WARRANT TO PURCHASE COMMON STOCK OF CHINA CENTURY DRAGON MEDIA, INC.
UNDER
FINRA RULE 5110(g) AND SUBJECT TO LIMITED EXCEPTIONS, THIS WARRANT AND THE
UNDERLYING SHARES OF COMMON STOCK SHALL NOT BE SOLD DURING THE PUBLIC OFFERING
OF THE COMPANY'S COMMON STOCK (THE "PUBLIC OFFERING") OR SOLD, TRANSFERRED,
ASSIGNED, PLEDGED, OR HYPOTHECATED, OR BE THE SUBJECT OF ANY HEDGING, SHORT
SALE, DERIVATIVE, PUT, OR CALL TRANSACTION THAT WOULD RESULT IN THE EFFECTIVE
ECONOMIC DISPOSITION OF THIS WARRANT OR THE SECURITIES UNDERLYING THIS WARRANT
BY ANY PERSON FOR A PERIOD OF 180 DAYS IMMEDIATELY FOLLOWING THE DATE OF
EFFECTIVENESS OR COMMENCEMENT OF SALES OF THE PUBLIC OFFERING.
WARRANT
TO PURCHASE COMMON STOCK
OF
NO.
__ February __, 2011
THIS CERTIFIES THAT, for
$_____ and other valuable consideration received by CHINA CENTURY DRAGON MEDIA,
INC., a Delaware corporation (the “Company”),
[WESTPARK CAPITAL, INC.],
or its permitted registered assigns (“Holder”),
is entitled, subject to the terms and conditions of this Warrant, at any time or
from time to time after February __, 2012 (the “Effective
Date”), and before 5:00 p.m. Pacific Time on _________, 2016 (the “Expiration
Date”), to purchase from the Company, _________ shares of Common Stock of
the Company at a price per share equal to $_____ (the “Purchase
Price”). Both the number of shares of Common Stock purchasable
upon exercise of this Warrant and the Purchase Price are subject to adjustment
and change as provided herein.
The
Company has filed with the Securities and Exchange Commission (the “Commission”)
a Registration Statement, No. 333-166866 on Form S-1 ("Registration
Statement") for the registration under the Securities Act of 1933, as
amended ("Securities Act") of,
among other securities, the Warrant and the shares of Common Stock issuable upon
exercise of the Warrant (the “Warrant
Shares”).
1. CERTAIN
DEFINITIONS. As used in this Warrant the following terms shall
have the following respective meanings:
1.1 “Fair Market
Value” of a share of Common Stock as of a particular date shall
mean:
If traded
on a securities exchange, the Fair Market Value shall be deemed to be the
average of the closing prices of the Common Stock of the Company on such
exchange or market over the five (5) trading days ending immediately prior to
the applicable date of valuation;
If
actively traded over-the-counter, the Fair Market Value shall be deemed to be
the average of the closing bid prices over the thirty (30)-day period ending
immediately prior to the applicable date of valuation; and
If there
is no active public market, the Fair Market Value shall be the value thereof, as
agreed upon by the Company and the Holder; provided, however, that if the Company
and the Holder cannot agree on such value, such value shall be determined by an
independent valuation firm experienced in valuing businesses such as the Company
and jointly selected in good faith by the Company and the
Holder. Fees and expenses of the valuation firm shall be paid for in
equal proportions by the Company and the Holder.
1.2 “Registered
Holder” shall mean any Holder in whose name this Warrant is registered
upon the books and records maintained by the Company.
1.3 “Warrant”
as used herein, shall include this Warrant and any warrant delivered in
substitution or exchange therefor as provided herein.
1.4 “Common
Stock” shall mean the Common Stock of the Company and any other
securities at any time receivable or issuable upon exercise of this
Warrant.
2. EXERCISE OF
WARRANT.
2.1 Payment. Subject
to compliance with the terms and conditions of this Warrant and applicable
securities laws, this Warrant may be exercised, in whole or in part at any time
or from time to time, on or before the Expiration Date by the delivery
(including, without limitation, delivery by facsimile) of the form of Notice of
Exercise attached hereto as Exhibit A (the
“Notice of
Exercise”), duly executed by the Holder, at the principal office of the
Company, and as soon as practicable after such date, surrendering
(a) this
Warrant at the principal office of the Company, and
(b) payment,
(i) in cash (by check) or by wire transfer, (ii) by cancellation by
the Holder of indebtedness of the Company to the Holder; or (iii) by a
combination of (i) and (ii), of an amount equal to the product obtained by
multiplying the number of shares of Common Stock being purchased upon such
exercise by the then effective Purchase Price (the “Exercise
Amount”).
2.2 Net Issue Exercise.
In lieu of the payment methods set forth in Section 2.1(b) above,
the Holder may elect to exchange all or some of this Warrant for shares of
Common Stock equal to the value of the amount of the Warrant being exchanged on
the date of exchange. If Holder elects to exchange this Warrant as
provided in this Section 2.2, Holder
shall tender to the Company the Warrant for the amount being exchanged, along
with written notice of ▇▇▇▇▇▇’s election to exchange some or all of the Warrant,
and the Company shall issue to Holder the number of shares of the Common Stock
computed using the following formula:
|
X
=
|
Y
(A-B)
|
||
|
A
|
|
||
|
Where: X
=
|
the
number of shares of Common Stock to be issued to
Holder.
|
||
|
Y
=
|
the
number of shares of Common Stock purchasable under the amount of the
Warrant being exchanged (as adjusted to the date of such
calculation).
|
||
|
A
=
|
the
Fair Market Value of one share of the Common Stock on the date that the
relevant Notice of Exercise is received by the Company.
|
||
|
B
=
|
Purchase
Price (as adjusted to the date of such
calculation).
|
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2.3 Stock Certificates; Direct
Registration; Fractional Shares. As soon as practicable on or
after the date of any exercise of this Warrant, the Company shall issue and
deliver to the person or persons entitled to receive the same a certificate or
certificates for the number of whole shares of Common Stock issuable upon such
exercise, together with cash in lieu of any fraction of a share equal to such
fraction of the current Fair Market Value of one whole share of Common Stock as
of such date of exercise. No fractional shares or scrip representing
fractional shares shall be issued upon an exercise of this
Warrant. In lieu of providing a stock certificate pursuant to this
Section 2.3, the Holder may request that the Company provide the securities in
book-entry (uncertificated form) if, at such time, the Company is direct
registration eligible. Notwithstanding the foregoing, the Company shall not be
obligated to deliver any securities pursuant to the exercise of this Warrant
unless a registration statement under the Securities Act with respect to the
Warrant Shares is effective and such securities are qualified for sale or exempt
from qualification under applicable securities laws of the states or other
jurisdictions in which the registered holders reside.
2.4 Partial Exercise; Effective
Date of Exercise. In case of any partial exercise of this
Warrant, the Company shall cancel this Warrant upon surrender hereof and shall
execute and deliver a new Warrant of like tenor and date for the balance of the
shares of Common Stock purchasable hereunder. This Warrant shall be
deemed to have been exercised immediately prior to the close of business on the
date of its surrender for exercise as provided above. The person
entitled to receive the Warrant Shares shall be treated for all purposes as the
holder of record of such shares as of the close of business on the date the
Holder is deemed to have exercised this Warrant.
2.5 Vesting. This
Warrant shall vest fully upon issuance.
2.6 Restrictions on
Exercise: Notwithstanding anything to contrary herein, in no
event will the registered holder of this Warrant be entitled to receive a
net-cash settlement or other consideration in lieu of physical settlement in
shares of Common Stock if the Warrant Shares are not covered by an effective
registration statement filed with the Securities and Exchange Commission under
the Securities Act. Accordingly, the Warrant may expire unexercised and
worthless if a current registration statement covering the Warrant Shares is not
effective.
3. VALID ISSUANCE;
TAXES. All shares of Common Stock issued upon the exercise of
this Warrant shall be validly issued, fully paid and nonassessable, and the
Company shall pay all taxes and other governmental charges that may be imposed
in respect of the issue or delivery thereof. The Company shall not be
required to pay any tax or other charge imposed in connection with any transfer
involved in the issuance of any certificate for shares of Common Stock in any
name other than that of the Registered Holder of this Warrant, and in such case
the Company shall not be required to issue or deliver any stock certificate or
security until such tax or other charge has been paid, or it has been
established to the Company’s reasonable satisfaction that no tax or other charge
is due.
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4. ADJUSTMENT OF PURCHASE PRICE AND
NUMBER OF SHARES. The number of shares of Common Stock
issuable upon exercise of this Warrant (or any shares of stock or other
securities or property receivable or issuable upon exercise of this Warrant) and
the Purchase Price are subject to adjustment upon occurrence of the following
events:
4.1 Adjustment for Stock Splits,
Stock Subdivisions or Combinations of Shares. The Purchase
Price of this Warrant shall be proportionally decreased and the number of shares
of Common Stock issuable upon exercise of this Warrant (or any shares of stock
or other securities at the time issuable upon exercise of this Warrant) shall be
proportionally increased to reflect any stock split or subdivision of the
Company’s Common Stock. The Purchase Price of this Warrant shall be
proportionally increased and the number of shares of Common Stock issuable upon
exercise of this Warrant (or any shares of stock or other securities at the time
issuable upon exercise of this Warrant) shall be proportionally decreased to
reflect any combination of the Company’s Common Stock.
4.2 Adjustment for Dividends or
Distributions of Stock or Other Securities or Property. In
case the Company shall make or issue, or shall fix a record date for the
determination of eligible holders entitled to receive, a dividend or other
distribution with respect to the Common Stock (or any shares of stock or other
securities at the time issuable upon exercise of the Warrant) payable in (a)
securities of the Company or (b) assets (excluding cash dividends), then, in
each such case, the Holder of this Warrant on exercise hereof at any time after
the consummation, effective date or record date of such dividend or other
distribution, shall receive, in addition to the shares of Common Stock (or such
other stock or securities) issuable on such exercise prior to such date, and
without the payment of additional consideration therefor, the securities or such
other assets of the Company to which such Holder would have been entitled upon
such date if such Holder had exercised this Warrant on the date hereof and had
thereafter, during the period from the date hereof to and including the date of
such exercise, retained such shares and all such additional securities or other
assets distributed with respect to such shares as aforesaid during such period
giving effect to all adjustments called for by this Section
4.
4.3 Reclassification. If
the Company, by reclassification of securities or otherwise, shall change any of
the securities as to which purchase rights under this Warrant exist into the
same or a different number of securities of any other class or classes, this
Warrant shall thereafter represent the right to acquire such number and kind of
securities as would have been issuable as the result of such change with respect
to the securities that were subject to the purchase rights under this Warrant
immediately prior to such reclassification or other change, and the Purchase
Price therefor shall be appropriately adjusted, all subject to further
adjustment as provided in this Section
4. No adjustment shall be made pursuant to this Section 4.3 upon any
conversion or redemption of the Common Stock which is the subject of Section
4.5.
4.4 Adjustment for Capital
Reorganization, Merger or Consolidation. In case of any
capital reorganization of the capital stock of the Company (other than a
combination, reclassification, exchange or subdivision of shares otherwise
provided for herein), or any merger or consolidation of the Company with or into
another corporation, or the sale of all or substantially all the assets of the
Company then, and in each such case, as a part of such reorganization, merger,
consolidation, sale or transfer, lawful provision shall be made so that the
Holder of this Warrant shall thereafter be entitled to receive upon exercise of
this Warrant, during the period specified herein and upon payment of the
Purchase Price then in effect, the number of shares of stock or other securities
or property of the successor corporation resulting from such reorganization,
merger, consolidation, sale or transfer that a holder of the shares deliverable
upon exercise of this Warrant would have been entitled to receive in such
reorganization, consolidation, merger, sale or transfer if this Warrant had been
exercised immediately before such reorganization, merger, consolidation, sale or
transfer, all subject to further adjustment as provided in this Section
4. The foregoing provisions of this Section 4.4 shall
similarly apply to successive reorganizations, consolidations, mergers, sales
and transfers and to the stock or securities of any other corporation that are
at the time receivable upon the exercise of this Warrant. If the
per-share consideration payable to the Holder hereof for shares in connection
with any such transaction is in a form other than cash or marketable securities,
then the value of such consideration shall be determined in good faith by the
Company’s Board of Directors. In all events, appropriate adjustment
(as determined in good faith by the Company’s Board of Directors) shall be made
in the application of the provisions of this Warrant with respect to the rights
and interests of the Holder after the transaction, to the end that the
provisions of this Warrant shall be applicable after that event, as near as
reasonably may be, in relation to any shares or other property deliverable after
that event upon exercise of this Warrant.
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4.5 Conversion of Common
Stock. In case all or any portion of the authorized and
outstanding shares of Common Stock of the Company are redeemed or converted or
reclassified into other securities or property pursuant to the Company’s
Certificate of Incorporation or otherwise, or the Common Stock otherwise ceases
to exist, then, in such case, the Holder of this Warrant, upon exercise hereof
at any time after the date on which the Common Stock is so redeemed or
converted, reclassified or ceases to exist (the “Termination
Date”), shall receive, in lieu of the number of shares of Common Stock
that would have been issuable upon such exercise immediately prior to the
Termination Date, the securities or property that would have been received if
this Warrant had been exercised in full and the Common Stock received thereupon
had been simultaneously converted immediately prior to the Termination Date, all
subject to further adjustment as provided in this
Warrant. Additionally, the Purchase Price shall be immediately
adjusted to equal the quotient obtained by dividing (x) the aggregate Purchase
Price of the maximum number of shares of Common Stock for which this Warrant was
exercisable immediately prior to the Termination Date by (y) the number of
shares of Common Stock of the Company for which this Warrant is exercisable
immediately after the Termination Date, all subject to further adjustment as
provided herein.
5. CERTIFICATE AS TO
ADJUSTMENTS. In each case of any adjustment in the Purchase
Price, or number or type of shares issuable upon exercise of this Warrant, the
Chief Financial Officer or Controller of the Company shall compute such
adjustment in accordance with the terms of this Warrant and prepare a
certificate setting forth such adjustment and showing in detail the facts upon
which such adjustment is based, including a statement of the adjusted Purchase
Price. The Company shall promptly send (by facsimile and by either
first class mail, postage prepaid or overnight delivery) a copy of each such
certificate to the Holder.
6. LOSS OR
MUTILATION. Upon receipt of evidence reasonably satisfactory
to the Company of the ownership of and the loss, theft, destruction or
mutilation of this Warrant, and of indemnity reasonably satisfactory to it, and
(in the case of mutilation) upon surrender and cancellation of this Warrant, the
Company will execute and deliver in lieu thereof a new Warrant of like tenor as
the lost, stolen, destroyed or mutilated Warrant.
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7. RESERVATION OF COMMON
STOCK. The Company hereby covenants that at all times there
shall be reserved for issuance and delivery upon exercise of this Warrant such
number of shares of Common Stock or other shares of capital stock of the Company
as are from time to time issuable upon exercise of this Warrant and, from time
to time, will take all steps necessary to amend its Certificate of Incorporation
to provide sufficient reserves of shares of Common Stock issuable upon exercise
of this Warrant. All such shares shall be duly authorized, and when
issued upon such exercise, shall be validly issued, fully paid and
non-assessable, free and clear of all liens, security interests, charges and
other encumbrances or restrictions on sale and free and clear of all preemptive
rights, except encumbrances or restrictions arising under federal or state
securities laws. Issuance of this Warrant shall constitute full authority to the
Company’s Officers who are charged with the duty of executing stock certificates
to execute and issue the necessary certificates for shares of Common Stock upon
the exercise of this Warrant.
8. TRANSFER AND
EXCHANGE. Subject to the terms and conditions of this Warrant
and compliance with all applicable securities laws, this Warrant and all rights
hereunder may be transferred to any Registered Holder’s parent, subsidiary or
affiliate, or, if the Registered Holder is a partnership, to any partner of such
Registered Holder, in whole or in part, on the books of the Company maintained
for such purpose at the principal office of the Company referred to above, by
the Registered Holder hereof in person, or by duly authorized attorney, upon
surrender of this Warrant properly endorsed and upon payment of any necessary
transfer tax or other governmental charge imposed upon such
transfer. Upon any permitted partial transfer, the Company will issue
and deliver to the Registered Holder a new Warrant or Warrants with respect to
the shares of Common Stock not so transferred. Each taker and holder
of this Warrant, by taking or holding the same, consents and agrees that when
this Warrant shall have been so endorsed, the person in possession of this
Warrant may be treated by the Company, and all other persons dealing with this
Warrant, as the absolute owner hereof for any purpose and as the person entitled
to exercise the rights represented hereby, any notice to the contrary
notwithstanding; provided, however, that until a
transfer of this Warrant is duly registered on the books of the Company, the
Company may treat the Registered Holder hereof as the owner for all
purposes. Notwithstanding anything to the contrary, this Warrant and
the Common Stock issued or issuable upon exercise hereof, shall be subject to
the restrictions on transfer contained in FINRA Rule 5110(g) and may not be sold
during the offering pursuant to which such Warrant was issued, or sold,
transferred, assigned, pledged, or hypothecated, or be the subject of any
hedging, short sale, derivative, put, or call transaction that would result in
the effective economic disposition of the securities by any person for a period
of 180 days immediately following the Effective Date, except as provided in
subparagraph (g)(2) of FINRA Rule 5110.
9. REGISTRATION OF COMMON
STOCK.
9.1 The
Company agrees that prior to the Effective Date, it shall file with the
Commission a post-effective amendment to the Registration Statement, or a new
registration statement, for the registration, under the Securities Act, of, and
it shall take such action as is necessary to qualify for sale, in those states
in which the Warrant was initially offered by the Company, the Warrant Shares
and any shares of Common Stock issued as (or issuable upon the conversion or
exercise of any warrant, right or other security which is issued as) a dividend
or other distribution with respect to, or in exchange for or in replacement of
any Warrant Shares (collectively, the “Registrable
Securities”). In either case, the Company will use its
commercially reasonable efforts to cause the same to become effective on or
prior to the Effective Date and to maintain the effectiveness of such
registration statement until the expiration of this Warrant in accordance with
the provisions herein.
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9.2 The
Company shall pay all expenses incurred in connection with the registration of
the Registrable Securities pursuant to this Section 9 (excluding underwriters’
or brokers’ discounts and commissions relating to shares sold by the Holders of
Registrable Securities (the “Registrable
Securities Holders”) and legal fees of counsel for the Registrable
Securities Holders), including without limitation federal and “blue sky”
registration, filing and qualification fees, printers’ and accounting fees, and
fees and disbursements of counsel. The Company shall furnish to the
Registrable Securities Holders such number of copies of a prospectus, including
a preliminary prospectus, in conformity with the requirements of the Securities
Act, and such other documents as they may reasonably request in order to
facilitate the disposition of the Registrable Securities owned by them that are
included in such registration statement. The Company shall use its
commercially reasonable efforts to register and qualify the securities covered
by such registration statement under such other securities or Blue Sky laws of
such states as shall be reasonably requested by the Registrable Securities
Holders, provided that the Company shall not be required in connection therewith
or as a condition thereto to qualify to do business or to file a general consent
to service of process in any such states or jurisdictions. The
Company shall notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing.
9.3 If
requested by the Company, it shall be a condition precedent to the obligations
of the Company to take any action pursuant to this Section 9 that the
selling Registrable Securities Holders shall furnish to the Company such
information regarding themselves, the Registrable Securities held by them, and
the intended method of disposition of such securities as shall be required to
timely effect the registration of their Registrable Securities.
10. INDEMNIFICATION. In
the event any Registrable Securities are included in a registration statement
under Section
9:
10.1 By the
Company. To the extent permitted by law; the Company will
indemnify and hold harmless each Registrable Securities Holder, the partners,
officers and directors of each Registrable Securities Holder, any underwriter
(as determined in the Securities Act) for such Registrable Securities Holder and
each person, if any, who controls such Registrable Securities
Holder or underwriter within the meaning of the Securities Act or the
Securities Exchange Act of 1934, as amended, (the “1934
Act”), against any losses, claims, damages, or liabilities (joint or
several) to which they may become subject under the Securities Act, the 1934 Act
or other federal or state law, insofar as such losses, claims, damages, or
liabilities (or actions in respect thereof) arise out of or are based upon any
of the following statements, omissions or violations (collectively a “Violation”):
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(a) any
untrue statement or alleged untrue statement of a material fact contained in
such registration statement, including any preliminary prospectus or final
prospectus contained therein or any amendments or supplements
thereto;
(b) the
omission or alleged omission to state therein a material fact required to be
stated therein, or necessary to make the statements therein not misleading,
or
(c) any
violation or alleged violation by the Company of the Securities Act, the 1934
Act, any federal or state securities law or any rule or regulation promulgated
under the Securities Act, the 1934 Act or any federal or state securities law in
connection with the offering covered by such registration
statement;
and the
Company will reimburse each such Registrable Securities Holder, partner, officer
or director, underwriter or controlling person for any legal or other expenses
reasonably incurred by them, as incurred, in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however, that the indemnity
agreement contained in this Section 10 shall not
apply to amounts paid in settlement of any such loss, claim, damage, liability
or action if such settlement is effected without the consent of the Company
(which consent shall not be unreasonably withheld), nor shall the Company be
liable in any such case for any such loss, claim, damage, liability or action to
the extent that it arises out of or is based upon a Violation which occurs in
reliance upon and in conformity with written information furnished expressly for
use in connection with such registration by such Registrable Securities Holder,
partner, officer, director, underwriter or controlling person of such
Registrable Securities Holder.
10.2 By Selling
Holders. To the extent permitted by law, each selling
Registrable Securities Holder will indemnify and hold harmless the Company, each
of its directors, each of its officers who have signed the registration
statement, each person, if any, who controls the Company within the meaning of
the Securities Act, any underwriter and any other Registrable Securities Holder
selling securities under such registration statement or any of such other
Registrable Securities Holder’s partners, directors or officers or any person
who controls such Registrable Securities Holder within the meaning of the
Securities Act or the 1934 Act, against any losses, claims, damages or
liabilities (joint or several) to which the Company or any such director,
officer, controlling person, underwriter or other such Registrable Securities
Holder, partner or director, officer or controlling person of such other
Registrable Securities Holder may become subject under the Securities Act, the
1934 Act or other federal or state law, insofar as such losses, claims, damages
or liabilities (or actions in respect thereto) arise out of or are based upon
any Violation, in each case to the extent (and only to the extent) that such
Violation occurs in reliance upon and in conformity with written information
furnished by such Registrable Securities Holder expressly for use in connection
with such registration; and each such Registrable Securities Holder will
reimburse any legal or other expenses reasonably incurred by the Company or any
such director, officer, controlling person, underwriter or other Registrable
Securities Holder, partner, officer, director or controlling person of such
other Registrable Securities Holder in connection with investigating or
defending any such loss, claim, damage, liability or action: provided, however, that the indemnity
agreement contained in this Section 10.2 shall
not apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent of the
Registrable Securities Holder, which consent shall not be unreasonably withheld;
and provided, further, that the total
amounts payable in indemnity by a Registrable Securities Holder under this Section 10.2 in
respect of any Violation shall not exceed the net proceeds received by such
Registrable Securities Holder in the registered offering out of which such
Violation arises.
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10.3 Notice. Promptly
after receipt by an indemnified party under this Section 10 of notice
of the commencement of any action (including any governmental action), such
indemnified party will, if a claim in respect thereof is to be made against any
indemnifying party under this Section 10, deliver
to the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified
party shall have the right to retain its own counsel, with the fees and expenses
to be paid by the indemnifying party, if representation of such indemnified
party by the counsel retained by the indemnifying party would be inappropriate
due to actual or potential conflict of interests between such indemnified party
and any other party represented by such counsel in such
proceeding. The failure to deliver written notice to the indemnifying
party within a reasonable time of the commencement of any such action shall
relieve such indemnifying party of liability to the indemnified party under this
Section 10 to
the extent the indemnifying party is prejudiced as a result thereof, but the
omission so to deliver written notice to the indemnified party will not relieve
it of any liability that it may have to any indemnified party otherwise than
under this Section
10.
10.4 Defect Eliminated in Final
Prospectus. The foregoing indemnity agreements of the Company
and Registrable Securities Holders are subject to the condition that, insofar as
they relate to any Violation made in a preliminary prospectus but eliminated or
remedied in the amended prospectus on file with the SEC at the time the
registration statement in question becomes effective or the amended prospectus
filed with the SEC pursuant to SEC Rule 424(b) (the “Final
Prospectus”), such indemnity agreement shall not inure to the benefit of
any person if a copy of the Final Prospectus was timely furnished to the
indemnified party and was not furnished to the person asserting the loss,
liability, claim or damage at or prior to the time such action is required by
the Securities Act.
10.5 Contribution. In
order to provide for just and equitable contribution to joint liability under
the Securities Act in any case in which either (i) any Registrable Securities
Holder exercising rights under this Warrant, or any controlling person of any
such Registrable Securities Holder, makes a claim for indemnification pursuant
to this Section
10 but it is judicially determined (by the entry of a final judgment or
decree by a court of competent jurisdiction and the expiration of time to appeal
or the denial of the last right of appeal) that such indemnification may not be
enforced in such case notwithstanding the fact that this Section 10 provides
for indemnification in such case, or (ii) contribution under the Securities Act
may be required on the part of any such selling Registrable Securities Holder or
any such controlling person in circumstances for which indemnification is
provided under this Section 10; then, and
in each such case, the Company and such Registrable Securities Holder will
contribute to the aggregate losses, claims, damages or liabilities to which they
may be subject (after contribution from others) in such proportion so that such
Registrable Securities Holder is responsible for the portion represented by the
percentage that the public offering price of its Registrable Securities offered
by and sold under the registration statement bears to the public offering price
of all securities offered by and sold under such registration statement, and the
Company and other selling Registrable Securities Holders are responsible for the
remaining portion; provided, however, that, in any such
case: (A) no such Registrable Securities Holder will be required to contribute
any amount in excess of the public offering price of all such Registrable
Securities offered and sold by such Registrable Securities Holder pursuant to
such registration statement; and (B) no person or entity guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
will be entitled to contribution from any person or entity who was not guilty of
such fraudulent misrepresentation.
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10.6 Survival. The
obligations of the Company and Registrable Securities Holders under this Section 10 shall
survive until the fifth anniversary of the completion of any offering of
Registrable Securities in a registration statement, regardless of the expiration
of any statutes of limitation or extensions of such statutes.
11. NO RIGHTS OR LIABILITIES AS
STOCKHOLDERS. This Warrant shall not entitle the Holder to any
voting rights or other rights as a stockholder of the Company. In the
absence of affirmative action by such Holder to purchase Common Stock by
exercise of this Warrant or Common Stock upon conversion thereof, no provisions
of this Warrant, and no enumeration herein of the rights or privileges of the
Holder hereof shall cause such Holder hereof to be a stockholder of the Company
for any purpose.
12. REPRESENTATIONS AND WARRANTIES OF THE
COMPANY. The Company hereby represents and warrants to Holder
that:
12.1 Due Authorization;
Consents. All corporate action on the part of the Company, its
officers, directors and stockholders necessary for (a) the authorization,
execution and delivery of, and the performance of all obligations of the Company
under, this Warrant, and (b) the authorization, issuance, reservation for
issuance and delivery of all of the Common Stock issuable upon exercise of this
Warrant, has been duly taken. This Warrant constitutes a valid and
binding obligation of the Company enforceable in accordance with its terms,
subject, as to enforcement of remedies, to applicable bankruptcy, insolvency,
moratorium, reorganization and similar laws affecting creditors’ rights
generally and to general equitable principles.
12.2 Organization. The
Company is a corporation duly organized and validly existing under the laws of
the State of Delaware and has all requisite corporate power to own, lease and
operate its property and to carry on its business as now being conducted and as
currently proposed to be conducted.
13. NOTICES. Except as
may be otherwise provided herein, all notices, requests, waivers and other
communications made pursuant to this Agreement shall be in writing and shall be
conclusively deemed to have been duly given (a) when hand delivered to the other
party; (b) when received when sent by facsimile at the address and number set
forth below; (c) three business days after deposit in the U.S. mail with first
class or certified mail receipt requested postage prepaid and addressed to the
other party as set forth below; or (d) the next business day after deposit with
a national overnight delivery service, postage prepaid, addressed to the parties
as set forth below with next-business-day delivery guaranteed, provided that the
sending party receives a confirmation of delivery from the delivery service
provider.
10
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To the
Company:
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To the
Holder:
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Room
801, ▇▇. ▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇
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Each
person making a communication hereunder by facsimile shall promptly confirm by
telephone to the person to whom such communication was addressed each
communication made by it by facsimile pursuant hereto but the absence of such
confirmation shall not affect the validity of any such
communication. A party may change or supplement the addresses given
above, or designate additional addresses, for purposes of this Section 13 by giving
the other party written notice of the new address in the manner set forth
above.
14. HEADINGS. The
headings in this Warrant are for purposes of convenience in reference only, and
shall not be deemed to constitute a part hereof.
15. LAW GOVERNING. This
Warrant shall be construed and enforced in accordance with, and governed by, the
laws of the State of California, with regard to conflict of law principles of
such state.
16. NO IMPAIRMENT. The
Company will not, by amendment of its Certificate of Incorporation or bylaws, or
through reorganization, consolidation, merger, dissolution, issue or sale of
securities, sale of assets or any other voluntary action, avoid or seek to avoid
the observance or performance of any of the terms of this Warrant, but will at
all times in good faith assist in the carrying out of all such terms and in the
taking of all such action as may be necessary or appropriate in order to protect
the rights of the Registered Holder of this Warrant against
impairment. Without limiting the generality of the foregoing, the
Company (a) will not increase the par value of any shares of stock issuable upon
the exercise of this Warrant above the amount payable therefor upon such
exercise, and (b) will take all such action as may be necessary or appropriate
in order that the Company may validly and legally issue fully paid and
nonassessable shares of Common Stock upon exercise of this Warrant.
17. NOTICES OF RECORD
DATE. In case:
17.1 the
Company shall take a record of the holders of its Common Stock (or other stock
or securities at the time receivable upon the exercise of this Warrant), for the
purpose of entitling them to receive any dividend or other distribution, or any
right to subscribe for or purchase any shares of stock of any class or any other
securities or to receive any other right; or
17.2 of
any consolidation or merger of the Company with or into another corporation, any
capital reorganization of the Company, any reclassification of the capital stock
of the Company, or any conveyance of all or substantially all of the assets of
the Company to another corporation in which holders of the Company’s stock are
to receive stock, securities or property of another corporation; or
17.3 of
any voluntary dissolution, liquidation or winding-up of the Company;
or
11
17.4 of
any redemption or conversion of all outstanding Common Stock;
then, and
in each such case, the Company will mail or cause to be mailed to the Registered
Holder of this Warrant a notice specifying, as the case may be, (i) the date on
which a record is to be taken for the purpose of such dividend, distribution or
right, or (ii) the date on which such reorganization, reclassification,
consolidation, merger, conveyance, dissolution, liquidation, winding-up,
redemption or conversion is to take place, and the time, if any is to be fixed,
as of which the holders of record of Common Stock or (such stock or securities
as at the time are receivable upon the exercise of this Warrant), shall be
entitled to exchange their shares of Common Stock (or such other stock or
securities), for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, conveyance,
dissolution, liquidation or winding-up. The Company shall use all
reasonable efforts to ensure such notice shall be delivered at least thirty (30)
days prior to the date therein specified.
18. SEVERABILITY. If
any term, provision, covenant or restriction of this Warrant is held by a court
of competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions, covenants and restrictions of this Warrant shall remain
in full force and effect and shall in no way be affected, impaired or
invalidated.
19. COUNTERPARTS. For
the convenience of the parties, any number of counterparts of this Warrant may
be executed by the parties hereto and each such executed counterpart shall be,
and shall be deemed to be, an original instrument.
20. NO INCONSISTENT
AGREEMENTS. The Company will not on or after the date of this
Warrant enter into any agreement with respect to its securities which is
inconsistent with the rights granted to the Holders of this Warrant or otherwise
conflicts with the provisions hereof. The rights granted to the
Holders hereunder do not in any way conflict with and are not inconsistent with
the rights granted to holders of the Company’s securities under any other
agreements, except rights that have been waived.
21. SATURDAYS, SUNDAYS AND
HOLIDAYS. If the Expiration Date falls on a Saturday, Sunday
or legal holiday, the Expiration Date shall automatically be extended until 5:00
p.m. PST the next business day.
22. ENTIRE
AGREEMENT. This Warrant contains the sole and entire agreement
and understanding of the parties with respect to the entire subject matter of
this Warrant, and any and all prior discussions, negotiations, commitments and
understandings, whether oral or otherwise, related to the subject matter of this
Warrant are hereby merged herein.
[Signatures
appear on following page.]
12
IN WITNESS WHEREOF, the
Company has caused this Warrant to be duly executed as of the Effective
Date.
| CHINA CENTURY DRAGON MEDIA, INC. | |||
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By:
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| ▇▇▇▇▇▇▇ ▇▇, Chief Executive Officer | |||
Signature
page to Warrant to Purchase Common Stock
13
EXHIBIT
A
NOTICE
OF EXERCISE
(To be
executed upon exercise of Warrant)
The
undersigned hereby irrevocably elects to exercise the right of purchase
represented by the within Warrant Certificate for, and to purchase thereunder,
the securities of the Company, as provided for therein, and (check the
applicable box):
| o |
tenders
herewith payment of the exercise price in full in the form of cash or a
certified or official bank check in same-day funds in the amount of
$____________ for _________ such securities.
|
| o |
elects
the Net Issue Exercise option pursuant to Section 2.2 of the Warrant, and
accordingly requests delivery of a net of ______________ of such
securities.
|
Please
issue a certificate or certificates for such securities in the name of, and pay
any cash for any fractional share to (please print name, address and social
security number):
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Name:
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Address:
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Signature:
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Note: The
above signature should correspond exactly with the name on the first page of
this Warrant Certificate or with the name of the assignee appearing in the
assignment form below.
If said
number of shares shall not be all the shares purchasable under the within
Warrant Certificate, a new Warrant Certificate is to be issued in the name of
said undersigned for the balance remaining of the shares purchasable thereunder
rounded up to the next higher whole number of shares.
A-1
EXHIBIT
B
ASSIGNMENT
(To be
executed only upon assignment of Warrant Certificate)
For value
received, hereby sells, assigns and transfers unto ____________________________
the within Warrant Certificate, together with all right, title and interest
therein, and does hereby irrevocably constitute and appoint
____________________________ attorney, to transfer said Warrant Certificate on
the books of the within-named Company with respect to the number of Warrants set
forth below, with full power of substitution in the premises:
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Name(s)
of Assignee(s)
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Address
|
#
of Warrants
|
And if
said number of Warrants shall not be all the Warrants represented by the Warrant
Certificate, a new Warrant Certificate is to be issued in the name of said
undersigned for the balance remaining of the Warrants registered by said Warrant
Certificate.
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Dated:
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Signature:
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Notice: The
signature to the foregoing Assignment must correspond to the name as written
upon the face of this security in every particular, without alteration or any
change whatsoever; signature(s) must be guaranteed by an eligible guarantor
institution (banks, stock brokers, savings and loan associations and credit
unions with membership in an approved signature guarantee medallion program)
pursuant to Securities and Exchange Commission Rule 17Ad-15.
B-1