China Natural Gas, Inc. Seven-Year Warrants to Purchase Shares of Common Stock Warrant Agreement Dated as of January 29, 2008 Deutsche Bank AG, Hong Kong Branch as Warrant Agent and Deutsche Bank Luxembourg S.A. as Warrant Registrar
Seven-Year
Warrants to Purchase
Shares
of
Common Stock
Dated
as
of January 29, 2008
Deutsche
Bank AG, Hong Kong Branch
as
Warrant Agent
and
Deutsche
Bank Luxembourg S.A.
as
Warrant Registrar
WARRANT
AGREEMENT, dated as of January 29, 2008 (the “Agreement”),
by
and among China Natural Gas, Inc., a Delaware corporation (the “Company”),
Mr.
XX Xxxxx (PRC ID No. 612125195706230432)(the “Controlling
Shareholder”),
Deutsche Bank AG, Hong Kong Branch, as warrant agent (the “Warrant
Agent”)
and
Deutsche Bank Luxembourg S.A. as the initial Warrant Registrar.
RECITALS
WHEREAS,
the Company proposes to issue warrants (each a “Warrant”
and
collectively, the “Warrants”)
to
initially purchase up to an aggregate of 2,900,000 shares of the Company’s
Common Stock, par value $.0001 (the “Common
Stock”,
with
the Common Stock issuable upon exercise of the Warrants being referred to herein
as the “Warrant
Shares”),
in
connection with the offering by the Company of up
to an
aggregate of RMB363,000,000 principal amount of 5.0% Guaranteed Senior Notes
due
2014 settled in U.S.Dollars (each, a “Note”,
and
collectively, the “Notes”)
pursuant
to that certain Indenture, dated as of January 29, 2008 (the “Indenture”),
between the Company and DB Trustees (Hong Kong) Limited, as trustee.
WHEREAS,
the Company desires the Warrant Agent to act on behalf of the Company, and
the
Warrant Agent is willing so to act in connection with the issuance of Warrant
Certificates (as defined) and other matters as provided herein.
AGREEMENT
NOW,
THEREFORE, in consideration of the premises and the mutual agreements herein
set
forth, the parties hereto agree as follows:
|
SECTION
1.
|
CERTAIN
DEFINITIONS
|
As
used
in this Agreement, the following terms shall have the following respective
meanings:
“Affiliate”
of
any
specified Person means any other Person directly or indirectly controlling
or
controlled by or under direct or indirect common control with such specified
Person. For purposes of this definition, “control,” as used with respect to any
Person, means the possession, directly or indirectly, of the power to direct
or
cause the direction of the management or policies of such Person, whether
through the ownership of voting securities, by agreement or otherwise. For
purposes of this definition, the terms “controlling,” “controlled by” and “under
common control with” have correlative meanings.
“Board
of Directors”
means
the board of directors of the corporation or any committee thereof duly
authorized to act on behalf of such Board of Directors.
“Business
Day”
means
a
day other than a Saturday or Sunday and means any day that is neither a legal
holiday nor a day on which banking institutions are authorized or required
by
law or regulation (including any executive order) to close in either the city
of
New York, Hong Kong or London.
“Clearstream”
means
Clearstream Banking, societe anonyme, Luxembourg, and its
successors.
“Commission”
means
the Securities and Exchange Commission.
“Common
Depositary”
means,
with respect to the Warrants issuable or issued in whole or in part in global
form, the Person specified in Section
3.3
hereof
as the Common Depositary with respect to the Warrants, and any and all
successors thereto appointed as Common Depositary hereunder and having become
such pursuant to the applicable provision of this Agreement.
“Common
Stock”
has
the
meaning set forth in the Recitals.
“Common
Stock Equivalents”
means
Common Stock and all shares of Common Stock issuable upon conversion, exercise
or exchange of all options, warrants or other securities convertible into or
exercisable or exchangeable for shares of Common Stock or other securities
of
the Company that are convertible into or exercisable or exchangeable for shares
of Common Stock.
“Company”
has
the
meaning set forth in the Recitals.
“Controlling
Shareholder”
has
the
meaning set forth in the Recitals.
“Definitive
Warrants”
has
the
meaning specified in Section
3.5.
“Distribution
Compliance Period”
means
the period ending on the first anniversary of the date hereof.
“Equity
Registration Rights Agreement”
means
that certain Equity Registration Rights Agreement, dated even date herewith,
by
and among the Company, and the purchasers of the Warrants relating to the
Warrant Shares.
“Euroclear”
means
Euroclear Bank S.A./N.V., as operator of the Euroclear system, and its
successors.
“Exchange
Act”
means
the Securities Exchange Act of 1934, as amended.
“Exercise
Period”
has
the
meaning set forth in Section
4(a).
“Exercise
Price”
means
$7.3652 per share on the date hereof and as adjusted as herein provided. The
Exercise Price shall be subject to a contingent downward price adjustment on
the
twelve month anniversary of the date hereof and upon the expiration of each
subsequent twelve month period (each, a “Reset
Date”),
such
that if the VWAP per share of Common Stock for the 15-Trading Day period
immediately prior to the applicable Reset Date (the “Reset
Price Determination Period”)
is
less than the then applicable Exercise Price (such lower volume weighted average
closing price, the “Reset
Exercise Price”),
the
Exercise Price shall automatically be changed to the Reset Exercise Price;
provided,
however,
that
notwithstanding the foregoing, in no event shall the Reset Exercise Price be
less than $3.6826 (as adjusted proportionally for stock dividends, stock splits,
combinations, recapitalizations and the like). Notwithstanding the foregoing,
beginning with the fiscal year 2009, the adjustment of the exercise price as
described herein shall occur every six months.
2
In
all
cases, the Exercise Price shall also be subject to adjustment from time to
time
in accordance with Section
8
below.
“Financial
Trigger”
means,
for the Company and its Subsidiaries on a consolidated basis, that (i) net
profit after tax for the fiscal year ending December 31, 2007 shall be less
than
$9.0 million (or its equivalent in RMB, calculated at the exchange rate for
conversion of US dollars into RMB quoted by the People’s Bank of China on the
last Business Day of such fiscal year) or (ii) net profit after tax for the
fiscal year ending December 31, 2008 shall be less than $13.5 million (or its
equivalent in RMB, calculated at the exchange rate for conversion of US dollars
into RMB quoted by the People’s Bank of China on the last Business Day of such
fiscal year).
The
calculation of “net profit after tax” for the purposes of this definition shall
be as reported in the Company’s audited financial statements for the applicable
fiscal year, and shall be made in accordance with GAAP consistently applied
and
as determined by the Company’s regular independent public accountants in the
Company’s fiscal year ending December 31, 2006, after deducting “income tax
expense” and the amount, if any, for minority interest that may arise, but
without adding any “other comprehensive income” or any extraordinary income;
provided
that the
calculation of “net profit after tax” for the purposes of this definition shall
not include (i) accounting charges arising from or in connection with the
issuance of the Notes and all other accounting charges related to the Notes,
if
any, (ii) accounting charges arising from or in connection with the issuance
or
exercise of the Warrants and all other accounting charges related to the
Warrants, if any, (iii) the after tax amount of interest recognized in each
of
the relevant fiscal year associated with the Notes, (iv) accounting income
or
changes arising from any change or the introduction of new accounting standards
required by GAAP after the date of this Agreement (v) any non-cash expense
incurred at any time in connection with the issuance of shares of Common Stock
pursuant to (x) Section
8
and (y)
the Company’s stock option plans and employee stock purchase plans and which
have been approved by the Company’s Board of Directors so long as such issuances
in the aggregate do not exceed five percent (5%) of the Common Stock of the
Company issued and outstanding immediately prior to such issuance or grants,
and
(vi) any extraordinary gain or loss.
“GAAP”
means
United States generally accepted accounting principles as in effect on the
date
hereof, including those set forth in:
(a)
the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants,
(b)
the
statements and pronouncements of the Financial Accounting Standards Board,
(c)
such
other statements by such other entity as approved by a significant segment
of
the accounting profession, and
3
(d)
the
rules and regulations of the Commission governing the inclusion of financial
statements (including pro
forma financial
statements) in periodic reports required to be filed pursuant to Section 13
of
the Exchange Act, including opinions and pronouncements in staff accounting
bulletins and similar written statements from the accounting staff of the
Commission.
All
ratios and computations based on GAAP contained in this Agreement will be
computed in conformity with GAAP.
“Global
Warrants”
has
the
meaning specified in Section
3.1(b).
“Holders”
or
“holder”
means
the registered holders or registered holder of the Warrants.
“Indenture” has
the
meaning set forth in the Recitals.
“Independent
Financial Advisor”
means
an investment banking firm of international standing or any third party
appraiser of international standing that is qualified to provide an appraisal
of
the relevant asset, provided that such firm or appraiser is not an Affiliate
of
the Company.
“Market
Value”
for
each share of Common Stock, as of any date, shall equal:
(i) if
the
Common Stock is primarily traded on a securities exchange, the volume
weighted average closing price per share of Common Stock for the 15-trading
day
period immediately prior to the applicable
date of
determination,
(ii) if
the
principal market for the Common Stock is in the over-the-counter market, the
volume
weighted average closing price per share of Common Stock for the 15-trading
day
period immediately prior to the applicable
date of
the determination, as published by the applicable trading organization, and
(iii) if
neither clause (i) nor clause (ii) is applicable, the fair market value on
the
date of determination of the Common Stock, as determined in good faith by the
Board of Directors of the Company based on a written opinion of an
internationally recognized investment banking, appraisal or valuation firm
that
is (A) acceptable in writing to a majority of the then outstanding holders
of
the Warrants (excluding the warrants held by the Company or any of its
Affiliates) and (B) not an Affiliate of the Company.
“Note”
and
“Notes”
have
the meanings set forth in the Recitals.
“Officer”
means,
with respect to the Company, the Chief Executive Officer, the President, the
Chief Financial Officer or any Executive Vice President.
“Officers’
Certificate”
means
a
certificate, signed by two Officers of the Company, at least one of whom shall
be the principal executive officer or principal financial officer of the
Company, and is delivered to the Trustee.
4
“Opinions
of Counsel”
means
an opinion from legal counsel of recognized standing which meets the
requirements of Section 12.04 of the Indenture.
“Participant”
means,
with respect to Euroclear or Clearstream, a Person who has an account with
Euroclear or Clearstream.
“Person”
means
any individual, corporation, partnership, joint venture, association,
joint-stock company, trust, unincorporated organization, limited liability
company or government or other entity.
“PRC”
means
the People’s Republic of China, exclusive of Macau, Hong Kong and Taiwan.
“Redemption
Date”
has
the
meaning set forth in Section
12.
“Redemption
Price”
in
aggregate for all Warrants means $17.5 million.
“Regulation
S”
means
Regulation S under the Securities Act.
“RMB”
means
the lawful currency of the PRC.
“Rule
144A”
means
Rule 144A promulgated under the Securities Act.
“Securities
Act”
means
the Securities Act of 1933, as amended.
“Subsidiary,”
means,
in respect of any person (the “first person”) at any particular time, any other
person (the “second person”):
(a)
Control: whose affairs and policies the first person controls or has the power
to control (directly or indirectly), whether by ownership of share capital,
contract, the power to appoint or remove members of the governing body of the
second person or otherwise; or
(b)
Consolidation: whose financial statements are, in accordance with applicable
law
and generally accepted accounting principles, consolidated with those of the
first person.
“Trading
Day”
shall
mean (x) if the applicable security is quoted on the Nasdaq Global Market,
Global Select Market or Capital Market, a day on which trades may be made
thereon, (y) if the applicable security is listed or admitted for trading
on the American Stock Exchange, New York Stock Exchange or another national
securities exchange, a day on which the American Stock Exchange, New York Stock
Exchange or another national securities exchange is open for business, or
(z) if the applicable security is not so listed, admitted for trading or
quoted, any day other than a Saturday or Sunday or a day on which banking
institutions in the State of New York are authorized or obligated by law or
executive order to close.
“Trading
Market”
means
the following markets or exchanges on which the Common Stock is listed or quoted
for trading on the date in question: the Nasdaq Capital Market, the American
Stock Exchange, the New York Stock Exchange, the Nasdaq Global Market, the
Nasdaq Global Select Market or the OTC Bulletin Board.
5
“Transfer
Agent”
has
the
meaning set forth in Section
6(b).
“VWAP”
means,
for any date, the price determined by the first of the following clauses that
applies: (a) if the Common Stock is then listed or quoted on a Trading Market,
the daily volume weighted average price of the Common Stock for such date (or
the nearest preceding date) on the Trading Market on which the Common Stock
is
then listed or quoted for trading as reported by Bloomberg Financial
L.P.
through
its “Volume at Price” functions (based
on
a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City
time); (b) if the OTC Bulletin Board is not a Trading Market, the volume
weighted average price of the Common Stock for such date (or the nearest
preceding date) on the OTC Bulletin Board; or (c) if the Common Stock is not
then quoted for trading on the OTC Bulletin Board and if prices for the Common
Stock are then reported in the “Pink Sheets” published by Pink Sheets, LLC (or a
similar organization or agency succeeding to its functions of reporting prices),
the
average of the highest closing bid price and lowest closing ask price of any
of
the market makers for such security as reported, and in each of the foregoing
clauses ignoring any block trade (which for purposes of this definition means
any transfer of more than 100,000 shares).
If the
VWAP cannot be calculated for such security on such date on any of the foregoing
bases, the VWAP
of such
security on such date shall be the fair market value as mutually determined
by
the Company and the Noteholders of at least a majority in aggregate principal
amount of the Notes then outstanding. If the Company and the holders of the
Notes cannot agree on the fair market value referred to above, then the fair
market value shall be determined in good faith by an Independent Financial
Advisor (acting as an expert) selected by the Company and approved in writing
by
the holders of at least a majority in aggregate principal amount of the Notes
then outstanding.
“Warrant”
and
“Warrants”
have
the meanings set forth in the Recitals.
“Warrant
Agent”
has
the
meaning set forth in the Recitals.
“Warrant
Certificate”
has
the
meaning set forth in Section
3.1(b).
“Warrant
Countersignature Order”
has
the
meaning set forth in Section
3.2.
“Warrant
Expiration Date”
is
January 29, 2015.
“Warrant
Register”
has
the
meaning set forth in Section
3.3.
“Warrant
Registrar”
has
the
meaning set forth in Section
3.3.
“Warrant
Shares”
has
the
meaning set forth in the Recitals and shall initially be an aggregate of
2,900,000 shares of Common Stock; provided,
however,
that
the number of Warrant Shares shall be subject to further adjustment from time
to
time in accordance with Section
8
below.
6
|
SECTION
2.
|
APPOINTMENT
OF WARRANT AGENT.
|
The
Company hereby appoints the Warrant Agent to act as agent for the Company in
accordance with the instructions set forth hereinafter in this Agreement and
the
Warrant Agent hereby accepts such appointment.
|
SECTION
3.
|
ISSUANCE
OF WARRANTS; WARRANT
CERTIFICATES
|
3.1 Form
and Dating.
(a) General.
The
Warrants and the Warrant Shares may have notations, legends or endorsements
required by law, stock exchange rule or usage,
and
which, if required, will be provided by the Company to the Warrant Agent in
writing.
Each
Warrant shall be dated the date of the countersignature.
The
terms
and provisions contained in the Warrants shall constitute, and are hereby
expressly made, a part of this Agreement. The Company and the Warrant Agent,
by
their execution and delivery of this Agreement, expressly agree to such terms
and provisions and to be bound thereby. However, to the extent any provision
of
any Warrant conflicts with the express provisions of this Agreement, the
provisions of this Agreement shall govern and be controlling.
(b) Form
of the Warrants
The
Warrants shall be issued initially in the form of global warrants (each a
“Global
Warrant”).
Global Warrants shall be substantially in the form of Exhibit
A attached
hereto (including the Global Warrant Legend and the Regulation S Legend thereon
and the “Schedule of Exchanges of Interests in the Global Warrant” attached
thereto). Definitive Warrants, once issued pursuant to Section
3.5(a),
shall
be substantially in the form of Exhibit
A attached
hereto, but without the Global Warrant Legend thereon and without the “Schedule
of Exchanges of Interests in the Global Warrant” attached thereto (the
certificates of the Definitive Warrants, together with the certificate of the
Global Warrant, each a “Warrant
Certificate”).
Each
Global Warrant shall represent such of the outstanding Warrants as shall be
specified therein and each shall provide that it shall represent the number
of
outstanding Warrants from time to time endorsed thereon and that the number
of
outstanding Warrants represented thereby may from time to time be reduced or
increased, as appropriate, to reflect exchanges and redemptions. Any endorsement
of a Global Warrant to reflect the amount of any increase or decrease in the
number of outstanding Warrants represented thereby shall be made by the Warrant
Agent in accordance with instructions given by the holder thereof as required
by
Section
3.5
hereof.
Each Global Warrant shall be deposited with the Common Depositary, which shall
hold such Global Warrant in safe custody for the account of Euroclear and/or
Clearstream and instruct Euroclear or Clearstream or both of them, as the case
may be, to credit the number of Warrants represented by such Global Warrant
to
the holder’s distribution account with Euroclear or Clearstream.
If at
any time the Common Depositary notifies the Company in writing that it is
unwilling or unable to discharge properly its responsibilities, or if at any
time it is no longer eligible to act as the depositary for the Global Warrants,
a successor common depositary shall be appointed.
7
(c) Euroclear
and Clearstream Procedures Applicable.
The
provisions of the “Operating Procedures of the Euroclear System” and “Terms and
Conditions Governing Use of Euroclear” and the “General Terms and Conditions of
Clearstream Banking” and “Customer Handbook” of Clearstream shall be applicable
to notices to Holders and transfers of beneficial interests in the Global
Warrants that are held by Participants through Euroclear or Clearstream. Any
obligation the Company (and the Collateral Agent on its behalf) may have to
publish a notice to the Holders shall have been met upon delivery to the
relevant clearing system.
3.2 Execution
An
Officer shall sign the Warrants on behalf of the Company by manual or facsimile
signature and
deliver the executed Warrants to the Warrant Registrar for countersignature,
accompanied by a written order of the Company signed by an Officer of the
Company (a “Warrant
Countersignature Order”)
specifying the number of Warrants to be countersigned and the date on which
the
Warrants are to be countersigned and other information the Company may determine
to include or the Warrant Agent may reasonably request.
Upon
the
execution and the delivery of this Agreement, the Company shall furnish, and
from time to time thereafter may furnish, to the Warrant Agent, a certificate
substantially in the form of Exhibit
C
(an
“Authorization
Certificate”)
identifying and certifying the incumbency and specimen (or facsimile) signatures
of the Officers. Until the Warrant Agent receives a subsequent Authorization
Certificate, the Warrant Agent shall be entitled to conclusively rely on the
last Authorization Certificate delivered to each of them for purposes of
determining the Officers.
If
the
Officer whose signature is on a Warrant no longer holds that office at the
time
a Warrant is countersigned, the Warrant shall nevertheless be
valid.
A
Warrant
shall not be valid until countersigned by the manual signature of the Warrant
Agent. The signature shall be conclusive evidence that the Warrant has been
properly countersigned under this Agreement.
The
Warrant Registrar shall, upon receipt of a Warrant Countersignature Order,
countersign Warrants for original issue up to the number stated in the preamble
hereto.
The
Warrant Registrar may appoint an agent acceptable to the Company to countersign
Warrants. Such an agent may countersign Warrants whenever the Warrant Agent
may
do so. Each reference in this Agreement to a countersignature by the Warrant
Agent includes a countersignature by such agent. Such an agent has the same
rights as the Warrant Agent to deal with the Company or an Affiliate of the
Company and
the
benefit of all rights and indemnities available to the Warrant Agent in respect
of the countersignature of Warrants hereunder.
8
3.3 Warrant
Registrar and Common Depositary
The
Company shall maintain an office or agency where Warrants may be presented
for
registration of transfer or for exchange (the “Warrant
Registrar”).
The
Warrant Registrar shall keep a register of the Warrants and of their
registration of transfer and exchange (the “Warrant
Register”).
The
Company may appoint one or more co-Warrant Registrars. The term “Warrant
Registrar” includes any co-Warrant Registrar. The Company may change any Warrant
Registrar without notice to any holder. The Company shall notify the Warrant
Agent in writing of the name and address of any agent not a party to this
Agreement. If the Company fails to appoint or maintain another entity as Warrant
Registrar, the Warrant Agent shall act as such. The Company or any of its
subsidiaries may act as Warrant Registrar.
The
Company initially appoints Deutsche Bank Luxembourg S. A. to act as the Warrant
Registrar with respect to the Global Warrants.
The
Company initially appoints the Deutsche Bank AG, London Branch to act as Common
Depositary with respect to the Global Warrants.
3.4 Holder
Lists
The
Warrant Registrar shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses
of
all holders of Warrants. If the Warrant Agent is not the Warrant Registrar,
the
Company shall promptly furnish (or arrange to have furnished) to the Warrant
Agent at such times as the Warrant Agent may request in writing, a list in
such
form and as of such date as the Warrant Agent may reasonably require of the
names and addresses of the holders.
3.5 Transfer
and Exchange
(a) In
accordance with the terms of this Agreement, the Warrant Agent shall at the
cost
of the Company, make available for collection at the corporate trust office
of
the Warrant Agent set forth in Section 17
hereof,
upon not less than 45 days’ notice to the Warrant Agent by Euroclear or
Clearstream, the relevant Warrants in definitive form (“Definitive
Warrants”)
in
exchange for interests in a Global Warrant in whole (but not in part) if either
Euroclear or Clearstream or any other relevant clearing system ceases to operate
as a clearing system for 14 consecutive days (other than by reason of public
holiday) or announces an intention to permanently cease business and it shall
not be practicable to transfer the relevant Warrants to another clearing system
within 90 days. For this purpose, the Warrant Agent is authorized and it shall,
upon receipt of a Warrant Countersignature Order, (A) countersign each such
Definitive Warrant and (B) deliver each such Definitive Warrant to or to the
order of Euroclear or Clearstream, in exchange for interests in such Global
Warrant. The Warrant Agent shall promptly notify the Company upon receipt of
a
request for issue of Definitive Warrants the aggregate number of Warrants
represented by the relevant Global Warrant to be exchanged in connection
therewith. The Company undertakes to deliver to, or to the order of, the Warrant
Agent sufficient numbers of duly executed Definitive Warrants to enable the
Warrant Agent to comply with its obligations under this Section
3.5(a).
Transfer
of a Global Warrant by the Common Depositary to another shall be limited to
transfer of such Global Warrant in whole, but not in part, to nominees of
Euroclear or Clearstream, to a successor of Euroclear or Clearstream, such
successor’s nominee, or such depositary other than the Common Depositary (or its
nominee) as the Company may designate.
9
(b) Until
a
Global Warrant has been exchanged for a Definitive Warrant, no holder of any
interest in any Global Warrant except the registered holder shall be entitled
to
any rights as a holder or any benefits under this Agreement. Once exchanged,
a
Global Warrant shall be canceled and disposed of by the Warrant Agent in
accordance with its customary procedures.
(c) The
Warrant Agent shall cause all Global Warrants and Definitive Warrants delivered
to it and held by it hereunder to be maintained in safe custody in accordance
with this Section
3.5,
and
shall ensure that such Warrants are issued only in accordance with the
provisions of this Agreement.
(d) The
Warrant Agent shall be entitled to treat a facsimile communication from a person
purporting to be (and who the Warrant Agent believes in good faith to be) the
authorized representative of the Company, named in the last Authentication
Certificate furnished to the Warrant Agent, as sufficient instructions and
authority of the Company for the Warrant Agent to act in accordance with this
Section
3.5.
(e) Title
to
the Definitive Warrants shall pass by notation on the Warrant Register. However,
title to Warrants issued in the form of Global Warrants held through Euroclear
and Clearstream shall be transferable only in accordance with the rules and
procedures of Euroclear and Clearstream, as appropriate.
(f) General
Provisions Relating to Transfers and Exchanges
(1) To
permit
registrations of transfers and exchanges, the Company shall execute and the
Warrant Agent shall, upon receipt of a Warrant Countersignature Order,
countersign Global Warrants and Definitive Warrants.
(2) The
Company hereby agrees and instructs the Warrant Agent that the Warrant Registrar
shall not register the proposed transfer of any beneficial interest in, or
proposed exercise of any right in, any Warrant, unless the Warrant Registrar
shall have first received certification in the form of Exhibit
B
hereto
that such transfer or exercise is made in accordance with the provisions of
Regulation S.
(3) The
Warrant Register shall be in written form in the English language and shall
include a record of the certificate number of each Warrant issued, and shall
show the number of Warrants, the date of issue, all subsequent transfer and
changes of ownership in respect thereof and the names, tax identifying numbers
(if relevant to a specific holder) and addresses of the holders.
(4) Subject
to its receipt of one Business Day’s advanced notice, the Warrant Registrar
shall at all reasonable times during office hours make the Warrant Register
available to the Company, the Warrant Agent, the holders of Warrants or any
person authorized by the Company in writing for inspection and at the expense
of
the person making such request, for the taking of copies thereof or extracts
therefrom, and at the expense of the Company, the Warrant Registrar shall
deliver to such persons all lists of holders of Warrants, their addresses,
number of holdings and other details as they may reasonably
request.
10
(5) The
Warrant Registrar shall only register the transfer of an interest in a Warrant
if the requested transfer is (i) being made by a person who has provided the
Warrant Registrar with a certification in the form of Exhibit
B
hereto
or (ii) pursuant to an effective registration statement under the Securities
Act
with certification to that effect from such holder.
(6) No
service charge shall be made to a holder of a beneficial interest in a Global
Warrant or to a holder of a Definitive Warrant for any registration of transfer
or exchange, but the Company or the Warrant Agent may require payment of a
sum
sufficient to cover any tax or other governmental charge payable in connection
therewith
and may
require that a Person receiving Definitive Warrants bear the cost of insurance,
postage, transportation and the like in the event that such Person does not
receive such Definitive Warrants in person at the offices of the Warrant Agent
or Warrant Registrar.
(7) All
Global Warrants and Definitive Warrants issued upon any registration of transfer
or exchange of Global Warrants or Definitive Warrants shall be the duly
authorized, executed and issued warrants for Common Stock of the Company, not
subject to any preemptive rights, and entitled to the same benefits under this
Agreement, as the Global Warrants or Definitive Warrants surrendered upon such
registration of transfer or exchange.
(8) Prior
to
due presentment for the registration of a transfer of any Warrant, the Warrant
Agent, and the Company may deem and treat the Person in whose name any Warrant
is registered as the absolute owner of such Warrant for all purposes and none
of
the Warrant Agent, Warrant Registrar or the Company shall be affected by notice
to the contrary.
(9) The
Warrant Registrar shall countersign Global Warrants and Definitive Warrants
in
accordance with the provisions of Section
3.2
hereof.
(g) Facsimile
Submissions to Warrant Agent
All
certifications, certificates and Opinions of Counsel required to be submitted
to
the Warrant Agent pursuant to this Section
3.5
to
effect a registration of transfer or exchange may be submitted by
facsimile.
Notwithstanding
anything herein to the contrary, as to any certificates and/or certifications
delivered to the Warrant Agent pursuant to this Section
3.5,
the
Warrant Registrar’s and the Warrant Agent’s duties shall be limited to
confirming that any such certifications and certificates delivered to it are
in
the form of Exhibit
B
attached
hereto. The Warrant Agent shall not be responsible for confirming the truth
or
accuracy of representations made in any such certifications or certificates
and
Warrant Agent. As to any Opinions of Counsel delivered pursuant to this
Section
3.5,
the
Warrant Registrar and Warrant Agent may conclusively rely upon, and be fully
protected in relying upon, such opinions.
11
3.6 Replacement
Warrants
If
any
mutilated Warrant is surrendered to the Warrant Agent or the Company and the
Warrant Agent receives evidence to its satisfaction of the destruction, loss
or
theft of any Warrant, the Company shall issue and the Warrant Agent, upon
receipt of a Warrant Countersignature Order, shall countersign a replacement
Warrant if the Warrant Agent’s requirements are met. The
holder of such Warrant shall (i) provide sufficient security or indemnity to
the
Company, the Warrant Agent or any agent of the Company or the Warrant Agent
as
may be required by each of them to indemnify and hold each of them harmless
from
any loss that any of them may suffer in connection with such replacement; and
(ii) reimburse the Company and the Warrant Agent or any of their agents, as
the
case may be, for their expenses incurred in connection with such replacement.
Every
replacement Warrant issued in accordance with this Section shall be a valid
obligation of the Company, evidencing the same warrant as the mutilated,
destroyed, lost or stolen Warrant, and shall be entitled to all of the benefits
of this Agreement equally and proportionately with all other Warrants duly
issued hereunder.
3.7 Cancellation
The
Company and the Warrant Registrar shall deliver to the Warrant Agent any
Warrants surrendered to them for registration of transfer, exchange, replacement
or exercise. The Warrant Agent and no one else shall cancel all Warrants
surrendered for registration of transfer, exchange, exercise, replacement or
cancellation and shall dispose of canceled Warrants (subject to the record
retention requirement of the Exchange Act) in accordance with its customary
procedures. Upon the Company’s written request, certification of the disposition
of all canceled Warrants shall be delivered to the Company. The Company may
not
issue new Warrants to replace Warrants that have been exercised or that have
been delivered to the Warrant Agent for cancellation.
|
SECTION
4.
|
SEPARATION
OF WARRANTS; EXERCISE OF WARRANTS; TERMS OF
WARRANTS
|
(a) The
Notes
and Warrants will be separately transferable from the date hereof. Subject
to
the terms of this Agreement, each holder of Warrants shall have the right,
which
may be exercised during the period commencing at the opening of business on
the
date hereof and until 11:59 pm, Hong Kong time, on the Warrant Expiration Date
(the “Exercise
Period”),
to
receive from the Company the number of fully paid and non-assessable Warrant
Shares which the holder may at the time be entitled to receive on exercise
of
such Warrants and payment of the applicable Exercise Price then in effect
(subject to sub-clause (e) below) (i) in cash, by wire transfer or by certified
or official bank check payable to the order of the Company, (ii) by tendering
Notes having a principal amount of premium, interest and other amounts actually
outstanding at the time of tender equal to the applicable Exercise Price then
in
effect or (iii) any combination of cash or Notes.
12
(b) Each
Warrant not exercised prior to 11:59 p.m., Hong Kong time, on the Warrant
Expiration Date shall become void and all rights thereunder and all rights
in
respect thereof under this Agreement shall cease as of such time. The Warrant
Agent shall have no responsibility for making any allocation between items
(i)
through (iv) in Section
4(a)
above.
No adjustments as to dividends will be made upon exercise of the
Warrants.
(c) In
order
to exercise all or any of the Warrants represented by a Warrant Certificate,
(i)
in the case of a Definitive Warrant, the holder thereof must surrender upon
exercise the Warrant Certificate to the Company before 11:59 p.m., Hong Kong
time on any Business Day prior to the Warrant Expiration Date, at the corporate
trust office of the Warrant Agent set forth in Section
16
hereof
during normal business hours of the Warrant Agent and (ii) in the case of a
book-entry interest in a Global Warrant, the exercising Participant whose name
appears on a securities position listing of Euroclear or Clearstream as the
holder of such book-entry interest must comply with Euroclear or Clearstream’s
procedures relating to the exercise of such book-entry interest in such Global
Warrant. In each of (i) and (ii), the holder of the Warrants shall execute
the
form of election to purchase attached to the Warrant Certificate, and upon
receipt of such executed form, the Warrant Agent shall promptly, but in no
event
later than three (3) Business Days following receipt thereof, notify the Company
and deliver a copy of such form election to purchase. In the event of exercise
via tender of Notes, the Company shall be solely responsible for calculating
any
interest or other amounts owing thereunder, and the Warrant Agent shall have
no
responsibility to make any such calculation.
(d) Subject
to the provisions of Section
5
hereof,
upon compliance with clause (c) above, the Company shall deliver or cause to
be
delivered with all reasonable dispatch, to or to the written order of the holder
and in such name or names as the holder may designate, a certificate or
certificates for the number of whole Warrant Shares issuable upon the exercise
of such Warrants or other securities or property to which such holder is
entitled hereunder, together with cash as provided in Section
9
hereof;
provided
that if
any consolidation, merger or lease or sale of assets is proposed to be effected
by the Company or its subsidiaries as described in Section
8(j)
hereof,
or a tender offer or an exchange offer for shares of Common Stock shall be
made,
upon such surrender of Warrants and payment of the applicable Exercise Price
in
accordance with clause (c) above, the Company shall, as soon as possible, but
in
any event not later than two Business Days thereafter, deliver or cause to
be
delivered the full number of Warrant Shares issuable upon the exercise of such
Warrants in the manner described in this sentence or other securities or
property to which such holder is entitled hereunder, together with cash as
provided in Section
9
hereof.
Such certificate or certificates shall be deemed to have been issued and any
Person so designated to be named therein shall be deemed to have become a holder
of record of such Warrant Shares as of the date of the surrender of such
Warrants and payment of the applicable Exercise Price.
(e) The
Warrants shall be exercisable, at the election of the holders thereof, either
in
full or in part from time to time during the Exercise Period; provided
that
notwithstanding
any other provision of this Agreement, no Person shall be entitled
to
exercise
the Warrants to the extent that such exercise would result in beneficial
ownership by such Person and its Affiliates of more than 9.9% of the then
outstanding number of shares of Common Stock on such date. For the purposes
of
this Agreement beneficial ownership shall be determined in accordance with
Section 13(d) of the Exchange Act and Regulation 13d-3 thereunder. If
less
than all the Warrants represented by a Warrant Certificate are exercised, such
Warrant Certificate shall be surrendered and a new Warrant Certificate of the
same tenor and for the number of Warrants which were not exercised shall be
executed by the Company and delivered to the Warrant Agent and the Warrant
Agent
shall, upon receipt of a Warrant Countersignature Order, countersign the new
Warrant Certificate, registered in such name or names as may be directed in
writing by the holder, and shall deliver or cause to be delivered the new
Warrant Certificate to the Person or Persons entitled to receive the same.
13
(f) All
Warrant Certificates surrendered upon exercise of Warrants shall be delivered
to
and canceled by the Warrant Agent. Such canceled Warrant Certificates shall
then
be disposed of by the Warrant Agent in accordance with its customary procedures.
The Warrant Agent shall report promptly to the Company with respect to Warrants
exercised.
(g) The
Warrant Agent shall keep copies of this Agreement and any notices given or
received hereunder available for inspection by the holders which shall be
allowed upon prior written request with reasonable notice and during normal
business hours at its office. The Company shall supply the Warrant Agent from
time to time with such numbers of copies of this Agreement as the Warrant Agent
may request.
|
SECTION
5.
|
PAYMENT
OF TAXES
|
The
Company shall pay all securities transaction taxes and documentary stamp taxes
attributable to the initial issuance of Warrant Shares upon the exercise of
Warrants; provided
that the
Company shall not be required to pay any tax or taxes which may be payable
in
respect of any transfer involved in the issue of any Warrant Certificates or
any
certificates for Warrant Shares in a name other than that of the registered
holder of a Warrant Certificate surrendered upon the exercise of a Warrant,
and
the Company shall not be required to issue or deliver such Warrant Certificates
unless or until the Person or Persons requesting the issuance thereof shall
have
paid to the Company the amount of such tax or shall have established to the
satisfaction of the Company that such tax has been paid.
|
SECTION
6.
|
RESERVATION
OF WARRANT SHARES
|
(a) The
Company shall at all times reserve and keep available, free and clear of all
liens, security interests, charges and other encumbrances or restrictions on
sale, free from preemptive rights, out of the aggregate of its authorized but
unissued Common Stock or the authorized and issued Common Stock held in its
treasury, for the purpose of enabling it to satisfy any obligation to issue
Warrant Shares upon exercise of Warrants, the maximum number of shares of Common
Stock which may then be deliverable upon the exercise of all outstanding
Warrants.
(b) Interwest
Transfer, Inc., or any other transfer agent for the Common Stock to be appointed
by the Company (the “Transfer
Agent”)
and
every subsequent transfer agent for any shares of the Company’s capital stock
issuable upon the exercise of any of the rights of purchase aforesaid will
be
irrevocably authorized and directed at all times to reserve such number of
authorized shares as shall be required for such purpose. The Company shall
keep
a copy of this Agreement on file with the Transfer Agent and with every
subsequent transfer agent for any shares of the Company’s capital stock issuable
upon the exercise of the rights of purchase represented by the Warrants. The
Company shall supply such Transfer Agent with duly executed certificates for
such purposes and shall provide or otherwise make available any cash which
may
be payable as provided in Section
9
hereof.
The Company shall furnish such Transfer Agent with a copy of all notices of
adjustments, and certificates related thereto, transmitted to each holder
pursuant to Section
11
hereof.
14
(c) Before
taking any action which would cause an adjustment pursuant to Section
8
hereof
to reduce the Exercise Price below the then par value (if any) of the Warrant
Shares, the Company shall take any corporate action which may, in the opinion
of
its counsel, be necessary in order that the Company may validly and legally
issue fully paid and non-assessable Warrant Shares at the Exercise Price as
so
adjusted.
(d) The
Company covenants that all Warrant Shares which may be issued upon exercise
of
Warrants shall, upon issue, be fully paid, non-assessable, free of preemptive
rights and free from all taxes, liens, charges and security interests with
respect to the issuance thereof.
|
SECTION
7.
|
OBTAINING
STOCK EXCHANGE LISTINGS.
|
The
Company shall from time to time take all action which may be necessary so that
the Warrant Shares, immediately upon their issuance upon the exercise of
Warrants, will be listed on the principal securities exchange, automated
quotation system or other internationally-recognized stock market on which
the
Common Stock is then listed in the United States, if any.
|
SECTION
8.
|
ADJUSTMENT
OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES
ISSUABLE
|
The
applicable Exercise Price and the number of Warrant Shares issuable upon the
exercise of each Warrant shall be subject to adjustment from time to time during
the Exercise Period upon the occurrence of the events enumerated in this
Section
8;
provided
that in
no event shall the applicable Exercise Price be less than the then current
par
value of Common Stock, provided
further that
if
by virtue of an adjustment under this Agreement, the Warrant Exercise Price
is
to be reduced to below the par value, the Company shall take all action
practicable to reduce the par value of the Common Stock to a value equal to
and
below such adjusted Exercise Price, and if not practicable, to the lowest
practicable value which shall also be the adjusted Exercise Price. For purposes
of this Section
8,
“Common
Stock” includes shares now or hereafter authorized of any class of common stock
of the Company and any other stock of the Company, however designated, that
has
the right (subject to any prior rights of any class or series of preferred
stock) to participate in any distribution of the assets or earnings of the
Company without limit as to per share amount.
In
addition to the adjustments required under this Section
8,
the
Company may, at any time, reduce the applicable Exercise Price to any amount
greater than or equal to $.0001 per share for any period of time (but not less
than 20 Business Days) deemed appropriate by the Board of Directors of the
Company.
15
(a) Adjustment
for Change in Capital Stock.
If
the
Company (i) pays a dividend or makes a distribution on its Common Stock payable
in shares of its Common Stock, (ii) subdivides its outstanding shares of Common
Stock into a greater number of shares, (iii) combines its shares of outstanding
Common Stock into a smaller number of shares or (iv) issues by reclassification
of its Common Stock any shares of its capital stock, then the applicable
Exercise Price in effect immediately prior to such action shall, subject to
the
proviso to the first sentence of the first paragraph of this Section
8,
be
proportionately adjusted so that the holder of any Warrant thereafter exercised
may receive the aggregate number and kind of shares of capital stock of the
Company which such holder would have owned immediately following such action
as
if such Warrant had been exercised immediately prior to such action.
The
adjustment shall become effective immediately after the record date in the
case
of a dividend or distribution and immediately after the effective date in the
case of a subdivision, combination or reclassification. If, after an adjustment,
a holder of a Warrant upon exercise of it may receive shares of two or more
classes of capital stock of the Company, the Company shall determine, in good
faith, the allocation of the adjusted Exercise Price between the classes of
capital stock. After such allocation, the exercise privilege and the applicable
Exercise Price of each class of capital stock shall thereafter be subject to
adjustment on terms comparable to those applicable to Common Stock in this
Section
8.
Such
adjustment shall be made successively whenever any event listed above shall
occur.
(b) Adjustment
for Rights Issue.
If
the
Company distributes any rights, options or warrants to all holders of its Common
Stock entitling them for a period expiring within 60 days after the record
date
set forth below to subscribe for shares of Common Stock or securities
convertible into, or exchangeable or exercisable for, shares of Common Stock,
in
either case, at a price per share less than the Market Value per share on that
record date, the applicable Exercise Price shall be adjusted in accordance
with
the formula:
O
+
N
x
P
E’ = E x
M
O
+
N
where:
|
E’
|
=
|
the
adjusted Exercise Price.
|
|
E
|
=
|
the
then current Exercise Price.
|
|
O
|
=
|
the
number of shares of Common Stock outstanding on the record
date.
|
|
N
|
=
|
the
number of shares of additional Common Stock issued pursuant to such
rights, options or warrants.
|
16
|
P
|
=
|
the
price per share of the additional shares of Common
Stock.
|
|
M
|
=
|
the
Market Value per share of Common Stock on the record
date.
|
The
adjustment shall be made successively whenever any such rights, options or
warrants are issued and shall become effective immediately after the record
date
for the determination of stockholders entitled to receive the rights, options
or
warrants. If at the end of the period during which such rights, options or
warrants are exercisable, not all rights, options or warrants shall have been
exercised, the applicable Exercise Price shall be promptly readjusted to what
it
would have been if “N” in the above formula had been the number of shares
actually issued.
(c) Adjustment
for Other Distributions.
If
the
Company distributes to all holders of its Common Stock any of its assets
(including cash), debt securities, preferred stock or any rights or warrants
to
purchase assets (including cash), debt securities, preferred stock or other
securities of the Company, the applicable Exercise Price shall be adjusted
in
accordance with the formula:
| E’ |
=
E x M –
F
|
M
where:
|
E’
|
=
|
the
adjusted Exercise Price.
|
|
E
|
=
|
the
then current Exercise Price.
|
|
M
|
=
|
the
Market Value per share of Common Stock on the record date mentioned
below.
|
|
F
|
=
|
the
fair market value on the record date of the debt securities, preferred
stock, assets (including cash), securities, rights or warrants to
be
distributed in respect of one share of Common Stock as determined
in good
faith by the Board of Directors of the Company based on a written
opinion
of an internationally recognized investment banking, appraisal or
valuation firm that is not an Affiliate of the
Company.
|
The
adjustment shall be made successively whenever any such distribution is made
and
shall become effective immediately after the record date for the determination
of stockholders entitled to receive the distribution.
This
Section
8(c)
shall
not apply to distributions of stock referred to in Section
8(a)
or of
rights, options or warrants referred to in Section
8(b)
hereof.
17
(d) Adjustment
for Common Stock Issue.
If
the
Company issues shares of Common Stock for a consideration per share less than
the Exercise Price per share on the date the Company fixes the offering price
of
such additional shares, the applicable Exercise Price shall be adjusted in
accordance with the formula:
P
E’
=
E x O
+
E
A
where:
|
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.
|
The
adjustment shall be made successively whenever any such issuance is made, and
shall become effective immediately after such issuance.
This
subsection (d) shall not apply to:
(1) any
of
the transactions described in subsections (a), (b) or (c) of this Section
8,
including, without limitation, the shares of Common Stock issuable upon the
exercise thereof,
(2) the
exercise of Warrants, or the conversion, exchange or exercise of other
securities convertible into or exchangeable or exercisable for Common Stock
the
issuance of which requires an adjustment to be made under Section
8(e),
(3) the
issuance of Common Stock to employees, officers or directors of the Company
or
its subsidiaries under other bona fide employee benefit plans adopted by the
Board of Directors and approved by the holders of Common Stock when required
by
law, if such Common Stock would otherwise be covered by this subsection (d),
but
only to the extent that the aggregate number of shares excluded hereby and
issued after the date of this Warrant Agreement shall not, together with options
exercisable for Common Stock issued under the employee benefit plans referred
to
Section 8(e)(2), exceed 3,000,000 shares of Common Stock (as adjusted
proportionally for stock dividends, stock splits, combinations,
recapitalizations and the like) per calendar year, or
18
(4) the
issuance of Common Stock issuable upon the conversion, exchange or exercise
of
other securities, warrants, options or similar rights if the conversion,
exchange or exercise price is not less than the Exercise Price per share of
Common Stock at the time the security, warrant, option or right so converted,
exchanged or exercised was issued or granted.
(e) Adjustment
for Convertible Securities Issue.
If
the
Company issues any securities convertible into or exchangeable or exercisable
for Common Stock (other than securities issued in transactions described in
subsections (a), (b) or (c) of this Section
8)
for a
consideration per share of Common Stock initially deliverable upon conversion,
exchange or exercise of such securities less than the Exercise Price per share
on the date of issuance of such securities or on the date the Company fixes
the
offering price of such securities, the applicable Exercise Price shall be
adjusted in accordance with the formula:
P
O + E
E’ = E
x
O + D
where:
|
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 securities.
|
|
P
|
=
|
the
aggregate consideration received for the issuance of such
securities.
|
|
D
|
=
|
the
maximum number of shares of Common Stock deliverable upon conversion
or in
exchange for such securities at the initial conversion, exchange
or
exercise rate.
|
The
adjustment shall be made successively whenever any such issuance is made, and
shall become effective immediately after such issuance.
If
all of
the Common Stock deliverable upon conversion, exchange or exercise of such
securities have not been issued when such securities are no longer outstanding,
then the applicable Exercise Price shall promptly be readjusted to the
applicable Exercise Price which would then be in effect had the adjustment
upon
the issuance of such securities been made on the basis of the actual number
of
shares of Common Stock issued upon conversion, exchange or exercise of such
securities.
19
This
subsection (e) shall not apply to:
(1)
convertible securities issued to stockholders of any Person which merges into
the Company, or with a subsidiary of the Company, in proportion to their stock
holdings of such person immediately prior to such merger, upon such merger,
provided
that if
such Person is an Affiliate of the Company, the Board of Directors shall have
obtained a fairness opinion from a internationally recognized investment
banking, appraisal or valuation firm, which is not an Affiliate of the Company,
stating that the consideration received in such merger is fair to the Company
from a financial point of view, or
(2)
the
issuance of options exercisable for Common Stock to employees, officers or
directors of the Company or its subsidiaries under other bona fide employee
benefit plans adopted by the Board of Directors and approved by the holders
of
Common Stock when required by law, if such Common Stock would otherwise be
covered by this subsection (e), but only to the extent that the aggregate number
of shares excluded hereby and issued after the date of this Warrant Agreement
shall not, together with Common Stock issued under the employee benefit plans
referred to in Section
8(d)(3),
exceed
3,000,000 shares of Common Stock (as adjusted proportionally for stock
dividends, stock splits, combinations, recapitalizations and the like) per
calendar year.
(f) Consideration
Received.
For
purposes of any computation respecting consideration received pursuant to
subsections (d) and (e) of this Section
8,
the
following shall apply:
(1) in
the
case of the issuance of shares of Common Stock for cash, the consideration
shall
be the amount of such cash, provided
that in
no case shall any deduction be made for any commissions, discounts or other
expenses incurred by the Company for any underwriting of the issue or otherwise
in connection therewith;
(2) in
the
case of the issuance of shares of Common Stock for a consideration in whole
or
in part other than cash, the consideration other than cash shall be deemed
to be
the fair market value thereof as determined in good faith by the Board of
Directors based on a written opinion of an internationally recognized investment
banking, appraisal or valuation firm that is not an Affiliate of the Company
(irrespective of the accounting treatment thereof), whose determination shall
be
conclusive, and described in a Board resolution which shall be filed with the
Warrant Agent;
(3) in
the
case of the issuance of securities convertible into or exchangeable or
exercisable for shares of Common Stock, the aggregate consideration received
therefor shall be deemed to be the consideration received by the Company for
the
issuance of such securities plus the additional minimum consideration, if any,
to be received by the Company upon the conversion, exchange or exercise thereof
(the consideration in each case to be determined in the same manner as provided
in clauses (1) and (2) of this subsection (f)); and
20
(4) in
the
case of the issuance of shares of Common Stock pursuant to rights, options
or
warrants which rights, options or warrants were originally issued together
with
one or more other securities as part of a unit at a price per unit, the
consideration shall be deemed to be the fair value of such rights, options
or
warrants at the time of issuance thereof as determined in good faith by the
Board of Directors based on a written opinion of an internationally recognized
investment banking, appraisal or valuation firm that is not an Affiliate of
the
Company and in accordance with GAAP whose determination shall be conclusive
and
described in a Board resolution, which shall be filed with the Warrant Agent,
plus the additional minimum consideration, if any, to be received by the Company
upon the exercise, conversion or exchange thereof (as determined in the same
manner as provided in clauses (1) and (2) of this subsection (f)).
(g) When
De Minimis Adjustment May Be Deferred.
No
adjustment in the applicable Exercise Price need be made unless the adjustment
would require an increase or decrease of at least 1% in the applicable Exercise
Price. Any adjustments that are not made shall be carried forward and taken
into
account in any subsequent adjustment. All calculations under this Section
8
shall be
made by the Company to the nearest cent or to the nearest 1/100th of a share,
as
the case may be, it being understood that no such rounding shall be made under
subsection (n).
(h) When
No Adjustment Required.
With
respect to Warrants of any holder, no adjustment need be made for a transaction
referred to Section
8(a),
(b),
(c),
(d)
or
(e)
hereof,
if such holder is to participate (without being required to exercise its
Warrants) in the transaction on a basis and with notice that the Board of
Directors determines to be fair and appropriate in light of the basis and notice
on which holders of Common Stock participate in the transaction. No adjustment
need be made for (i) rights to purchase Common Stock pursuant to a Company
plan
for reinvestment of dividends or interest or (ii) a change in the par value or
no par value of the Common Stock. To the extent the Warrants become convertible
into cash, no adjustment need be made thereafter as to the cash. Interest will
not accrue on the cash.
(i) Notice
of Adjustment.
Whenever
the applicable Exercise Price is adjusted, the Company shall provide the notices
required by Section
11
hereof.
(j) Financial
Trigger.
If
and at
each time, upon completion of the annual audit of the Company’s financial
statements for the fiscal year ending December 31, 2007 and the fiscal year
ending December 31, 2008 a Financial Trigger shall have occurred in such fiscal
year, then within five (5) Business Days following issuance of the review or
audit report, as the case may be, for such fiscal year, the Exercise Price
shall
be adjusted (such adjustment to take effect as of the date of its determination)
by multiplying it by a fraction, (i) the numerator of which is the sum of (a)
the number of shares of Common Stock outstanding immediately before such
adjustment to the Exercise Price and (b) 87,000 shares of Common Stock (which
number shall be adjusted according to the terms of Section
8(a)),
and
(ii) the denominator of which is the number of shares of Common Stock
outstanding immediately before such adjustment to the Exercise
Price.
21
(k) Reorganization
of Company.
(1) If
the
Company consolidates or merges with or into, or transfers or leases all or
substantially all its assets to, any Person, upon consummation of such
transaction the Warrants shall automatically become exercisable for the kind
and
amount of securities, cash or other assets which the holder of a Warrant would
have owned immediately after the consolidation, merger, transfer or lease if
the
holder had exercised the Warrant immediately before the effective date of the
transaction. Concurrently with the consummation of such transaction, the
corporation formed by or surviving any such consolidation or merger if other
than the Company, or the Person to which such sale or conveyance shall have
been
made, shall enter into (i) a supplemental warrant agreement so providing and
further providing for adjustments which shall be as nearly equivalent as may
be
practical to the adjustments provided for in this Section
8
and (ii)
a supplement to the Equity Registration Rights Agreement providing for the
assumption of the Company’s obligations thereunder. The successor company shall
mail to Warrant holders a notice describing the supplemental warrant agreement
and Equity Registration Rights Agreement. If the issuer of securities
deliverable upon exercise of Warrants under the supplemental warrant agreement
is an Affiliate of the formed, surviving, transferee or lessee corporation,
such
issuer shall join in the supplemental warrant agreement and Equity Registration
Rights Agreement. If this Section
8(k)
shall be
applicable, Sections
8(a),
(b),
(c),
(d),
(e)
and
(f)
hereof
shall not be applicable to such consolidation, merger, transfer or
lease.
(2) Notwithstanding
subclause (1) above, if (A) the Company consolidates or merges with or into,
or
sells, transfers or leases all or substantially all its assets to, any Person
and in connection therewith, the consideration payable to holders of shares
of
Common Stock in exchange for their shares of Common Stock is payable solely
in
cash or (B) proceedings commence for the voluntary or involuntary dissolution,
liquidation or winding up of the Company, then the Warrants shall automatically
be exercised into such number of Warrant Shares as is determined pursuant to
the
provisions of Section
4(a),
and the
Warrant Certificate representing such Warrants shall be deemed canceled. As
a
result of such conversion, each holder of Warrant Shares shall be entitled
to
receive distributions on an equal basis with the holders of the shares of Common
Stock. If this Section
8(k)
applies
to a transaction, Sections
8(a),
(b),
(c),
(d)
and
(e)
hereof
do not apply to such transaction.
(l) Company
Determination Final.
The
Company or the Board of Directors shall make any determination pursuant to
Section
8(a),
(b),
(c),
(d),
(e),
(f),
(g)
or
(h)
hereof
in good faith. Notwithstanding the foregoing, if the holders of more than 25%
of
the Warrants object to any such determination, the Company shall appoint an
Independent Financial Advisor to make such determination, which if made in
good
faith shall be conclusive.
22
(m) Warrant
Agent’s Disclaimer.
The
Warrant Agent shall have no duty to determine when an adjustment under this
Section
8
should
be made, how it should be made or what it should be. The Warrant Agent shall
have no duty to determine whether a supplemental warrant agreement under
Section
8(k)
need be
entered into or whether any provisions of a supplemental warrant agreement
under
Section
8(k)
hereof
are correct. The Warrant Agent makes no representation as to the validity or
value of any securities or assets issued upon exercise of Warrants. The Warrant
Agent shall not be responsible for the Company’s failure to comply with this
Section
8.
The
Warrant Agent shall not be required to make or be responsible for any
calculations under this Section
8.
(n) When
Issuance or Payment May Be Deferred.
In
any
case in which this Section
8
shall
require that an adjustment in the applicable Exercise Price be made effective
as
of a record date for a specified event, the Company may elect to defer until
the
occurrence of such event (i) issuing to the holder of any Warrant exercised
after such record date the Warrant Shares and other capital stock of the
Company, if any, issuable upon such exercise over and above the Warrant Shares
and other capital stock of the Company, if any, issuable upon such exercise
on
the basis of the applicable Exercise Price and (ii) paying to such holder any
amount in cash in lieu of a fractional share pursuant to Section
9
hereof;
provided
that the
Company shall deliver to such holder a due bill or other appropriate instrument
evidencing such holder’s right to receive such additional Warrant Shares, other
capital stock and cash upon the occurrence of the event requiring such
adjustment.
(o) Adjustment
in Number of Shares.
Upon
each
adjustment of the applicable Exercise Price pursuant to this Section
8,
each
Warrant outstanding prior to the making of the adjustment in the applicable
Exercise Price shall thereafter evidence the right to receive upon payment
of
the adjusted Exercise Price that number of shares of Common Stock (calculated
to
the nearest hundredth) obtained from the following formula:
| N’ |
=
N
x E
|
E’
where:
|
N’
|
=
|
the
adjusted number of Warrant Shares issuable upon exercise of a Warrant
by
payment of the adjusted Exercise
Price.
|
|
N
|
=
|
the
number or Warrant Shares previously issuable upon exercise of a Warrant
by
payment of the Exercise Price prior to
adjustment.
|
|
E’
|
=
|
the
adjusted Exercise Price.
|
|
E
|
=
|
the
Exercise Price prior to adjustment.
|
23
(p) Form
of Warrants.
Irrespective
of any adjustments in the applicable Exercise Price or the number or kind of
shares purchasable upon the exercise of the Warrants, Warrants theretofore
or
thereafter issued may continue to express the same price and number and kind
of
shares as are stated in the Warrants initially issuable pursuant to this
Agreement.
(q) No
Impairment.
If any
event shall occur as to which the provisions of Section
8
are not
strictly applicable but the failure to make any adjustment would adversely
affect the purchase rights represented by the Warrants in accordance with the
essential intent and principles of such Section, then, in each such case, the
Company shall appoint an investment banking firm of recognized international
standing, or any other financial expert that does not (or whose directors,
officers, employees, or affiliates do not) have a direct or material indirect
financial interest in the Company or any of its subsidiaries, who has not been,
and, at the time it is called upon to given independent financial advice to
the
Company, is not (and none of its directors, officers, employees or affiliates)
are a promoter, director or officer of the Company or any of its subsidiaries,
which shall give their opinion upon the adjustment, if any, on a basis
consistent with the essential intent and principles established in Section
8
necessary to preserve, without dilution, the purchase rights represented by
the
Warrants. Upon receipt of such opinion, the Company will promptly deliver a
copy
thereof to the Warrant Agent and shall make the adjustments described
therein.
|
SECTION
9.
|
FRACTIONAL
INTERESTS
|
The
Company shall not be required to issue fractional Warrant Shares on the exercise
of Warrants. If more than one Warrant shall be presented for exercise in full
at
the same time by the same holder, the number of full Warrant Shares which shall
be issuable upon the exercise thereof shall be computed on the basis of the
aggregate number of Warrant Shares purchasable on exercise of the Warrants
so
presented. If any fraction of a Warrant Share would, except for the provisions
of this Section
9,
be
issuable on the exercise of any Warrants (or specified portion thereof), the
Company shall round up the number of Warrant Shares issued to the nearest whole
number.
|
SECTION
10.
|
SHORTING
TRANSACTIONS
|
If
any
Holder (the “Disposing
Holder”)
or any
of its Affiliates or one or more Persons acting in concert with such Holder
shall have directly or indirectly, executed any disposition, including Short
Sales, in the Common Stock during any Reset Price Determination Period, and
the
Exercise Price immediately prior to such Reset Date (the “ex-Reset
Exercise Price”)
is
reset downward on such Reset Date (the “Post
Reset Exercise Price”)
as a
result of such disposition by the Disposing Holder, then the Disposing Holder
shall indemnify the Company for the loss equals to (x) the difference between
the ex-Reset Exercise Price and Post Reset Exercise Price multiplied by (y)
the
number of Warrant Shares exercised by any Holder during the period between
such
Reset Date and the immediately subsequent Reset Date. For the purpose of this
Agreement, “Short
Sales”
shall
include all “short sales” as defined in Rule 200 of Regulation SHO under the
Exchange Act.
24
|
SECTION
11.
|
NOTICES
TO WARRANT HOLDERS
|
(a) Upon
any
adjustment of the applicable Exercise Price pursuant to Section
8
hereof,
the Company shall promptly thereafter (i) cause to be filed with the Warrant
Agent a certificate of a firm of independent public accountants of recognized
standing selected by the Board of Directors of the Company (who may be the
regular auditors of the Company) setting forth the applicable Exercise Price
after such adjustment and setting forth in reasonable detail the method of
calculation and the facts upon which such calculations are based and setting
forth the number of Warrant Shares (or portion thereof) issuable after such
adjustment in the applicable Exercise Price, upon exercise of a Warrant and
payment of the adjusted Exercise Price, which certificate shall be conclusive
evidence of the correctness of the matters set forth therein, and (ii) cause
to
be given to each of the registered holders of Warrants at the address appearing
on the Warrant register for each such registered holder written notice of such
adjustments by first-class mail, postage prepaid. Where appropriate, such notice
may be given in advance and included as a part of the notice required to be
mailed under the other provisions of this Section 11.
(b) In
the
event:
(i) that
the
Company shall authorize the issuance to all holders of shares of Common Stock
of
rights, options or warrants to subscribe for or purchase shares of Common Stock
or of any other subscription rights or warrants;
(ii) that
the
Company shall authorize the distribution to all holders of shares of Common
Stock of evidences of its indebtedness or assets;
(iii) of
any
consolidation or merger to which the Company is a party and for which approval
of any stockholders of the Company is required, or of the conveyance, lease
or
transfer of all or substantially all of the Company’s properties and assets, or
of any reclassification or change of Common Stock issuable upon exercise of
the
Warrants (other than a change in par value, or from par value to no par value,
or from no par value to par value, or as a result of a subdivision or
combination), or a tender offer or exchange offer for shares of Common
Stock;
(iv) of
the
voluntary or involuntary dissolution, liquidation or winding up of the Company;
or
(v) that
the
Company proposes to take any action which would require an adjustment of the
applicable Exercise Price pursuant to Section
8
hereof;
then
the
Company shall cause to be filed with the Warrant Agent and shall cause to be
given to each of the registered holders of Warrants at his address appearing
on
the Warrant Register, at least 20 days (or 10 days in any case specified in
clauses (i) or (ii) above) prior to the applicable record date hereinafter
specified, or promptly in the case of events for which there is no record date,
by first-class mail, postage prepaid, a written notice stating (x) the date
as
of which the holders of record of shares of Common Stock to be entitled to
receive any such rights, options, warrants or distribution are to be determined,
(y) the initial expiration date set forth in any tender offer or exchange offer
for shares of Common Stock, or (z) the date on which any such consolidation,
merger, conveyance, transfer, dissolution, liquidation or winding up is expected
to become effective or consummated, and the date as of which it is expected
that
holders of record of shares of Common Stock shall be entitled to exchange such
shares for securities or other property, if any, deliverable upon such
reclassification, consolidation, merger, conveyance, transfer, dissolution,
liquidation or winding up. If the Warrant Agent is asked to give notice to
the
holders of the Warrants on behalf of the Company, such notice shall be delivered
to the Warrant Agent at least 5 Business Days prior to the latest time the
notice is required to be given to such holders under this section. The failure
to give the notice required by this Section
11
or any
defect therein shall not affect the legality or validity of any distribution,
right, option, warrant, consolidation, merger, conveyance, transfer,
dissolution, liquidation or winding up, or the vote upon any
action.
25
(c) Nothing
contained in this Agreement or in any of the Warrant Certificates shall be
construed as conferring upon the holders of Warrants the right to vote or to
consent or to receive notice as stockholders in respect of the meetings of
stockholders or the election of directors of the Company or any other matter,
or
any rights whatsoever as stockholders of the Company.
|
SECTION
12.
|
REDEMPTION
OF WARRANTS
|
(a) If
at any
time between the sixth anniversary of the date hereof and the Warrant Expiration
Date any Warrant remains unexercised, or if any Event of Default shall occur
under the Indenture (the fifteenth Business Day following any such time selected
by the Holder of a Warrant, or the fifteenth Business Day following the date
of
any Event of Default under the Indenture, the “Redemption
Date”),
then
on the Redemption Date the Company and the Controlling Shareholder agree to,
jointly and severally, and shall, redeem the Warrants tendered by such
Warrantholder for a price equal to the pro rata portion of the Redemption Price
that is applicable to the Warrants tendered by such Holder.
(b) Redemptions
of Warrants under this Section shall be made, at the option of the holder
thereof, upon:
(1) delivery
to the Company by a holder of a duly completed notice (the “Redemption
Notice”)
in the
form set forth on the reverse of the Warrant attached hereto as Exhibit
A
on the
date that is fifteen (15) Business Days prior to the Redemption Date;
and
(2) delivery
or book entry transfer of such Warrants to the Warrant Agent at any time after
delivery of the Redemption Notice (together with all necessary endorsements)
at
the address of the Warrant Agent specified in Section
17
hereof,
such delivery being a condition to receipt by the holder of the Redemption
Price
therefor; provided
that
such Redemption Price shall be so paid pursuant to this Section only if the
Warrant so delivered to the Warrant Agent shall conform in all respects to
the
description thereof in the related Redemption Notice.
(c) Any
redemption by the Company contemplated pursuant to the provisions of this
Section shall be consummated by the delivery of the consideration to be received
by the holder promptly following the later of the Redemption Date and the time
of the book entry transfer or delivery of the Warrant.
26
(d) Any
Warrants redeemed by the Company pursuant to Section
12(a)
shall be
canceled and no rights shall thereafter exist with respect to such
Warrants.
(e) Neither
the Company nor the Controlling Shareholder shall have any redemption rights
with respect to the Warrants except as expressly set forth in Section
12(a).
|
SECTION
13.
|
MERGER,
CONSOLIDATION OR CHANGE OF NAME OF WARRANT
AGENT
|
(a) Any
corporation into which the Warrant Agent may be merged or with which it may
be
consolidated, or any corporation resulting from any merger or consolidation
to
which the Warrant Agent shall be a party, or any corporation succeeding to
the
business of the Warrant Agent, shall be the successor to the Warrant Agent
hereunder without the execution or filing of any paper or any further act on
the
part of any of the parties hereto, provided
that
such corporation would be eligible for appointment as a successor warrant agent
under the provisions of Section
15
hereof.
In case at the time such successor to the Warrant Agent shall succeed to the
agency created by this Agreement, and in case at that time any of the Warrant
Certificates shall have been countersigned but not delivered, any such successor
to the Warrant Agent may adopt the countersignature of the original Warrant
Agent; and in case at that time any of the Warrant Certificates shall not have
been countersigned, any successor to the Warrant Agent may countersign such
Warrant Certificates in its own name upon receipt of a Warrant Countersignature
Order; and in all such cases such Warrant Certificates shall have the full
force
and effect provided in the Warrant Certificates and in this
Agreement.
(b) In
case
at any time the name of the Warrant Agent shall be changed and at such time
any
of the Warrant Certificates shall have been countersigned but not delivered,
the
Warrant Agent whose name has been changed may adopt the countersignature under
its prior name, and in case at that time any of the Warrant Certificates shall
not have been countersigned, the Warrant Agent may countersign such Warrant
Certificates either in its prior name or in its changed name, and in all such
cases such Warrant Certificates shall have the full force and effect provided
in
the Warrant Certificates and in this Agreement.
|
SECTION
14.
|
WARRANT
AGENT
|
The
Warrant Agent undertakes the duties and obligations imposed by this Agreement
upon the following terms and conditions, by all of which the Company and the
holders of Warrants, by their acceptance thereof, shall be bound and the rights
and protection provided to the Warrant Agent shall also apply to the Warrant
Registrar:
(a) The
statements contained herein and in the Warrant Certificates shall be taken
as
statements of the Company and the Warrant Agent assumes no responsibility for
the correctness of any of the same except such as describe the Warrant Agent
or
action taken or to be taken by it. The Warrant Agent assumes no responsibility
with respect to the distribution of the Warrant Certificates except as otherwise
provided herein.
27
(b) The
Warrant Agent shall not be responsible for any failure of the Company to comply
with any of the covenants contained in this Agreement or in the Warrant
Certificates to be complied with by the Company. The Warrant Agent shall not
be
liable for any action it takes or omits to take in good faith that it reasonably
believes to be authorized or within the rights or powers conferred upon it
by
this Warrant Agreement.
(c) Before
the Warrant Agent acts or refrains from acting, it may require an Officers’
Certificate or an Opinion of Counsel or both. The Warrant Agent shall not be
liable for any action it takes or omits to take in good faith in reliance on
such Officers’ Certificate or Opinion of Counsel. The Warrant Agent may at the
expense of the Company consult with counsel and the written advice of such
counsel or any Opinion of Counsel shall be full and complete authorization
and
protection from liability in respect of any action taken, suffered or omitted
by
it hereunder in good faith and in reliance thereon. The Company shall reimburse
the Warrant Agent and Warrant Registrar for any expenses, including attorneys
fees, incurred in connection with the actions contemplated by this Section 14.
(d) The
Warrant Agent may rely upon and shall not be liable for acting or refraining
from acting upon any written notice, instruction or request furnished to it
hereunder and believed by it to be genuine and to have been signed or presented
by the proper party or parties. The Warrant Agent shall be under no duty to
inquire into or investigate the validity, accuracy or content of any such
document except that the Warrant Agent shall verify the signatures of these
documents based on the specimen provided by the relevant party. Notwithstanding
the generality of the foregoing, each Holder shall be solely responsible for
making its own independent appraisal of and investigation into the financial
condition, creditworthiness, condition, affairs, status and nature of the
Company and any of its subsidiaries, and the Warrant Agent shall not at any
time
have any responsibility for the same and each Holder shall not rely on the
Warrant Agent in respect thereof.
(e) The
Warrant Agent shall not be required to give any bond or surety in respect of
the
performance of its power and duties hereunder.
(f) The
Warrant Agent shall have no duty to inquire as to the performance or observance
of any covenants, conditions or agreements on the part of the Company under
this
Agreement; but the Warrant Agent may require of the Company full information
and
advice as to the performance of the covenants, conditions and agreements
aforesaid.
(g) The
Warrant Agent may execute any of the trusts or powers hereunder or perform
any
duties hereunder either directly or by or through agents or attorneys and the
Warrant Agent shall not be responsible for any misconduct or negligence on
the
part of any agent or attorney appointed with due care by it
hereunder.
(h) The
Company shall pay the fees and expenses of the Warrant Agent and the Warrant
Registrar as may be separately agreed from time to time.
28
(i) The
Company agrees to pay to the Warrant Agent and Warrant Registrar compensation
as
agreed in writing for all services rendered by the Warrant Agent and Warrant
Registrar in the execution of this Agreement, to reimburse the Warrant Agent
and
Warrant Registrar for all expenses, taxes and governmental charges and other
charges of any kind and nature incurred by the Warrant Agent and Warrant
Registrar in the execution of this Agreement. The
Company hereby unconditionally and irrevocably covenants and undertakes to
indemnify and hold harmless the Warrant Agent
and
Warrant Registrar,
its
directors, officers, employees and agents (each an “indemnified
party”)
in
full at all times against all losses, liabilities, actions, proceedings, claims,
demands, penalties, damages, costs, expenses disbursements, and other
liabilities whatsoever (the “Losses”),
including without limitation incidental and out-of-pocket expenses and the
costs
and expenses of legal advisors and other experts, which may be incurred,
suffered or brought against such indemnified party as a result or in connection
with the acceptance or administration of its duties under this Agreement,
including the costs and expenses of enforcing this Agreement against the Company
(including this Section) and defending itself against any claim (whether
asserted by the Company or any Holder or any other Person) or liability in
connection with the exercise or performance of any of its powers or duties
hereunder; provided
that
this indemnity shall not apply in respect of an indemnified party to the extent
but only to the extent that a court of competent jurisdiction determines that
any such Losses incurred or suffered by or brought against such indemnified
party arises directly from the fraud, willful default, or gross negligence
of
such indemnified party. The parties hereto acknowledge that the foregoing
indemnities shall survive the resignation or removal of the Warrant Agent or
the
termination of this Agreement.
(j) Notwithstanding
any other term or provision of this Agreement to the contrary, the Warrant
Agent
shall not be liable under any circumstances, and shall be fully indemnified
by
the Company, for special, punitive, indirect or consequential loss or damage
of
any kind whatsoever including but not limited to loss of profits, regardless
of
whether the claim for such loss or damage is in connection with the Warrant
Agent’s fraud, willful default, breach of fiduciary duty or gross negligence.
The
provisions of this Section
14(f)
shall
survive the termination or expiration of this Agreement and the resignation
or
removal of the Warrant Agent.
(k) The
Warrant Agent shall be under no obligation to institute any action, suit or
legal proceeding or to take any other action likely to involve expense unless
the Company or one or more registered holders of Warrants shall furnish the
Warrant Agent with security and indemnity to its satisfaction for any costs
and
expenses which may be incurred, but this provision shall not affect the power
of
the Warrant Agent to take such action as it may consider proper, whether with
or
without any such security or indemnity. All rights of action under this
Agreement or under any of the Warrants may be enforced by the Warrant Agent
without the possession of any of the Warrant Certificates or the production
thereof at any trial or other proceeding relative thereto, and any such action,
suit or proceeding instituted by the Warrant Agent shall be brought in its
name
as Warrant Agent and any recovery of judgment shall be for the ratable benefit
of the registered holders of the Warrants, as their respective rights or
interests may appear.
(l) The
Warrant Agent, its affiliates and any stockholder, director, officer or employee
of it, may buy, sell or deal in any of the Warrants or other securities of
the
Company or become pecuniarily interested in any transaction in which the Company
may be interested, or contract with or lend money to the Company or otherwise
act as fully and freely as though it were not Warrant Agent under this
Agreement. Nothing herein shall preclude the Warrant Agent from acting in any
other capacity for the Company or for any other legal entity.
29
(m) The
Warrant Agent shall act hereunder solely as agent for the Company and need
have
no concern for the Holders, and its duties shall be determined solely by the
provisions hereof. No implied duties shall be read into this Agreement, and
the
permissive rights of the Warrant Agent herein shall not be construed as its
duties. The Warrant Agent shall not be liable for anything which it may do
or
refrain from doing in connection with this Agreement except for its own gross
negligence or willful default. The duties of the Warrant Agent and Warrant
Registrar are several and not joint.
(n) The
Warrant Agent shall not at any time be under any duty or responsibility to
any
holder of any Warrant to make or cause to be made any adjustment of the
applicable Exercise Price or number of the Warrant Shares or other securities
or
property deliverable as provided in this Agreement, or to determine whether
any
facts exist which may require any of such adjustments, or with respect to the
nature or extent of any such adjustments, when made, or with respect to the
method employed in making the same. The Warrant Agent shall not be accountable
with respect to the validity or value or the kind or amount of any Warrant
Shares or of any securities or property which may at any time be issued or
delivered upon the exercise of any Warrant or with respect to whether any such
Warrant Shares or other securities will when issued be validly issued and fully
paid and non-assessable, and makes no representation with respect
thereto.
(o) The
Warrant Agent shall not be required to risk or expend its own funds on the
performance of it obligations and duties hereunder, nor to take any action
for
which it reasonably believes may not be fully indemnified to its
satisfaction.
(p) In
the
event that the Warrant Agent shall be uncertain as to its duties or rights
hereunder or shall receive instructions, claims or demands from the Company, in
its opinion, conflict with any of the provisions of this Agreement, it shall
be
entitled to refrain from taking any action until it is directed in writing
by a
final order or judgment of a court of competent jurisdictions.
(q) Notwithstanding
anything to the contrary contained in this Agreement, the Warrant Agent shall
not be obliged to act or omit to act in accordance with any instruction,
direction or request delivered to it by the Company unless such instruction,
direction or request is delivered to the Warrant Agent in writing.
(r) The
Warrant Agent may execute and exercise any of the rights or powers hereby vested
in it or perform any duty hereunder either itself or by or through its
attorneys, accountants, agents or other experts, and the Warrant Agent will
not
be answerable or accountable for any act, default, neglect or unintentional
misconduct of any such attorneys or agents or for any loss to the Company or
the
holders of the Warrants resulting from any such act, default, neglect or
unintentional misconduct, absent gross negligence or willful default (as each
is
determined by a final non-appealable order of a court of competent jurisdiction)
in the selection and continued employment thereof.
(s) The
Warrant Agent shall not incur any liability for not performing any act, duty,
obligation or responsibility under this Warrant Agreement, arising out of or
caused, directly or indirectly, by any occurrence beyond the control of the
Warrant Agent (including without limitation any act or provision of any present
or future law or regulation or governmental authority, any act of God, war,
civil disorder or failure of any means of communication).
30
|
SECTION
15.
|
CHANGE
OF WARRANT AGENT
|
The
Warrant Agent and the Warrant Registrar may resign without assigning any reason
and without being responsible for any costs, charges and expenses occasioned
by
such retirement, and be discharged from the duties and obligations under this
Agreement at any time upon 30 days’ prior notice to the Company. If
the
Warrant Agent shall become incapable of acting as Warrant Agent or resigns
in
accordance with this Agreement, the Company shall appoint a successor to such
Warrant Agent. If the Company shall fail to make such appointment within a
period of 30 days after it has been notified in writing of such incapacity
or
resignation by the Warrant Agent without assigning any reason and without being
responsible for any costs, charges and expenses or by the registered holder
of a
Warrant Certificate, then the Warrant Agent or the registered holders holding
the majority of the Warrants may appoint a successor Warrant Agent or may,
at
the expense of the Company, apply to any court of competent jurisdiction for
the
appointment of a successor to the Warrant Agent. Pending appointment of a
successor to such Warrant Agent, either by the Company or by such a court,
the
duties of the Warrant Agent shall be carried out by the Company. The holders
(other than the Company and any Affiliate thereof) of a majority of the
unexercised Warrants shall be entitled at any time to remove the Warrant Agent
and appoint a successor to such Warrant Agent, provided
that the
Warrant Agent shall not be responsible for any costs associated with such
removal and appointment. Such successor to the Warrant Agent need not be
approved by the Company or the former Warrant Agent. After appointment the
successor to the Warrant Agent shall be vested with the same powers, rights,
duties and responsibilities as if it had been originally named as Warrant Agent
without further act or deed; provided
that the
former Warrant Agent shall deliver and transfer to the successor to the Warrant
Agent any property at the time held by it hereunder and execute and deliver
any
further assurance, conveyance, act or deed necessary for the purpose. Failure
to
give any notice provided for in this Section
15,
however, or any defect therein, shall not affect the legality or validity of
the
appointment of a successor to the Warrant Agent. The provisions under this
Section 15 shall also apply to the change of Warrant Registrar.
|
SECTION
16.
|
REPORTS
|
(a) The
Company agrees with each holder, for so long as any Warrants remain outstanding,
it shall file with the Warrant Agent and furnish to the Holders (or promptly
provide notice thereof to the Warrant Agent and to the Holders in case of
documents described below that are publicly available) within the time periods
specified in the Commission’s rules and regulations:
(1) all
quarterly and annual reports that would be required to be filed with the
Commission on Forms 10-QSB and 10-KSB if the Company were required to file
such
reports (or Forms 10-Q and 10-K if the Company is not eligible to file Forms
10-QSB or 10-KSB, as the case may be); and
31
(2) all
current reports that would be required to be filed with the Commission on Form
8-K if the Company were required to file such reports.
(3) All
such
reports shall be prepared in all material respects in accordance with all of
the
rules and regulations of the Commission applicable to such reports. Each annual
report on Form 10-KSB (or 10-K, as the case may be) shall include a report
on
the Company’s consolidated financial statements by a firm of independent
certified accountants. Delivery of such reports, information and documents
to
the Warrant Agent is for informational purposes only and the Warrant Agent’s
receipt of such shall not constitute constructive notice of any information
contained therein, including the Company’s compliance with any of its covenants
hereunder (as to which the Warrant Agent shall be entitled to rely exclusively
on Officers’ Certificates).
(b) For
as
long as any Warrants are “restricted securities” within the meaning of Rule
144(a)(3) under the Securities Act, during any period in which the Company
is
neither subject to Section 13 or 15(d) of the Exchange Act, nor exempt from
reporting pursuant to Rule 12g3-2(b) thereunder, the Company shall supply (i)
to
any holder or beneficial owner of a Warrant or (ii) upon their request to a
prospective purchaser of a Warrant or beneficial interest therein designated
by
such holder or owner, the information specified in, and meeting the requirements
of Rule 144A(d)(4) under the Securities Act.
(c) The
Company shall provide the Warrant Agent with a sufficient number of copies
of
all such reports that the Warrant Agent may be required to deliver to the
holders of the Warrants under this Section
16.
|
SECTION
17.
|
NOTICES
TO COMPANY AND WARRANT
AGENT
|
Any
notice or demand authorized by this Agreement to be given or made by the Warrant
Agent or the Warrant Registrar or by the registered holder of any Warrant to
or
on the Company shall be sufficiently given or made when received if deposited
in
the mail, first class or registered, postage prepaid, addressed (until another
address is filed in writing by the Company with the Warrant Agent or Warrant
Registrar) or delivered by facsimile as follows:
The
Company:
19th
Floor, Van Metropolis B,
Tangyan
RD, Hi-tech Zone,
Xi'an
710065
P.R.
China
Attention:
Chief Financial Officer
Facsimile
No.: x00-0000
0000
00
Xxxx
Xxx Xxxxx# 0000
New
York,
NY 10016
Attention:
Xxxxxx Xxxxx
Facsimile
No.: x0 000
000 – 7371
32
Any
notice pursuant to this Agreement to be given by the Company or by the
registered holder(s) of any Warrant to the Warrant Agent shall be given in
English and shall be sufficiently given when and if deposited in the mail,
first-class or registered, postage prepaid, addressed (until another address
is
filed in writing by the Warrant Agent with the Company), or delivered by
facsimile, to and received by the Warrant Agent at its corporate trust office
as
follows:
Deutsche
Bank AG, Hong Kong Branch
00xx
Xxxxx, Xxxxxx Xxxx Center
0
Xxxxx’x
Xxxx Central
Hong
Kong
Attention:
The Managing Director
Facsimile
No: x000 0000 0000
Any
notice pursuant to this Agreement to be given by the Company or by the
registered holder(s) of any Warrant to the Warrant Registrar shall be given
in
English and shall be sufficiently given when and if deposited in the mail,
first-class or registered, postage prepaid, addressed (until another address
is
filed in writing by the Warrant Registrar with the Company), or delivered by
facsimile, to and received by the Warrant Registrar at its corporate trust
office as follows:
Deutsche
Bank Luxembourg S.A.
0,
Xxxxxxxxx Xxxxxx Xxxxxxx
L-1115
Luxembourg
Attntion:
Coupon Payment Department
Facsimile
No: 000-000-000
With
copy
to:
Deutsche
Bank AG, Hong Kong Branch
00xx
Xxxxx, Xxxxxx Xxxx Center
0
Xxxxx’x
Xxxx Central
Hong
Kong
Attention:
The Managing Director
Facsimile
No: x000 0000 0000
|
SECTION
18.
|
SUPPLEMENTS
AND AMENDMENTS
|
The
Company, the Controlling Shareholder and the Warrant Agent may from time to
time
supplement or amend this Agreement without the approval of any holders of
Warrants in order to cure any ambiguity or to correct or supplement any
provision contained herein which may be defective or inconsistent with any
other
provision herein, or to make any other provisions in regard to matters or
questions arising hereunder which the Company, the Controlling Shareholder
and
the Warrant Agent may deem necessary or desirable and which shall not in any
way
materially adversely affect the interests of the holders of Warrants.
33
Any
amendment or supplement to this Agreement that has an adverse effect on the
interests of the holders of the Warrants shall require the written consent
of
the holders of a majority of the then outstanding Warrants (excluding the
Warrants held by the Company or any of its Affiliates).
The
consent of each holder of Warrants affected shall be required for any amendment
pursuant to which the applicable Exercise Price would be increased or the number
of Warrant Shares purchasable upon exercise of Warrants would be decreased
(other than pursuant to adjustments provided in this Agreement). In executing
or
accepting any supplement, modification or amendment to this Agreement, the
Warrant Agent shall be entitled to receive at the expense of the Company, and
shall be fully protected in relying upon, an Opinion of Counsel stating that
the
execution of such supplement, modification or amendment is authorized or
permitted by this Agreement and all conditions precedent herein have been
complied with. The Warrant Agent may, but shall not be obligated to, enter
into
any such supplement, modification or amendment which affects the Warrant Agent’s
own rights, duties or immunities under this Agreement or otherwise.
|
SECTION
19.
|
SUCCESSORS
|
All
the
covenants and provisions of this Agreement by or for the benefit of the Company
or the Warrant Agent or Warrant Registrar shall bind and inure to the benefit
of
their respective successors and assigns hereunder.
|
SECTION
20.
|
TERMINATION
|
This
Agreement shall terminate at 11:59 p.m., New York time, on the Warrant
Expiration Date. Notwithstanding the foregoing, this Agreement will terminate
on
any earlier date if all Warrants have been exercised. The provisions of
Section
14
shall
survive such termination.
|
SECTION
21.
|
GOVERNING
LAW
|
This
Agreement and each Warrant Certificate issued hereunder shall be deemed to
be a
contract made under the laws of the state of New York and for all purposes
shall
be construed in accordance with the internal laws of said State.
|
SECTION
22.
|
JURISDICTION
|
Each
of
the Company and the Controlling Shareholder agrees that any suit, action or
proceeding against it or him arising out of or based upon this Agreement or
the
transactions contemplated hereby may be instituted in any State or U.S. federal
court in The city of New York and County of New York, and waives any objection
which it or he may now or hereafter have to the laying of venue of any such
proceeding, and irrevocably submits to the non-exclusive jurisdiction of such
courts in any suit, action or proceeding.
34
|
SECTION
23.
|
BENEFITS
OF THIS AGREEMENT
|
Nothing
in this Agreement shall be construed to give to any person or corporation other
than the Company, the Controlling Shareholder, the Warrant Agent and the
registered holders of Warrants any legal or equitable right, remedy or claim
under this Agreement; but this Agreement shall be for the sole and exclusive
benefit of the Company, the Controlling Shareholder, the Warrant Agent and
the
registered holders of Warrants.
|
SECTION
24.
|
COUNTERPARTS
|
This
Agreement may be executed in any number of counterparts and each of such
counterparts shall for all purposes be deemed to be an original, and all such
counterparts shall together constitute but one and the same
instrument.
[Signature
Page Follows]
35
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed, as of the day and year first above written.
|
The
Company:
|
|||
|
By:
|
/s/ Xxxxx Xx | ||
|
Name:
|
|||
|
Title:
|
|||
|
The
Controlling Shareholder:
|
|||
| /s/ Xxxxx Xx | |||
|
Mr.
XX Xxxxx
|
|||
[SIGNATURE
PAGE TO WARRANT AGREEMENT]
|
Warrant
Agent:
|
|||
|
Deutsche
Bank AG, Hong Kong Branch
|
|||
|
By:
|
/s/
Xxxx Xxx-Xxxxxxx
|
||
|
Name:
Xxxx
Xxx-Xxxxxxx
|
|||
|
Title:
Authorized
Signatory
|
|||
|
By:
|
/s/
Xxxx Xxx Xxxx Xxxxxx
|
||
|
Name:
Xxxx
Xxx Xxxx Xxxxxx
|
|||
|
Title:
Authorized
Signatory
|
|||
|
Warrant
Registrar:
|
|||
|
Deutsche
Bank Luxembourg S.A.
|
|||
|
By:
|
/s/
Xxxx Xxx-Xxxxxxx
|
||
|
Name:
Xxxx
Xxx-Xxxxxxx
|
|||
|
Title:
Attorney
|
|||
|
By:
|
/s/
Xxxx Xxx Xxxx Xxxxxx
|
||
|
Name:
Xxxx
Xxx Xxxx Xxxxxx
|
|||
|
Title:
Attorney
|
|||
[SIGNATURE
PAGE TO WARRANT AGREEMENT]
EXHIBIT
A
[Form
of
Warrant Certificate]
[Face]
[GLOBAL
WARRANT LEGEND]
THIS
GLOBAL WARRANT IS HELD BY THE COMMON DEPOSITARY (AS DEFINED IN THE WARRANT
AGREEMENT GOVERNING THIS WARRANT) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT
OF
THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY
CIRCUMSTANCES EXCEPT THAT (I) THE WARRANT AGENT MAY MAKE SUCH NOTATIONS HEREON
AS MAY BE REQUIRED PURSUANT TO SECTION 3.5 OF THE WARRANT AGREEMENT, (II) THIS
GLOBAL WARRANT MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION
3.5
OF THE WARRANT AGREEMENT, (III) THIS GLOBAL WARRANT MAY BE DELIVERED TO THE
WARRANT AGENT FOR CANCELLATION PURSUANT TO SECTION 3.7 OF THE WARRANT AGREEMENT
AND (IV) THIS GLOBAL WARRANT MAY BE TRANSFERRED TO A SUCCESSOR COMMON DEPOSITARY
WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY.
[REGULATION
S LEGEND]
THIS
WARRANT AND THE SECURITIES TO BE ISSUED UPON ITS EXERCISE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE “SECURITIES ACT”) AND THE
WARRANT AND THE SECURITIES TO BE ISSUED UPON ITS EXERCISE MAY NOT BE OFFERED
OR
SOLD IN THE UNITED STATES OR TO U.S. PERSONS BY OR ON BEHALF OF ANY U.S. PERSON,
UNLESS REGISTERED UNDER THE SECURITIES ACT OR AN EXEMPTION FROM SUCH
REGISTRATION IS AVAILABLE. IN ORDER TO TRANSFER OR EXERCISE ANY INTEREST IN
THIS
WARRANT, THE BENEFICIAL HOLDER MUST FURNISH TO THE COMPANY AND THE WARRANT
REGISTRAR (A) A WRITTEN CERTIFICATION THAT SUCH TRANSFER OR EXERCISE IS AN
“OFFSHORE TRANSACTION” MEETING THE REQUIREMENTS OF RULE 904 UNDER THE SECURITIES
ACT AND THAT IT IS NOT A U.S. PERSON AND THE WARRANT IS NOT BEING EXERCISED
ON
BEHALF OF A U.S. PERSON AND (B) A WRITTEN OPINION OF COUNSEL TO THE EFFECT
THAT
THE SECURITIES DELIVERED UPON EXERCISE OF THE WARRANT HAVE BEEN REGISTERED
UNDER
THE SECURITIES ACT OR THAT THE DELIVERY OF SUCH SECURITIES IS EXEMPT FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. EACH BENEFICIAL HOLDER BY
ACCEPTING AN INTEREST IN THIS WARRANT AGREES THAT ANY HEDGING TRANSACTION
INVOLVING THIS WARRANT OR THE SECURITIES TO BE ISSUED UPON EXERCISE OF THIS
WARRANT MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES ACT.
TERMS
IN THIS LEGEND HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE
SECURITIES ACT.
No.
1
ISIN
No.
US1689101152
Common
Code: 033842066
Warrant
Certificate
This
Warrant Certificate certifies that BT
Globenet Nominees Limited,
or its
registered assigns, as nominee of the common depository for Clearstream Banking,
societe anonyme (“Clearstream”)
and/or
Euroclear Bank S.A./N.V. as operator of the Euroclear System, (“Euroclear”),
is
the registered holder of the 2,900,000
Warrants
to purchase certain Common Stock, par value $.0001 (the “Common
Stock”),
of
China Natural Gas, Inc., a company incorporated under the laws of Delaware
(the
“Company”).
Capitalized terms used but not defined herein have the meaning ascribed to
such
terms in the Warrant Agreement.
Each
Warrant entitles the registered holder, upon exercise at any time during the
Exercise Period, to receive from the Company the Warrant Shares at the Exercise
Price per share payable upon surrender of this Warrant Certificate and payment
of the Exercise Price at the office or agency of the Warrant Agent, but only
subject to the conditions set forth herein and in the Warrant Agreement referred
to on the reverse hereof. The Exercise Price and number of Warrant Shares
issuable upon exercise of the Warrants are subject to adjustment upon the
occurrence of certain events set forth in the Warrant Agreement.
No
Warrant may be exercised after 11:59 p.m., New York time, on the Warrant
Expiration Date. To the extent not exercised by such time, any such Warrant
shall become void.
Reference
is hereby made to the further provisions of this Warrant Certificate set forth
on the reverse hereof and such further provisions shall for all purposes have
the same effect as though fully set forth at this place.
This
Warrant Certificate shall not be valid unless countersigned by the Warrant
Agent, as such term is used in the Warrant Agreement.
This
Warrant Certificate shall be governed by and construed in accordance with the
internal laws of the State of New York.
A-2
IN
WITNESS WHEREOF,
China
Natural Gas, Inc. has caused this Warrant Certificate to be signed
below.
Dated:
_______, 2008
|
|
|||
|
By:
|
|||
|
Name:
|
|||
|
Title:
|
|||
Countersigned:
Deutsche
Bank Luxembourg S.A.
as
Warrant Registrar
By:
____________________________________________
Authorized
Signatory
By:
____________________________________________
Authorized
Signatory
[SIGNATURE
PAGE TO WARRANT CERTIFICATE]
[Reverse
of Warrant Certificate]
The
Warrants evidenced by this Warrant Certificate are part of a duly authorized
issue of Warrants expiring at 11:59 p.m., New York time, on the Warrant
Expiration Date entitling the holder on exercise to receive shares of Common
Stock, and are issued or to be issued pursuant to a Warrant Agreement dated
as
of January 29, 2008 (the “Warrant
Agreement”),
duly
executed and delivered by the Company to Deutsche Bank AG, Hong Kong Branch,
as
warrant agent (the “Warrant
Agent”),
which
Warrant Agreement is hereby incorporated by reference in and made a part of
this
instrument and is hereby referred to for a description of the rights, limitation
of rights, obligations, duties and immunities thereunder of the Warrant Agent,
the Company and the holders of the Warrants. To
the
extent any provision of this Warrant Certificate conflicts with the express
provisions of the Warrant Agreement, the provisions of the Warrant Agreement
shall govern and be controlling.
Capitalized terms used but not defined herein have the meaning ascribed to
such
terms in the Warrant Agreement. A copy of the Warrant Agreement may be obtained
by the holder hereof upon written request to the Company.
Warrants
may be exercised at any time during the Exercise Period. In order to exercise
all or any of the Warrants represented by this Warrant Certificate, the holder
must deliver to the Warrant Agent at its corporate trust office set forth in
Section 17 of the Warrant Agreement this Warrant Certificate and the form of
election to purchase on the reverse hereof duly completed and signed, and upon
payment to the Company of the Exercise Price, for the number of Warrant Shares
in respect of which such Warrants are then exercised. No adjustment shall be
made for any dividends on any Common Stock issuable upon exercise of this
Warrant.
The
Warrant Agreement provides that upon the occurrence of certain events the
Exercise Price set forth on the face hereof may, subject to certain conditions,
be adjusted. If the Exercise Price is adjusted, the Warrant Agreement provides
that the number of shares Common Stock issuable upon the exercise of each
Warrant shall be adjusted. No fractions of a share of Common Stock will be
issued upon the exercise of any Warrant, but the Company will pay the cash
value
thereof determined as provided in the Warrant Agreement.
The
Company has agreed pursuant to an Equity Registration Rights Agreement dated
as
of January 29, 2008 to, as promptly as practicable upon the request of a certain
number of holders of the Company’s securities, file a registration statement on
an appropriate form under the Securities Act of 1933 (the “Securities
Act”)
covering the resale of the Warrant Shares. The Company will use its best efforts
to cause any such registration statement to be declared effective and to keep
such registration statement continuously effective under the Securities Act
in
order to permit the resale of the Warrant Shares by the holders thereof until
the Warrant Shares (i) have been sold pursuant thereto or (ii) may be sold
without volume limitations pursuant to Rule 144.
Warrant
Certificates, when surrendered at the corporate trust office of the Warrant
Agent by the registered holder thereof in person or by legal representative
or
attorney duly authorized in writing, may be exchanged, in the manner and subject
to the limitations provided in the Warrant Agreement, but without payment of
any
service charge, for another Warrant Certificate or Warrant Certificates of
like
tenor evidencing in the aggregate a like number of Warrants.
Upon
due
presentation for registration of transfer of this Warrant Certificate at the
corporate trust office of the Warrant Agent a new Warrant Certificate or Warrant
Certificates of like tenor and evidencing in the aggregate a like number of
Warrants shall be issued to the transferee(s) in exchange for this Warrant
Certificate, subject to the limitations provided in the Warrant Agreement,
without charge except for any tax or other governmental charge payable in
connection therewith.
The
Company and the Warrant Agent may deem and treat the registered holder(s)
thereof as the absolute owner(s) of this Warrant Certificate (notwithstanding
any notation of ownership or other writing hereon made by anyone), for the
purpose of any exercise hereof, of any distribution to the holder(s) hereof,
and
for all other purposes, and none the Company, the Warrant Registrar and the
Warrant Agent shall be affected by any notice to the contrary. Neither the
Warrants nor this Warrant Certificate entitles any holder hereof to any rights
of a stockholder of the Company.
This
Agreement and each Warrant Certificate issued hereunder shall be deemed to
be a
contract made under the laws of the State of New York and for all purposes
shall
be construed in accordance with the internal laws of the State of New
York.
The
Company agrees that any suit, action or proceeding against it arising out of
or
based upon this Agreement or the transactions contemplated hereby may be
instituted in any State or U.S. federal court in The City of New York and County
of New York, and waives any objection which it may now or hereafter have to
the
laying of venue of any such proceeding, and irrevocably submits to the
non-exclusive jurisdiction of such courts in any suit, action or
proceeding.
A-2
FORM
OF ELECTION TO PURCHASE
Transaction
Details
| To: |
DEUTSCHE
BANK AG, HONG KONG BRANCH
|
00xx
Xxxxx, Xxxxxx Xxxx Center
0
Xxxxx’x
Xxxx Central
Hong
Kong
IMPORTANT:
PLEASE READ THE NOTES AT THE END OF THIS NOTICE BEFORE COMPLETING THIS
NOTICE.
I/We
hereby irrevocably elect to exercise the Warrants into the common shares
(“Common
Shares”)
in
accordance with Section 4 of the Warrant Agreement.
Please
enter the number of Units and serial or identifying numbers of Warrant
Certificates to be exercised:
|
Total
number of Units of Warrant:
|
|
|
Serial
or identifying number of Warrant Certificates*:
|
|
|
ISIN
number of Global Warrant:
|
*
Not
required for Warrants represented by a Global Warrant.
Please
tick (√) the box of the elected option.
| o |
Option
1: Cash Payment
|
|
I/We
have arranged/will arrange payment of subscription moneys to the
account
of the Company.
Cash
Amount: __________________________
(please
attach payment evidence)
|
| o |
Option
2: Tender Notes
|
|
I/We
elect to exercise the Warrants by delivery of the 5.0% Notes (the
“Notes”)
in lieu of payment of subscription
money.
|
|
Total
principal amount of Notes:
|
|
|
Serial
Number:
|
|
|
ISIN
Number:
|
A-3
Please
complete all remaining sections of this notice before delivering it to the
Warrant Agent.
A. Exercising
holder’s Information.
|
Name
of holder
|
|
|
Address
of holder:
|
|
|
Telephone
Number:
|
|
|
Fax
Number:
|
|
|
Email
Address:
|
|
|
Contact
Person:
|
B. Delivery
of Common Stock
Please
register the Common Stock in the name of the following person:
|
Name:
|
|
|
Address:
|
Please
deliver certificate(s) representing the Common Stock issued in respect of the
exercise of the Warrant to the following person (at our risk and, if we request
that delivery by mail, at our expense)
|
Name:
|
|
|
Address:
|
|
|
Account
Number with Custodian (if applicable)
|
|
|
Name
and Telephone No of Contact Person:
|
A-4
C. The
undersigned hereby certifies that (i) the exercise of the Warrant is an
“offshore transaction” meeting the requirements of Rule 904 of Regulation S and
that it is not a U.S. person and the Warrant is not being exercised on behalf
of
a U.S. person, and (ii) the undersigned is providing herewith an opinion of
counsel to the effect that the Warrant and the Common Stock to be delivered
upon
exercise thereof have been registered under the Securities Act of 1933 or are
exempted from registration thereunder.
Signed: __________________________________________
(Notice
to be signed by an authorised signatory)
Date:
__________________________________________
A-5
For
Warrant Agent’s use only:
1 Warrants
deposited for exercise.
(a) Identification
Reference Number: _______________________
(b) Deposit
Date: _______________________
(c) Exercise
Date: _______________________
*
Delete
as appropriate.
For
Company’s use only:
2 Common
Stock to be Issued Upon exercise.
|
(a)
|
Aggregate
Units of Warrants deposited for exercise
|
|
|
(b)
|
Exercise
Price on Exercise Date:
|
|
|
(c)
|
Number
of Common Stock deliverable (rounded up to the nearest whole
number):
|
A-6
WARRANTS
|
1
|
This
notice will be void unless all relevant details are duly completed
and
deposited during the Exercise
Period.
|
|
2
|
Your
attention is particularly drawn to Section 4 of the Warrant Agreement
relating to the exercise of the Warrants.
|
|
3
|
If
a retroactive adjustment of the Exercise Price contemplated by the
terms
and conditions of the Warrants is required in respect of an exercise
of
Warrants, additional Common Shares deliverable pursuant to such
retroactive adjustment (together with any other securities, property
or
cash) shall be delivered or dispatched in accordance with the Warrant
Agreement.
|
|
4
|
Despatch
of share certificates or other securities or property will be made
at the
risk of the exercising holder and the exercising holder will be required
to submit any necessary documents required in order to effect, despatch
in
the manner specified.
|
A-7
SCHEDULE
OF EXCHANGES OF INTERESTS OF GLOBAL WARRANTS
The
following exchanges of a part of this Global Warrant have been
made:
|
Date of Exchange
|
Amount of
decrease in number of warrants in this Global Warrant |
Amount of
increase in number of Warrants in this Global Warrant |
Number of
Warrants in this Global Warrant following such decrease or increase |
Signature of
authorized officer
of Warrant Agent |
||||
Option
of
Holder to Elect Redemption
If
you
want to elect to have this Warrant repurchased by the Company pursuant to
Section 12 of the Warrant Agreement, check the box below and indicate the
Redemption Date (15 business days after today’s date):
o Section
12 Redemption
Date:___________________
Date:__________________________________
Your
Signature:___________________________________
(Sign
exactly as your name appears on the Warrant)
Tax
Identification No.:
______________________________________________________
A-8
EXHIBIT
B
FORM
OF
CERTIFICATE OF TRANSFER
China
Natural Gas, Inc.
19th
Floor, Building B, Van Metropolis
Xx.
00
Xxxxxx Xxxx
High
Tech
Zone
Xi’an
710065
P.R.
China
Facsimile
No.: x00 00 0000 0000
Attention:
Chief Financial Officer
Deutsche
Bank AG, Hong Kong Branch
00xx
Xxxxx, Xxxxxx Xxxx Center
0
Xxxxx’x
Xxxx Central
Hong
Kong
Attention:
The Managing Director
Facsimile
No: x000 0000 0000
Re:
Warrants
Reference
is hereby made to the Warrant Agreement, dated as of January 29, 2008 (the
“Warrant
Agreement”),
between China Natural Gas, Inc., as issuer (the “Company”)
and
Deutsche Bank AG, Hong Kong Branch, as Warrant Agent. Capitalized terms used
but
not defined herein shall have the meanings given to them in the Warrant
Agreement.
___________________,
(the “Transferee”)
proposes to acquire ___________ number of Warrant[s] or interest in such
Warrant[s] (the “Transfer”).
In
connection with the Transfer, the Transferee hereby agrees (i) that any hedging
transactions involving the Warrants or the securities issuable upon exercise
thereof may not be conducted unless in compliance with the Securities Act and
(ii) such Transferee will only resell the Warrants or the securities issuable
upon exercise of the Warrants in accordance with the provisions of Regulation
S,
pursuant to registration under the Securities Act or pursuant to an available
exemption from registration. The Transferee further certifies that:
[CHECK
ALL THAT APPLY]
1.
o Check
if Transferee will take delivery of a beneficial interest in the Global Warrant
or a Definitive Warrant pursuant to Regulation S.
The
Transfer is being effected pursuant to and in accordance with Rule 903 or Rule
904 under the Securities Act of 1933 (the “Securities
Act”)
and,
accordingly, the Transferee hereby further certifies that (i) the Transferee
is
not a “U.S. person” and (x) at the time the buy order was originated, the
Transferee was outside the United States or (y) the transaction was executed
in,
on or through the facilities of a designated offshore securities market and
the
Transfer was not prearranged with a buyer in the United States, (ii) no directed
selling efforts have been made in contravention of the requirements of Rule
903(b) or Rule 904(b) of Regulation S under the Securities Act and (iii) the
transaction is not part of a plan or scheme to evade the registration
requirements of the Securities Act. Upon consummation of the proposed Transfer
in accordance with the terms of the Warrant Certificate and the warrant
Agreement, the transferred beneficial interest or Definitive Warrant will be
subject to the restrictions on transfer printed on the Global Warrant and/or
the
Definitive Warrant and the Securities Act.
2. o Check
if Transfer is Pursuant to Other Exemption.
(i) The
Transfer is being effected pursuant to and in compliance with an exemption
from
the registration requirements of the Securities Act and in compliance with
the
transfer restrictions contained in the Warrant Certificate and the Warrant
Agreement and any applicable blue sky securities laws of any State of the United
States.
This
certificate and the statements contained herein are made for your benefit and
the benefit of the Company.
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[Insert
Name of Transferee]
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By:
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Name:
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Title:
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Dated:
_______________________
Exhibit
C
FORM
OF
AUTHORIZATION CERTIFICATE
I,
[Name], [Title], acting on behalf of China Natural Gas, Inc. (the “Company”),
hereby certify that:
(A)
the
persons listed below are (i) Officers for purposes of the Warrant Agreement
dated as of January [●], 2008 between the Company and Deutsche Bank AG, Hong
Kong Branch, as Warrant Agent, (ii) duly elected or appointed, qualified and
acting as the holder of the respective office or offices set forth opposite
his
name and (iii) the duly authorized person who executed or will execute the
Warrants by his manual or facsimile signature and was at the time of such
execution, duly elected or appointed, qualified and acting as the holder of
the
office set forth opposite his name;
(B)
each
signature appearing below is the person’s genuine signature; and
(C)
attached hereto as Schedule I is a true, correct and complete specimen of the
certificates representing the Warrants.
Officers:
Name
Title Signature
______________________ ______________________ ______________________
______________________ ______________________ ______________________
______________________ ______________________ ______________________
