EXHIBIT A Form of Representative’s Option Agreement]
Exhibit
4.1
[EXHIBIT
A
Form
of Representative’s Option Agreement]
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) XXXXXX & XXXXXXX, LLC OR AN UNDERWRITER OR A
SELECTED DEALER IN CONNECTION WITH THE OFFERING, OR (II) A BONA FIDE OFFICER OR
PARTNER OF XXXXXX & XXXXXXX, LLC OR OF ANY SUCH UNDERWRITER OR SELECTED
DEALER.
THIS
PURCHASE OPTION IS NOT EXERCISABLE PRIOR TO ________________ [DATE THAT IS SIX MONTHS FROM DATE OF
PROSPECTUS]. VOID AFTER
5:00 P.M. EASTERN TIME, ___________________ [DATE THAT IS FIVE YEARS THE
FROM DATE OF THE PROSPECTUS].
COMMON
STOCK PURCHASE OPTION
For the
Purchase of Shares of Common Stock
Of
1. Purchase Option. THIS
CERTIFIES THAT, in consideration of funds duly paid by or on behalf of
[_______________]("Holder"), as registered owner of this Purchase Option, to
China Shandong Industries, Inc. (the "Company"), Holder is entitled, at any time
or from time to time from ________________ [DATE THAT IS SIX MONTHS FROM DATE OF
PROSPECTUS] (the "Commencement Date"), and at or before 5:00 p.m., Eastern
Time, ___________________ [DATE THAT IS FIVE YEARS THE FROM DATE OF THE
PROSPECTUS] (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 $0.0001 per share (the "Shares") 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 $[________]
per Share (125% 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
hereof, the rights granted by this Purchase Option, 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" 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 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. 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 Cashless
Exercise. In
lieu of exercising this Purchase Option by payment of cash or certified check or
official bank check payable to the order of the Company pursuant to Section 2.1
above, Holder may elect to receive the number of Shares equal to the value of
this Purchase Option (or the portion thereof being exercised), by surrender of
this Purchase Option to the Company, together with the exercise form attached
hereto, in which event the issue to Holder, Shares in accordance with the
following formula:
|
X
|
=
|
Y(A-B)
|
|
A
|
Where,
|
X
|
=
|
The
number of Shares to be issued to Holder;
|
|
|
Y
|
=
|
The
number of Shares for which the Purchase Option is being
exercised;
|
|
|
A
|
=
|
The
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 Company’s common stock is traded on a securities exchange, the value shall
be deemed to be the average of the closing prices on such exchange or market
over the thirty (30) day period ending three (3) days prior to the date of the
exercise form being submitted in connection with the exercise of the Purchase
Option; or
(ii) if
the Company’s common stock is actively traded over-the-counter, the 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 exercise form being
submitted in connection with the exercise of the Purchase Option; if there is no
active public market, the value shall be the fair market value thereof, as
determined in good faith by the Company’s Board of Directors.
2.3 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."
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) Xxxxxx & Xxxxxxx, LLC ("Xxxxxx & Xxxxxxx") or an underwriter or a
selected dealer participating in the Offering, or (ii) a bona fide officer or
partner of Xxxxxx & Xxxxxxx or of any such underwriter or selected dealer,
in each case in accordance with FINRA Conduct Rule 5110(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 5110(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 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 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 Loeb & Loeb 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. Registration
Rights.
4.1 Demand
Registration.
4.1.1 Grant of Right. The
Company, upon written demand (a "Demand Notice") of the Holder(s) of at least
51% of the Purchase Options and/or the underlying Shares ("Majority Holders"),
agrees to register, on one occasion, all or any portion of the Shares underlying
the Purchase Options (collectively the "Registrable Securities"). On such
occasion, the Company will file a registration statement with the SEC covering
the Registrable Securities within sixty (60) days after receipt of a Demand
Notice and use its reasonable best efforts to have the registration statement
declared effective promptly thereafter, subject to compliance with review by the
SEC; provided, however, that the Company shall not be required to comply with a
Demand Notice if the Company has filed a registration statement with respect to
which the Holder is entitled to piggyback registration rights pursuant to
Section 4.2 hereof and either: (i) the Holder has elected to participate in the
offering covered by such registration statement or (ii) if such registration
statement relates to an underwritten primary offering of securities of the
Company, until the offering covered by such registration statement has been
withdrawn or until thirty (30) days after such offering is consummated. The
demand for registration may be made at any time during a period of four (4)
years beginning one (1) year from the Closing 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 (10) days from the date of the receipt of any
such Demand Notice.
4.1.2 Terms. The Company
shall bear all fees and expenses attendant to the registration of the
Registrable Securities pursuant to Section 4.1.1, but the Holders shall pay any
and all underwriting commissions and the expenses of any legal counsel selected
by the Holders to represent them in connection with the sale of the Registrable
Securities. The Company agrees to use its reasonable best efforts to cause the
filing required herein to become effective promptly and to qualify or register
the Registrable Securities in such States as are reasonably requested by the
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 register or license to do business in
such State or submit to general service of process in such State, 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
filed pursuant to the demand right granted under Section 4.1.1 to remain
effective for a period of at least twelve consecutive months from the date that
the Holders of the Registrable Securities covered by such registration statement
are first given the opportunity to sell all of suchsecurities. The Holders shall
only use the prospectuses provided by the Company to sell the shares covered by
such registration statement, and will immediately cease to use any prospectus
furnished by the Company if the Company advises the Holder that such prospectus
may no longer be used due to a material misstatement or
omission.
4.2 "Piggy-Back"
Registration.
4.2.1 Grant of Right. In
addition to the demand right of registration, described in Section 4.1 hereof
the Holder shall have the right, for a period of four (4) years commencing
one(1) year from the Closing 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 equivalent form); provided, however, that if,
solely in connection with any primary underwritten public offering for the
account of the Company, the managing underwriter(s) thereof shall, in its
reasonable discretion, impose a limitation on the number of shares of Common
Stock which may be included in the Registration Statement because, in such
underwriter(s)' judgment, marketing or other factors dictate such limitation is
necessary to facilitate public distribution, then the Company shall be obligated
to include in such Registration Statement only such limited portion of the
Registrable Securities with respect to which the Holder requested inclusion
hereunder as the underwriter shall reasonably permit. Any exclusion of
Registrable Securities shall be made pro rata among the Holders seeking to
include Registrable Securities in proportion to the number of Registrable
Securities sought to be included by such Holders; provided, however, that the
Company shall not exclude any Registrable Securities unless the Company has
first excluded all outstanding securities, the holders of which are not entitled
to inclusion of such securities in such Registration Statement or are not
entitled to pro rata inclusion with the Registrable Securities.
4.2.2 Terms. The Company
shall bear all fees and expenses attendant to registering the Registrable
Securities pursuant to Section 4.2.1 hereof, but the Holders shall pay any and
all underwriting commissions and the expenses of any legal counsel selected by
the Holders to represent them in connection with the sale of the Registrable
Securities. In the event of such a proposed registration, the Company shall
furnish the then Holders 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 Holders 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. The holders of
the Registrable Securities shall exercise the "piggy-back" 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.
4.3 General
Terms.
4.3.1 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 ("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 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 5.1 of the Underwriting Agreement between the
Underwriters and the Company, dated as of [_________________]. 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 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
5.2 of the Underwriting Agreement pursuant to which the Underwriters have agreed
to indemnify the Company.
4.3.2 Exercise of Purchase
Options. Nothing contained in this Purchase Option shall be construed as
requiring the Holder(s) to exercise their Purchase Options prior to or after the
initial filing of any registration statement or the effectiveness
thereof.
4.3.3 Documents Delivered to
Holders. The Company shall furnish to each Holder participating in any of
the foregoing offerings and to each underwriter of any such offering, if any, a
signed counterpart, addressed to such Holder or underwriter, 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 deliver promptly to each Holder
participating in the offering requesting the correspondence and memoranda
described below and to the managing underwriter, if any, copies of all
correspondence between the SEC and the Company, its counsel or auditors and all
memoranda relating to discussions with the SEC or its staff with respect to the
registration statement and 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.
4.3.4 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 4, which managing
underwriter shall be reasonably satisfactory 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, their Shares and their
intended methods 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 sought of selling
security holders.
4.3.6 Damages. Should the
registration or the effectiveness thereof required by Sections 4.1 and 4.2 hereof
be delayed by the Company or the Company otherwise fails to comply with such
provisions, the Holder(s) shall, in addition to any other legal or other relief
available to the Holder(s), be entitled to obtain specific performance or other
equitable (including injunctive) relief against the threatened breach of such
provisions or the continuation of any such breach, without the necessity of
proving actual damages and without the necessity of posting bond or other
security.
5. New Purchase Options to be
Issued.
5.1 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 Shares purchasable hereunder as to which this
Purchase Option has 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 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.
6. Adjustments.
6.1 Adjustments to Exercise
Price and Number of Securities. The Exercise Price and the number of
Shares 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 Shares is increased by a stock dividend
payable in Shares or by a split up of Shares or other similar event, then, on
the effective day thereof, the number of Shares purchasable hereunder shall be
increased in proportion to such increase in outstanding shares, and the Exercise
Price shall be proportionately increased.
6.1.2 Aggregation of
Shares. If after the date hereof, and subject to the provisions of
Section 6.3, the number of outstanding Shares is decreased by a consolidation,
combination or reclassification of Shares or other similar event, then, on the
effective date thereof, the number of Shares purchasable hereunder shall be
decreased in proportion to such decrease in outstanding shares.
6.1.3 Replacement of Securities
upon Reorganization, etc. In case of any reclassification or
reorganization of the outstanding 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 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 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
Shares of the Company obtainable upon exercise of this Purchase Option
immediately prior to such event; and if any reclassification also results in a
change in 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 6.1, and Purchase Options issued after such
change may state the same Exercise Price and the same number of Shares 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 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 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 for in this
Section 6. The above provision of this Section shall similarly apply to
successive consolidations or share reconstructions or
amalgamations.
6.3 Elimination of Fractional
Interests. The Company shall not be required to issue certificates
representing fractions of Shares 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 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 Shares, solely for the purpose of issuance upon exercise of the
Purchase Options, such number of 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 therefore, 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.
The Company further covenants and agrees that upon exercise of the Purchase
Options and payment of the exercise price therefore, 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 the Purchase Options shall be outstanding, the Company shall use its
commercially reasonable efforts to cause all Shares issuable upon exercise of
the Purchase Options 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 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 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 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, 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:
Xxxxxxxx
Xx
No. 0000
Xxxxxx Xxxx
Development
Zone Cao County
Xxxxxxxx
Xxxxxxxx, 000000 Xxxxx
With a
copy to:
Xxxxxxxx
X. Xxxxxxx
Gusrae,
Xxxxxx, Xxxxx & Xxxxxxx PLLC
000 Xxxx
Xxxxxx, 00xx Xxxxx
Xxx Xxxx,
Xxx Xxxx 00000
9. Miscellaneous.
9.1 Amendments. The
Company and Xxxxxx & Xxxxxxx 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 Xxxxxx & Xxxxxxx may xxxx necessary or desirable and that the Company
and Xxxxxx & Xxxxxxx xxxx 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 New York, 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 Purchase Option shall be brought and enforced in the New York
Supreme Court, County of New York, or in the United States District Court for
the Southern District of New York, 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 therefore.
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,
Holder agrees that, at any time prior to the complete exercise of this Purchase
Option by Holder, if the Company and Xxxxxx & Xxxxxxx 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.]
IN
WITNESS WHEREOF, the Company has caused this Purchase Option to be signed by its
duly authorized officer as of the ____ day of _______, 20___.
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By:
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Name:
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Title:
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[Form to be used to exercise
Purchase Option:
Date: , 20___
The
undersigned hereby elects irrevocably to exercise the Purchase Option for [___]
Shares of China Shandong
Industries, Inc. and hereby makes payment of $[_________] (at the rate of
$[___________] per Share) in payment of the Exercise Price pursuant thereto.
Please issue the Shares as to which this Purchase Option is exercised in
accordance with the instructions given below and, if applicable, a new Purchase
Option representing the number of Shares for which this Purchase Option has not
been exercised.
or
The
undersigned hereby elects irrevocably to convert its right to purchase [___]
Shares under the Purchase Option for [___] Shares, as determined in accordance
with the following formula:
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X
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=
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Y(A-B)
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A
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Where,
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X
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=
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The
number of Shares to be issued to Holder;
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Y
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=
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The
number of Shares for which the Purchase Option is being
exercised;
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|
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A
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=
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The
fair market value of one Share which is equal to $[____];
and
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|
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B
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=
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The
Exercise Price which is equal to $[_____] per
share
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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 Purchase Option is exercised in accordance
with the instructions given below and, if applicable, a new Purchase Option
representing the number of Shares for which this Purchase Option has not been
converted.
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 Purchase Option 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.
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
transferunto the right to purchaseShares of China Shandong Industries,
Inc. ("Company") evidenced by
the Purchase Option and does hereby authorize the Company to transfer such right
on the books of the Company.
Dated: ,
20__
Signature
Signature
Guaranteed
NOTICE:
The signature to this form must correspond with the name as written upon the
face of the within Purchase Option 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.
