WARRANT AGREEMENT Skystar Bio-Pharmaceutical Company and Warrant Agent
and
[_____________________]
Warrant
Agent
[__________],
2008
THIS
AGREEMENT dated as of [__________], 2008, between Skystar Bio-Pharmaceutical
Company, a Nevada corporation (the "Company"), and [__________], a transfer
agency located in [__________] (the "Warrant Agent").
WHEREAS:
The
Company proposes to issue and sell, through a public offering (the "Public
Offering"), [__________] units of the Company's securities (the "Units"), with
each Unit consisting of one share of common stock of the Company, $0.001 par
value per share ("Common Stock"), and a warrant to purchase one quarter of
one
share of Common Stock (each a "Firm Warrant");
The
Company also has granted to the representative of the underwriters (the
"Underwriters") of the Company's Public Offering pursuant to an underwriting
agreement (the "Underwriting Agreement"), a 45-day option (“Over-Allotment
Option”) to purchase up to an additional [__________] Units consisting of in the
aggregate [__________] shares of Common Stock and [__________] Warrants (the
"Over-Allotment Warrants") exercisable to purchase up to an aggregate of
[__________] shares of Common Stock; and
The
Company desires to provide for the issuance, registration, transfer, exchange
and exercise of certificates (the "Warrant Certificates") representing the
Firm
Warrants and the Over-Allotment Warrants (collectively, herein, the "Warrants")
and for the exercise of the Warrants;
NOW,
THEREFORE, in consideration of the premises and the mutual agreements
hereinafter set forth and for the purpose of defining the terms and provisions
of the Warrant Certificates and the Warrants, and the respective rights and
obligations thereunder of the Company, the registered holders of the Warrant
Certificates and the Warrant Agent, the parties hereto agree as follows:
1.
Definitions.
As used
herein:
(a)
"Common Stock" shall mean the Common Stock of the Company, whether now or
hereafter authorized, holders of which have the right to participate in the
distribution of earnings and assets of the Company without limit as to amount
or
percentage.
(b)
"Corporate Office" shall mean the place of business of the Warrant Agent (or
its
successor) located in [city, state], which office is presently located at
[__________].
(c)
"Effective Date" shall mean [__________], 2008, the date on which the Company's
Registration Statement is declared effective by the Securities and Exchange
Commission.
(d)
"Exercise Date" shall mean the date of surrender for exercise of any Warrant
Certificate, provided such surrender takes place during the Exercise Period,
the
exercise form on the back of the Warrant Certificate or a form substantially
similar thereto has been completed in full by the Registered Owner or a duly
appointed attorney and the Warrant Certificate is accompanied by payment in
full
of the Exercise Price.
(e)
"Exercise Period" shall mean the period commencing on the Separation Date and
extending to and through the Expiration Date.
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(f)
"Exercise Price" shall mean a purchase price of $[__________] per one quarter
share of Common Stock; provided, however, that in the event the Company reduces
the Exercise Price in accordance with Section 9(i) hereof, the Exercise Price
shall be as established by the Company in accordance with such Section; and
provided further, however, that Warrants may only be exercised in whole numbers
for whole shares of Common Stock, so that the Exercise Price per whole share
of
Common Stock shall be $[__________].
(g)
"Expiration Date" shall mean 5:00 P.M. Eastern Time on the last day of the
[_____]th month period commencing on the Effective Date, subject to the terms
provided in Section 5 herein for redemption and subject to extension by the
Board of Directors of the Company; provided however, if such date shall be
a
holiday or a day on which banks are authorized to close, then Expiration Date
shall mean 5:00 p.m., Eastern Time on the next following day which in the State
of [New York] is not a holiday or a day on which banks are authorized to close.
The Expiration Date may be extended from time to time, by resolution of the
Board of Directors of the Company, to a later date upon giving notice to the
Warrant Agent and the Registered Owners; provided, however, that notice to
the
Registered Owners of an extension of the Expiration Date may be made by
publication or by release to [Dow ▇▇▇▇▇, ▇.▇. Newswire] or other means of
general distribution. If the Company redeems the Warrants as provided in Section
5 of this agreement, the Expiration Date shall be the date fixed for
redemption.
(h)
"Firm
Warrants" shall mean [__________] Warrants to purchase [__________] shares
of
Common Stock, all of which will be purchased as part of the Units by the
Underwriters from the Company and sold in the Public Offering in accordance
with
the Underwriting Agreement.
(i)
"Over-Allotment Warrants" shall mean [__________] Warrants to purchase
[__________] shares of Common Stock, any or all of which may be purchased as
part of the Units by the Representative for the Underwriters from the Company
in
accordance with the Underwriting Agreement. The Over-Allotment Warrants shall
have identical terms and conditions to those established for the Firm Warrants,
subject to their issuance in accordance with Section 2 hereof.
(j)
"Representative" shall mean Jesup & ▇▇▇▇▇▇ Securities Corporation, the
representative of the Underwriters.
(k)
"Registered Owner" shall mean the person in whose name any Warrant Certificate
shall be registered on the books maintained by the Warrant Agent pursuant to
Section 6 of this Agreement.
(l)
"Registration Statement" shall mean the Company's Registration Statement on
Form
S-1 (S.E.C. File No. [__________]), as amended.
(m)
"Separation Date" shall mean a date on which the Units shall separate into
their
component Common Stock and Warrants, such date to be 180 days following the
Effective Date unless separate trading is authorized earlier by the
Representative, whereupon the Company will issue a press release announcing
that
separate trading will begin. Prior to the Separation Date, the Warrants may
not
be exercised and the shares of Common Stock and the Warrants comprising the
Units may not be detached or separately traded.
(n)
"Subsidiary" shall mean any corporation of which shares having ordinary voting
power to elect a majority of the Board of Directors of such corporation
(regardless of whether the shares of any other class or classes of such
corporation shall have or may have voting power by reason of the happening
of
any contingency) is at the time directly or indirectly owned by the Company
or
one or more subsidiaries of the Company.
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(o)
"Warrant" or the "Warrants" shall mean and include up to [__________] Warrants
to purchase [__________] authorized and unissued Shares of Common Stock of
the
Company and, unless otherwise noted, shall include [__________] Firm Warrants
and [__________] Over-Allotment Warrants.
(p)
"Warrant Agent" shall mean [__________], or its successor, as the transfer
agent
and registrar of the Warrants.
(q)
"Warrant Shares" shall mean and include up to [__________] authorized and
unissued shares of Common Stock reserved for issuance on exercise of the
Warrants, and unless otherwise noted, shall include [__________] shares of
Common Stock issuable upon exercise of the Firm Warrants and [__________] shares
of Common Stock issuable upon exercise of the Over-Allotment Warrants and any
additional shares of Common Stock or other property which may hereafter be
issuable or deliverable on exercise of the
Warrants
pursuant to Section 9 of this Agreement.
2.
Warrants
and Issuance of Warrant Certificates.
Each
Warrant shall initially entitle the Registered Owner of the Warrant Certificates
representing such Warrant to purchase one quarter of one share of Common Stock
on exercise thereof, subject to modification and adjustment as hereinafter
provided in Section 9; and provided that Warrants may only be exercised in
whole
numbers for whole shares of Common Stock. Warrant Certificates representing
[__________] Firm Warrants and evidencing the right to purchase an aggregate
of
[__________] shares of Common Stock of the Company shall be executed by the
proper officers of the Company and delivered to the Warrant Agent for
countersignature. Certificates representing the Firm Warrants to be delivered
to
the Warrant Agent shall be in direct relation to the Firm Shares sold as a
Unit
in the Company's Public Offering and shall be attached to certificates
representing such corresponding number of Firm Shares. The Warrant Certificates
representing the Firm Warrants will be issued and delivered on written order
of
the Company signed by its President and attested by its Secretary or Assistant
Secretary. The Warrant Agent shall deliver Warrant Certificates in required
whole number denominations to the persons entitled thereto in connection with
any transfer or exchange permitted under this Agreement.
The
Over-Allotment Warrants shall be identical to the Firm Warrants, as described
herein. Up to [__________] Over-Allotment Warrants may be issued and such
Over-Allotment Warrants shall evidence the right of the Registered Owners
thereof to purchase an aggregate of up to [__________] shares of Common Stock
of
the Company. Any Warrant Certificates for Over-Allotment Warrants to be issued
will be executed by the proper officers of the Company and delivered to the
Warrant Agent for countersignature on exercise of the option to purchase
Over-Allotment Warrants by the Underwriters in accordance with the Underwriting
Agreement.
Except
as
provided in Section 8 hereof, share certificates representing the Warrant Shares
shall be issued only on or after the Separation Date on exercise of the Warrants
or on transfer or exchange of the Warrant Shares. The Warrant Agent, if other
than the Company's Transfer Agent, shall arrange with the Transfer Agent for
the
issuance and registration of all Warrant Shares.
The
Warrants are exercisable in even numbers, for whole shares of the Company’s
Common Stock. In the case of the exercise of less than all the Warrants
represented in a Certificate, the Warrant Agent shall cancel the Certificate
upon the surrender thereof and shall deliver a new Warrant Certificate or
Warrant Certificates of like tenor, which the Warrant Agent shall countersign,
for the balance of such Warrants. In the case that the attempted exercise of
all
of the Warrants represented thereby would require the issuance of a fractional
share of Common Stock, the Warrants shall be deemed to have been exercised
for
the nearest whole number of shares of Common Stock into which the Warrants
may
be exercised. No half shares or fractional shares will be issued by the Company.
The Warrant Agent shall not permit the exercise of any Warrants for fractional
share of Common Stock.
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3.
Form
and Execution of Warrant Certificates.
The
Warrant Certificates shall be substantially in the form attached as Exhibit
"A"
and may have such letters, numbers or other marks of identification and such
legends, summaries or endorsements printed, lithographed or engraved thereon
as
the Company may deem appropriate and as are not inconsistent with the provisions
of this Agreement. The Warrant Certificates shall be dated as of the date of
issuance, whether on initial issuance, transfer, exchange or in lieu of
mutilated, lost, stolen or destroyed Warrant Certificates.
Each
Warrant Certificate for Firm Warrants shall be initially issued only when
attached to a certificate representing the corresponding number of Firm Shares
of Common Stock sold as per Unit and shall be separately transferable from
the
certificate representing Firm Shares only on and after the Separation Date.
Warrant Certificates issued for Over-Allotment Warrants shall be issued together
with certificates representing the corresponding number of shares of Common
Stock sold as per Unit and shall be separately transferable only on and after
the Separation Date.
The
Warrant Certificates shall be executed on behalf of the Company by its President
and Secretary, by manual signatures or by facsimile signatures printed thereon,
and shall have imprinted thereon a facsimile of the Company's seal. The Warrant
Certificates shall be manually countersigned by the Warrant Agent and shall
not
be valid for any purpose unless so countersigned. In the event any officer
of
the Company who executed the Warrant Certificates shall cease to be an officer
of the Company before the date of issuance of the Warrant Certificates or before
countersignature and delivery by the Warrant Agent, such Warrant Certificates
may be countersigned, issued and delivered by the Warrant Agent with the same
force and effect as though the person who signed such Warrant Certificates
had
not ceased to be an officer of the Company.
4.
Exercise.
The
exercise of Warrants in accordance with this Agreement shall only be permitted
during the Exercise Period.
Warrants
shall be deemed to have been exercised immediately prior to the close of
business on the Exercise Date. The exercise form shall be executed by the
Registered Owner thereof or his attorney duly authorized in writing and shall
be
delivered together with payment to the Warrant Agent, in cash or by official
bank or certified check, of an amount in lawful money of the United States
of
America. Such payment shall be in an amount equal to the Exercise Price as
hereinabove defined.
The
person entitled to receive the number of Warrant Shares deliverable on such
exercise shall be treated for all purposes as the Registered Owner of such
Warrant Shares as of the close of business on the Exercise Date. The Company
shall not be obligated to issue any fractional share interests in Warrant
Shares. If Warrants represented by more than one Warrant Certificate shall
be
exercised at one time by the same Registered Owner, the number of full Warrant
Shares which shall be issuable on exercise thereof shall be computed on the
basis of the aggregate number of full Warrant Shares issuable on such exercise.
As
soon
as practicable on or after the Exercise Date and in any event within 30 days
after such date, the Warrant Agent shall cause to be issued and delivered by
the
Transfer Agent to the person or persons entitled to receive the same, a
certificate or certificates for the number of Warrant Shares deliverable on
such
exercise. No adjustment shall be made in respect of cash dividends on Warrant
Shares deliverable on exercise of any Warrant. The Warrant Agent shall promptly
notify the Company, in writing, of any exercise and of the number of Warrant
Shares caused to be delivered, and shall cause payment of an amount in cash
equal to the Exercise Price to be made promptly to the order of the Company.
The
parties contemplate such payments will be made by the Warrant Agent to the
Company on a weekly basis and will consist of collected funds only. The Warrant
Agent shall hold any proceeds collected and not yet paid to the Company in
a
Federally-insured account at a commercial bank selected by agreement of the
Company and the Warrant Agent, at all times relevant hereto. Following a
determination by the Warrant Agent that collected funds have been received,
the
Warrant Agent shall cause the Transfer Agent to issue share certificates
representing the number of Warrant Shares purchased by the Registered Owner.
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Expenses
incurred by the Warrant Agent, including administrative costs, costs of
maintaining records and other expenses, shall be paid by the Company according
to the standard fees imposed by the Warrant Agent for such services. All
expenses incurred by the Warrant Agent shall be invoiced to the Company.
A
detailed accounting statement setting forth the number of Warrants exercised,
the number of Warrant Shares issued, the net amount of exercised funds and
all
expenses incurred by the Warrant Agent shall be transmitted to the Company
on
payment of each exercise amount. Such accounting statement shall serve as an
interim accounting for the Company during the Exercise Period. The Warrant
Agent
shall render to the Company, at the completion of the Exercise Period, a
complete accounting setting forth the number of Warrants exercised, the identity
of persons exercising such Warrants, the number of Warrant Shares issued, the
amounts distributed to the Company, and all expenses incurred by the Warrant
Agent.
The
Company may be required to deliver a prospectus that satisfies the requirements
of Section 10 of the Securities Act of 1933, as amended (the "1933 Act") with
delivery of the Warrant Shares and must have a registration statement (or a
post-effective amendment to an existing registration statement) effective under
the 1933 Act in order for the Company to comply with any such prospectus
delivery requirements. The Company will advise the Warrant Agent of the status
of any such registration statement under the 1933 Act and of the effectiveness
of the Company's registration statement or lapse of effectiveness.
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No
issuance of Warrant Shares shall be made unless there is an effective
registration statement under the 1933 Act, and registration or qualification
of
the Warrant Shares, or an exemption therefrom, has been obtained from state
or
other regulatory authorities in the jurisdiction in which such Warrant Shares
are sold. The Company will provide to the Warrant Agent written confirmation
of
all such registration or qualification, or an exemption therefrom, when
requested by the Warrant Agent. In no event will the Company be obligated to
pay
the Registered Holder any cash consideration upon exercise or otherwise “net
cash settle” the warrants.
5.
Redemption.
Commencing from the Effective Date, the Company may, at its sole discretion,
redeem the Warrants in whole, but not in part, for a redemption price of $0.01
per Warrant, on not less than 30 days' notice to the Registered Owners. The
right to redeem the Warrants may be exercised by the Company during the Exercise
Period only in the event (i) the closing sale price for the Company's shares
of
Common Stock has equaled or exceeded $[__________] per share for each of the
20
consecutive trading days within a 30 trading day period ending on the third
trading day prior to a 30-day notice of redemption is sent to the Registered
Owners, (ii) the Company has a registration statement (or a post-effective
amendment to an existing registration statement) pertaining to the Warrant
Shares effective with the Securities and Exchange Commission, which registration
statement would enable a Registered Owner to receive upon exercise, one or
more
certificates evidencing the Warrant Shares, without legend restricting the
transferability of such Warrant Shares, and (iii) the expiration of the 30-day
notice period is within the Exercise Period. In the event the Company exercises
its right to redeem the Warrants, the Expiration Date will be deemed to be,
and
the Warrants will be exercisable until the close of business on, the date fixed
for redemption in such notice. If any Warrant called for redemption is not
exercised by such time, it will cease to be exercisable and the Registered
Owner
thereof will be entitled only to the redemption price.
6.
Reservation
of Shares and Payment of Taxes.
The
Company covenants that it will at all times reserve and have available from
its
authorized shares of Common Stock such number of shares of Common Stock as
shall
then be issuable on exercise of all outstanding Warrants. The Company covenants
that all Warrant Shares issuable shall be duly and validly issued, fully paid
and nonassessable, and free from all taxes, liens and charges with respect
to
the issue thereof.
The
Registered Owner shall pay all documentary, stamp or similar taxes and other
government charges that may be imposed with respect to the issuance of the
Warrants, or the issuance, transfer or delivery of any Warrant Shares on
exercise of the Warrants. In the event the Warrant Shares are to be delivered
in
a name other than the name of the Registered Owner of the Warrant Certificates,
no such delivery shall be made unless the person requesting the same has paid
to
the Warrant Agent or Transfer Agent the amount of any such taxes or charges
incident thereto.
The
Company will supply the Warrant Agent with blank Warrant Certificates, so as
to
maintain an inventory satisfactory to the Warrant Agent. The Company will file
with the Warrant Agent a statement setting forth the name and address of its
Transfer Agent for Warrant Shares and of each successor Transfer Agent, if
any.
7.
Registration
of Transfer.
The
Warrant Certificates may be transferred in whole or in part and may be
separately transferred from the Common Stock share certificate to which such
Warrant Certificate is attached only following the Separation Date and during
the Exercise Period. Warrant Certificates to be exchanged shall be surrendered
to the Warrant Agent at its corporate office. The Company shall execute and
the
Warrant Agent shall countersign, issue and deliver in exchange therefor, the
Warrant Certificate or Certificates that the holder making the transfer shall
be
entitled to receive.
The
Warrant Agent shall keep transfer books at its corporate office on which Warrant
Certificates and the transfer thereof shall be registered. On due presentment
for registration of transfer of any Warrant Certificate at such office, the
Company shall execute and the Warrant Agent shall issue and deliver to the
transferee or transferees a new Warrant Certificate or Certificates representing
an equal aggregate number of Warrants.
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All
Warrant Certificates presented for registration of transfer or exercise shall
be
duly endorsed or be accompanied by a written instrument or instruments of
transfer in form satisfactory to the Company and the Warrant Agent.
Prior
to
due presentment for registration of transfer thereof, the Company and the
Warrant Agent may treat the Registered Owner of any Warrant Certificate as
the
absolute owner thereof (notwithstanding any notations of ownership or writing
thereon made by anyone other than the Company or the Warrant Agent) and the
parties hereto shall not be affected by any notice to the contrary.
8.
Loss;
Mutilation or Exchange.
On
receipt by the Company and the Warrant Agent of evidence satisfactory as to
the
ownership of and the loss, theft, destruction or mutilation of any Warrant
Certificate, the Company shall execute and the Warrant Agent shall countersign
and deliver in lieu thereof, a new Warrant Certificate representing an equal
aggregate number of Warrants. In the case of loss, theft or destruction of
any
Warrant Certificate, the Registered Owner requesting issuance of a new Warrant
Certificate shall be required to secure an indemnity bond in favor of the
Company and Warrant Agent in an amount satisfactory to each of them. In the
event a Warrant Certificate is mutilated, such Certificate shall be surrendered
and cancelled by the Warrant Agent prior to delivery of a new Warrant
Certificate. Applicants for a substitute Warrant Certificate shall also comply
with such other regulations and pay such other reasonable charges as the Company
may prescribe.
If,
at
any time and from time to time following the Separation Date, a holder of Units
shall tender his, her or its Unit certificate(s) and request that the Unit
certificate(s) be replaced by certificates evidencing the number of shares
of
Common Stock and the number of Warrants comprising the Unit(s) so tendered,
then
the Warrant Agent shall cause the Transfer Agent to cancel the Unit
certificate(s) so tendered and, in the place and stead of such Unit
certificate(s), the Warrant Agent (a) shall cause the Transfer Agent to issue
and deliver to such holder, a share certificate registered in the name of the
holder evidencing the number of shares of Common Stock included in the Units
tendered by the holder and (b) shall issue and deliver to such holder, a Warrant
Certificate registered in the name of the holder evidencing the number of
Warrants included in the Units tendered by the holder.
9.
Adjustment
of Exercise Price and Shares.
(a)
If at
any time prior to the expiration of the Warrants by their terms or by exercise,
the Company increases or decreases the number of its issued and outstanding
shares of Common Stock, or changes in any way the rights and privileges of
such
shares of Common Stock, by means of (i) the payment of a share dividend or
the
making of any other distribution on such shares of Common Stock payable in
its
shares of Common Stock, (ii) a split or subdivision of shares of Common Stock,
or (iii) a consolidation or combination of shares of Common Stock, then the
Exercise Price in effect at the time of such action and the number of Warrants
required to purchase each Warrant Share at that time shall be proportionately
adjusted so that the numbers, rights and privileges relating to the Warrant
Shares then purchasable upon the exercise of the Warrants shall be increased,
decreased or changed in like manner, for the same aggregate purchase price
set
forth in the Warrants, as if the Warrant Shares purchasable upon the exercise
of
the Warrants immediately prior to the event had been issued, outstanding, fully
paid and nonassessable at the time of that event. Any dividend paid or
distributed on the shares of Common Stock in shares of any other class of shares
of the Company or securities convertible into shares of Common Stock shall
be
treated as a dividend paid in shares of Common Stock to the extent shares of
Common Stock are issuable on the payment or conversion thereof.
(b)
In
the event, prior to the expiration of the Warrants by exercise or by their
terms, the Company shall be recapitalized by reclassifying its outstanding
shares of Common Stock into shares with a different par value, or by changing
its outstanding shares of Common Stock to shares without par value or in the
event of any other material change in the capital structure of the Company
or of
any successor corporation by reason of any reclassification, recapitalization
or
conveyance, prompt, proportionate, equitable, lawful and adequate provision
shall be made whereby any Registered Owner of the Warrants shall thereafter
have
the right to purchase, on the basis and the terms and conditions specified
in
this Agreement, in lieu of the Warrant Shares theretofore purchasable on the
exercise of any Warrant, such securities or assets as may be issued or payable
with respect to or in exchange for the number of Warrant Shares theretofore
purchasable on exercise of the Warrants had such reclassification,
recapitalization or conveyance not taken place; and in any such event, the
rights of any Registered Owner of a Warrant to any adjustment in the number
of
Warrant Shares purchasable on exercise of such Warrant, as set forth above,
shall continue and be preserved in respect of any stock, securities or assets
which the Registered Owner becomes entitled to purchase.
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(c)
In
the event the Company, at any time while the Warrants shall remain unexpired
and
unexercised, shall sell all or substantially all of its property, or dissolves,
liquidates or winds up its affairs, prompt, proportionate, equitable, lawful
and
adequate provision shall be made as part of the terms of such sale, dissolution,
liquidation or winding up such that the Registered Owner of a Warrant may
thereafter receive, on exercise thereof, in lieu of each Warrant Share which
he
would have been entitled to receive, the same kind and amount of any stock,
securities or assets as may be issuable, distributable or payable on any such
sale, dissolution, liquidation or winding up with respect to each share of
Common Stock of the Company; provided, however, that in the event of any such
sale, dissolution, liquidation or winding up, the right to exercise the Warrants
shall terminate on a date fixed by the Company, such date to be not earlier
than
[5:00 P.M., Eastern Time, on the 30th]
day
next succeeding the date on which notice of such termination of the right to
exercise the Warrants has been given by mail to the Registered Owners thereof
at
such addresses as may appear on the books of the Company.
(d)
In
the event prior to the expiration of the Warrants by exercise or by their terms,
the Company shall take a record of the holders of its Common Stock for the
purpose of entitling them to purchase its shares of Common Stock at a price
per
share more than 10% below the then-current market price per share (as defined
below) at the date of taking such record, then, (i) the number of Warrant Shares
purchasable pursuant to the Warrants shall be redetermined as follows: the
number of Warrant Shares purchasable pursuant to a Warrant immediately prior
to
such adjustment (taking into account fractional interests to the nearest 1,000th
of a share) shall be multiplied by a fraction, the numerator of which shall
be
the number of shares of Common Stock of the Company outstanding (excluding
shares of Common Stock then owned by the Company) immediately prior to the
taking of such record, plus the number of additional shares offered for
purchase, and the denominator of which shall be the number of shares of Common
Stock of the Company outstanding (excluding shares of Common Stock owned by
the
Company) immediately prior to the taking of such record, plus the number of
shares which the aggregate offering price of the total number of additional
shares so offered would purchase at such current market price; and (ii) the
Exercise Price per Warrant Share purchasable pursuant to a Warrant shall be
redetermined as follows: the Exercise Price in effect immediately prior to
the
taking of such record shall be multiplied by a fraction, the numerator of which
is the number of Warrant Shares purchasable immediately prior to the taking
of
such record, and the denominator of which is the number of Warrant Shares
purchasable immediately after the taking of such record as determined pursuant
to clause (i) above; provided, however, (i) that any adjustment in the number
of
shares issuable as set forth above shall be effective only to the extent
sufficient shares of Common Stock have been registered through a registration
statement effective under the 1933 Act, and (ii) that any adjustment in the
Exercise Price does not cause the Company to receive proceeds in excess of
the
amount authorized by any such registration statement. For the purposes of any
computation hereunder, the "Current Market Price" at any date shall be the
closing price of the Common Stock on the business day next preceding the event
requiring an adjustment hereunder. If the principal trading market for such
securities is an exchange, the closing price shall be the reported last sale
price on such exchange on such day provided if trading of such Common Stock
is
listed on any consolidated tape, the closing price shall be the reported last
sale price set forth on such consolidated tape. If the principal trading market
for such securities is the over-the-counter market, the closing price shall
be
the last reported sale price on such date as set forth by The Nasdaq Stock
Market, Inc., or, if the security is not quoted on such market, the average
closing bid and asked prices as set forth in the National Quotation Bureau
pink
sheet or the Electronic Bulletin Board System for such day. Notwithstanding
the
foregoing, if there is no reported last sale price or average closing bid and
asked prices, as the case may be, on a date prior to the event requiring an
adjustment hereunder, then the Current Market Price shall be determined as
of
the latest date prior to such day for which such last sale price or average
closing bid and asked price is available.
9
(e)
The
Warrants are exercisable in even numbers at the option of the holder for whole
shares of the Company’s Common Stock. No fractional interests will be issued. In
the case of the exercise of less than all the Warrants represented in a
Certificate, the Warrant Agent shall cancel the Certificate upon the surrender
thereof and shall deliver a new Warrant Certificate or Warrant Certificates
of
like tenor, which the Warrant Agent shall countersign, for the balance of such
Warrants. In the case that the attempted exercise of all of the Warrants
represented thereby would require the issuance of a fractional share of Common
Stock, the Warrants shall be deemed to have been exercised for the nearest
whole
number of shares of Common Stock into which the Warrants may be exercised.
No
half shares or fractional shares will be issued by the Company. The Warrant
Agent shall not provide for the exercise of any Warrants for fractional share
of
Common Stock.
(f)
In
the event, prior to expiration of the Warrants by exercise or by their terms,
the Company shall determine to take a record of the holders of its shares of
Common Stock for the purpose of determining shareholders entitled to receive
any
stock dividend, distribution or other right which will cause any change or
adjustment in the number, amount, price or nature of the shares of Common Stock
or other stock, securities or assets deliverable on exercise of the Warrants
pursuant to the foregoing provisions, the Company shall give to the Registered
Owners of the Warrants at the addresses as may appear on the books of the
Company at least 30 days' prior written notice to the effect that it intends
to
take such a record provided, however, that notice to the Registered Owners
of an
extension of the Expiration Date may be made by publication or by release to
[Dow ▇▇▇▇▇, ▇.▇. Newswire] or other means of general distribution. Such notice
shall specify the date as of which such record is to be taken; the purpose
for
which such record is to be taken; and the number, amount, price and nature
of
the shares of Common Stock or other stock, securities or assets which will
be
deliverable on exercise of the Warrants after the action for which such record
will be taken has been completed. Without limiting the obligation of the Company
to provide notice to the Registered Owners of the Warrants of any corporate
action hereunder, the failure of the Company to give notice shall not invalidate
such corporate action of the Company.
(g)
The
Warrants shall not entitle the Registered Owner thereof to any of the rights
of
shareholders or to any dividend declared on the shares of Common Stock unless
the Warrant is exercised and the Warrant Shares purchased prior to the record
date fixed by the Board of Directors of the Company for the determination of
holders of shares of Common Stock entitled to such dividend or other
right.
(h)
No
adjustment of the Exercise Price shall be made as a result of or in connection
with (i) the issuance of shares of Common Stock of the Company pursuant to
options, warrants, employee stock ownership plans and share purchase agreements
outstanding or in effect on the date hereof, (ii) the establishment of
additional option plans of the Company, the modification, renewal or extension
of any plan now in effect or hereafter created, or the issuance of shares of
Common Stock on exercise of any options pursuant to such plans, and (iii) the
issuance of shares of Common Stock in connection with compensation arrangements
for officers, employees or agents of the Company or any subsidiary, and the
like.
(i)
The
Company shall be empowered, in the sole and unconditional discretion of the
Board of Directors, at any time during the Exercise Period, to reduce the
applicable Exercise Price of all but not part of the Warrants then outstanding.
Any such reduction in the applicable Exercise Price shall be effective upon
written notice to the Warrant Agent, which notice shall be given pursuant to
a
duly and validly authorized resolution of the Board of Directors of the Company.
Any such reduction in the Exercise Price shall not entitle the Registered Owners
to issuance of any additional Common Shares pursuant to the adjustment
provisions set forth elsewhere herein, regardless of whether the reduction
in
the Exercise Price was effected either prior to or following exercise of
Warrants by the Registered Owners thereof. A nonexercising Registered Owner
shall have no remedy or rights to receive any additional Warrant Shares as
a
result of any reduction in any applicable Exercise Price pursuant to this
subsection. Any reduction in the Exercise Price shall be effective for minimum
periods of not less than ten (10) business days.
10
10.
Duties,
Compensation and Termination of Warrant Agent.
The
Warrant Agent shall act hereunder as agent and in a ministerial capacity for
the
Company, and its duties shall be determined solely by the provisions hereof.
The
Warrant Agent shall not, by issuing and delivering Warrant Certificates or
by
any other act hereunder, be deemed to make any representations as to the
validity, value or authorization of the Warrant Certificate or the Warrants
represented thereby or of the Warrant Shares or other property delivered on
exercise of any Warrant. The Warrant Agent shall not be under any duty or
responsibility to any holder of the Warrant Certificates to make or cause to
be
made any adjustment of the Exercise Price or to determine whether any fact
exists which may require any such adjustments.
The
Warrant Agent shall not (i) be liable for any recital or statement of fact
contained herein or for any action taken or omitted by it in reliance on any
Warrant Certificate or other document or instrument believed by it in good
faith
to be genuine and to have been signed or presented by the proper party or
parties, (ii) be responsible for any failure on the part of the Company to
comply with any of its covenants and obligations contained in this Agreement
or
in the Warrant Certificates, or (iii) be liable for any act or omission in
connection with this Agreement except for its own negligence or willful
misconduct.
The
Warrant Agent may at any time consult with counsel satisfactory to it (who
may
be counsel for the Company) and shall incur no liability or responsibility
for
any action taken or omitted by it in good faith in accordance with the opinion
or advice of such counsel.
Any
notice, statement, instruction, request, direction, order or demand of the
Company shall be sufficiently evidenced by an instrument signed by its President
and attested by its Secretary or Assistant Secretary. The Warrant Agent shall
not be liable for any action taken or omitted by it in accordance with such
notice, statement, instruction, request, direction, order or demand.
The
Company agrees to pay the Warrant Agent reasonable compensation for its services
hereunder and to reimburse the Warrant Agent for its reasonable expenses. The
Company further agrees to indemnify the Warrant Agent against any and all
losses, expenses and liabilities, including judgments, costs and counsel fees,
for any action taken or omitted by the Warrant Agent in the execution of its
duties and powers hereunder, excepting losses, expenses and liabilities arising
as a result of the Warrant Agent's negligence or willful misconduct.
The
Warrant Agent may resign its duties or the Company may terminate the Warrant
Agent and the Warrant Agent shall be discharged from all further duties and
liabilities hereunder (except liabilities arising as a result of the Warrant
Agent's own negligence or willful misconduct) on [30 days'] prior written notice
to the other party. At least [12 days] prior to the date such resignation is
to
become effective, the Warrant Agent shall cause a copy of such notice of
resignation to be mailed to the Registered Owner of each Warrant Certificate.
On
such resignation or termination, the Company shall appoint a new 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 the resignation by the Warrant Agent,
then the Registered Owner of any Warrant Certificate may apply to any court
of
competent jurisdiction for the appointment of a new Warrant Agent. Any new
Warrant Agent, whether appointed by the Company or by such court, shall be
a
bank or trust company having a capital and surplus, as shown by its last
published report to its shareholders, of not less than [$1,000,000], and having
its principal office in the United States.
11
After
acceptance in writing of an appointment of a new Warrant Agent is received
by
the Company, such new Warrant Agent shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally named herein
as
the Warrant Agent, without any further assurance, conveyance, act or deed;
provided, however, if it shall be necessary or expedient to execute and deliver
any further assurance, conveyance, act or deed, the same shall be done at the
expense of the Company and shall be legally and validly executed. The Company
shall file a notice of appointment of a new Warrant Agent with the resigning
Warrant Agent and shall forthwith cause a copy of such notice to be mailed
to
the Registered Owner of each Warrant Certificate.
Any
corporation into which the Warrant Agent or any new Warrant Agent may be
converted or merged, or any corporation resulting from any consolidation to
which the Warrant Agent or any new Warrant Agent shall be a party, or any
corporation succeeding to the corporate trust business of the Warrant Agent
shall be a successor Warrant Agent under this Agreement, provided that such
corporation is eligible for appointment as a successor to the Warrant Agent.
Any
such successor Warrant Agent shall promptly cause notice of its succession
as
Warrant Agent to be mailed to the Company and to the Registered Owner of each
Warrant Certificate. No further action shall be required for establishment
and
authorization of such successor Warrant Agent.
The
Warrant Agent, its officers or directors and it subsidiaries or affiliates
may
buy, hold or sell Warrants or other securities of the Company and otherwise
deal
with the Company in the same manner and to the same extent and with like effect
as though it were not the Warrant Agent. Nothing herein shall preclude the
Warrant Agent from acting in any other capacity for the Company.
11.
Modification
of Agreement.
The
Warrant Agent and the Company may by supplemental agreement make any changes
or
corrections in this Agreement they shall deem appropriate to cure any ambiguity
or to correct any defective or inconsistent provision or mistake or error herein
contained. Additionally, the parties may make any changes or corrections deemed
necessary which shall not adversely affect the interests of the Registered
Owners of Warrant Certificates; provided, however, this Agreement shall not
otherwise be modified, supplemented or altered in any respect except with the
consent in writing of the Registered Owners of Warrant Certificates representing
not less than a majority of the Warrants outstanding. Additionally, no change
in
the number or nature of the Warrant Shares purchasable on exercise of a Warrant
or the Exercise Price therefore shall be made without the consent in writing
of
the Registered Owner of the Warrant Certificate representing such Warrant,
other
than such changes as are specifically prescribed by this Agreement.
12.
Notices.
All
notices, demands, elections, opinions or requests (however characterized or
described) required or authorized hereunder shall be deemed given sufficiently
in writing and sent by registered or certified mail, return receipt requested
and postage prepaid, or by tested telex, telegram or cable to, in the case
of
the Company:
12
COMPANY:
Rm.
10601, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇.▇, ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇, P.R. China
Fax:
[__________]
Attention:
President
with
a
copy to:
▇▇▇▇▇▇▇▇▇▇
& ▇▇▇▇▇ LLP
▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax:
▇▇▇-▇▇▇-▇▇▇▇
Attention:
▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
and
in
the case of the Warrant Agent:
[name]
[address]
Fax:
[__________]
and
if to
the Registered Owner of a Warrant Certificate, at the address of such Registered
Owner as set forth on the books maintained by the Warrant Agent.
13.
Persons
Benefiting.
This
Agreement shall be binding upon and inure to the benefit of the Company, the
Warrant Agent and their respective successors and assigns, and the Registered
Owners and beneficial owners from time to time of the Warrant Certificates.
Nothing in this Agreement is intended or shall be construed to confer on any
other person any right, remedy or claim or to impose on any other person any
duty, liability or obligation.
14.
Further
Instruments.
The
parties shall execute and deliver any and all such other instruments and shall
take any and all such other actions as may be reasonable or necessary to carry
out the intention of this Agreement.
15.
Severability.
If any
provision of this Agreement shall be held, declared or pronounced void,
voidable, invalid, unenforceable or inoperative for any reason by any court
of
competent jurisdiction, government authority or otherwise, such holding,
declaration or pronouncement shall not affect adversely any other provision
of
this Agreement, which shall otherwise remain in full force and effect and be
enforced in accordance with its terms, and the effect of such holding,
declaration or pronouncement shall be limited to the territory or jurisdiction
in which made.
16.
Waiver.
All the
rights and remedies of either party under this Agreement are cumulative and
not
exclusive of any other rights and remedies as provided by law. No delay or
failure on the part of either party in the exercise of any right or remedy
arising from a breach of this Agreement shall operate as a waiver of any
subsequent right or remedy arising from a subsequent breach of this Agreement.
The consent of any party where required hereunder to any act or occurrence
shall
not be deemed to be a consent to any other action or occurrence.
17.
General
Provisions.
This
Agreement shall be construed and enforced in accordance with, and governed
by,
the laws of the State of California. Except as otherwise expressly stated
herein, time is of the essence in performing hereunder. This Agreement embodies
the entire agreement and understanding between the parties and supersedes all
prior agreements and understandings relating to the subject matter hereof,
and
this Agreement may not be modified or amended or any term or provision hereof
waived or discharged except in writing signed by the party against whom such
amendment, modification, waiver or discharge is sought to be enforced. The
headings of this Agreement are for convenience of reference only and shall
not
limit or otherwise affect the meaning thereof. This Agreement may be executed
in
any number of counterparts, each of which shall be deemed an original, but
all
of which taken together shall constitute one and the same
instrument.
13
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the date first above mentioned.
THE
COMPANY:
By:
Name:
Title:
THE
WARRANT AGENT:
[NAME]
By:
Name:
Title:
14