CHINA BROADBAND, INC. COMMON STOCK PURCHASE WARRANT
Exhibit
4.3
NEITHER
THIS WARRANT NOR THE SECURITIES INTO WHICH THIS WARRANT IS EXERCISABLE HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”),
OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES HAVE BEEN ACQUIRED FOR
INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE
SECURITIES ACT, OR APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL,
IN A FORM ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER THE
SECURITIES ACT OR APPLICABLE STATE SECURITIES LAWS OR UNLESS SOLD PURSUANT TO
RULE 144 UNDER THE SECURITIES ACT.
CHINA
BROADBAND, INC.
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Initial
Holder: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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Original Issue
Date: ____________, 2010
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No. of Shares Subject to
Warrant:
[ ]
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Exercise Price Per
Share: $0.05
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Expiration
Time: 5:00 p.m., New York City time, on ________,
2015
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China Broadband, Inc., a Nevada
corporation (the “Company”), hereby certifies
that, for value received, the Initial Holder shown above, or its permitted
registered assigns (the “Holder”), is entitled to
purchase from the Company up to the number of shares of its common stock, par
value $0.001 per share (the “Common Stock”), shown
above (each such share, a “Warrant Share” and all such
shares, the “Warrant
Shares”) at the exercise price shown above (as may be adjusted from time
to time as provided herein, the “Exercise Price”), at any time
and from time to time on or original issue date indicated above (the “Original Issue Date”) and
through and including the expiration time shown above (the “Expiration Time”), and subject
to the following terms and conditions:
This
Warrant is being issued pursuant to a Securities Purchase Agreement, dated May
20, 2010 (the “SPA”), by
and between the Company, the Holder and the other parties thereto, pursuant to
which the Holder purchased units consisting of shares of the Company’s Series B
Preferred Stock.
1.
Definitions. In
addition to the terms defined elsewhere in this Warrant, capitalized terms that
are not otherwise defined herein have the meanings given to such terms in the
SPA.
2.
List of Warrant
Holders. The Company shall register this Warrant, upon records to
be maintained by the Company for that purpose (the “Warrant Register”), in the
name of the record Holder (which shall include the Holder or, as the case may
be, any registered assignee to which this Warrant is permissibly assigned
hereunder from time to time). The Company may deem and treat the
registered Holder of this Warrant as the absolute owner hereof for the purpose
of any exercise hereof or any distribution to the Holder, and for all other
purposes, absent actual notice to the contrary.
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3.
List of Transfers;
Restrictions on Transfer. The Company shall register any transfer of all
or any portion of this Warrant in the Warrant Register, upon surrender of this
Warrant, with the Form of Assignment attached hereto duly completed and signed,
to the Company at its address specified herein. Upon any such registration or
transfer, a new Warrant to purchase Common Stock, in substantially the form of
this Warrant (any such new Warrant, a “New Warrant”), evidencing the
portion of this Warrant so transferred shall be issued to the transferee and a
New Warrant evidencing the remaining portion of this Warrant not so transferred,
if any, shall be issued to the transferring Holder. The acceptance of the
New Warrant by the transferee thereof shall be deemed the acceptance by such
transferee of all of the rights and obligations in respect of the New Warrant
that the Holder has in respect of this Warrant.
4.
Exercise and Duration of
Warrant.
(a)
All or any part of this Warrant
shall be exercisable by the registered Holder at any time and from time to time
on or after the Original Issue Date and through and including the Expiration
Time. Subject to Section 11 hereof, at the Expiration Time, the portion of this
Warrant not exercised prior thereto shall be and become void and of no value and
this Warrant shall be terminated and shall no longer be
outstanding.
(b)
The Holder may exercise this Warrant by delivering to the Company: (i) an
exercise notice, in the form attached hereto (the “Exercise Notice”), completed
and duly signed, and (ii) payment by wire transfer of immediately available
funds to an account designated by the Company of the Exercise Price for the
number of Warrant Shares as to which this Warrant is being exercised (unless
cashless exercise shall have been elected in accordance with the provisions of
Section 4(c) hereof). The date such items are delivered to the Company (as
determined in accordance with the notice provisions hereof) is an “Exercise Date.” The
Holder shall be required to deliver the original Warrant, or any New Warrant
that may have been previously issued, in order to effect an exercise
hereunder. Execution and delivery of the Exercise Notice shall have
the same effect as cancellation of the original Warrant, or any New Warrant that
may have been previously issued, and issuance of a New Warrant evidencing the
right to purchase the remaining number of Warrant Shares.
(c) Notwithstanding
any provisions herein to the contrary, in lieu of exercising this Warrant by
payment of cash, the Holder may exercise this Warrant by a cashless exercise and
shall receive the number of Warrant Shares equal to an amount (as determined
below) by surrender of this Warrant at the principal office of the Company
together with the properly endorsed Exercise Notice in which event the Company
shall issue to the Holder a number of Warrant Shares computed using the
following formula:
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X =
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Y (B-A)
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B
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2
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Where
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X
=
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the
number of Warrant Shares to be issued to the Holder.
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Y
=
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the
number of Warrant Shares purchasable upon exercise of all of the Warrant
or, if only a portion of the Warrant is being exercised, the portion of
the Warrant being exercised.
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A
=
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the
Exercise Price.
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B
=
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the
average of the Fair Market Value for the five days immediately preceding
the date of the Exercise
Notice.
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For
purposes of this Section 4(c), “Fair Market Value” means (a) if the Common Stock
is then listed or quoted on a national trading market, the volume weighted
average price of the Common Stock for the 20 trading days preceding such
Exercise Date (b) if the Common Stock is not then listed or quoted on a national
trading market and if prices for the Common Stock are then quoted on the OTC
Bulletin Board, the volume weighted average price of the Common Stock for the 20
trading days preceding such Exercise Date on the OTC Bulletin Board, (c) if the
Common Stock is not then listed or quoted on the OTC Bulletin Board and if
prices for the Common Stock are then reported in the “Pink Sheets” published by
Pink Sheets, LLC (or a similar organization or agency succeeding to its
functions of reporting prices), the average bid price per share of the Common
Stock for the 20 trading days preceding such Determination Date as so reported,
or (d) in all other cases, the value of the Common Stock as determined in good
faith by the Company’s Board of Directors.
(d)
The Company will not close its stockholder books
or records in any manner which prevents the timely exercise of this Warrant
pursuant to the terms hereof.
5. Limitations and Restrictions
on Exercise. The Company shall not effect any exercise, and
the Holder shall not have the right to exercise any portion of this Warrant,
pursuant to Section 4 hereof or otherwise, to the extent that after giving
effect to such exercise, the Holder (together with the Holder’s affiliates)
would beneficially own in excess of 4.99% of the number of shares of Common
Stock outstanding immediately after giving effect to such conversion unless the
Holder shall have, in its sole discretion, elected to increase such amount to
9.99% of the number of shares of Common Stock outstanding immediately after
giving effect to such exercise. For purposes of the foregoing sentence,
the number of shares of Common Stock beneficially owned by the Holder (together
with the Holder’s affiliates) shall include the number of shares of Common Stock
issuable upon exercise of this Warrant with respect to which the determination
of such sentence is being made, but shall exclude the number of shares of Common
Stock which would be issuable upon (A) exercise of the remaining, unexercised
portion of the this Warrant beneficially owned by the Holder or any of its
affiliates and (B) exercise or conversion of the unexercised or nonconverted
portion of any other securities of the Company subject to a limitation on
conversion or exercise analogous to the limitation contained herein beneficially
owned by the Holder or any of its affiliates. Except as set forth in the
preceding sentence, for purposes of this Section 5, beneficial ownership shall
be calculated in accordance with Section 13(d) of the Exchange
Act. To the extent that the limitation contained in this section
applies, the determination of whether this Warrant is exercisable (in relation
to other securities owned by the Holder) and of which a portion of this Warrant
shall be in the sole discretion of the Holder. To ensure compliance with this
restriction, the Holder will be deemed to represent to the Company each time it
delivers an Exercise Notice in accordance with Section 4 hereof that the Holder
has not violated the restrictions set forth in this paragraph, and the Company
shall have no obligation to verify or confirm the accuracy of such
determination. For purposes of this Section 5, in determining the
number of outstanding shares of Common Stock, the Holder may rely on the number
of outstanding shares of Common Stock as reflected in a Company filing with the
U.S. Securities and Exchange Commission, a public announcement by the Company,
or any other notice by the Company or the Company’s transfer agent setting forth
the number of shares of Common Stock outstanding. The provisions of this
Section 5 may be waived by the Holder upon not less than sixty-one (61) days’
prior notice to the Company, and the provisions of this Section 5 shall continue
to apply until such 61st day (or such later date, as determined by the
Holder.
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6.
Delivery of Warrant
Shares.
(a)
Upon exercise of this Warrant, the Company shall promptly (but in no event later
than three (3) Trading Days after the Exercise Date) issue or cause to be issued
and cause to be delivered to or upon the written order of the Holder and in such
name or names as the Holder may designate, a certificate for the Warrant Shares
issuable upon such exercise, free of restrictive legends. “Trading Day” shall mean a date
on which the Company’s Common Stock trades on its principal trading market.
The Holder, or any Person permissibly so designated by the Holder to
receive Warrant Shares, shall be deemed to have become the holder of record of
such Warrant Shares as of the Exercise Date. The Company shall, upon the
written request of the Holder, use its best efforts to deliver, or cause to be
delivered, Warrant Shares hereunder electronically through the Depository Trust
and Clearing Corporation (“DTCC”) or another established
clearing corporation performing similar functions, if available; provided, that, the Company
may, but will not be required to, change its transfer agent if its current
transfer agent cannot deliver Warrant Shares electronically through DTCC or
another established clearing corporation performing similar functions, if
available. If as of the time of exercise the Warrant Shares constitute
restricted or control securities, the Holder, by exercising, agrees not to
resell them except in compliance with all applicable securities
laws.
(b)
To the extent permitted by law, the Company’s obligations to issue and deliver
Warrant Shares in accordance with the terms hereof are absolute and
unconditional, irrespective of any action or inaction by the Holder to enforce
the same, any waiver or consent with respect to any provision hereof, the
recovery of any judgment against any Person or any action to enforce the same,
or any setoff, counterclaim, recoupment, limitation or termination, or any
breach or alleged breach by the Holder or any other Person of any obligation to
the Company or any violation or alleged violation of law by the Holder or any
other Person, and irrespective of any other circumstance that might otherwise
limit such obligation of the Company to the Holder in connection with the
issuance of Warrant Shares. Nothing herein shall limit a Holder’s
right to pursue any other remedies available to it hereunder, at law or in
equity including, without limitation, a decree of specific performance and/or
injunctive relief with respect to the Company’s failure to timely deliver
certificates representing shares of Common Stock upon exercise of the
Warrant as required pursuant to the terms hereof.
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(c)
If the Company fails to cause its transfer agent to transmit to the Holder a
certificate or the certificates (or, if electronically, a book-entry position)
representing the Warrant Shares pursuant to the terms hereof by applicable
delivery date, then the Holder will have the right to rescind such
exercise.
7. Charges, Taxes and
Expenses. Issuance and delivery of certificates (or, if electronically, a
book-entry position) representing the Warrant Shares shall be made without
charge to the Holder for any issue or transfer tax, withholding tax, transfer
agent fee or other incidental tax or expense in respect of the issuance of such
certificates, all of which taxes and expenses shall be paid by the
Company; provided,
however, that
the Company shall not be required to pay any tax that may be payable in respect
of any transfer involved in the registration of any certificates for Warrant
Shares or the Warrants in a name other than that of the Holder. The Holder shall
be responsible for all other tax liability that may arise as a result of holding
or transferring this Warrant or receiving Warrant Shares upon exercise
hereof.
8. Replacement of
Warrant. If this Warrant is mutilated, lost, stolen or destroyed,
the Company shall issue or cause to be issued in exchange and substitution for
and upon cancellation hereof, or in lieu of and substitution for this Warrant, a
New Warrant, but only upon receipt of evidence reasonably satisfactory to the
Company of such loss, theft or destruction and customary and reasonable
indemnity, if requested. Applicants for a New Warrant under such circumstances
shall also comply with such other reasonable regulations and procedures and pay
such other reasonable third-party costs as the Company may prescribe. If a New
Warrant is requested as a result of a mutilation of this Warrant, then the
Holder shall deliver such mutilated Warrant to the Company as a condition
precedent to the Company’s obligation to issue the New Warrant.
9. Reservation of Warrant
Shares. The Company covenants that it will at all times reserve and
keep available out of the aggregate of its authorized but unissued and otherwise
unreserved Common Stock, solely for the purpose of enabling it to issue Warrant
Shares upon exercise of this Warrant as herein provided, the number of Warrant
Shares that are then issuable and deliverable upon the exercise of this entire
Warrant, free from preemptive rights or any other contingent purchase
rights of persons other than the Holder (taking into account the adjustments and
restrictions of Section 10). The Company covenants that all Warrant Shares so
issuable and deliverable shall, upon issuance and the payment of the applicable
Exercise Price in accordance with the terms hereof, be duly and validly
authorized, issued and fully paid and nonassessable.
10. Certain Adjustments to
Exercise Price. The Exercise Price and number of Warrant
Shares issuable upon exercise of this Warrant are subject to adjustment from
time to time as set forth in this Section 10.
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(a)
Adjustments for Stock Splits
and Combinations and Stock Dividends. If the Company
shall at any time or from time to time after the date hereof, effect a stock
split or combination of the outstanding Common Stock or pay a stock dividend in
shares of Common Stock, then the Exercise Price shall be proportionately
adjusted. Any adjustments under this Section 10(a) shall be effective
at the close of business on the date the stock split or combination becomes
effective or the date of payment of the stock dividend, as
applicable.
(b)
Merger Sale,
Reclassification, etc. In case of any: (i)
consolidation or merger (including a merger in which the Company is the
surviving entity), (ii) sale or other disposition of all or substantially all of
the Company’s assets or distribution of property to shareholders (other than
distributions payable out of earnings or retained earnings), or
reclassification, change or conversion of the outstanding securities of the
Company or of any reorganization of the Company (or any other corporation the
stock or securities of which are at the time receivable upon the exercise of
this Warrant) or any similar corporate reorganization on or after the date
hereof, then and in each such case the Holder of this Warrant, upon the exercise
hereof at any time thereafter shall be entitled to receive, in lieu of the stock
or other securities and property receivable upon the exercise hereof prior to
such consolidation, merger, sale or other disposition, reclassification, change,
conversion or reorganization, the stock or other securities or property to which
such Holder would have been entitled upon such consummation if such Holder had
exercised this Warrant immediately prior thereto.
11. No Fractional Shares.
No fractional Warrant Shares will be issued in connection with any
exercise of this Warrant. In lieu of any fractional shares that would otherwise
be issuable, the Company shall pay cash equal to the product of such fraction
multiplied by the closing price of the Company’s Common Stock as reported by the
applicable Trading Market on the Exercise Date.
12. Notices. Any
and all notices or other communications or deliveries hereunder (including,
without limitation, any Exercise Notice) shall be delivered in accordance with
the procedures set forth in Section 10.2 of the SPA.
13. Warrant Agent. The
Company shall serve as warrant agent under this Warrant. Upon thirty (30) days’
notice to the Holder, the Company may appoint a new warrant agent. Any
corporation into which the Company or any new warrant agent may be merged or any
corporation resulting from any consolidation to which the Company or any new
warrant agent shall be a party or any corporation to which the Company or any
new warrant agent transfers substantially all of its corporate trust or
shareholders services business shall be a successor warrant agent under this
Warrant without any further act. Any such successor warrant agent shall
promptly cause notice of its succession as warrant agent to be mailed (by first
class mail, postage prepaid) to the Holder at the Holder’s last address as shown
on the Warrant Register.
14.
Miscellaneous.
(a)
This Warrant shall be binding on and inure to the benefit of the parties hereto
and their respective successors and assigns. Subject to the preceding sentence,
nothing in this Warrant shall be construed to give to any Person other than the
Company and the Holder any legal or equitable right, remedy or cause of action
under this Warrant. This Warrant may be amended only in writing signed by
the Company and the Holder, or their successors and assigns.
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(b)
Each party agrees that all legal proceedings concerning the interpretations,
enforcement and defense of the transactions contemplated by this Warrant
(whether brought against a party hereto or its respective affiliates, directors,
officers, shareholders, employees or agents) shall be commenced exclusively in
the state and federal courts sitting in the City of New York. Each
party hereto hereby irrevocably submits to the exclusive jurisdiction of the
state and federal courts sitting in the City of New York, New York for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein (including with respect to
the enforcement of this Warrant, and hereby irrevocably waives, and agrees not
to assert in any suit, action or proceeding, any claim that it is not personally
subject to the jurisdiction of any such court, that such suit, action or
proceeding is improper. Each party hereto hereby irrevocably waives
personal service of process and consents to process being served in any such
suit, action or proceeding by mailing a copy thereof via registered or certified
mail or overnight delivery (with evidence of delivery) to such party at the
address in effect for notices to it under this Note and agrees that such service
shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way
any right to serve process in any manner permitted by law. EACH PARTY
HERETO (INCLUDING ITS AFFILIATES, AGENTS, OFFICERS, DIRECTORS AND EMPLOYEES)
HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR
RELATING TO THIS WARRANT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
(c)
The headings herein are for convenience only, do not constitute a part of this
Warrant and shall not be deemed to limit or affect any of the provisions
hereof.
(d)
In case any one or more of the provisions of this Warrant shall be invalid or
unenforceable in any respect, the validity and enforceability of the remaining
terms and provisions of this Warrant shall not in any way be affected or
impaired thereby and the parties will attempt in good faith to agree upon a
valid and enforceable provision which shall be a commercially reasonable
substitute therefore, and upon so agreeing, shall incorporate such substitute
provision in this Warrant.
(e)
Prior to exercise of this Warrant, the Holder hereof shall not, by reason of by
being a Holder, be entitled to any rights of a stockholder with respect to the
Warrant Shares.
(f)
No provision hereof, in the absence of any affirmative action by Holder to
exercise this Warrant to purchase Warrant Shares, and no enumeration herein of
the rights or privileges of Holder, shall give rise to any liability of Holder
for the purchase price of any Common Stock or as a stockholder of the Company,
whether such liability is asserted by the Company or by creditors of the
Company.
[Signature
Page Follows]
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IN WITNESS WHEREOF, the
Company has caused this Warrant to be duly executed by its authorized officer as
of the date first indicated above.
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CHINA
BROADBAND, INC.
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By:
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Name:
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Title:
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Signature
Page
Warrant
CHINA
BROADBAND, INC.
EXERCISE
NOTICE
Ladies
and Gentlemen:
The
undersigned, pursuant to the provisions set forth in the attached Warrant hereby
irrevocably elects to purchase ____________ Warrant Shares covered by such
Warrant, and is providing, herewith, the aggregate purchase price for such
shares. Capitalized terms used herein and not otherwise defined
herein have the respective meanings set forth in the Warrant.
The
undersigned intends that payment of the Warrant Price shall be made as (check
one):
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Cash
Exercise_______
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Cashless
Exercise_______
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If the
Holder has elected a Cash Exercise, the Holder shall pay the sum of $________ by
certified or official bank check (or via wire transfer) to the Company in
accordance with the terms of the Warrant.
If the
Holder has elected a Cashless Exercise, a certificate shall be issued to the
Holder for the number of shares equal to the whole number portion of the product
of the calculation set forth below, which is ___________. The Company
shall pay a cash adjustment in respect of the fractional portion of the product
of the calculation set forth below in an amount equal to the product of the
fractional portion of such product and the VWAP of one share of Common Stock on
the date of exercise, which product is ____________.
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X =
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Y (B-A)
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B
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Where:
The
number of Warrant Shares to be issued to the Holder
__________________(“X”).
The
number of Warrant Shares purchasable upon exercise of all of the Warrant or, if
only a portion of the Warrant is being exercised, the portion of the Warrant
being exercised ___________________________ (“Y”).
The
Exercise Price ______________ (“A”).
The 5-day
average Fair Market Value of one share of Common Stock _______________________
(“B”).
[Signature
Page to Exercise Notice Follows]
Pursuant
to this Exercise Notice, the Company shall deliver to the Holder the number of
Warrant Shares determined in accordance with the terms of the Warrant and, in
lieu of any fractional shares, cash.
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Dated:
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HOLDER:
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Print
name
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By:
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Title:
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CHINA
BROADBAND, INC.
FORM
OF ASSIGNMENT
To be
completed and signed only upon transfer of Warrant
FOR VALUE RECEIVED, the
undersigned hereby sells, assigns and transfers unto _________________ the right
represented by the within Warrant to purchase _________________ shares of Common
Stock to which the within Warrant relates and appoints __________________
attorney to transfer said right on the books of the Company with full power of
substitution in the premises.
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Dated:
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TRANSFEROR:
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Print
name
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By:
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Title:
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TRANSFEREE:
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Print
name
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By:
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Title:
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WITNESS:
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Address
of Transferee:
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Print
name
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