Contract
Exhibit
4.2
THIS
WARRANT AND THE SHARES OF SERIES B CONVERTIBLE PREFERRED STOCK ISSUABLE UPON
EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS
AMENDED (THE "SECURITIES ACT") OR ANY STATE SECURITIES LAWS AND MAY NOT BE
SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES
ACT
AND UNDER APPLICABLE STATE SECURITIES LAWS OR THE ISSUER SHALL HAVE RECEIVED
AN
OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE ISSUER THAT REGISTRATION
OF
SUCH SECURITIES UNDER THE SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE
STATE SECURITIES LAWS IS NOT REQUIRED.
SERIES
J
WARRANT TO PURCHASE
SHARES
OF
SERIES B CONVERTIBLE PREFERRED STOCK
OF
(formerly
known as UNITED NATIONAL FILM CORPORATION)
Expires
November 7, 2008
|
No.:
X-X-07- __
|
Number
of Shares: ___________
|
Date
of
Issuance: February 7, 2007
FOR
VALUE
RECEIVED, the undersigned, Wuhan General Group (China), Inc. (formerly known
as
United National Film Corporation), a Nevada corporation (together with its
successors and assigns, the " Issuer
"),
hereby certifies that _______________________________ or its registered assigns
is entitled to subscribe for and purchase, during the Term (as hereinafter
defined), up to ____________________________________ (_____________) shares
(subject to adjustment as hereinafter provided) of the duly authorized, validly
issued, fully paid and non-assessable Series B Convertible Preferred Stock
of
the Issuer, at an exercise price per share equal to the Warrant Price then
in
effect, subject, however, to the provisions and upon the terms and conditions
hereinafter set forth. Capitalized terms used in this Warrant and not otherwise
defined herein shall have the respective meanings specified in Section 8 hereof.
1. Term.
The
term of this Warrant shall commence on February 7, 2007 and shall expire at
6:00
p.m., Eastern Time, on November 7, 2008 (such period being the " Term
").
2. Method
of Exercise; Payment; Issuance of New Warrant; Transfer and
Exchange.
(a)
Time
of Exercise.
The
purchase rights represented by this Warrant may be exercised in whole or in
part
during the Term.
(b)
Method
of Exercise.
The
Holder hereof may exercise this Warrant, in whole or in part, by the surrender
of this Warrant (with the exercise form attached hereto duly executed) at the
principal office of the Issuer, and by the payment to the Issuer of an amount
of
consideration therefor equal to the Warrant Price in effect on the date of
such
exercise multiplied by the number of shares of Warrant Stock with respect to
which this Warrant is then being exercised, payable at such Holder's election
by
certified or official bank check or by wire transfer to an account designated
by
the Issuer .
(c)
Issuance
of Stock Certificates.
In the
event of any exercise of this Warrant in accordance with and subject to the
terms and conditions hereof, certificates for the shares of Warrant Stock so
purchased shall be dated the date of such exercise and delivered to the Holder
hereof within a reasonable time (the “ Delivery
Date “),
and
the Holder hereof shall be deemed for all purposes to be the holder of the
shares of Warrant Stock so purchased as of the date of such exercise. The Holder
shall deliver this original Warrant, or an indemnification reasonably acceptable
to the Issuer undertaking with respect to such Warrant in the case of its loss,
theft or destruction, at such time that this Warrant is fully exercised. With
respect to partial exercises of this Warrant, the Issuer shall keep written
records for the Holder of the number of shares of Warrant Stock exercised as
of
each date of exercise.
(d)
Transferability
of Warrant.
Subject
to Section 2(f) hereof, this Warrant may be transferred by a Holder, in whole
or
in part, without the consent of the Issuer. If transferred pursuant to this
paragraph, this Warrant may be transferred on the books of the Issuer by the
Holder hereof in person or by duly authorized attorney, upon surrender of this
Warrant at the principal office of the Issuer, properly endorsed (by the Holder
executing an assignment in the form attached hereto) and upon payment of any
necessary transfer tax or other governmental charge imposed upon such transfer.
This Warrant is exchangeable at the principal office of the Issuer for Warrants
to purchase the same aggregate number of shares of Warrant Stock, each new
Warrant to represent the right to purchase such number of shares of Warrant
Stock as the Holder hereof shall designate at the time of such exchange. All
Warrants issued on transfers or exchanges shall be dated the Original Issue
Date
and shall be identical with this Warrant except as to the number of shares
of
Warrant Stock issuable pursuant thereto.
(e)
Continuing
Rights of Holder.
The
Issuer will, at the time of or at any time after each exercise of this Warrant,
upon the request of the Holder hereof, acknowledge in writing the extent, if
any, of its continuing obligation to afford to such Holder all rights to which
such Holder shall continue to be entitled after such exercise in accordance
with
the terms of this Warrant, provided
that if
any such Holder shall fail to make any such request, the failure shall not
affect the continuing obligation of the Issuer to afford such rights to such
Holder.
(f)
Compliance
with Securities Laws.
(i)
The
Holder of this Warrant, by acceptance hereof, acknowledges that this Warrant
and
the shares of Warrant Stock to be issued upon exercise hereof are being acquired
solely for the Holder's own account and not as a nominee for any other party,
and for investment, and that the Holder will not offer, sell or otherwise
dispose of this Warrant or any shares of Warrant Stock to be issued upon
exercise hereof except pursuant to an effective registration statement, or
an
exemption from registration, under the Securities Act and any applicable state
securities laws.
(ii) Except
as
provided in paragraph (iii) below, this Warrant and all certificates
representing shares of Warrant Stock issued upon exercise hereof shall be
stamped or imprinted with a legend in substantially the following form:
THIS
WARRANT AND THE SHARES OF SERIES B CONVERTIBLE PREFERRED STOCK ISSUABLE UPON
EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS
AMENDED (THE "SECURITIES ACT") OR ANY STATE SECURITIES LAWS AND MAY NOT BE
SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES
ACT
AND UNDER APPLICABLE STATE SECURITIES LAWS OR THE ISSUER SHALL HAVE RECEIVED
AN
OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE ISSUER THAT REGISTRATION
OF
SUCH SECURITIES UNDER THE SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE
STATE SECURITIES LAWS IS NOT REQUIRED.
(iii)
The
Issuer agrees to reissue this Warrant or certificates representing any of the
Warrant Stock, without the legend set forth above if at such time, prior to
making any transfer of any such securities, the Holder shall give written notice
to the Issuer describing the manner and terms of such transfer. Such proposed
transfer will not be effected until: (a) either (i) the Issuer has received
an
opinion of counsel reasonably satisfactory to the Issuer, to the effect that
the
registration of such securities under the Securities Act is not required in
connection with such proposed transfer, (ii) a registration statement under
the
Securities Act covering such proposed disposition has been filed by the Issuer
with the Securities and Exchange Commission and has become effective under
the
Securities Act, (iii) the Issuer has received other evidence reasonably
satisfactory to the Issuer that such registration and qualification under the
Securities Act and state securities laws are not required, or (iv) the Holder
provides the Issuer with reasonable assurances that such security can be sold
pursuant to Rule 144 under the Securities Act; and (b) either (i) the Issuer
has
received an opinion of counsel reasonably satisfactory to the Issuer, to the
effect that registration or qualification under the securities or "blue sky"
laws of any state is not required in connection with such proposed disposition,
or (ii) compliance with applicable state securities or "blue sky" laws has
been
effected or a valid exemption exists with respect thereto. The Issuer will
respond to any such notice from a holder within three (3) Trading Days. In
the
case of any proposed transfer under this Section 2(f), the Issuer will use
reasonable efforts to comply with any such applicable state securities or "blue
sky" laws, but shall in no event be required, (x) to qualify to do business
in
any state where it is not then qualified, (y) to take any action that would
subject it to tax or to the general service of process in any state where it
is
not then subject, or (z) to comply with state securities or “blue sky” laws of
any state for which registration by coordination is unavailable to the Issuer.
The restrictions on transfer contained in this Section 2(f) shall be in addition
to, and not by way of limitation of, any other restrictions on transfer
contained in any other section of this Warrant.
2
(g) Accredited
Investor Status.
In no
event may the Holder exercise this Warrant in whole or in part unless the Holder
is an “accredited investor” as defined in Regulation D under the Securities Act.
3.
Stock
Fully Paid; Reservation and Listing of Shares; Covenants.
(a)
Stock
Fully Paid.
The
Issuer represents, warrants, covenants and agrees that all shares of Warrant
Stock which may be issued upon the exercise of this Warrant or otherwise
hereunder will, when issued in accordance with the terms of this Warrant, be
duly authorized, validly issued, fully paid and non-assessable and free from
all
taxes, liens and charges created by or through the Issuer. The Issuer further
covenants and agrees that during the period within which this Warrant may be
exercised, the Issuer will at all times have authorized and reserved for the
purpose of the issuance upon exercise of this Warrant a number of authorized
but
unissued shares of Series B Convertible Preferred Stock equal to at least one
hundred percent (100%) of the number of shares of Series B Convertible Preferred
Stock issuable upon exercise of this Warrant.
(b)
Reservation.
If any
shares of Series B Convertible Preferred Stock required to be reserved for
issuance upon exercise of this Warrant or as otherwise provided hereunder
require registration or qualification with any Governmental Authority under
any
federal or state law before such shares may be so issued, the Issuer will in
good faith use its best efforts as expeditiously as possible at its expense
to
cause such shares to be duly registered or qualified. If the Issuer shall list
any shares of Series B Convertible Preferred Stock on any securities exchange
or
market it will, at its expense, list thereon, and maintain and increase when
necessary such listing, of, all shares of Warrant Stock from time to time issued
upon exercise of this Warrant or as otherwise provided hereunder (provided
that
such Warrant Stock has been registered pursuant to a registration statement
under the Securities Act then in effect), and, to the extent permissible under
the applicable securities exchange rules, all unissued shares of Warrant Stock
which are at any time issuable hereunder, so long as any shares of Series B
Convertible Preferred Stock shall be so listed. The Issuer will also so list
on
each securities exchange or market, and will maintain such listing of, any
other
securities which the Holder of this Warrant shall be entitled to receive upon
the exercise of this Warrant if at the time any securities of the same class
shall be listed on such securities exchange or market by the Issuer.
(c)
Covenants.
The
Issuer shall not by any action including, without limitation, amending the
Articles of Incorporation or the by-laws of the Issuer, or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue
or
sale of securities or any other action, avoid or seek to avoid the observance
or
performance of any of the terms of this Warrant, but will at all times in good
faith assist in the carrying out of all such terms and in the taking of all
such
actions as may be necessary or appropriate to protect the rights of the Holder
hereof against dilution (to the extent specifically provided herein) or
impairment. Without limiting the generality of the foregoing, the Issuer will
(i) not permit the par value, if any, of its Common Stock to exceed the then
effective Warrant Price, (ii) not amend or modify any provision of the Articles
of Incorporation or by-laws of the Issuer in any manner that would adversely
affect the rights of the Holders of the Warrants, (iii) take all such action
as
may be reasonably necessary in order that the Issuer may validly and legally
issue fully paid and nonassessable shares of Series B Convertible Preferred
Stock, free and clear of any liens, claims, encumbrances and restrictions (other
than as provided herein) upon the exercise of this Warrant, and (iv) use its
best efforts to obtain all such authorizations, exemptions or consents from
any
public regulatory body having jurisdiction thereof as may be reasonably
necessary to enable the Issuer to perform its obligations under this Warrant.
3
(d)
Loss,
Theft, Destruction of Warrants.
Upon
receipt of evidence satisfactory to the Issuer of the ownership of and the
loss,
theft, destruction or mutilation of any Warrant and, in the case of any such
loss, theft or destruction, upon receipt of indemnity or security satisfactory
to the Issuer or, in the case of any such mutilation, upon surrender and
cancellation of such Warrant, the Issuer will make and deliver, in lieu of
such
lost, stolen, destroyed or mutilated Warrant, a new Warrant of like tenor and
representing the right to purchase the same number of shares of Common Stock.
4.
Adjustment
of Warrant Price.
The
price at which such shares of Warrant Stock may be purchased upon exercise
of
this Warrant shall be subject to adjustment from time to time as set forth
in
this Section 4. The Issuer shall give the Holder notice of any event described
below which requires an adjustment pursuant to this Section 4 in accordance
with
the notice provisions set forth in Section 5.
(a)
Recapitalization,
Reorganization, Reclassification, Consolidation, Merger or Sale.
(i)
In
case
the Issuer after the Original Issue Date shall do any of the following (each,
a
" Triggering
Event "):
(a)
consolidate or merge with or into any other Person and the Issuer shall not
be
the continuing or surviving corporation of such consolidation or merger, or
(b)
permit any other Person to consolidate with or merge into the Issuer and the
Issuer shall be the continuing or surviving Person but, in connection with
such
consolidation or merger, any Capital Stock of the Issuer shall be changed into
or exchanged for Securities of any other Person or cash or any other property,
or (c) transfer all or substantially all of its properties or assets to any
other Person, or (d) effect a capital reorganization or reclassification of
its
Capital Stock, then, and in the case of each such Triggering Event, proper
provision shall be made to the Warrant Price and the number of shares of Warrant
Stock that may be purchased upon exercise of this Warrant so that, upon the
basis and the terms and in the manner provided in this Warrant, the Holder
of
this Warrant shall be entitled upon the exercise hereof at any time after the
consummation of such Triggering Event, to the extent this Warrant is not
exercised prior to such Triggering Event, to receive at the Warrant Price in
effect at the time immediately prior to the consummation of such Triggering
Event, in lieu of the Series B Convertible Preferred Stock issuable upon such
exercise of this Warrant prior to such Triggering Event, the Securities, cash
and property to which such Holder would have been entitled upon the consummation
of such Triggering Event if such Holder had exercised the rights represented
by
this Warrant immediately prior thereto (including the right of a shareholder
to
elect the type of consideration it will receive upon a Triggering Event),
subject to adjustments (subsequent to such corporate action) as nearly
equivalent as possible to the adjustments provided for elsewhere in this Section
4. Immediately upon the occurrence of a Triggering Event, the Issuer shall
notify the Holder in writing of such Triggering Event Upon the Holder’s request,
the continuing or surviving corporation as a result of such Triggering Event
shall issue to the Holder a new warrant of like tenor evidencing the Holder’s
rights hereunder.
(ii)
In
the
event that the Holder has elected not to exercise this Warrant prior to the
consummation of a Triggering Event, so long as the surviving entity pursuant
to
any Triggering Event is a company that has a class of equity securities
registered pursuant to the Securities Exchange Act of 1934, as amended, and
its
common stock is listed or quoted on a national securities exchange, national
automated quotation system or the OTC Bulletin Board, the surviving entity
and/or each Person (other than the Issuer) which may be required to deliver
any
Securities, cash or property upon the exercise of this Warrant as provided
herein shall assume, by written instrument delivered to, and reasonably
satisfactory to, the Holder of this Warrant, (A) the obligations of the Issuer
under this Warrant (and if the Issuer shall survive the consummation of such
Triggering Event, such assumption shall be in addition to, and shall not release
the Issuer from, any continuing obligations of the Issuer under this Warrant)
and (B) the obligation to deliver to such Holder such Securities, cash or
property as, in accordance with the foregoing provisions of this subsection
(a),
such Holder shall be entitled to receive, and the surviving entity and/or each
such Person shall have similarly delivered to such Holder an opinion of counsel
for the surviving entity and/or each such Person, which counsel shall be
reasonably satisfactory to such Holder, or in the alternative, a written
acknowledgement executed by the President or Chief Financial Officer of the
Issuer, stating that this Warrant shall thereafter continue in full force and
effect and the terms hereof (including, without limitation, all of the
provisions of this subsection (a)) shall be applicable to the Securities, cash
or property which the surviving entity and/or each such Person may be required
to deliver upon any exercise of this Warrant or the exercise of any rights
pursuant hereto.
4
(b)
Stock
Dividends and Certain Other Distributions.
If at
any time the Issuer shall make or issue or set a record date for the holders
of
the Series B Convertible Preferred Stock for the purpose of entitling them
to
receive a dividend or other distribution of:
(i)
shares
of
Common Stock,
(ii)
cash
(other than a cash dividend payable out of earnings or earned surplus legally
available for the payment of dividends under the laws of the jurisdiction of
incorporation of the Issuer),
(iii)
any
evidences of its indebtedness, any shares of stock of any class or any other
securities or property of any nature whatsoever (other than cash, Common Stock
Equivalents or Additional Shares of Common Stock), or
(iv)
any
warrants or other rights to subscribe for or purchase any evidences of its
indebtedness, any shares of stock of any class or any other securities or
property of any nature whatsoever (other than cash, Common Stock Equivalents
or
Additional Shares of Common Stock),
then
upon
exercise of this Warrant, the Holder shall be entitled to receive the same
dividend or other distribution as if the Holder had been a record holder of
the
number of shares of Warrant Stock so exercised on the applicable record
date.
(c)
Issuance
of Additional Shares of Common Stock.
For a
period of two (2) years following the Original Issue Date, in the event the
Issuer shall issue any Additional Shares of Common Stock (otherwise than as
provided in the foregoing subsections (a) through (b) of this Section 4), at
a
price per share less than the Warrant Price then in effect or without
consideration, then the Warrant Price upon each such issuance shall be adjusted
to the price equal to the consideration per share paid for such Additional
Shares of Common Stock.
(d)
Issuance
of Common Stock Equivalents.
For a
period of two (2) years following the Original Issue Date, in the event the
Issuer shall take a record of the holders of its Common Stock for the purpose
of
entitling them to receive a distribution of, or shall in any manner (whether
directly or by assumption in a merger in which the Issuer is the surviving
corporation) issue or sell, any Common Stock Equivalents, whether or not the
rights to exchange or convert thereunder are immediately exercisable, and the
price per share for which Common Stock is issuable upon such conversion or
exchange shall be less than the Warrant Price in effect immediately prior to
the
time of such issue or sale, or if, after any such issuance of Common Stock
Equivalents, the price per share for which Additional Shares of Common Stock
may
be issuable thereafter is amended or adjusted, and such price as so amended
shall be less than the Warrant Price in effect at the time of such amendment
or
adjustment, then the Warrant Price then in effect shall be adjusted as provided
in Section 4(c). No further adjustments of the number of shares of Series B
Convertible Preferred Stock for which this Warrant is exercisable and the
Warrant Price then in effect shall be made upon the actual issue of such Common
Stock upon conversion or exchange of such Common Stock Equivalents.
(e) Superseding
Adjustment.
If, at
any time after any adjustment of the Warrant Price then in effect shall have
been made pursuant to Section 4(d) as the result of any issuance of Common
Stock
Equivalents, and such Common Stock Equivalents, or the right of conversion
or
exchange in such Common Stock Equivalents, shall expire, and all of such or
the
right of conversion or exchange with respect to all of such Common Stock
Equivalents shall not have been converted or exercised, then such previous
adjustment shall be rescinded and annulled and the Warrant Price then in effect
shall be adjusted to the Warrant Price in effect immediately prior to the
issuance of such Common Stock Equivalents, subject to any further adjustments
pursuant to this Section 4.
5
(f) Other
Provisions applicable to Adjustments under this Section.
The
following provisions shall be applicable to the making of adjustments of the
number of shares of Common Stock for which this Warrant is exercisable and
the
Warrant Price then in effect provided for in this Section 4:
(i)
Computation
of Consideration.
To the
extent that any Additional Shares of Common Stock or any Common Stock
Equivalents (or any warrants or other rights therefor) shall be issued for
cash
consideration, the consideration received by the Issuer therefor shall be the
amount of the cash received by the Issuer therefor, or, if such Additional
Shares of Common Stock or Common Stock Equivalents are offered by the Issuer
for
subscription, the subscription price, or, if such Additional Shares of Common
Stock or Common Stock Equivalents are sold to underwriters or dealers for public
offering without a subscription offering, the initial public offering price
(in
any such case subtracting any amounts paid or receivable for accrued interest
or
accrued dividends and without taking into account any compensation, discounts
or
expenses paid or incurred by the Issuer for and in the underwriting of, or
otherwise in connection with, the issuance thereof). In connection with any
merger or consolidation in which the Issuer is the surviving corporation (other
than any consolidation or merger in which the previously outstanding shares
of
Common Stock of the Issuer shall be changed to or exchanged for the stock or
other securities of another corporation), the amount of consideration therefor
shall be, deemed to be the fair value, as determined reasonably and in good
faith by the Board, of such portion of the assets and business of the
nonsurviving corporation as the Board may determine to be attributable to such
shares of Common Stock or Common Stock Equivalents, as the case may be. The
consideration for any Additional Shares of Common Stock issuable pursuant to
any
warrants or other rights to subscribe for or purchase the same shall be the
consideration received by the Issuer for issuing such warrants or other rights
plus the additional consideration payable to the Issuer upon exercise of such
warrants or other rights. The consideration for any Additional Shares of Common
Stock issuable pursuant to the terms of any Common Stock Equivalents shall
be
the consideration received by the Issuer for issuing warrants or other rights
to
subscribe for or purchase such Common Stock Equivalents, plus the consideration
paid or payable to the Issuer in respect of the subscription for or purchase
of
such Common Stock Equivalents, plus the additional consideration, if any,
payable to the Issuer upon the exercise of the right of conversion or exchange
in such Common Stock Equivalents. In the event of any consolidation or merger
of
the Issuer in which the Issuer is not the surviving corporation or in which
the
previously outstanding shares of Common Stock of the Issuer shall be changed
into or exchanged for the stock or other securities of another corporation,
or
in the event of any sale of all or substantially all of the assets of the Issuer
for stock or other securities of any corporation, the Issuer shall be deemed
to
have issued a number of shares of its Common Stock for stock or securities
or
other property of the other corporation computed on the basis of the actual
exchange ratio on which the transaction was predicated, and for a consideration
equal to the fair market value on the date of such transaction of all such
stock
or securities or other property of the other corporation. In the event any
consideration received by the Issuer for any securities consists of property
other than cash, the fair market value thereof at the time of issuance or as
otherwise applicable shall be as determined in good faith by the Board. In
the
event Common Stock is issued with other shares or securities or other assets
of
the Issuer for consideration which covers both, the consideration computed
as
provided in this Section 4(f)(i) shall be allocated among such securities and
assets as determined in good faith by the Board.
(ii)
When
Adjustments to Be Made.
The
adjustments required by this Section 4 shall be made whenever and as often
as
any specified event requiring an adjustment shall occur, except that any
adjustment of the number of shares of Common Stock for which this Warrant is
exercisable that would otherwise be required may be postponed up to, but not
beyond the date of exercise if such adjustment either by itself or with other
adjustments not previously made adds or subtracts less than one percent (1%)
of
the shares of Common Stock for which this Warrant is exercisable immediately
prior to the making of such adjustment. Any adjustment representing a change
of
less than such minimum amount (except as aforesaid) which is postponed shall
be
carried forward and made as soon as such adjustment, together with other
adjustments required by this Section 4 and not previously made, would result
in
a minimum adjustment or on the date of exercise. For the purpose of any
adjustment, any specified event shall be deemed to have occurred at the close
of
business on the date of its occurrence.
6
(iii)
Fractional
Interests.
In
computing adjustments under this Section 4, fractional interests in Common
Stock
shall be taken into account to the nearest one one-hundredth (1/100 th
)
of a
share.
(iv)
When
Adjustment Not Required.
If the
Issuer shall take a record of the holders of its Common Stock for the purpose
of
entitling them to receive a dividend or distribution or subscription or purchase
rights and shall, thereafter and before the distribution to stockholders
thereof, legally abandon its plan to pay or deliver such dividend, distribution,
subscription or purchase rights, then thereafter no adjustment shall be required
by reason of the taking of such record and any such adjustment previously made
in respect thereof shall be rescinded and annulled.
(g)
Form
of Warrant after Adjustments.
The
form of this Warrant need not be changed because of any adjustments in the
Warrant Price or the number and kind of Securities purchasable upon the exercise
of this Warrant.
(i) Escrow
of Warrant Stock.
If
after any property becomes distributable pursuant to this Section 4 by reason
of
the taking of any record of the holders of Common Stock, but prior to the
occurrence of the event for which such record is taken, and the Holder exercises
this Warrant, any shares of Common Stock issuable upon exercise by reason of
such adjustment shall be held in escrow for the Holder by the Issuer to be
issued to the Holder upon and to the extent that the event actually takes place,
upon payment of the current Warrant Price. Notwithstanding any other provision
to the contrary herein, if the event for which such record was taken fails
to
occur or is rescinded, then such escrowed shares shall be cancelled by the
Issuer and escrowed property returned.
5.
Notice
of Adjustments.
Whenever the Warrant Price or Warrant Share Number shall be adjusted pursuant
to
Section 4 hereof (for purposes of this Section 5, each an " adjustment
"),
the
Issuer shall cause its Chief Financial Officer to prepare and execute a
certificate setting forth, in reasonable detail, the event requiring the
adjustment, the amount of the adjustment, the method by which such adjustment
was calculated (including a description of the basis on which the Board made
any
determination hereunder), and the Warrant Price and Warrant Share Number after
giving effect to such adjustment, and shall cause copies of such certificate
to
be delivered to the Holder of this Warrant promptly after each adjustment.
Any
dispute between the Issuer and the Holder of this Warrant with respect to the
matters set forth in such certificate may at the option of the Holder of this
Warrant be submitted to a national or regional accounting firm reasonably
acceptable to the Issuer and the Holder, provided
that
the
Issuer shall have ten (10) days after receipt of notice from such Holder of
its
selection of such firm to object thereto, in which case such Holder shall select
another such firm and the Issuer shall have no such right of objection. The
firm
selected by the Holder of this Warrant as provided in the preceding sentence
shall be instructed to deliver a written opinion as to such matters to the
Issuer and such Holder within thirty (30) days after submission to it of such
dispute. Such opinion shall be final and binding on the parties hereto. The
costs and expenses of the initial accounting firm shall be paid equally by
the
Issuer and the Holder and, in the case of an objection by the Issuer, the costs
and expenses of the subsequent accounting firm shall be paid in full by the
Issuer.
6.
Fractional
Shares.
No
fractional shares of Warrant Stock will be issued in connection with any
exercise hereof, but in lieu of such fractional shares, the Issuer shall make
a
cash payment therefor equal in amount to the product of the applicable fraction
multiplied by the Per Share Market Value then in effect.
7. Registration
Rights.
The
Holder of this Warrant is entitled to the benefit of certain registration rights
with respect to the shares of Warrant Stock issuable upon the exercise of this
Warrant pursuant to that certain Registration Rights Agreement, of even date
herewith, by and among the Company and Persons listed on Schedule I thereto
(the
“ Registration
Rights Agreement “)
and
the registration rights with respect to the shares of Warrant Stock issuable
upon the exercise of this Warrant by any subsequent Holder may only be assigned
in accordance with the terms and provisions of the Registrations Rights
Agreement.
8. Definitions.
For the
purposes of this Warrant, the following terms have the following meanings:
7
"
Additional
Shares of Common Stock "
means
all shares of Common Stock issued by the Issuer after the Original Issue Date,
and all shares of Other Common, if any, issued by the Issuer after the Original
Issue Date, except: (i) securities issued (other than for cash) in connection
with a merger, acquisition, or consolidation, (ii) securities issued pursuant
to
the conversion or exercise of convertible or exercisable securities issued
or
outstanding on or prior to the date of the Purchase Agreement or issued pursuant
to the Purchase Agreement (so long as the conversion or exercise price in such
securities are not amended to lower such price and/or adversely affect the
Holders), (iii) the Warrant Stock, (iv) securities issued in connection with
bona fide strategic license agreements or other partnering arrangements so
long
as such issuances are not for the purpose of raising capital, (v) Common Stock
issued or the issuance or grants of options to purchase Common Stock pursuant
to
the Issuer’s equity incentive plans outstanding as they exist on the date of the
Purchase Agreement, (vi) the issuance or grants of options to purchase Common
Stock to employees, officers or directors of the Issuer pursuant to any equity
incentive plan duly adopted by the Board or a committee thereof established
for
such purpose so long as such issuances in the aggregate do not exceed ten
percent (10)% of the issued and outstanding shares of Common Stock as of the
Original Issue Date and the specified price at which the options may be
exercised is equal to or greater than the Per Share Market Value as of the
date
of such grant, and (vii) any warrants, shares of Common Stock or other
securities issued to a placement agent and its designees for the transactions
contemplated by the Purchase Agreement or in any other sales of the Issuer’s
securities and any securities issued in connection with any financial advisory
agreements of the Issuer and the shares of Common Stock issued upon exercise
of
any such warrants or conversions of any such other securities.
"
Articles
of Incorporation "
means
the Articles of Incorporation of the Issuer as in effect on the Original Issue
Date, and as hereafter from time to time amended, modified, supplemented or
restated in accordance with the terms hereof and thereof and pursuant to
applicable law.
“
Board
"
shall
mean the Board of Directors of the Issuer.
"
Capital
Stock "
means
and includes (i) any and all shares, interests, participations or other
equivalents of or interests in (however designated) corporate stock, including,
without limitation, shares of preferred or preference stock, (ii) all
partnership interests (whether general or limited) in any Person which is a
partnership, (iii) all membership interests or limited liability company
interests in any limited liability company, and (iv) all equity or ownership
interests in any Person of any other type.
"
Common
Stock "
means
the Common Stock, $0.0001 par value per share, of the Issuer and any other
Capital Stock into which such stock may hereafter be changed.
"
Common
Stock Equivalent "
means
any Convertible Security or warrant, option or other right to subscribe for
or
purchase any Additional Shares of Common Stock or any Convertible Security.
"
Convertible
Securities "
means
evidences of Indebtedness, shares of Capital Stock or other Securities which
are
or may be at any time convertible into or exchangeable for Additional Shares
of
Common Stock. The term "Convertible Security" means one of the Convertible
Securities.
"
Governmental
Authority "
means
any governmental, regulatory or self-regulatory entity, department, body,
official, authority, commission, board, agency or instrumentality, whether
federal, state or local, and whether domestic or foreign.
"
Holders
"
mean
the Persons who shall from time to time own any Warrant. The term "Holder"
means
one of the Holders.
"
Independent
Appraiser "
means a
nationally recognized or major regional investment banking firm or firm of
independent certified public accountants of recognized standing (which may
be
the firm that regularly examines the financial statements of the Issuer) that
is
regularly engaged in the business of appraising the Capital Stock or assets
of
corporations or other entities as going concerns, and which is not affiliated
with either the Issuer or the Holder of any Warrant.
8
"
Issuer
"
means
Wuhan General Group (China), Inc. (formerly known as United National Film
Corporation), a Nevada corporation, and its successors.
"
Majority
Holders "
means
at any time the Holders of Warrants exercisable for a majority of the shares
of
Warrant Stock issuable under the Warrants at the time outstanding.
"
Original
Issue Date "
means
February 7, 2007.
"
OTC
Bulletin Board "
means
the over-the-counter electronic bulletin board.
"
Other
Common "
means
any other Capital Stock of the Issuer of any class which shall be authorized
at
any time after the date of this Warrant (other than Common Stock) and which
shall have the right to participate in the distribution of earnings and assets
of the Issuer without limitation as to amount.
“
Outstanding
Common Stock “
means,
at any given time, the aggregate amount of outstanding shares of Common Stock,
assuming full exercise, conversion or exchange (as applicable) of all options,
warrants and other Securities which are convertible into or exercisable or
exchangeable for, and any right to subscribe for, shares of Common Stock that
are outstanding at such time.
"
Person
"
means
an individual, corporation, limited liability company, partnership, joint stock
company, trust, unincorporated organization, joint venture, Governmental
Authority or other entity of whatever nature.
"
Per
Share Market Value "
means
on any particular date (a) the last closing price per share of the Common Stock
on such date on the NASDAQ Capital Market or another registered national stock
exchange on which the Common Stock is then listed, or if there is no such price
on such date, then the closing price on such exchange on the date nearest
preceding such date, or (b) if the Common Stock is not listed then on a
registered national stock exchange, the last closing bid price per share of
the
Common Stock on such date on the OTC Bulletin Board, or if there is no such
price on such date, then the closing bid price on the OTC Bulletin Board on
the
date nearest preceding such date, or (c) if the Common Stock is not listed
then
on the OTC Bulletin Board or any registered national stock exchange, the last
closing bid price for a share of Common Stock in the over-the-counter market,
as
reported by the OTC Bulletin Board or in the National Quotation Bureau
Incorporated (or similar organization or agency succeeding to its functions
of
reporting prices) at the close of business on such date, or (d) if the Common
Stock is not then reported by the OTC Bulletin Board or the National Quotation
Bureau Incorporated (or similar organization or agency succeeding to its
functions of reporting prices), then the average of the "Pink Sheet" quotes
for
the five (5) Trading Days preceding such date of determination, or (e) if the
Common Stock is not then publicly traded the fair market value of a share of
Common Stock as determined by an Independent Appraiser selected in good faith
by
the Majority Holders; provided
,
however
,
that
the Issuer, after receipt of the determination by such Independent Appraiser,
shall have the right to select an additional Independent Appraiser, in which
case, the fair market value shall be equal to the average of the determinations
by each such Independent Appraiser; and provided
,
further
that
all
determinations of the Per Share Market Value shall be appropriately adjusted
for
any stock dividends, stock splits or other similar transactions during such
period. The determination of fair market value by an Independent Appraiser
shall
be based upon the fair market value of the Issuer determined on a going concern
basis as between a willing buyer and a willing seller and taking into account
all relevant factors determinative of value, and shall be final and binding
on
all parties. In determining the fair market value of any shares of Common Stock,
no consideration shall be given to any restrictions on transfer of the Common
Stock imposed by agreement or by federal or state securities laws, or to the
existence or absence of, or any limitations on, voting rights.
"
Purchase
Agreement "
means
the Series A Convertible Preferred Stock Purchase Agreement dated as of February
7, 2007, among the Issuer and the Purchasers.
"
Purchasers
"
means
the purchasers of the Series A Convertible Preferred Stock and the Warrants
issued by the Issuer pursuant to the Purchase Agreement.
9
"
Securities
"
means
any debt or equity securities of the Issuer, whether now or hereafter
authorized, any instrument convertible into or exchangeable for Securities
or a
Security, and any option, warrant or other right to purchase or acquire any
Security. "Security" means one of the Securities.
"
Securities
Act "
means
the Securities Act of 1933, as amended, or any similar federal statute then
in
effect.
"
Series
B Convertible Preferred Stock "
means
the Series B Convertible Preferred Stock, par value $0.0001 per share, of the
Issuer and any other Capital Stock into which such stock may hereafter be
changed.
"
Subsidiary
"
means
any corporation at least 50% of whose outstanding Voting Stock shall at the
time
be owned directly or indirectly by the Issuer or by one or more of its
Subsidiaries, or by the Issuer and one or more of its Subsidiaries.
"
Term
"
has the
meaning specified in Section 1 hereof.
"
Trading
Day "
means
(a) a day on which the Common Stock is traded on the NASDAQ Capital Market
or
another national securities exchange on which the Common Stock is then listed,
or (b) if the Common Stock is not traded on the NASDAQ Capital Market or another
national securities exchange, the OTC Bulletin Board, or (c) if the Common
Stock
is not traded on the NASDAQ Capital Market or another national securities
exchange or the OTC Bulletin Board, a day on which the Common Stock is quoted
in
the over-the-counter market as reported by National Quotation Bureau
Incorporated (or any similar organization or agency succeeding its functions
of
reporting prices); provided
,
however
,
that in
the event that the Common Stock is not listed or quoted as set forth in (a),
(b)
or (c) hereof, then Trading Day shall mean any day except Saturday, Sunday
and
any day which shall be a legal holiday or a day on which banking institutions
in
the State of New York are authorized or required by law or other government
action to close.
"
Voting
Stock "
means,
as applied to the Capital Stock of any corporation, Capital Stock of any class
or classes (however designated) having ordinary voting power for the election
of
a majority of the members of the Board of Directors (or other governing body)
of
such corporation, other than Capital Stock having such power only by reason
of
the happening of a contingency.
"
Warrants
"
means
the Warrants issued and sold pursuant to the Purchase Agreement, including,
without limitation, this Warrant, and any other warrants of like tenor issued
in
substitution or exchange for any thereof pursuant to the provisions of Section
2(c) or 2(d) hereof or of any of such other Warrants.
"
Warrant
Price "
initially means $2.33, as such price may be adjusted from time to time as shall
result from the adjustments specified in this Warrant, including Section 4
hereto.
"
Warrant
Share Number "
means
at any time the aggregate number of shares of Warrant Stock which may at such
time be purchased upon exercise of this Warrant, after giving effect to all
prior adjustments and increases to such number made or required to be made
under
the terms hereof.
"
Warrant
Stock "
means
Common Stock or Series B Convertible Preferred Stock, as the case may be,
issuable upon exercise of any Warrant or Warrants or otherwise issuable pursuant
to any Warrant or Warrants.
9. Other
Notices.
In case
at any time:
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(A)
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the
Issuer shall make any distributions to the holders of Common Stock
or
Series B Convertible Preferred Stock; or
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(B)
|
the
Issuer shall authorize the granting to all holders of its Common
Stock or
Series B Convertible Preferred Stock of rights to subscribe for or
purchase any shares of Capital Stock of any class or other rights;
or
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10
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(C)
|
there
shall be any reclassification of the Capital Stock of the Issuer;
or
|
|
|
(D)
|
there
shall be any capital reorganization by the Issuer; or
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(E)
|
there
shall be any (i) consolidation or merger involving the Issuer or
(ii)
sale, transfer or other disposition of all or substantially all of
the
Issuer's property, assets or business (except a merger or other
reorganization in which the Issuer shall be the surviving corporation
and
its shares of Capital Stock shall continue to be outstanding and
unchanged
and except a consolidation, merger, sale, transfer or other disposition
involving a wholly owned Subsidiary); or
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(F)
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there
shall be a voluntary or involuntary dissolution, liquidation or winding-up
of the Issuer or any partial liquidation of the Issuer or distribution
to
holders of Common Stock or Series B Convertible Preferred Stock;
|
then,
in
each of such cases, the Issuer shall give written notice to the Holder of the
date on which (i) the books of the Issuer shall close or a record shall be
taken
for such dividend, distribution or subscription rights or (ii) such
reorganization, reclassification, consolidation, merger, disposition,
dissolution, liquidation or winding-up, as the case may be, shall take place.
Such notice also shall specify the date as of which the holders of Common Stock
of record shall participate in such dividend, distribution or subscription
rights, or shall be entitled to exchange their certificates for Common Stock
for
securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, disposition, dissolution, liquidation
or winding-up, as the case may be. Such notice shall be given at least twenty
(20) days prior to the action in question and not less than ten (10) days prior
to the record date or the date on which the Issuer's transfer books are closed
in respect thereto. This Warrant entitles the Holder to receive copies of all
financial and other information distributed or required to be distributed to
the
holders of the Common Stock or Series B Convertible Preferred Stock.
10. Amendment
and Waiver.
Any
term, covenant, agreement or condition in this Warrant may be amended, or
compliance therewith may be waived (either generally or in a particular instance
and either retroactively or prospectively), by a written instrument or written
instruments executed by the Issuer and the Majority Holders; provided
,
however
,
that no
such amendment or waiver shall reduce the Warrant Share Number, increase the
Warrant Price, shorten the period during which this Warrant may be exercised
or
modify any provision of this Section 10 without the consent of the Holder of
this Warrant. No consideration shall be offered or paid to any person to amend
or consent to a waiver or modification of any provision of this Warrant unless
the same consideration is also offered to all holders of the Warrants.
11.
Governing
Law; Jurisdiction.
This
Warrant shall be governed by and construed in accordance with the internal
laws
of the State of New York, without giving effect to any of the conflicts of
law
principles which would result in the application of the substantive law of
another jurisdiction. This Warrant shall not be interpreted or construed with
any presumption against the party causing this Warrant to be drafted. The Issuer
and the Holder agree that venue for any dispute arising under this Warrant
will
lie exclusively in the state or federal courts located in New York County,
New
York, and the parties irrevocably waive any right to raise forum
non conveniens or
any
other argument that New York is not the proper venue. The Issuer and the Holder
irrevocably consent to personal jurisdiction in the state and federal courts
of
the state of New York. The Issuer and the Holder consent to process being served
in any such suit, action or proceeding by mailing a copy thereof 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 in this Section 11 shall affect or limit any right to serve
process in any other manner permitted by law. The Issuer and the Holder hereby
agree that the prevailing party in any suit, action or proceeding arising out
of
or relating to this Warrant or the Purchase Agreement, shall be entitled to
reimbursement for reasonable legal fees from the non-prevailing party. The
parties hereby waive all rights to a trial by jury.
11
12. Notices.
Any
notice, demand, request, waiver or other communication required or permitted
to
be given hereunder shall be in writing and shall be effective (a) immediately
upon hand delivery, telecopy or facsimile at the address or number designated
below (if delivered on a business day during normal business hours where such
notice is to be received), or the first business day following such delivery
(if
delivered other than on a business day during normal business hours where such
notice is to be received) or (b) on the second business day following the date
of mailing by express courier service, fully prepaid, addressed to such address,
or upon actual receipt of such mailing, whichever shall first occur. The
addresses for such communications shall be:
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If
to the Issuer:
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Canglongdao
Science Park of Wuhan
East
Lake Hi-Tech Development Zone
Wuhan,
Hubei 430200
People’s
Republic of China
Attention:
Xx Xxx
Tel.
No.: (00) 00 0000 0000
Fax
No.: (00) 000 0000 0000
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with
copies (which copies
shall
not constitute notice)
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Xxxxxxxx
Xxxxxxx LLP
The
Chrysler Building
405
Xxxxxxxxx Xxxxxx
Xxx
Xxxx, Xxx Xxxx 00000
Xxxention:
Xxxxx X. Xxxxxxx, Esq.
Tel.
No.: (000) 000-0000
Fax
No.: (000) 000-0000
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At
the address of such Holder set forth in the Company’s records, with copies
to Holder’s counsel or as specified in writing by such Holder with copies
to:
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with
copies (which copies
shall
not constitute notice)
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Xxxxxx
Xxxxx Xxxxxxxx & Xxxxxxx LLP
1177
Xxxxxx xx xxx Xxxxxxxx
Xxx
Xxxx, Xxx Xxxx 00000
Xxxention:
Xxxxxxxxxxx X. Xxxxxxx, Esq.
Tel.
No.: (000) 000-0000
Fax
No.: (000) 000-0000
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Any
party
hereto may from time to time change its address for notices by giving written
notice of such changed address to the other party hereto.
13.
Warrant
Agent.
The
Issuer may, by written notice to each Holder of this Warrant, appoint an agent
having an office in New York, New York for the purpose of issuing shares of
Warrant Stock on the exercise of this Warrant pursuant to subsection (b) of
Section 2 hereof or replacing this Warrant pursuant to subsection (d) of Section
3 hereof, or any of the foregoing, and thereafter any such issuance or
replacement, as the case may be, shall be made at such office by such
agent.
14.
Remedies.
The
Issuer stipulates that the remedies at law of the Holder of this Warrant in
the
event of any default or threatened default by the Issuer in the performance
of
or compliance with any of the terms of this Warrant are not and will not be
adequate and that, to the fullest extent permitted by law, such terms may be
specifically enforced by a decree for the specific performance of any agreement
contained herein or by an injunction against a violation of any of the terms
hereof or otherwise.
15. Successors
and Assigns.
This
Warrant and the rights evidenced hereby shall inure to the benefit of and be
binding upon the successors and assigns of the Issuer, the Holder hereof and
(to
the extent provided herein) the Holders of Warrant Stock issued pursuant hereto,
and shall be enforceable by any such Holder or Holder of Warrant Stock.
12
16.
Modification
and Severability.
If, in
any action before any court or agency legally empowered to enforce any provision
contained herein, any provision hereof is found to be unenforceable, then such
provision shall be deemed modified to the extent necessary to make it
enforceable by such court or agency. If any such provision is not enforceable
as
set forth in the preceding sentence, the unenforceability of such provision
shall not affect the other provisions of this Warrant, but this Warrant shall
be
construed as if such unenforceable provision had never been contained herein.
17.
Headings.
The
headings of the Sections of this Warrant are for convenience of reference only
and shall not, for any purpose, be deemed a part of this Warrant.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
13
IN
WITNESS WHEREOF, the Issuer has executed this Series J Warrant as of the day
and
year first above written.
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By:
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Name:
Xx Xxx
Title:
President and Chief Executive Officer
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14
SERIES
J
WARRANT
The
undersigned _______________, pursuant to the provisions of the within Warrant,
hereby elects to purchase _____ shares of Series B Convertible Preferred Stock
of Wuhan General Group (China), Inc. covered by the within Warrant.
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Dated:
_________________
|
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Signature
|
___________________________
|
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Address
|
_____________________
_____________________
|
The
undersigned is an “accredited investor” as defined in Regulation D under the
Securities Act of 1933, as amended.
FOR
VALUE
RECEIVED, _________________ hereby sells, assigns and transfers unto
__________________ the within Warrant and all rights evidenced thereby and
does
irrevocably constitute and appoint _____________, attorney, to transfer the
said
Warrant on the books of the within named corporation.
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Dated:
_________________
|
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Signature
|
___________________________
|
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Address
|
_____________________
_____________________
|
FOR
VALUE
RECEIVED, _________________ hereby sells, assigns and transfers unto
__________________ the right to purchase _________ shares of Warrant Stock
evidenced by the within Warrant together with all rights therein, and does
irrevocably constitute and appoint ___________________, attorney, to transfer
that part of the said Warrant on the books of the within named corporation.
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Dated:
_________________
|
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Signature
|
___________________________
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Address
|
_____________________
_____________________
|
FOR
USE
BY THE ISSUER ONLY:
This
Warrant No. W-___ canceled (or transferred or exchanged) this _____ day of
___________, _____, shares of Series B Convertible Preferred Stock issued
therefor in the name of _______________, Warrant No. W-_____ issued for ____
shares of Series B Convertible Preferred Stock in the name of _______________.
15
