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,...
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 YEAR FOLLOWING THE EFFECTIVE DATE (DEFINED BELOW) TO ANYONE OTHER
THAN (I) EARLYBIRDCAPITAL, INC. (“EBC”)
OR AN
UNDERWRITER OR SELECTED DEALER IN CONNECTION WITH THE OFFERING, OR (II) A BONA
FIDE OFFICER OR PARTNER OF EBC OR OF ANY SUCH UNDERWRITER OR SELECTED
DEALER.
THIS
PURCHASE OPTION IS NOT EXERCISABLE PRIOR TO THE LATER OF THE CONSUMMATION BY
CHINA DISCOVERY ACQUISITION CORP. (“COMPANY”)
OF A
MERGER, 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. VOID AFTER 5:00 P.M. NEW YORK CITY LOCAL TIME,
___________, 2012.
UNIT
PURCHASE OPTION
FOR
THE
PURCHASE OF
__________
UNITS
OF
1. Purchase
Option.
THIS
CERTIFIES THAT, in consideration of $100.00 duly paid by or on behalf of
____________ (“Holder”),
as
registered owner of this Purchase Option, to China Discovery Acquisition Corp.
(“Company”),
Holder is entitled, at any time or from time to time upon the later of the
consummation of a Business Combination or ___________ __, 2008 (“Commencement
Date”),
and
at or before 5:00 p.m., New York City local time, ________ __, 2012
(“Expiration
Date”),
but
not thereafter, to subscribe for, purchase and receive, in whole or in part,
up
to __________ (________) units (“Units”)
of the
Company, each Unit consisting of one ordinary share of the Company, par value
$0.0001 per share (“Ordinary
Share”),
and
two warrants (“Warrant(s)”)
expiring four years from the effective date (“Effective
Date”)
of the
registration statement (“Registration
Statement”)
pursuant to which Units are offered for sale to the public (“Offering”).
Each
Warrant is the same as the warrants included in the Units being registered
for
sale to the public by way of the Registration Statement (“Public
Warrants”).
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 Unit 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 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 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., New York City local 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 (“Act”):
“The
securities represented by this certificate have not been registered under the
Securities Act of 1933, as amended (“Act”) or applicable state law. The
securities may not 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.”
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
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 (“Cashless
Exercise Right”)
as
follows: upon exercise of the Cashless Exercise 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 (or that number of Ordinary Shares and Warrants
comprising 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 Value (as defined below). 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 Value of a Unit multiplied by the number of Units underlying
the portion of the Purchase Option being converted. As used herein, the term
“Current Market Value” per Unit at any date means: (A) in the event that neither
the Units nor Public Warrants are still trading, the remainder derived from
subtracting (x) the exercise price of the Warrants multiplied by the number
of
Ordinary Shares issuable upon exercise of the Warrants underlying one Unit
from
(y) (i) the Current Market Price of the Ordinary Share multiplied by (ii) the
number of Ordinary Shares underlying one Unit, which shall include the Ordinary
Shares underlying the Warrants included in such Unit; (B) in the event that
the
Units, Ordinary Shares and Public Warrants are still trading, (i) if the Units
are listed on a national securities exchange or quoted on the Nasdaq National
Market, Nasdaq SmallCap Market or NASD OTC Bulletin Board (or successor
exchange), the last sale price of the Units in the principal trading market
for
the Units as reported by the exchange, Nasdaq or the NASD, as the case may
be,
on the last trading day preceding the date in question; or (ii) if the Units
are
not listed on a national securities exchange or quoted on the Nasdaq National
Market, Nasdaq SmallCap Market or the NASD OTC Bulletin Board (or successor
exchange), but is traded in the residual over-the-counter market, the closing
bid price for Units 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 (C) in the event that the Units are not still trading
but the Ordinary Share and Public Warrants underlying the Units are still
trading, the Current Market Price of the Ordinary Share plus the product of
(x)
the Current Market Price of the Public Warrants and (y) the number of Ordinary
Shares underlying the Warrants included in one Unit. The “Current Market Price”
shall mean (i) if the Ordinary Shares (or Public Warrants, as the case may
be)
is listed on a national securities exchange or quoted on the Nasdaq National
Market, Nasdaq SmallCap Market or NASD OTC Bulletin Board (or successor
exchange), the last sale price of the Ordinary Shares (or Public Warrants)
in
the principal trading market for the Ordinary Share as reported by the exchange,
Nasdaq or the NASD, as the case may be, on the last trading day preceding the
date in question; (ii) if the Ordinary Shares (or Public Warrants, as the case
may be) is not listed on a national securities exchange or quoted on the Nasdaq
National Market, Nasdaq SmallCap Market or the NASD OTC Bulletin Board (or
successor exchange), but is traded in the residual over-the-counter market,
the
closing bid price for the Ordinary Share (or Public Warrants) 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 Ordinary Share cannot be determined
pursuant to clause (i) or (ii) above, such price as the Board of Directors
of
the Company shall determine, in good faith. In the event the Public Warrants
have expired and are no longer exercisable, no “Value” shall be attributed to
the Warrants underlying this Purchase Option. Additionally, in the event that
this Purchase Option is exercised pursuant to this Section 2.3 and the Public
Warrants are still trading, the “Value” shall be reduced by the difference
between the Warrant Exercise Price and the exercise price of the Public Warrants
multiplied by the number of Warrants underlying the Units included in the
portion of this Purchase Option being converted.
2
2.3.1 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 the 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
No
Obligation to Net Cash Settle.
Notwithstanding anything to the contrary contained in this Purchase Option,
in
no event will the Company be required to net cash settle the exercise of the
Purchase Option or the Warrants underlying the Purchase Option. The holder
of
the Purchase Option and the Warrants underlying the Purchase Option will not
be
entitled to exercise the Purchase Option or the Warrants underlying such
Purchase Option unless a registration statement is effective, or an exemption
from the registration requirements is available at such time and, if the holder
is not able to exercise the Purchase Option or underlying Warrants, the Purchase
Option and/or the underlying Warrants, as applicable, will expire
worthless.
3
3. Transfer.
3.1 General
Restrictions.
The
registered Holder of this Purchase Option, by its acceptance hereof, agrees
that
it will not sell, transfer, assign, pledge or hypothecate this Purchase Option
for a period of one year (including a period of 180 days pursuant to Rule
2710(g)(1) of the Conduct Rules of the National Association of Securities
Dealers, Inc. (“NASD”))
following the Effective Date to anyone other than (i) EBC or an underwriter
or selected dealer in connection with the Offering, or (ii) a bona fide
officer or partner of EBC or of any such underwriter or selected dealer. On
and
after the first anniversary of 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 Xxxxxxxx Xxxxxx 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 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, 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 (“Initial
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 use its best efforts to register (the “Demand
Registration”)
under
the Act on one occasion, all or any portion of the Purchase Options requested
by
the Majority Holders in the Initial Demand Notice and all of the securities
underlying such Purchase Options, including the Units, Ordinary Share, the
Warrants and the Ordinary Share underlying the Warrants (collectively, the
“Registrable
Securities”).
On
such occasion, the Company will use its best efforts to file a registration
statement or a post-effective amendment to the Registration Statement covering
the Registrable Securities within sixty days after receipt of the Initial 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 five years
beginning on the Effective Date. The Initial Demand Notice shall specify the
number of shares of Registrable Securities proposed to be sold and the intended
method(s) of distribution thereof. The Company will notify all holders of the
Purchase Options and/or Registrable Securities of the demand within ten days
from the date of the receipt of any such Initial Demand Notice. Each holder
of
Registrable Securities who wishes to include all or a portion of such holder’s
Registrable Securities in the Demand Registration (each such holder including
shares of Registrable Securities in such registration, a “Demanding
Holder”)
shall
so notify the Company within fifteen (15) days after the receipt by the holder
of the notice from the Company. Upon any such request, the Demanding Holders
shall be entitled to have their Registrable Securities included in the Demand
Registration, subject to Section 5.1.4.
5.1.2 Effective
Registration.
A
registration will not count as a Demand Registration until the registration
statement filed with the Commission with respect to such Demand Registration
has
been declared effective and the Company has complied with all of its obligations
under this Agreement with respect thereto; provided, however, that if, after
such registration statement has been declared effective, the offering of
Registrable Securities pursuant to a Demand Registration is interfered with
by
any stop order or injunction of the Commission or any other governmental agency
or court, the registration statement with respect to such Demand Registration
will be deemed not to have been declared effective, unless and until,
(i) such stop order or injunction is removed, rescinded or otherwise
terminated, and (ii) a majority-in-interest of the Demanding Holders
thereafter elect to continue the offering.
5.1.3 Underwritten
Offering.
If the
Majority Holders so elect and such holders so advise the Company as part of
the
Initial Demand Notice, the offering of such Registrable Securities pursuant
to
such Demand Registration shall be in the form of an underwritten offering.
In
such event, the right of any holder to include its Registrable Securities in
such registration shall be conditioned upon such holder’s participation in such
underwriting and the inclusion of such holder’s Registrable Securities in the
underwriting to the extent provided herein. All Demanding Holders proposing
to
distribute their securities through such underwriting shall enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting by the Majority Holders.
5
5.1.4 Reduction
of Offering.
If the
managing underwriter or underwriters for a Demand Registration that is to be
an
underwritten offering advises the Company and the Demanding Holders in writing
that the dollar amount or number of shares of Registrable Securities which
the
Demanding Holders desire to sell, taken together with all other Ordinary Shares
or other securities which the Company desires to sell and the Ordinary Shares,
if any, as to which registration has been requested pursuant to written
contractual piggy-back registration rights held by other stockholders of the
Company who desire to sell, exceeds the maximum dollar amount or maximum number
of shares that can be sold in such offering without adversely affecting the
proposed offering price, the timing, the distribution method, or the probability
of success of such offering (such maximum dollar amount or maximum number of
shares, as applicable, the “Maximum
Number of Shares”),
then
the Company shall include in such registration: (i) first, the Registrable
Securities as to which Demand Registration has been requested by the Demanding
Holders (pro rata in accordance with the number of shares that each such Person
has requested be included in such registration, regardless of the number of
shares held by each such Person (such proportion is referred to herein as
“Pro
Rata”))
that
can be sold without exceeding the Maximum Number of Shares; (ii) second, to
the extent that the Maximum Number of Shares has not been reached under the
foregoing clause (i), the Ordinary Shares or other securities that the Company
desires to sell that can be sold without exceeding the Maximum Number of Shares;
(iii) third, to the extent that the Maximum Number of Shares has not been
reached under the foregoing clauses (i) and (ii), the Ordinary Shares or
other securities registrable pursuant to the terms of the Registration Rights
Agreement between the Company and the initial investors in the Company, dated
as
of _____________ __, 2007 (the “Registration
Rights Agreement”
and
such registrable securities, the “Investor
Securities”)
as to
which “piggy-back” registration has been requested by the holders thereof, Pro
Rata, that can be sold without exceeding the Maximum Number of Shares; and
(iv) fourth, to the extent that the Maximum Number of Shares have not been
reached under the foregoing clauses (i), (ii), and (iii), the Ordinary
Shares or other securities for the account of other persons that the Company
is
obligated to register pursuant to written contractual arrangements with such
persons and that can be sold without exceeding the Maximum Number of
Shares.
5.1.5 Withdrawal.
If a
majority-in-interest of the Demanding Holders disapprove of the terms of any
underwriting or are not entitled to include all of their Registrable Securities
in any offering, such majority-in-interest of the Demanding Holders may elect
to
withdraw from such offering by giving written notice to the Company and the
underwriter or underwriters of their request to withdraw prior to the
effectiveness of the registration statement filed with the Commission with
respect to such Demand Registration. If the majority-in-interest of the
Demanding Holders withdraws from a proposed offering relating to a Demand
Registration, then the Company does not have to continue its obligations under
Section 5.1 with respect to such proposed offering.
6
5.1.6 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.
The
Company agrees to use its reasonable best efforts 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 would subject the Company to taxation as a foreign
corporation doing business in such jurisdiction or (ii) the principal
stockholders of the Company to be obligated to escrow their shares of capital
stock of the Company. The Company shall use its best efforts to 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 nine
consecutive months from the effective date of such registration statement or
post-effective amendment.
5.2 Piggy-Back
Registration.
5.2.1 Piggy-Back
Rights.
If at
any time during the seven year period commencing on the Effective Date the
Company proposes to file a registration statement under the Act with respect
to
an offering of equity securities, or securities or other obligations exercisable
or exchangeable for, or convertible into, equity securities, by the Company
for
its own account or for stockholders of the Company for their account (or by
the
Company and by stockholders of the Company including, without limitation,
pursuant to Section 5.1), other than a registration statement (i) filed in
connection with any employee stock option or other benefit plan, (ii) for
an exchange offer or offering of securities solely to the Company’s existing
stockholders, (iii) for an offering of debt that is convertible into equity
securities of the Company or (iv) for a dividend reinvestment plan, then
the Company shall (x) give written notice of such proposed filing to the holders
of Registrable Securities as soon as practicable but in no event less than
ten
(10) days before the anticipated filing date, which notice shall describe the
amount and type of securities to be included in such offering, the intended
method(s) of distribution, and the name of the proposed managing underwriter
or
underwriters, if any, of the offering, and (y) offer to the holders of
Registrable Securities in such notice the opportunity to register the sale
of
such number of shares of Registrable Securities as such holders may request
in
writing within five (5) days following receipt of such notice (a “Piggy-Back
Registration”).
The
Company shall cause such Registrable Securities to be included in such
registration and shall use its best efforts to cause the managing underwriter
or
underwriters of a proposed underwritten offering to permit the Registrable
Securities requested to be included in a Piggy-Back Registration on the same
terms and conditions as any similar securities of the Company and to permit
the
sale or other disposition of such Registrable Securities in accordance with
the
intended method(s) of distribution thereof. All holders of Registrable
Securities proposing to distribute their securities through a Piggy-Back
Registration that involves an underwriter or underwriters shall enter into
an
underwriting agreement in customary form with the underwriter or underwriters
selected for such Piggy-Back Registration.
5.2.2 Reduction
of Offering.
If the
managing underwriter or underwriters for a Piggy-Back Registration that is
to be
an underwritten offering advises the Company and the holders of Registrable
Securities in writing that the dollar amount or number of Ordinary Shares which
the Company desires to sell, taken together with Ordinary Shares, if any, as
to
which registration has been demanded pursuant to written contractual
arrangements with persons other than the holders of Registrable Securities
hereunder, the Registrable Securities as to which registration has been
requested under this Section 5.2, and the Ordinary Shares, if any, as to which
registration has been requested pursuant to the written contractual piggy-back
registration rights of other stockholders of the Company, exceeds the Maximum
Number of Shares, then the Company shall include in any such
registration:
7
(a) If
the
registration is undertaken for the Company’s account: (A) first, the
Ordinary Shares or other securities that the Company desires to sell that can
be
sold without exceeding the Maximum Number of Shares; (B) second, to the
extent that the Maximum Number of Shares has not been reached under the
foregoing clause (A), the Ordinary Shares or other securities, if any,
comprised of Registrable Securities and Investor Securities, as to which
registration has been requested pursuant to the applicable written contractual
piggy-back registration rights of such security holders, Pro Rata, that can
be
sold without exceeding the Maximum Number of Shares; and (C) third, to the
extent that the Maximum Number of shares has not been reached under the
foregoing clauses (A) and (B), the Ordinary Shares or other securities for
the account of other persons that the Company is obligated to register pursuant
to written contractual piggy-back registration rights with such persons and
that
can be sold without exceeding the Maximum Number of Shares;
(b) If
the
registration is a “demand” registration undertaken at the demand of holders of
Investor Securities, (A) first, the Ordinary Shares or other securities for
the account of the demanding persons, Pro Rata, that can be sold without
exceeding the Maximum Number of Shares; (B) second, to the extent that the
Maximum Number of Shares has not been reached under the foregoing
clause (A), the Ordinary Shares or other securities that the Company
desires to sell that can be sold without exceeding the Maximum Number of Shares;
(C) third, to the extent that the Maximum Number of Shares has not been
reached under the foregoing clauses (A) and (B), the shares of Registrable
Securities, Pro Rata, as to which registration has been requested pursuant
to
the terms hereof, that can be sold without exceeding the Maximum Number of
Shares; and (D) fourth, to the extent that the Maximum Number of Shares has
not been reached under the foregoing clauses (A), (B) and (C), the Ordinary
Shares or other securities for the account of other persons that the Company
is
obligated to register pursuant to written contractual arrangements with such
persons, that can be sold without exceeding the Maximum Number of Shares;
and
(c) If
the
registration is a “demand” registration undertaken at the demand of persons
other than either the holders of Registrable Securities or of Investor
Securities, (A) first, the Ordinary Shares or other securities for the account
of the demanding persons that can be sold without exceeding the Maximum Number
of Shares; (B) second, to the extent that the Maximum Number of Shares has
not
been reached under the foregoing clause (A), the Ordinary Shares or other
securities that the Company desires to sell that can be sold without exceeding
the Maximum Number of Shares; (C) third, to the extent that the Maximum Number
of Shares has not been reached under the foregoing clauses (A) and (B),
collectively the Ordinary Shares or other securities comprised of Registrable
Securities and Investor Securities, Pro Rata, as to which registration has
been
requested pursuant to the terms hereof and of the Registration Rights Agreement,
as applicable, that can be sold without exceeding the Maximum Number of Shares;
and (D) fourth, to the extent that the Maximum Number of Shares has not been
reached under the foregoing clauses (A), (B) and (C), the Ordinary Shares or
other securities for the account of other persons that the Company is obligated
to register pursuant to written contractual arrangements with such persons,
that
can be sold without exceeding the Maximum Number of Shares.
8
5.2.3 Withdrawal.
Any
holder of Registrable Securities may elect to withdraw such xxxxxx’s request for
inclusion of Registrable Securities in any Piggy-Back Registration by giving
written notice to the Company of such request to withdraw prior to the
effectiveness of the registration statement. The Company (whether on its own
determination or as the result of a withdrawal by persons making a demand
pursuant to written contractual obligations) may withdraw a registration
statement at any time prior to the effectiveness of the registration statement.
Notwithstanding any such withdrawal, the Company shall pay all expenses incurred
by the holders of Registrable Securities in connection with such Piggy-Back
Registration as provided in Section 5.2.4.
5.2.4 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
related to 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 fifteen 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 ten
days of the receipt of the Company’s notice of its intention to file a
registration statement. The Company shall use its best efforts to cause any
registration statement filed pursuant to the above “piggyback” rights to remain
effective for at least nine months from the date that the Holders of the
Registrable Securities are first given the opportunity to sell all of such
securities.
5.3 Intentionally
Omitted.
5.4 General
Terms.
5.4.1 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 litigation, commenced or threatened, or any
claim
whatsoever whether arising out of any action between the underwriter and the
Company or between the underwriter and any third party or otherwise) 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
between the Company, EBC and the other underwriters named therein dated the
Effective Date. 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.
9
5.4.2 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.
5.4.3 Documents
Delivered to Holders.
The
Company shall furnish EBC, 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 (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 EBC, 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 EBC, 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 rules
of
the NASD. 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 EBC, as representative of the Holders, shall
reasonably request. The Company shall not be required to disclose any
confidential information or other records to EBC, as representative of the
Holders, or to any other person, until and unless such persons shall have
entered into reasonable confidentiality agreements (in form and substance
reasonably satisfactory to the Company), with the Company with respect
thereto.
10
5.4.4 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. Such Holders, however,
shall agree to such covenants and indemnification and contribution obligations
for selling stockholders 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.
5.4.5 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 to use its
best
efforts to obtain the registration of Registrable Securities held by any Holder
(i) 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, and (ii) where the number of Registrable Securities held by such
Holder is within the volume limitations under paragraph (e) of Rule 144
(calculated as if such Holder were an affiliate within the meaning of Rule
144).
5.4.6 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, such Holder will immediately discontinue disposition of Registrable
Securities pursuant to the registration statement covering such Registrable
Securities until such Xxxxxx’s receipt of the copies of a supplemental or
amended prospectus, 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.
11
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 Stock
Dividends - Split-Ups.
If
after the date hereof, and subject to the provisions of Section 6.4 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 date thereof, the number of Ordinary Shares underlying
each of 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 purchasable hereunder shall be adjusted in accordance with the
terms of the Warrants. For example, if the Company declares a two-for-one stock
dividend and at the time of such dividend this Purchase Option is for the
purchase of one Unit at $6.00 per whole Unit (each Warrant underlying the Units
is exercisable for $5.00 per share), upon effectiveness of the dividend, this
Purchase Option will be adjusted to allow for the purchase of one Unit at $6.00
per Unit, each Unit entitling the holder to receive two Ordinary Shares and
four
Warrants (each Warrant exercisable for $2.50 per share).
6.1.2 Aggregation
of Shares.
If
after the date hereof, and subject to the provisions of Section 6.4, 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
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 underlying each
of
the Units 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 merger
or
consolidation of the Company with or into another corporation (other than a
consolidation or merger 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, merger 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
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, mergers or consolidations, sales or other
transfers.
12
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 [Intentionally
Omitted]
6.3 Substitute
Purchase Option.
In case
of any consolidation of the Company with, or merger of the Company with, or
merger of the Company into, another corporation (other than a consolidation
or
merger which does not result in any reclassification or change of the
outstanding Ordinary Share), the corporation formed by such consolidation or
merger 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 merger, 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, merger, 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 mergers.
6.4 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 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, 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 stockholder. The Company further covenants and agrees that upon
exercise of the Warrants underlying the Purchase Options and payment of the
respective Warrant exercise price therefor, 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 stockholder.
As long as the Purchase Options shall be outstanding, the Company shall use
its
best efforts to cause all (i) Units and Ordinary Shares issuable upon exercise
of the Purchase Options, (iii) Warrants issuable upon exercise of the Purchase
Options and (iv) Ordinary Shares issuable upon exercise of the Warrants included
in the 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 National Market, SmallCap Market, OTC Bulletin Board or any
successor trading market) on which the Units, the Ordinary Share or the Public
Warrants issued to the public in connection herewith may then be listed and/or
quoted.
13
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 as a stockholder for the election of directors or any other matter,
or
as having any rights whatsoever as a stockholder 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 stockholders 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 stockholders of the Company at the same time and in the same manner
that such notice is given to the stockholders.
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, or (ii) the Company shall offer to all the holders of its Ordinary
Share 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 merger) 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 President and 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 the following address
or to such other address as the Company may designate by notice to the
Holders:
14
0000
Xxxx
Xxxxxxxx Xxxx, Xxxxx X
Palo
Alto, California 94303
Attn:
Chairman
9. Miscellaneous.
9.1 Amendments.
The
Company and EBC 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 EBC
may
deem necessary or desirable and that the Company and EBC deem 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. 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 New York or of the United States
of
America 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 therefor.
15
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 or non-compliance.
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.
9.8 Exchange
Agreement.
As a
condition of the Holder’s receipt and acceptance of this Purchase Option, Xxxxxx
agrees that, at any time prior to the complete exercise of this Purchase Option
by Holder, if the Company and EBC 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.
9.9 Intentionally
Omitted.
16
IN
WITNESS WHEREOF, the Company has caused this Purchase Option to be signed by
its
duly authorized officer as of the ____ day of _________, 2007.
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Name:
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Title:
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17
Form
to
be used to exercise Purchase Option:
0000
Xxxx
Xxxxxxxx Xxxx, Xxxxx X
Palo
Alto, California 94303
Date:_________________,
200__
The
undersigned hereby elects irrevocably to exercise all or a portion of the within
Purchase Option and to purchase ____ Units of China Discovery Acquisition Corp.
and hereby makes payment of $____________ (at the rate of $_________ per Unit)
in payment of the Exercise Price pursuant thereto. Please issue the Ordinary
Shares and 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” based 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.
|
NOTICE:
The signature to this assignment must correspond with the name as
written
upon the face of the purchase option in every particular, without
alteration or enlargement or any change
whatever.
|
Signature(s)
Guaranteed:
THE
SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS,
STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP
IN
AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM, PURSUANT TO S.E.C. RULE
17Ad-15).
18
INSTRUCTIONS
FOR REGISTRATION OF SECURITIES
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Name
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(Print
in Block Letters)
|
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|
Address
|
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19
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 Discovery Acquisition Corp. (“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
NOTICE: The signature to this assignment must correspond with the name as written upon the face of the purchase option in every particular, without alteration or enlargement or any change whatever.
Signature(s)
Guaranteed:
THE
SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS,
STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP
IN
AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM, PURSUANT TO S.E.C. RULE
17Ad-15).
20
