holders shall continue to be given for each
applicable registration statement filed (during the period in which the Purchase
Option is exercisable) by the Company until such time as all of the Registrable
Securities have been registered and sold. The holders of the Registrable
Securities shall exercise the “piggy back” rights provided for herein by giving
written notice, within five business days of the receipt of the Company’s notice
of its intention to file a registration statement. The Company shall cause
any
registration statement filed pursuant to the above “piggyback” rights that does
not relate to a firm commitment underwritten offering to remain effective for
at
least nine consecutive months from the effective date of such registration
statement or until the Holders have completed the distribution of the
Registrable Securities in the registration statement, whichever occurs
first.
6
| 5.3 |
General
Terms.
|
5.3.1 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 Holders within the meaning of Section 15 of the Act or
Section 20(a) of the Securities Exchange Act of 1934, as amended (the
“Exchange
Act”),
against all loss, claim, damage, expense or liability (including all reasonable
attorneys’ fees and other expenses reasonably incurred in investigating,
preparing or defending against litigation, commenced or threatened, or any
claim
whatsoever) to which any of them may become subject under the Act, the Exchange
Act or otherwise, arising from such registration statement but only to the
same
extent and with the same effect as the provisions pursuant to which the Company
has agreed to indemnify the underwriters contained in Section 5 of the
Underwriting Agreement in the Offering. 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,
its officers and directors and each person, if any, who controls the Company
within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act, against all loss, claim, damage, expense or liability (including
all reasonable attorneys’ fees and other expenses reasonably incurred in
investigating, preparing or defending against any claim whatsoever) to which
they may become subject under the Act, the Exchange Act or otherwise, arising
from information furnished by or on behalf of such Holders, 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 provisions contained in
Section 5 of the Underwriting Agreement pursuant to which the underwriters
have agreed to indemnify the Company.
5.3.2 Exercise
of Purchase Options.
Nothing contained in this Purchase Option shall be construed as requiring the
Holder(s) to exercise their Purchase Options or Warrants underlying such
Purchase Options prior to or after the initial filing of any registration
statement or the effectiveness thereof.
5.3.3 Documents
Delivered to Holders.
The Company shall furnish ▇▇▇▇▇▇, as representative of the Holders participating
in any of the foregoing offerings, a signed counterpart, addressed to the
participating Holders, of: (i) an opinion of counsel to the Company, dated
the effective date of such registration statement (or, 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;
provided however,
that in the case of an underwritten offering, the provisions of the underwriting
agreement described in Section 5.4.4 shall control. The Company shall also
deliver promptly to ▇▇▇▇▇▇, as representative of the Holders participating
in
the offering, the correspondence and memoranda described below and copies of
all
correspondence between the Commission and the Company, its counsel or auditors
and all memoranda relating to discussions with the Commission or its staff
with
respect to the registration statement and permit ▇▇▇▇▇▇, as representative
of
the Holders, 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
the 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 and as often as ▇▇▇▇▇▇, as representative of the Holders,
shall
reasonably request. The Company shall not be required to disclose any
confidential information or other records to ▇▇▇▇▇▇, as representative of the
Holders, or to any other person, until and unless such persons shall have
entered into confidentiality agreements (in form and substance reasonably
satisfactory to the Company) with the Company with respect thereto.
7
5.3.4 Underwriting
Agreement.
The Company shall enter into an underwriting agreement with the managing
underwriter(s), if any, selected by any Holders whose Registrable Securities
are
being registered pursuant to this Section 5, which managing underwriter
shall be reasonably acceptable to the Company. Such agreement shall be
reasonably satisfactory in form and substance to the Company, each Holder and
such managing underwriters, 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 Holders 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
Holders. Such Holders 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 such Holders and their intended methods of distribution or as
are
customarily required of selling shareholders in a firm commitment underwritten
offering. Such Holders, however, shall agree to such covenants and
indemnification and contribution obligations for selling shareholders as are
customarily contained in agreements of that type used by the managing
underwriter. Further, such Holders shall execute appropriate custody agreements
and otherwise cooperate fully in the preparation of the registration statement
and other documents relating to any offering in which they include securities
pursuant to this Section 5. Each Holder shall also furnish to the Company
such information regarding itself, the Registrable Securities held by it, and
the intended method of disposition of such securities as shall be reasonably
required to effect the registration of the Registrable Securities.
5.3.5 Rule 144
Sale.
Notwithstanding anything contained in this Section 5 to the contrary, the
Company shall have no obligation pursuant to Sections 5.1 or 5.2 for the
registration of Registrable Securities held by any Holder, where such Holder
would then be entitled to sell under Rule 144 within any three-month period
(or such other period prescribed under Rule 144 as may be provided by
amendment thereof) all of the Registrable Securities then held by such
Holder.
5.3.6 Supplemental
Prospectus.
Each Holder agrees, that upon receipt of any notice from the Company of the
happening of any event as a result of which the prospectus included in the
Registration Statement, as then in effect, includes an untrue statement of
a
material fact or omits to state a material fact required to be stated therein
or
necessary to make the statements therein not misleading in light of the
circumstances then existing, or that would otherwise require disclosure of
material nonpublic information that, if disclosed at such time, would be
materially harmful to the Company, such Holder will immediately discontinue
disposition of the Registrable Securities pursuant to the Registration Statement
covering such Registrable Securities until such Holder’s receipt of the copies
of a supplemental or amended prospectus, or the public disclosure and
dissemination of such information, as the case may be, and, if so desired by
the
Company, such Holder shall deliver to the Company (at the expense of the
Company) or destroy (and deliver to the Company a certificate of such
destruction) all copies, other than permanent file copies then in such Holder’s
possession, of the prospectus covering such Registrable Securities current
at
the time of receipt of such notice.
8
5.3.7 Documents
to be Delivered by ▇▇▇▇▇▇(s).
Each
Holder participating in any of the foregoing offerings shall furnish to the
Company a completed and executed questionnaire provided by the Company
requesting information customarily sought of selling
securityholders.
5.3.8 No
Net-Cash Settlement or Damages Upon Failure of Registration.
In no
event shall the registered holder of this Purchase Option and the Warrants
underlying the Purchase Option be entitled to: (i) net-cash settlement of this
Purchase Option or the Warrants underlying the Purchase Option, regardless
of
whether any or all of the Registrable Securities have been registered by the
Company pursuant to an effective registration statement, or (ii) receive any
damages if any or all of the Registrable Securities have not been registered
by
the Company pursuant to an effective registration statement, subject to the
requirement that the Company use its best efforts to have a registration
statement or post-effective amendment filed pursuant to this Section 5 declared
effective as soon as possible after receiving the Demand Notice. In the event
there is no effective registration statement related to the issuance or exercise
of the Warrants contained within the Units, that portion of the Units may not
be
exercised by the holder and therefore may expire and be worthless.
| 6. |
Adjustments.
|
6.1 Adjustments
to Exercise Price and Number of Securities.
The Exercise Price and the number of Units underlying the Purchase Option shall
be subject to adjustment from time to time as hereinafter set
forth:
6.1.1 Share
Dividends; Split Ups.
If after the date hereof, and subject to the provisions of Section 6.3
below, the number of outstanding Ordinary Shares is increased by a stock
dividend payable in Ordinary Shares or by a split up of Ordinary Shares or
other
similar event, then, on the effective day thereof, the number of Ordinary Shares
underlying each of the Sub-Units underlying the Units purchasable hereunder
shall be increased in proportion to such increase in outstanding shares. In
such
case, the number of Ordinary Shares, and the exercise price applicable thereto,
underlying the Warrants underlying each of the Units and Sub-Units purchasable
hereunder shall be adjusted in accordance with the terms of the Warrant
Agreement Warrant Agreement. For example, if the Company declares a two-for-one
share dividend and at the time of such dividend this Purchase Option is for
the
purchase of one Unit at $10.00 per whole Unit (each of the Warrants underlying
the Unit and Sub-Unit underlying the Unit is exercisable for $7.50 per share),
upon effectiveness of the dividend, this Purchase Option will be adjusted to
allow for the purchase of one Unit at $10.00 per Unit, each Unit entitling
the
holder to receive two Class A Warrants, and two Sub-Units consisting of two
Ordinary Shares and two Class B Warrants (each Warrant exercisable for $3.75
per
share).
9
6.1.2 Aggregation
of Shares.
If after the date hereof, and subject to the provisions of Section 6.3, the
number of outstanding Ordinary Shares is decreased by a consolidation,
combination or reclassification of Ordinary Shares or other similar event,
then,
on the effective date thereof, the number of Ordinary Shares underlying each
of
the Sub-Units underlying the Units purchasable hereunder shall be decreased
in
proportion to such decrease in outstanding shares. In such case, the number
of
Ordinary Shares, and the exercise price applicable thereto, underlying the
Warrants purchasable hereunder shall be adjusted in accordance with the terms
of
the Warrants.
6.1.3 Replacement
of Securities upon Reorganization, etc.
In case of any reclassification or reorganization of the outstanding Ordinary
Shares other than a change covered by Section 6.1.1 or 6.1.2 hereof or that
solely affects the par value of such Ordinary 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 Ordinary
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
Purchase Option shall have the right thereafter (until the expiration of the
right of exercise of this Purchase Option) 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 Ordinary
Shares of the Company obtainable upon exercise of this Purchase Option and
the
underlying Sub-Units and Warrants immediately prior to such event; and if any
reclassification also results in a change in Ordinary Shares covered by
Section 6.1.1 or 6.1.2, then such adjustment shall be made pursuant to
Sections 6.1.1, 6.1.2 and this Section 6.1.3. The provisions of this
Section 6.1.3 shall similarly apply to successive reclassifications,
reorganizations, share reconstructions or amalgamations, or consolidations,
sales or other transfers.
6.1.4 Changes
in Form of Purchase Option.
This form of Purchase Option need not be changed because of any change pursuant
to this Section, and Purchase Options issued after such change may state the
same Exercise Price and the same number of Units as are stated in the Purchase
Options initially issued pursuant to this Agreement. The acceptance by any
Holder of the issuance of new Purchase Options 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
Purchase Option.
In 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 Ordinary Shares), the
corporation formed by such consolidation or share reconstruction or amalgamation
shall execute and deliver to the Holder a supplemental Purchase Option providing
that the holder of each Purchase Option then outstanding or to be outstanding
shall have the right thereafter (until the stated expiration of such Purchase
Option) to receive, upon exercise of such Purchase Option, 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 Ordinary Shares of the Company for which such Purchase Option might have
been
exercised immediately prior to such consolidation, share reconstruction or
amalgamation, sale or transfer. Such supplemental Purchase Option shall provide
for adjustments which shall be identical to the adjustments provided in
Section 6. The above provision of this Section shall similarly apply to
successive consolidations or share reconstructions or
amalgamations.
10
6.3 Elimination
of Fractional Interests.
The Company shall not be required to issue certificates representing fractions
of Ordinary Shares or Warrants upon the exercise of the Purchase Option, nor
shall it be required to issue scrip or pay cash in lieu of any fractional
interests, it being the intent of the parties that all fractional interests
shall be eliminated by rounding any fraction up or down, as the case may be,
to
the nearest whole number of Warrants, Ordinary Shares or other securities,
properties or rights.
7. Reservation
and Listing.
The Company shall at all times reserve and keep available out of its authorized
Ordinary Shares, solely for the purpose of issuance upon exercise of the
Purchase Options or the Warrants underlying the Purchase Option, such number
of
Ordinary Shares or other securities, properties or rights as shall be issuable
upon the exercise thereof. The Company covenants and agrees that, upon exercise
of the Purchase Options and payment of the Exercise Price therefor, in
accordance with the terms hereby, all Ordinary 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. The
Company further covenants and agrees that upon exercise of the Warrants
underlying the Purchase Options and Units and payment of the respective Warrant
exercise price therefor, in accordance with the terms of the Warrant Agreement,
all Ordinary 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 the Purchase Options shall
be
outstanding, the Company shall use its commercially reasonable efforts to cause
all: (i) Units issuable upon exercise of the Purchase Options,
(ii) Sub-Units issuable upon exercise of the Purchase Options and
(iii) Warrants issuable upon exercise of the Purchase Options and (iv)
Ordinary Shares issuable upon exercise of the Warrants included in the Units
and
Sub-Units issuable upon exercise of the Purchase Option to be listed (subject
to
official notice of issuance) on all securities exchanges (or, if applicable
on
the Nasdaq Global Market, Capital Market, OTC Bulletin Board or any successor
trading market) on which the Units, Sub-Units, Public Warrants or Ordinary
Shares issued to the public in the Offering may then be listed and/or
quoted.
11
| 8. |
Certain
Notice Requirements.
|
8.1 Holder’s
Right to Receive Notice.
Nothing herein shall be construed as conferring upon the Holders 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
the Purchase Options and their exercise, any of the events described in
Section 8.2 shall occur, then, in one or more of said events, the Company
shall give written notice of such event at least fifteen 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.
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) if the Company
shall take a record of the holders of its Ordinary 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 Ordinary 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 therefor,
or
(iii) a dissolution, liquidation or winding up of the Company (other than
in connection with a consolidation or share reconstruction or amalgamation)
or a
sale of all or substantially all of its property, assets and business shall
be
proposed.
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 hereof, send notice to the Holders of such
event and change (“Price
Notice”).
The Price Notice shall describe the event causing the change and the method
of
calculating same and shall be certified as being true and accurate by the
Company’s Chief Financial Officer.
8.4 Transmittal
of Notices.
All notices, requests, consents and other communications under this Purchase
Option shall be in writing and shall be deemed to have been duly made when
hand
delivered, or mailed by express mail or private courier service: (i) If to
the registered Holder of the Purchase Option, to the address of such Holder
as
shown on the books of the Company, or (ii) if to the Company, to following
address or to such other address as the Company may designate by notice to
the
Holders:
Room
409, 4/F Aetna Tower
▇▇▇
▇▇▇▇▇ ▇▇▇▇
Shanghai,
200051, China
Attn:
Dr.
▇▇▇ ▇▇▇▇
Fax
No.:
(▇▇) ▇▇-▇▇▇▇▇▇▇▇
With
a
copy to:
▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ & Schole LLP
▇▇▇
▇.
▇▇▇▇ ▇▇▇▇▇▇, 11th Floor
New
York,
NY 10017
Attn:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Fax
No.:
(▇▇▇) ▇▇▇-▇▇▇▇
12
| 9. |
Miscellaneous.
|
9.1 Amendments.
The Company and ▇▇▇▇▇▇ may from time to time supplement or amend this Purchase
Option without the approval of any of the Holders 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 ▇▇▇▇▇▇ may ▇▇▇▇ necessary or desirable and that the Company and ▇▇▇▇▇▇
▇▇▇▇
shall not adversely affect the interest of the Holders. 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 Purchase
Option.
9.3. Entire
Agreement.
This Purchase Option (together with the other agreements and documents being
delivered pursuant to or in connection with this Purchase Option) 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 Purchase Option 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 Purchase Option or any provisions herein
contained.
9.5 Governing
Law; Submission to Jurisdiction.
This Purchase Option shall be governed by and construed and enforced in
accordance with the laws of the State of Maryland, without giving effect to
conflict of laws. The Company hereby agrees that any action, proceeding or
claim
against it arising out of, or relating in any way to this Purchase Option shall
be brought and enforced in the courts of the State of Maryland or of the United
States District Court for the District of Maryland, Baltimore Division, 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 hereof. 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
therefor.
13
9.6 Waiver,
etc.
The failure of the Company or the Holder to at any time enforce any of the
provisions of this Purchase Option shall not be deemed or construed to be a
waiver of any such provision, nor to in any way affect the validity of this
Purchase Option or any provision hereof or the right of the Company or any
Holder to thereafter enforce each and every provision of this Purchase Option.
No waiver of any breach, non-compliance or non-fulfillment of any of the
provisions of this Purchase Option 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 Purchase Option 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 Purchase Option,
▇▇▇▇▇▇ agrees that, at any time prior to the complete exercise of this Purchase
Option by Holder, if the Company and ▇▇▇▇▇▇ enter into an agreement (“Exchange
Agreement”) pursuant to which they agree that all outstanding Purchase Options
will be exchanged for securities or cash or a combination of both, then Holder
shall agree to such exchange and become a party to the Exchange
Agreement.
[Remainder
of page deliberately left blank.]
14
IN
WITNESS WHEREOF, the Company has caused this Purchase Option to be signed by
its
duly authorized officer as of the ___ day of
, 2008.
| |
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| By: | ||
|
Name:
|
||
|
Title:
|
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15
Form
to be used to exercise Purchase Option:
Room
409, 4/F Aetna Tower
▇▇▇
▇▇▇▇▇ ▇▇▇▇
Shanghai,
200051, China
Fax
No.:
(▇▇) ▇▇-▇▇▇▇▇▇▇▇
Date:
,
200__
The undersigned hereby elects irrevocably to exercise the within Purchase Option
and to purchase ______ Units of China Growth Alliance Ltd. and hereby makes
payment of $
(at the rate of $
per Unit) in payment of the Exercise Price pursuant thereto. Please issue the
Sub-Units and Class A Warrants as to which this Purchase Option is exercised
in
accordance with the instructions given below.
or
The undersigned hereby elects irrevocably to convert its right to purchase
______ Units purchasable under the within Purchase Option by surrender of the
unexercised portion of the attached Purchase Option (with a “Value” of $______
based on a “Market Price” of $______). Please issue the securities comprising
the Units as to which this Purchase Option is exercised in accordance with
the
instructions given below.
|
Signature
|
||
|
Signature
Guaranteed
|
||
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 within Purchase Option in every particular 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.
16
Form
to be used to assign Purchase Option:
ASSIGNMENT
(To be executed by the registered Holder to effect a transfer of the
within Purchase Option):
FOR VALUE RECEIVED,
does hereby sell, assign and transfer unto
the right to purchase
Units of China Growth Alliance Ltd. (“Company”) evidenced by the within Purchase
Option and does hereby authorize the Company to transfer such right on the
books
of the Company.
| Dated: , 200_ | ||
|
Signature
|
||
|
Signature
Guaranteed
|
||
NOTICE:
The signature to this form must correspond with the name as written upon the
face of the within Purchase Option in every particular 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.
17