Contract
EXHIBIT 10.3
NEITHER
THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON EXERCISE OF THESE SECURITIES
HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY.
WARRANT
|
Warrant
No. W2010-
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Original
Issue Date: March __, 2010
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SinoHub,
Inc., a Delaware corporation (the "Company"), hereby certifies
that, for value received, [ ] or its
registered assigns (the "Holder"), is entitled to
purchase from the Company up to a total of
[ ]
shares [50% of the Shares
issuable to such Investor at such Closing under the Purchase Agreement]
of Common Stock (each such share, a "Warrant Share" and all such
shares, the "Warrant
Shares"), at any time and from time to time from and after the six (6)
month anniversary of the Original Issue Date (the “Initial Exercise Date”) and
through and including September __, 2015 (or, in the event that there are Cut
Back Shares (as such term is defined in the Registration Rights Agreement, as
defined below), March __, 2016) (the "Expiration Date"), and
subject to the following terms and conditions:
1. Definitions. As
used in this Warrant, the following terms shall have the respective definitions
set forth in this Section 1. Capitalized terms that are used and not
defined in this Warrant that are defined in the Purchase Agreement (as defined
below) shall have the respective definitions set forth in the Purchase
Agreement.
"Business Day" means any day
except Saturday, Sunday and any day which is a federal legal holiday or a day on
which banking institutions in the State of New York are authorized or required
by law or other governmental action to close.
"Common Stock" means the
common stock of the Company, par value $0.001 per share, and any securities into
which such common stock may hereafter be reclassified.
“Convertible Securities” means
any stock or other security (other than Options) that is at any time and under
any circumstances, directly or indirectly, convertible into, exercisable or
exchangeable for, or which otherwise entitles the holder thereof to acquire, any
shares of Common Stock.
"Exercise Price" means $3.25,
subject to adjustment in accordance with Section 9.
"Fundamental Transaction"
means any of the following: (1) the Company, either directly or indirectly
through a subsidiary or otherwise, effects any merger or consolidation of the
Company with or into another Person, (2) the Company effects any sale of all or
substantially all of its assets in one or a series of related transactions, (3)
any tender offer or exchange offer (whether by the Company or another Person) is
completed pursuant to which holders of Common Stock are permitted to tender or
exchange their shares for other securities, cash or property, and at least a
majority of the total number of outstanding shares of Common Stock are tendered
or exchanged, or (4) the Company effects any reclassification of the Common
Stock or any compulsory share exchange pursuant to which the Common Stock is
effectively converted into or exchanged for other securities, cash or
property.
“Initial Exercise Date” means
the Initial Exercise Date first set forth on the first page of this
Warrant.
“Options” means any rights,
warrants or options to subscribe for or purchase shares of Common Stock or
Convertible Securities.
“Original Issue Date” means
the Original Issue Date first set forth on the first page of this
Warrant.
"Purchase Agreement" means the
Securities Purchase Agreement, dated February 24, 2010, to which the Company and
the original Holder are parties.
"Purchase Warrants" means all
warrants to purchase Common Stock of the Company issued by the Company pursuant
to the Purchase Agreement.
"Registration Rights
Agreement" means the Registration Rights Agreement, dated February 24,
2010, to which the Company and the original Holder are parties.
“VWAP” means on any particular
Trading Day or for any particular period, the volume weighted average trading
price per share of Common Stock on such date or for such period as reported by
Bloomberg L.P., or by any successor performing similar functions.
2. Registration of
Warrant. The Company shall register this Warrant upon records
to be maintained by the Company for that purpose (the "Warrant Register"), in the
name of the record Holder hereof from time to time. The Company may
deem and treat the registered Holder of this Warrant as the absolute owner
hereof for the purpose of any exercise hereof or any distribution to the Holder,
and for all other purposes, absent actual notice to the contrary.
3. Registration of
Transfers. The Company shall register the transfer of any
portion of this Warrant in the Warrant Register, upon surrender of this Warrant,
with the Form of Assignment attached hereto duly completed and signed, to the
Company at its address specified herein. Upon any such registration
or transfer, a new Warrant to purchase Common Stock, in substantially the form
of this Warrant (any such new Warrant, a "New Warrant"), evidencing the
portion of this Warrant so transferred shall be issued to the transferee and a
New Warrant evidencing the remaining portion of this Warrant not so transferred,
if any, shall be issued to the transferring Holder. The acceptance of the New
Warrant by the transferee thereof shall be deemed the acceptance by such
transferee of all of the rights and obligations of a holder of a
Warrant.
4. Exercise and Duration of
Warrants.
(a) This
Warrant shall be exercisable by the registered Holder at any time and from time
to time on or after the Initial Exercise Date through and including the
Expiration Date. At 5:30 p.m., New York City time on the Expiration
Date, the portion of this Warrant not exercised prior thereto shall be and
become void and of no value.
(b) Xxxxxx’s Exercise
Limitations. The Company shall not effect
any exercise of this Warrant, and a Holder shall not have the right to exercise
any portion of this Warrant, pursuant to Section 2 or otherwise, to the extent
that after giving effect to such issuance after exercise as set forth on the
applicable Notice of Exercise, the Holder (together with the Holder’s
Affiliates, and any other Persons acting as a group together with the Holder or
any of the Holder’s Affiliates), would beneficially own in excess of the
Beneficial Ownership Limitation (as defined below). For purposes of the
foregoing sentence, the number of shares of Common Stock beneficially
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owned by the Holder and its Affiliates shall include the
number of shares of Common Stock issuable upon exercise of this Warrant with
respect to which such determination is being made, but shall exclude the number
of shares of Common Stock which would be issuable upon (i) exercise of the
remaining, nonexercised portion of this Warrant beneficially owned by the Holder
or any of its Affiliates and (ii) exercise or conversion of the unexercised or
nonconverted portion of any other securities of the Company (including, without
limitation, any other Common Stock Equivalents) subject to a limitation on
conversion or exercise analogous to the limitation contained herein beneficially
owned by the Holder or any of its Affiliates. Except as set forth in the
preceding sentence, for purposes of this Section 4(b), beneficial ownership
shall be calculated in accordance with Section 13(d) of the Exchange Act and the
rules and regulations promulgated thereunder, it being acknowledged by the
Holder that the Company is not representing to the Holder that such calculation
is in compliance with Section 13(d) of the Exchange Act and the Holder is solely
responsible for any schedules required to be filed in accordance therewith. To
the extent that the limitation contained in this Section 4(b) applies, the
determination of whether this Warrant is exercisable (in relation to other
securities owned by the Holder together with any Affiliates) and of which
portion of this Warrant is exercisable shall be in the sole discretion of the
Holder, and the submission of a Notice of Exercise shall be deemed to be the
Holder’s determination of whether this Warrant is exercisable (in relation to
other securities owned by the Holder together with any Affiliates) and of which
portion of this Warrant is exercisable, in each case subject to the Beneficial
Ownership Limitation, and the Company shall have no obligation to verify or
confirm the accuracy of such determination. In addition, a determination as to
any group status as contemplated above shall be determined in accordance with
Section 13(d) of the Exchange Act and the rules and regulations promulgated
thereunder. For purposes of this Section 4(b), in determining the number of
outstanding shares of Common Stock, a Holder may rely on the number of
outstanding shares of Common Stock as reflected in (A) the Company’s most recent
periodic or annual report filed with the Commission, as the case may be, (B) a
more recent public announcement by the Company or (C) a more recent written
notice by the Company or the transfer agent of the Company setting forth the
number of shares of Common Stock outstanding. Upon the written or oral request
of a Holder, the Company shall within two Trading Days confirm orally and in
writing to the Holder the number of shares of Common Stock then outstanding. In
any case, the number of outstanding shares of Common Stock shall be determined
after giving effect to the conversion or exercise of securities of the Company,
including this Warrant, by the Holder or its Affiliates since the date as of
which such number of outstanding shares of Common Stock was reported. The
“Beneficial Ownership
Limitation” shall be 4.9% of the number of
shares of the Common Stock outstanding immediately after giving effect to the
issuance of shares of Common Stock issuable upon exercise of this Warrant. The
Holder may decrease or, upon not less than 61 days’ prior notice to the Company,
may increase the Beneficial Ownership Limitation provisions of this Section
4(b), provided that the Beneficial Ownership Limitation in no event exceeds 9.9%
of the number of shares of the Common Stock outstanding immediately after giving
effect to the issuance of shares of Common Stock upon exercise of this Warrant
held by the Holder and the provisions of this Section 4(b) shall continue to
apply. Any such increase will not be effective until the 61st day after such notice is delivered to the Company. The
provisions of this paragraph shall be construed and implemented in a manner
otherwise than in strict conformity with the terms of this Section 4(b) to
correct this paragraph (or any portion hereof) which may be defective or
inconsistent with the intended Beneficial Ownership Limitation herein contained
or to make changes or supplements necessary or desirable to properly give effect
to such limitation. The limitations contained in this paragraph shall apply to a
successor holder of this Warrant.
5. Delivery of Warrant
Shares.
(a) To
effect exercises hereunder, subject to the request of the transfer agent of the
Company, the Holder shall not be required to physically surrender this Warrant
unless the aggregate Warrant Shares represented by this Warrant is being
exercised. Upon delivery of the Exercise Notice (in the form attached
hereto) to the Company (with the attached Warrant Shares Exercise Log) at its
address for notice set forth herein and upon payment of the Exercise Price
multiplied by the number of Warrant Shares that the Holder intends to purchase
hereunder (if such Holder is not utilizing the cashless exercise provisions set
forth in this Warrant), the Company shall promptly (but in no event later than
three Trading Days after the Date of Exercise (as defined herein) (such date
being referred to as the “Delivery Date”) issue and
deliver to the Holder, a certificate for the Warrant Shares issuable upon such
exercise. A "Date of
Exercise" means the date on which the Holder shall have delivered to the
Company the Exercise Notice (with the Warrant Exercise Log attached to it),
appropriately completed and duly signed. This Warrant shall be deemed
to have been exercised immediately prior to the close of business on the Date of
Exercise, and the person entitled to receive the shares of Common Stock issuable
upon such exercise shall be treated for all purposes as the holder of record of
such shares as of the close of business on such date.
3
(b) The
Company shall promptly (but in no event later than one Trading Day after the
receipt of the Exercise Notice from the Holder confirm receipt of the Exercise
Notice to the Holder. Within 2 Trading Days of the date said Notice
of Exercise is delivered to the Company, the Holder shall pay the aggregate
Exercise Price of the shares thereby purchased in the manner described in
Section 10 hereof.
(c)
In addition to any other rights available to the Holder, if the Company fails to
cause its transfer agent to transmit to the Holder a certificate or certificates
representing the shares issuable upon exercise of this Warrant pursuant to an
exercise on or before the Delivery Date, and if after such date the Holder is
required by its broker to purchase (in an open market transaction or otherwise)
shares of Common Stock to deliver in satisfaction of a sale by the Holder of the
shares issuable upon exercise of this Warrant which the Holder anticipated
receiving upon such exercise (a “Buy-In”), then the Company
shall (1) pay in cash to the Holder the amount by which (x) the Holder’s total
purchase price (including brokerage commissions, if any) for the shares of
Common Stock so purchased exceeds (y) the amount obtained by multiplying (A) the
number of shares issuable upon exercise of this Warrant that the Company was
required to deliver to the Holder in connection with the exercise at issue times
(B) the price at which the sell order giving rise to such purchase obligation
was executed, and (2) at the option of the Holder, either reinstate the portion
of the Warrant and equivalent number of shares issuable upon exercise of this
Warrant for which such exercise was not honored (in which case such exercise
shall be deemed rescinded and the Exercise Price, if previously paid by the
Holder to the Company, will be returned to the Holder by the Company) or deliver
to the Holder the number of shares of Common Stock that would have been issued
had the Company timely complied with its exercise and delivery obligations
hereunder (in which case the Warrant will be deemed exercised for such number of
shares and the Holder shall be required to pay the Exercise Price with respect
to such shares if not previously paid). For example, if the Holder
purchases Common Stock having a total purchase price of $11,000 to cover a
Buy-In with respect to an attempted exercise of shares of Common Stock with an
aggregate sale price giving rise to such purchase obligation of $10,000, under
clause (1) of the immediately preceding sentence the Company shall be required
to pay the Holder $1,000. The Holder shall provide the Company
written notice indicating the amounts payable to the Holder in respect of the
Buy-In, together with applicable confirmations and other evidence reasonably
requested by the Company. Nothing herein shall limit a Holder’s right
to pursue any other remedies available to it hereunder, at law or in equity
including, without limitation, a decree of specific performance and/or
injunctive relief with respect to the Company’s failure to timely deliver
certificates representing shares of Common Stock upon exercise of this Warrant
as required pursuant to the terms hereof.
(d) The
Company's obligations to issue and deliver Warrant Shares in accordance with the
terms hereof are absolute and unconditional, irrespective of any action or
inaction by the Holder to enforce the same, any waiver or consent with respect
to any provision hereof, the recovery of any judgment against any Person or any
action to enforce the same, or any setoff, counterclaim, recoupment, limitation
or termination, or any breach or alleged breach by the Holder or any other
Person of any obligation to the Company or any violation or alleged violation of
law by the Holder or any other Person, and irrespective of any other
circumstance which might otherwise limit such obligation of the Company to the
Holder in connection with the issuance of Warrant Shares. Nothing
herein shall limit a Xxxxxx's right to pursue any other remedies available to it
hereunder, at law or in equity including, without limitation, a decree of
specific performance and/or injunctive relief with respect to the Company's
failure to timely deliver certificates representing Warrant Shares upon exercise
of the Warrant as required pursuant to the terms hereof.
6. Charges, Taxes and
Expenses. Issuance and delivery of Warrant Shares upon
exercise of this Warrant shall be made without charge to the Holder for any
issue or transfer tax, withholding tax, transfer agent fee or other incidental
tax or expense in respect of the issuance of such certificates, all of which
taxes and expenses shall be paid by the Company; provided, however, that the
Company shall not be required to pay any tax which may be payable in respect of
any transfer involved in the registration of any certificates for Warrant Shares
or Warrants in a name other than that of the Holder. The Holder shall
be responsible for all other tax liability that may arise as a result of holding
or transferring this Warrant or receiving Warrant Shares upon exercise
hereof.
4
7. Replacement of
Warrant. If this Warrant is mutilated, lost, stolen or
destroyed, the Company shall issue or cause to be issued in exchange and
substitution for and upon cancellation hereof, or in lieu of and substitution
for this Warrant, a New Warrant, but only upon receipt of evidence reasonably
satisfactory to the Company of such loss, theft or destruction and customary and
reasonable indemnity, if requested. Applicants for a New Warrant
under such circumstances shall also comply with such other reasonable
regulations and procedures and pay such other reasonable third-party costs as
the Company may prescribe. If a New Warrant is requested as a result
of a mutilation of this Warrant, then the Holder shall deliver such mutilated
Warrant to the Company as a condition precedent to the Company’s obligation to
issue the New Warrant.
8. Reservation of Warrant
Shares. The Company covenants that it will at all times
reserve and keep available out of the aggregate of its authorized but unissued
and otherwise unreserved Common Stock, solely for the purpose of enabling it to
issue Warrant Shares upon exercise of this Warrant as herein provided, the
number of Warrant Shares which are then issuable and deliverable upon the
exercise of this entire Warrant, free from preemptive rights or any other
contingent purchase rights of Persons other than the Holder. The Company
covenants that all Warrant Shares so issuable and deliverable shall, upon
issuance and the payment of the applicable Exercise Price in accordance with the
terms hereof, be duly and validly authorized, issued and fully paid and
nonassessable.
9. Certain
Adjustments. The Exercise Price and number of Warrant Shares
issuable upon exercise of this Warrant are subject to adjustment from time to
time as set forth in this Section 9.
(a) Stock Dividends and
Splits. If the Company, at any time while this Warrant is
outstanding, (i) pays a stock dividend on its Common Stock or otherwise makes a
distribution on any class of capital stock that is payable in shares of Common
Stock, (ii) subdivides outstanding shares of Common Stock into a larger number
of shares, or (iii) combines outstanding shares of Common Stock into a smaller
number of shares, then in each such case the Exercise Price shall be multiplied
by a fraction of which the numerator shall be the number of shares of Common
Stock outstanding immediately before such event and of which the denominator
shall be the number of shares of Common Stock outstanding immediately after such
event.
(b) Fundamental
Transactions. If, at any time while this Warrant is
outstanding there is a Fundamental Transaction, then this Warrant shall remain
outstanding and the Holder shall have the right thereafter to receive, upon
exercise of this Warrant, the same amount and kind of securities, cash or
property as it would have been entitled to receive upon the occurrence of such
Fundamental Transaction if it had been, immediately prior to such Fundamental
Transaction, the holder of the number of Warrant Shares then issuable upon
exercise in full of this Warrant (the "Alternate
Consideration"). For purposes of any such exercise, the
determination of the Exercise Price shall be appropriately adjusted to apply to
such Alternate Consideration based on the amount of Alternate Consideration
issuable in respect of one share of Common Stock in such Fundamental
Transaction, and the Company shall apportion the Exercise Price among the
Alternate Consideration in a reasonable manner reflecting the relative value of
any different components of the Alternate Consideration. The terms of
any agreement pursuant to which a Fundamental Transaction is effected shall
include terms requiring any such successor or surviving entity to comply with
the provisions of this paragraph (b). Notwithstanding anything to the
contrary, in the event of a Fundamental Transaction the Company or any successor
entity shall pay at the Holder’s option, exercisable at any time concurrently
with or within 30 days after the consummation of the Fundamental Transaction, an
amount of cash equal to the value of this Warrant as determined in accordance
with the Black Scholes Option Pricing Model obtained from the “OV” function on
Bloomberg L.P. using (i) a price per share of Common Stock equal to the VWAP of
the Common Stock for the Trading Day immediately preceding the date of
consummation of the applicable Fundamental Transaction, (ii) a risk-free
interest rate corresponding to the U.S. Treasury rate for a period equal to the
remaining term of this Warrant as of the date of consummation of the applicable
Fundamental Transaction and (iii) an expected volatility equal to the greater of
60% and the 30 day
volatility obtained from the “HVT” function on Bloomberg L.P. determined as of
the end of the Trading Day immediately following the public announcement of the
applicable Fundamental Transaction.
(c) Pro Rata
Distributions. If the Company, at any time while this Warrant is
outstanding, shall distribute to all holders of Common Stock (and not to the
Holders) evidences of its indebtedness or assets (including cash and cash
dividends) or rights or warrants to subscribe for or purchase any security other
than the Common Stock (which shall be subject to Section 9(d) below), then in
each such case the Exercise Price shall be adjusted by multiplying the Exercise
Price in effect immediately prior to the record date fixed for determination of
stockholders entitled to receive such distribution by a fraction of which the
denominator shall be the VWAP determined as of the record date mentioned above,
and of which the numerator shall be such VWAP on such record date less the then
per share fair market value at such record date of the portion of such assets or
evidence of indebtedness or rights or warrants so distributed applicable to one
outstanding share of the Common Stock as determined by the Board of Directors in
good faith. In either case the adjustments shall be described in a statement
provided to the Holder of the portion of assets or evidences of indebtedness so
distributed or such subscription rights applicable to one share of Common Stock.
Such adjustment shall be made whenever any such distribution is made and shall
become effective immediately after the record date mentioned above.
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(d) Subsequent Equity
Sales. If the Company shall issue shares of Common Stock or
Common Stock Equivalents entitling any Person to acquire shares of Common Stock,
at a price per share less than the Exercise Price (if the holder of the Common
Stock or Common Stock Equivalent so issued shall at any time, whether by
operation of purchase price adjustments, reset provisions, floating conversion,
exercise or exchange prices or otherwise, or due to warrants, options or rights
issued in connection with such issuance, be entitled to receive shares of Common
Stock at a price less than the Exercise Price, such issuance shall be deemed to
have occurred for less than the Exercise Price), then, the Exercise Price shall
be adjusted in accordance with the formula:
E’
= E x (P/E+O)/A
where:
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E’
|
=
|
the
adjusted Exercise Price.
|
|
E
|
=
|
the
then current Exercise Price.
|
|
O
|
=
|
the
number of shares of Common Stock outstanding immediately prior to the
issuance of such additional shares.
|
|
P
|
=
|
the
aggregate consideration received for the issuance of such additional
shares.
|
|
A
|
=
|
the
number of shares outstanding of Common Stock immediately after the
issuance of such additional shares of Common
Stock.
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Such
adjustment shall be made whenever such Common Stock or Common Stock Equivalents
are issued.
For
purposes of determining the adjusted Exercise Price under this Section 9(d), the
following shall be applicable:
(1) Issuance of Options. If the
Company in any manner grants any Options and the lowest price per share for
which one share of Common Stock is issuable upon the exercise of any such Option
or upon conversion, exercise or exchange of any Convertible Securities issuable
upon exercise of any such Option is less than the Applicable Price, then such
share of Common Stock shall be deemed to be outstanding and to have been issued
and sold by the Company at the time of the granting or sale of such Option for
such price per share. For purposes of this Section 9(d), the "lowest
price per share for which one share of Common Stock is issuable upon exercise of
such Options or upon conversion, exercise or exchange of such Convertible
Securities issuable upon exercise of any such Option" shall be equal to the sum
of the lowest amounts of consideration (if any) received or receivable by the
Company with respect to any one share of Common Stock upon the granting or sale
of the Option, upon exercise of the Option and upon conversion, exercise or
exchange of any Convertible Security issuable upon exercise of such
Option. No further adjustment of the Exercise Price or number of
Warrant Shares shall be made upon the actual issuance of such shares of Common
Stock or of such Convertible Securities upon the exercise of such Options or
upon the actual issuance of such shares of Common Stock upon conversion,
exercise or exchange of such Convertible Securities.
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(2) Issuance of Convertible
Securities. If the Company in any manner issues or sells any
Convertible Securities and the lowest price per share for which one share of
Common Stock is issuable upon the conversion, exercise or exchange thereof is
less than the Applicable Price, then such share of Common Stock shall be deemed
to be outstanding and to have been issued and sold by the Company at the time of
the issuance or sale of such Convertible Securities for such price per
share. For the purposes of this Section 9(d), the "lowest price per
share for which one share of Common Stock is issuable upon the conversion,
exercise or exchange thereof" shall be equal to the sum of the lowest amounts of
consideration (if any) received or receivable by the Company with respect to one
share of Common Stock upon the issuance or sale of the Convertible Security and
upon conversion, exercise or exchange of such Convertible
Security. No further adjustment of the Exercise Price or number of
Warrant Shares shall be made upon the actual issuance of such shares of Common
Stock upon conversion, exercise or exchange of such Convertible Securities, and
if any such issue or sale of such Convertible Securities is made upon exercise
of any Options for which adjustment of this Warrant has been or is to be made
pursuant to other provisions of this Section 9(d), no further adjustment of the
Exercise Price or number of Warrant Shares shall be made by reason of such issue
or sale.
(3) Change in Option Price or Rate of
Conversion. If the purchase price provided for in any Options, the
additional consideration, if any, payable upon the issue, conversion, exercise
or exchange of any Convertible Securities, or the rate at which any Convertible
Securities are convertible into or exercisable or exchangeable for shares of
Common Stock increases or decreases at any time, then the Exercise Price and the
number of Warrant Shares in effect at the time of such increase or decrease
shall be adjusted to the Exercise Price and the number of Warrant Shares which
would have been in effect at such time had such Options or Convertible
Securities provided for such increased or decreased purchase price, additional
consideration or increased or decreased conversion rate, as the case may be, at
the time initially granted, issued or sold. For purposes of this
Section 9(d), if the terms of any Option or Convertible Security that was
outstanding as of the date of issuance of this Warrant are increased or
decreased in the manner described in the immediately preceding sentence, then
such Option or Convertible Security and the shares of Common Stock deemed
issuable upon exercise, conversion or exchange thereof shall be deemed to have
been issued as of the date of such increase or decrease. No
adjustment pursuant to this Section 9(d) shall be made if such adjustment would
result in an increase of the Exercise Price then in effect or a decrease in the
number of Warrant Shares.
(4) Calculation of Consideration
Received. In case any Option is issued in connection with the issue
or sale of other securities of the Company, together comprising one integrated
transaction, (x) the Options will be deemed to have been issued for a value
determined by use of the Black Scholes Option Pricing Model using a volatility
equal to the greater of 60% and the 30-day volatility obtained from the HVT
function on Bloomberg determined as of the Trading Day next following the public
announcement of the applicable Dilutive Issuance (the "Option Value")
and (y) the other securities issued or sold in such integrated transaction shall
be deemed to have been issued for the difference of (I) the aggregate
consideration received by the Company, less (II) the Option Value. If
any shares of Common Stock, Options or Convertible Securities are issued or sold
or deemed to have been issued or sold for cash, the consideration received
therefor will be deemed to be the net amount received by the Company
therefor. If any shares of Common Stock, Options or Convertible
Securities are issued or sold for a consideration other than cash, the amount of
such consideration received by the Company will be the fair value of such
consideration, except where such consideration consists of securities, in which
case the amount of consideration received by the Company will be the Weighted
Average Price of such security on the date of receipt. If any shares
of Common Stock, Options or Convertible Securities are issued to the owners of
the non-surviving entity in connection with any merger in which the Company is
the surviving entity, the amount of consideration therefor will be deemed to be
the fair value of such portion of the net assets and business of the
non-surviving entity as is attributable to such shares of Common Stock, Options
or Convertible Securities, as the case may be. The fair value of any
consideration other than cash or securities will be determined jointly by the
Company and the Holder. If such parties are unable to reach agreement
within ten (10) days after the occurrence of an event requiring valuation (the
"Valuation Event"), the fair value of such consideration will be determined
within five (5) Business Days after the tenth (10th) day following the Valuation
Event by an independent, reputable appraiser jointly selected by the Company and
the Holder. The determination of such appraiser shall be final and
binding upon all parties absent manifest error and the fees and expenses of such
appraiser shall be borne by the Company.
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This
subsection (d) shall not apply to:
(1) any of the transactions described in
subsections (a), (b) or (c) of this Section 9, including, without limitation,
the shares of Common Stock issuable upon the exercise thereof;
(2) the issuance, conversion, exchange or
exercise of any securities pursuant to the Purchase Agreement, provided such
securities are not amended after the Closing to increase the number of shares of
Common Stock issuable thereunder, to lower the exercise or conversion price
thereof, or to extend the term thereof;
(3) the issuance of Common Stock or options
exercisable for Common Stock to employees, officers, consultants or directors of
the Company or its subsidiaries, pursuant to any stock or option plan duly
adopted for such purpose, by a majority of the non-employee members of the Board
of Directors or a majority of the members of a committee of non-employee
directors established for such purpose;
(4) the issuance of Common Stock issuable upon
the conversion, exchange or exercise of other securities, warrants, options or
similar rights, which securities were issued before the Original Issue Date,
provided such securities are not amended after the Original Issue Date to
increase the number of shares of Common Stock issuable thereunder, to lower the
exercise or conversion price thereof, or to extend the term thereof;
or
(5) the issuance of Common Stock, options,
warrants or other convertible securities pursuant to acquisitions or strategic
transactions approved by a majority of the disinterested directors of the
Company, provided that any such issuance shall only be to a Person (or to the
equityholders of a Person) which is, itself or through its subsidiaries, an
operating company or an asset in a business synergistic with the business of the
Company and shall provide to the Company additional benefits in addition to the
investment of funds, but shall not include a transaction in which the Company is
issuing securities primarily for the purpose of raising capital or to an entity
whose primary business is investing in securities.
(e) Noncompliance with
Registration Rights Agreement. Except for an
Allowed Delay if (A) the Registration Statement is not declared effective by the
Commission on or prior to the Effective Date, or (B) the Company fails to file
with the Commission a request for acceleration in accordance with Rule 461
promulgated under the Securities Act within five (5) Business Days of the date
that the Company is notified (orally or in writing, whichever is earlier) by the
Commission that a Registration Statement will not be “reviewed,” or is not
subject to further review, the number of Warrant Shares that may be purchased
upon exercise of this Warrant at the Exercise Price shall be increased by
20%. For the purposes of this Section 9(e), capitalized terms that
are used and not defined in this Section 9(e) that are defined in the
Registration Rights Agreement shall have the respective definitions set forth in
the Registration Rights Agreement except that with respect to the definition of
Effective Date hereunder, clause (A) of such definition shall be “the
forty-fifth (45th) day
following the Closing Date” instead of “the sixtieth (60th) day
following the Closing Date.”
(f) Number of Warrant
Shares. Simultaneously with any adjustment to the Exercise
Price pursuant to subsections (a)-(d) of this Section 9, the number of Warrant
Shares that may be purchased upon exercise of this Warrant shall be increased or
decreased proportionately, so that after such adjustment the aggregate Exercise
Price payable hereunder for the adjusted number of Warrant Shares shall be the
same as the aggregate Exercise Price in effect immediately prior to such
adjustment.
(g) Calculations. All
calculations under this Section 9 shall be made to the nearest cent or the
nearest 1/100th of a
share, as applicable. The number of shares of Common Stock
outstanding at any given time shall not include shares owned or held by or for
the account of the Company.
(h) Voluntary Adjustment By
Company. The Company may at any time during the term of this Warrant
reduce (but not increase) the then-current Exercise Price, as the case may be,
to any amount and for any period of time deemed appropriate by the Board of
Directors of the Company provided that it applies the terms of such reduction
equally to all outstanding Purchase Warrants.
8
(i) Notice of
Adjustments. Upon the occurrence of each adjustment pursuant
to this Section 9, the Company at its expense will promptly compute such
adjustment in accordance with the terms of this Warrant and prepare a
certificate setting forth such adjustment, including a statement of the adjusted
Exercise Price and/or adjusted number or type of Warrant Shares or other
securities issuable upon exercise of this Warrant (as applicable), describing
the transactions giving rise to such adjustments and showing in detail the facts
upon which such adjustment is based. Upon written request, the
Company will promptly deliver a copy of each such certificate to the Holder and
to the Company's Transfer Agent.
(j) No
Impairment. The Company shall not, by amendment of its
Certificate of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed hereunder by the Company but will at all
times in good faith assist in the carrying out of all the provisions of this
Section 9 and in the taking of all such action as may be necessary or
appropriate in order to protect the exercise rights of the Holder
against undue impairment.
10. Payment of Exercise
Price. The Holder may pay the Exercise Price by delivering immediately
available funds to the designated account of the Company in one of the following
manners:
Cash
Exercise. The Holder may deliver immediately available funds;
or
Cashless
Exercise. If an Exercise Notice is delivered at a time after
six months from the date of original issuance of this Warrant when a
registration statement permitting the Holder to resell the Warrant Shares is not
then effective, the prospectus forming a part thereof is not then
available to the Holder for the resale of the Warrant Shares and exemption from
registration under Rule 144 is not then be available for the resale of the
Warrant Shares, then the Holder may notify the Company in an Exercise Notice of
its election to utilize cashless exercise, in which event the Company shall
issue to the Holder the number of Warrant Shares determined as
follows:
X = Y
[(A-B)/A]
where:
X = the
number of Warrant Shares to be issued to the Holder.
Y = the
number of Warrant Shares with respect to which this Warrant is being
exercised.
A = the
average of the closing prices for the five Trading Days immediately prior to
(but not including) the Exercise Date.
B = the
Exercise Price.
For
purposes of Rule 144 promulgated under the Securities Act, it is intended,
understood and acknowledged that the Warrant Shares issued in a cashless
exercise transaction shall be deemed to have been acquired by the Holder, and
the holding period for the Warrant Shares shall be deemed to have commenced, on
the date this Warrant was originally issued.
11. No Fractional
Shares. No fractional shares of Warrant Shares will be issued
in connection with any exercise of this Warrant. In lieu of any
fractional shares which would, otherwise be issuable, the Company shall pay cash
equal to the product of such fraction multiplied by the closing price of one
Warrant Share as reported by the applicable Trading Market on the date of
exercise.
12. Notices. Any
and all notices or other communications or deliveries hereunder (including,
without limitation, any Exercise Notice) shall be in writing and shall be deemed
given and effective on the earliest of (i) the date of transmission, if such
notice or communication is delivered via facsimile at the facsimile number
specified in this Section prior to 5:30 p.m. (New York City time) on a Trading
Day, (ii) the next Trading Day after the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number specified in
this Section on a day that is not a Trading Day or later than 5:30 p.m. (New
York City time) on any Trading Day, (iii) the Trading Day following the date of
mailing, if sent by nationally recognized overnight courier service, or (iv)
upon actual receipt by the party to whom such notice is required to be
given. The address for such notices and communications shall be as
follows:
9
|
If
to the Company:
|
0/X,
Xxxxxxxx 00, Xxxx 0, Xxxxxxx XxxxXxxxxxxxxx Xxxx, Xxxxxxx XxxxxxxxXxxxxxxx, People’s Republic
of China 518057
Facsimile:
x00-000-00000000
|
|
|
With
a copy to:
|
Xxxxxxxx
Xxxx LLP
0
Xxxxxxx Xxxx, Xxx. 000
Xxxxxx,
XX 00000
Facsimile: (000)
000-0000
Attn.: Xxxxxxx
X. Xxxxx, Esq.
|
(or such
other address as the Company shall indicate in writing in accordance with this
Section), or (ii) if to the Holder, to the address or facsimile number appearing
on the Warrant Register or such other address or facsimile number as the Holder
may provide to the Company in accordance with this Section.
13. Miscellaneous.
(a) This Warrant shall be binding on and inure
to the benefit of the parties hereto and their respective successors and
assigns. Subject to the preceding sentence, nothing in this Warrant
shall be construed to give to any Person other than the Company and the Holder
any legal or equitable right, remedy or cause of action under this
Warrant. This Warrant may be amended only in writing signed by the
Company and the Holder and their successors and assigns, provided, however, that
the provisions of Section 9(e) hereunder may be amended or waived as to this
Warrant and all other Purchase Warrants by an instrument in writing signed by
the Company and the Holders of no less than a majority in interest of the then
outstanding Registrable Securities (as such term is defined in the Registration
Rights Agreement) provided that such amendment or waiver shall apply equally to
all outstanding Purchase Warrants.
(b) All questions concerning the construction,
validity, enforcement and interpretation of this Warrant shall be governed by
and construed and enforced in accordance with the internal laws of the State of
New York (except for matters governed by corporate law in the State of
Delaware), without regard to the principles of conflicts of law
thereof. Each party agrees that all Actions concerning the
interpretations, enforcement and defense of the transactions contemplated by
this Warrant shall be commenced exclusively in the state or federal courts
located in the State of New York. Each party hereto hereby
irrevocably submits to the exclusive jurisdiction of the United States District
Court for the Southern District of New York and any state court located in New
York County, New York for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or discussed
herein, and hereby irrevocably waives, and agrees not to assert in any Action,
any claim that it is not personally subject to the jurisdiction of any such
courts, or that such Action has been commenced in an improper or inconvenient
forum. Each party hereto hereby irrevocably waives personal service
of process and consents to process being served in any such Action by mailing a
copy thereof via registered or certified mail or overnight delivery (with
evidence of delivery) to such party at the address in effect for notices to it
under this Warrant and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing contained
herein shall be deemed to limit in any way any right to serve process in any
manner permitted by law. Each party hereto hereby irrevocably waives,
to the fullest extent permitted by applicable law, any and all right to trial by
jury in any legal Action arising out of or relating to this
Warrant. If either party shall commence an Action to enforce any
provisions of this Warrant, then the prevailing party in such Action shall be
reimbursed by the other party for its reasonable attorneys’ fees and other costs
and expenses incurred with the investigation, preparation and prosecution of
such Action.
10
(c) The headings herein are for convenience
only, do not constitute a part of this Warrant and shall not be deemed to limit
or affect any of the provisions hereof.
(d) In case any one or more of the provisions
of this Warrant shall be invalid or unenforceable in any respect, the validity
and enforceability of the remaining terms and provisions of this Warrant shall
not in any way be affected or impaired thereby and the parties will attempt in
good faith to agree upon a valid and enforceable provision which shall be a
commercially reasonable substitute therefor, and upon so agreeing, shall
incorporate such substitute provision in this Warrant.
(e) Prior to exercise of this Warrant, the
Holder hereof shall not, by reason of being a Holder, be entitled to any rights
of a stockholder with respect to the Warrant Shares.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK;
SIGNATURE
PAGE FOLLOWS]
11
IN
WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by its
authorized officer as of the date first indicated above.
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By:
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Name: Xxxxx
X. Xxxxxxx
|
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|
Title: Chief
Executive Officer
|
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Company
Signature Page to Warrant
EXERCISE
NOTICE
WARRANT
DATED MARCH [ ], 2010
The
undersigned Holder hereby irrevocably elects to
purchase _____________ shares of Common Stock pursuant to the above
referenced Warrant. Capitalized terms used herein and not otherwise
defined have the respective meanings set forth in the Warrant.
(1) The
undersigned Holder hereby exercises its right to purchase _________________
Warrant Shares pursuant to the Warrant.
(2) The
Holder intends that payment of the Exercise Price shall be made as (check
one):
____ “Cash
Exercise” under Section 10.
____ “Cashless
Exercise” under Section 10.
(3) If
the holder has elected a Cash Exercise, the holder shall pay the sum of
$____________ to the Company in accordance with the terms of the
Warrant.
(4) Pursuant
to this Exercise Notice, the Company shall deliver to the holder _______________
Warrant Shares in accordance with the terms of the Warrant.
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Dated:
_______________, _____
|
Name
of Holder:
|
||
|
(Print)
|
|||
|
By:
|
|||
|
Name:
|
|||
|
Title:
|
|||
|
(Signature
must conform in all respects to name of holder as specified on the face of
the Warrant)
|
|||
Company
Signature Page to Warrant
Warrant Shares Exercise
Log
|
Date
|
Number
of Warrant
Shares
Available to be
Exercised
|
Number
of Warrant Shares
Exercised
|
Number
of Warrant
Shares
Remaining to
be
Exercised
|
|
|
WARRANT
ORIGINALLY ISSUED MARCH [ ], 2010
WARRANT
NO. [ ]
FORM OF
ASSIGNMENT
[To be
completed and signed only upon transfer of Warrant]
FOR VALUE
RECEIVED, the undersigned hereby sells, assigns and transfers unto
________________________________ the right represented by the above-captioned
Warrant to purchase ____________ shares of Common Stock to which such
Warrant relates and appoints ________________ attorney to transfer said right on
the books of the Company with full power of substitution in the
premises.
Dated: _______________,
____
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(Signature
must conform in all respects to name of
holder
as specified on the face of the Warrant)
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||
|
Address
of Transferee
|
||
In the
presence of:
__________________________
