COMMON SHARES PURCHASE WARRANT XINHUA SPORTS & ENTERTAINMENT LIMITED
Exhibit 99.2
XINHUA SPORTS & ENTERTAINMENT LIMITED
| Warrant Shares: ______ | Initial Exercise Date: April ___, 2010 |
THIS COMMON SHARES PURCHASE WARRANT (the “Warrant”) certifies that, for value
received, _________ (the “Holder”) is entitled, upon the terms and subject to the
limitations on exercise and the conditions hereinafter set forth, at any time on or after
April ___, 2010 (the “Initial Exercise Date”) and on or prior to the close of business on the
five year anniversary of the Initial Exercise Date (the “Termination Date”) but not
thereafter, to subscribe for and purchase from Xinhua Sports & Entertainment Limited, a Cayman
Islands corporation (the “Company”), up to _________ shares (the “Warrant Shares”) of
Common Shares.
Section 1. Definitions. Capitalized terms used and not otherwise defined
herein shall have the meanings set forth in that certain Securities Purchase Agreement (the
“Purchase Agreement”), dated October 26, 2009, among the Company and the purchasers
signatory thereto.
Section 2. Exercise.
a) Exercise of Warrant. Exercise of the purchase rights represented by this
Warrant may be made, in whole or in part, at any time or times on or after the Initial Exercise Date and
on or before the Termination Date by (i) delivery to the Company (or such other office or
agency of the Company as it may designate by notice in writing to the registered Holder at
the address of the Holder appearing on the books of the Company) of a duly executed
facsimile copy of the Notice of Exercise Form annexed hereto and (ii) payment to the Company
of the aggregate Exercise Price of the shares thereby purchased by wire transfer or, if
available, pursuant to the cashless exercise procedure specified in Section 2(c) below.
Notwithstanding anything herein to the contrary, the Holder shall not be required to
physically surrender this Warrant to the Company until the Holder has purchased all of the
Warrant Shares available hereunder and the Warrant has been exercised in full, in which
case, the Holder shall surrender this Warrant to the Company at the same time as the final
Notice of Exercise is delivered to the Company. Partial exercises of this Warrant resulting
in purchases of a portion of the total number of Warrant Shares available hereunder shall
have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder
in an amount equal to the applicable number of Warrant Shares purchased. The Holder and the
Company shall maintain records showing the number of Warrant Shares purchased and the date
of such purchases. The Company shall deliver any objection to any Notice of Exercise Form
within 1 Business Day of receipt of such notice. The Holder and any assignee, by acceptance
of this Warrant, acknowledge and agree that, by reason of the provisions of this
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paragraph, following the purchase of a portion of the Warrant Shares hereunder, the
number of Warrant Shares available for purchase hereunder at any given time may be less than
the amount stated on the face hereof.
b) Exercise Price. The exercise price per Common Share under this Warrant
shall be $0.975, subject to adjustment hereunder (the “Exercise Price”).
c) Cashless Exercise. If at the time of exercise hereof there is no effective
registration statement registering, or the prospectus contained therein is not available
for, the issuance of the Warrant Shares to the Holder and there is no effective registration
statement covering the resale of the Warrant Shares by the Holder (or the prospectus
contained therein is not available for use), then this Warrant may also be exercised, in
whole or in part, at such time by means of a “cashless exercise” in which the Holder shall
be entitled to receive a certificate for the number of Warrant Shares equal to the quotient
obtained by dividing [(A-B) (X)] by (A), where:
| (A) | = | the VWAP on the Trading Day immediately preceding the date on which Holder elects to exercise this Warrant by means of a “cashless exercise,” as set forth in the applicable Notice of Exercise; | |
| (B) | = | the Exercise Price of this Warrant, as adjusted hereunder; and | |
| (X) | = | the number of Warrant Shares that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant if such exercise were by means of a cash exercise rather than a cashless exercise. |
“VWAP” means, for any date, the price determined by the first of the following
clauses that applies: (a) if the Common Shares are then listed or quoted on a Trading
Market, the daily volume weighted average price of the Common Shares for such date (or the
nearest preceding date) on the Trading Market on which the Common Shares are then listed or
quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City
time) to 4:02 p.m. (New York City time), (b) if the OTC Bulletin Board is not a Trading
Market, the volume weighted average price of the Common Shares for such date (or the nearest
preceding date) on the OTC Bulletin Board, (c) if the Common Shares are not then listed or
quoted for trading on the OTC Bulletin Board and if prices for the Common Shares are then
reported in the “Pink Sheets” published by Pink OTC Markets, Inc. (or a similar organization
or agency succeeding to its functions of reporting prices), the most recent closing bid
price per share of the Common Shares so reported, or (d) in all other cases, the fair market
value of a Common Share as determined by an independent appraiser selected in good faith by
the Holders of a majority in interest of the Securities then outstanding and reasonably
acceptable to the Company, the reasonable fees and expenses of which shall be paid by the
Company. For purposes of computing “VWAP” in Section 2(c) and elsewhere in this Agreement,
if the Company’s Common Shares are listed or quoted in the form of American Depositary
Shares, the average closing price of the Common Shares shall be based on the closing prices
of such American Depositary Shares. The Company’s American Depositary Shares
(“ADSs”)
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are currently traded on the Nasdaq Global Market and each American Depositary Share
currently represents two (2) Common Shares.
d) Mechanics of Exercise.
i. Delivery of Certificates Upon Exercise. The Holder shall
specify in its Notice of Exercise whether the Holder is exercising this
Warrant for (1) Common Shares (a “Share Exercise”) or (2) ADSs (an
“ADS Exercise”). In the event of a Share Exercise, the Company
shall deliver or cause the delivery of a physical certificate representing
the Warrant Shares to the address specified by the Holder in the Notice of
Exercise by the date that is three (3) Trading Days after the latest of (A)
the delivery to the Company of the duly completed and executed Notice of
Exercise Form, (B) surrender of this Warrant (if required) and (C) payment
of the aggregate Exercise Price as set forth above, plus all taxes required
to be paid by the Holder, if any, pursuant to Section 2(d)(vi) (including by
cashless exercise, if permitted) (such date, the “Warrant Share Delivery
Date”). In the case of an ADS Exercise, subject to the provisions of
the Deposit Agreement and Section 5(f), no later than the Warrant Share
Delivery Date (i) the Company shall issue a share certificate representing
the Warrant Shares in the name of The Bank of New York Mellon as the
depositary under the Deposit Agreement, or the successor thereto (the
“Depositary”) and cause such Warrant Shares to be deposited with the
Depositary or with the Depositary’s Custodian (as defined under the Deposit
Agreement) and (ii) the corresponding ADSs shall have been delivered to or
upon the order of the Holder as set forth in the Exercise Notice. This
Warrant shall be deemed to have been exercised on the first date on which
all of the foregoing (with respect to a Share Exercise or an ADS Exercise,
as the case may be) have been performed by the Company. In the event of a
Share Exercise, the Warrant Shares shall be deemed to have been issued, and
the Holder or any other person so designated to be named therein shall be
deemed to have become a holder of record of such Warrant Shares for all
purposes, as of the date such person is entered on the register of members
of the Company.
ii. Delivery of New Warrants Upon Exercise. If this Warrant
shall have been exercised in part, the Company shall, at the request of a
Holder and upon surrender of this Warrant certificate, at the time of
delivery of the certificate or certificates representing Warrant Shares,
deliver to the Holder a new Warrant evidencing the rights of the Holder to
purchase the unpurchased Warrant Shares called for by this Warrant, which
new Warrant shall in all other respects be identical with this Warrant.
iii. Rescission Rights. If, following an exercise by the
Holder in accordance with Section 2(d)(i), the Company fails to (a)
deliver, or cause the delivery of, the Warrant Shares to the Holder in
accordance with
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Section 2(d)(i), in the case of a Share Exercise or (b) cause the
delivery of the corresponding ADSs to the Holder in accordance with Section
2(d)(i), in the case of an ADS Exercise, in each case by the date that is
three (3) Trading Days after the Warrant Share Delivery Date, then the
Holder will have the right to rescind such exercise by giving written notice
thereof to the Company.
iv. Compensation for Buy-In on Failure to Timely Deliver Shares or
ADSs Upon Exercise. In addition to any other rights available to the
Holder, if the Holder is entitled to rescind the exercise of this Warrant
pursuant to Section 2(d)(iii), and if after the date that is three (3)
Trading Days after the Warrant Share Delivery Date the Holder is required by
its broker to purchase (in an open market transaction or otherwise) or the
Holder’s brokerage firm otherwise purchases, Common Shares or ADSs to
deliver in satisfaction of a sale by the Holder of the Warrant Shares or
ADSs which the Holder anticipated receiving upon such exercise (a
“Buy-In”), then the Company shall (A) pay in cash to the Holder the
amount, if any, by which (x) the Holder’s total purchase price (including
brokerage commissions, if any) for the Common Shares or ADSs so purchased
exceeds (y) the amount obtained by multiplying (1) the number of Warrant
Shares or ADSs that the Company was required to deliver to the Holder in
connection with the exercise at issue times (2) the price at which the sell
order giving rise to such purchase obligation was executed, and (B) at the
option of the Holder, either reinstate the portion of the Warrant and
equivalent number of Warrant Shares for which such exercise was not honored
(in which case such exercise shall be deemed rescinded) or deliver to the
Holder the number of Common Shares that would have been issued had the
Company timely complied with its exercise and delivery obligations
hereunder. For example, if the Holder purchases ADSs having a total
purchase price of $11,000 to cover a Buy-In with respect to an attempted ADS
Exercise, and the Company has failed to perform its obligations as set forth
in Section 2(d)(i) with respect to such ADS Exercise, with an aggregate sale
price giving rise to such purchase obligation of $10,000, under clause (A)
of the immediately preceding sentence the Company shall be required to pay
the Holder $1,000. The Holder shall provide the Company written notice
indicating the amounts payable to the Holder in respect of the Buy-In and,
upon request of the Company, reasonable supporting evidence of the amount of
such loss. Nothing herein shall limit a ▇▇▇▇▇▇’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 Common Shares or ADSs, as
the case may be, upon the exercise of the Warrant as required pursuant to
the terms hereof.
v. No Fractional Shares or Scrip. No fractional shares or
scrip representing fractional shares shall be issued upon the exercise of
this
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Warrant. As to any fraction of a share which the Holder would
otherwise be entitled to purchase upon such exercise, the Company shall, at
its election, either pay a cash adjustment in respect of such final fraction
in an amount equal to such fraction multiplied by the Exercise Price or
round down to the next whole share.
vi. Charges, Taxes and Expenses. Issuance of certificates for
Warrant Shares shall be made without charge to the Holder for any issue or
transfer tax or other incidental expense in respect of the issuance of such
certificate, all of which taxes and expenses shall be paid by the Company,
and such certificates shall be issued in the name of the Holder or in such
name or names as may be directed by the Holder; provided,
however, that in the event certificates for Warrant Shares are to be
issued in a name other than the name of the Holder, this Warrant when
surrendered for exercise shall be accompanied by the Assignment Form
attached hereto duly executed by the Holder and the Company may require, as
a condition thereto, the payment of a sum sufficient to reimburse it for any
transfer tax incidental thereto.
vii. Closing of Books. Subject to the Company’s Memorandum and
Articles of Association and applicable law, the Company will not close its
shareholder books or records in any manner which prevents the timely
exercise of this Warrant, pursuant to the terms hereof.
e) ▇▇▇▇▇▇’s Exercise Limitations. The Company shall not knowingly effect any
exercise of this Warrant, and a Holder shall not have the right to exercise any portion of
this Warrant, pursuant to Section 2 or otherwise, to the extent that after giving effect to
such issuance after exercise as set forth on the applicable Notice of Exercise, the Holder
(together with the Holder’s Affiliates, and any other Persons acting as a group together
with the Holder or any of the Holder’s Affiliates), would beneficially own in excess of the
Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence,
the number of Common Shares beneficially owned by the Holder and its Affiliates shall
include the number of Common Shares issuable upon exercise of this Warrant with respect to
which such determination is being made, but shall exclude the number of Common Shares which
would be issuable upon (i) exercise of the remaining, nonexercised portion of this Warrant
beneficially owned by the Holder or any of its Affiliates and (ii) exercise or conversion of
the unexercised or nonconverted portion of any other securities of the Company (including,
without limitation, any other Common Shares Equivalents) 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 2(e), beneficial ownership shall be calculated in accordance with
Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder, it
being acknowledged by the Holder that the Company is not representing to the Holder that
such calculation is in compliance with Section 13(d) of the Exchange Act and the Holder is
solely responsible for any schedules required to be filed in accordance therewith. To the
extent that the limitation contained in this Section 2(e) applies, the determination of
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whether this Warrant is
exercisable (in relation to other securities owned by the Holder together with any
Affiliates) and of which portion of this Warrant is exercisable shall be in the sole
discretion of the Holder, in the absence of manifest error, and the submission of a Notice
of Exercise shall be deemed to be the Holder’s determination of whether this Warrant is
exercisable (in relation to other securities owned by the Holder together with any
Affiliates) and of which portion of this Warrant is exercisable, in each case subject to the
Beneficial Ownership Limitation, and the Company shall have no obligation to verify or
confirm the accuracy of such determination. In addition, a determination as to any group
status as contemplated above shall be determined in accordance with Section 13(d) of the
Exchange Act and the rules and regulations promulgated thereunder. For purposes of this
Section 2(e), in determining the number of outstanding Common Shares, a Holder may rely on
the number of outstanding Common Shares as reflected in (A) the Company’s most recent
periodic or annual report filed with the Commission, as the case may be (including for
purposes of this section any reports furnished by the Company on Form 6-K), (B) a more
recent public announcement by the Company or (C) a more recent written notice by the Company
or the Transfer Agent setting forth the number of Common Shares outstanding. In any case,
the number of outstanding Common Shares shall be determined after giving effect to the
conversion or exercise of securities of the Company, including this Warrant, by the Holder
or its Affiliates since the date as of which such number of outstanding Common Shares was
reported. The “Beneficial Ownership Limitation” shall be 4.9% of the number of shares of the Common Shares outstanding immediately after giving effect to the issuance of
Common Shares issuable upon exercise of this Warrant. The Holder, upon not less than 61
days’ prior notice to the Company, may increase or decrease the Beneficial Ownership
Limitation provisions of this Section 2(e), provided that the Beneficial Ownership
Limitation in no event exceeds 9.99% of the number of Common Shares outstanding immediately
after giving effect to the issuance of Common Shares upon exercise of this Warrant held by
the Holder and the provisions of this Section 2(e) shall continue to apply. Any such
increase or decrease will not be effective until the 61st day after such notice
is delivered to the Company. The provisions of this paragraph shall be construed and
implemented in a manner otherwise than in strict conformity with the terms of this Section
2(e) to correct this paragraph (or any portion hereof) which may be defective or
inconsistent with the intended Beneficial Ownership Limitation herein contained or to make
changes or supplements necessary or desirable to properly give effect to such limitation.
The limitations contained in this paragraph shall apply to a successor holder of this
Warrant.
Section 3. Certain Adjustments.
a) Share Dividends and Splits. If the Company, at any time while this Warrant
is outstanding: (i) pays a dividend in, or otherwise make a free distribution of, Common
Shares in respect of its outstanding Common Shares (ii) subdivides its outstanding Common
Shares into a larger number of shares, (iii) combines (including by way of reverse share
split) its outstanding Common Shares into a smaller number of shares, or (iv) issues by
reclassification of its outstanding Common Shares any capital shares of the Company, then in
each case the Exercise Price in effect immediately prior to such action shall be
proportionally adjusted so that the Holder of this Warrant therefore exercised may receive
the aggregate number and kind of shares of the capital of the
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Company which it would have owned immediately following such action if such Warrant had
been exercised immediately prior to such action. Any adjustment made pursuant to this
Section 3(a) shall become effective immediately after the record date for the determination
of shareholders entitled to receive such dividend or distribution and shall become effective
immediately after the effective date in the case of a subdivision, combination or
re-classification.
b) Subsequent Equity Sales. If the Company or any Subsidiary thereof, as
applicable, at any time while this Warrant is outstanding, shall sell or grant any option to
purchase, or sell or grant any right to reprice, or otherwise dispose of or issue (or
announce any offer, sale, grant or any option to purchase or other disposition) any Common
Stock or Common Stock Equivalents entitling any Person to acquire shares of Common Stock, at
an effective price per share less than the then Exercise Price (such lower price, the
“Base Share Price” and such issuances collectively, a “Dilutive Issuance”)
(if the holder of the Common Stock or Common Stock Equivalents so issued shall at any time,
whether by operation of purchase price adjustments, reset provisions, floating conversion,
exercise or exchange prices or otherwise, or due to warrants, options or rights per share
which are issued in connection with such issuance, be entitled to receive shares of Common
Stock at an effective price per share that is less than the Exercise Price, such issuance
shall be deemed to have occurred for less than the Exercise Price on such date of the
Dilutive Issuance), then (a) the Exercise Price shall be reduced and only reduced by
multiplying the Exercise Price by a fraction, the numerator of which is the number of shares
of Common Stock issued and outstanding immediately prior to the Dilutive Issuance plus the
number of shares of Common Stock which the offering price for such Dilutive Issuance would
purchase at the then Exercise Price, and the denominator of which shall be the sum of the
number of shares of Common Stock issued and outstanding immediately prior to the Dilutive
Issuance plus the number of shares of Common Stock so issued or issuable in connection with
the Dilutive Issuance and (b) the number of Warrant Shares issuable hereunder shall be
increased such that the aggregate Exercise Price payable hereunder, after taking into
account the decrease in the Exercise Price, shall be equal to the aggregate Exercise Price
prior to such adjustment; provided, however, in no event shall an adjustment under this
Section 3(b) be for less than $___1, subject to adjustment for forward and
reverse stock splits, recapitalizations, stock dividends and the like after the Initial
Exercise Date. Such adjustment shall be made whenever such Common Stock or Common Stock
Equivalents are issued. Notwithstanding the foregoing, no adjustments shall be made, paid
or issued under this Section 3(b) in respect of an Exempt Issuance. The Company shall
notify the Holder, in writing, no later than the Trading Day following the issuance of any
Common Stock or Common Stock Equivalents subject to this Section 3(b), indicating therein
the applicable issuance price, or applicable reset price, exchange price, conversion price
and other pricing terms (such notice, the “Dilutive Issuance Notice”). For purposes
of clarification, whether or not the Company provides a Dilutive Issuance Notice pursuant to
this Section 3(b), upon the occurrence of any Dilutive Issuance, after the date of such
Dilutive Issuance the Holder is entitled to receive a number of Warrant Shares based upon
the Base Share Price regardless of whether the Holder accurately refers to the Base Share
Price in the Notice of Exercise.
| 1 | The closing bid price immediately prior to the date of the Purchase Agreement. |
c) Pro Rata Distributions. If the Company, at any time while this Warrant is
outstanding, shall distribute to all holders of Common Shares (and not to the Holders)
evidences of its indebtedness or assets (including cash and cash dividends) or rights or
warrants to subscribe for or purchase any security other than the Common Shares), then in
each such case the Exercise Price shall be adjusted by multiplying the Exercise Price in
effect immediately prior to the record date fixed for determination of shareholders entitled
to receive such distribution by a fraction of which the denominator shall be the VWAP
determined as of the record date mentioned above, and of which the numerator shall be such
VWAP on such record date less the then per share fair market value at such record date of
the portion of such assets or evidence of indebtedness so distributed applicable to one
outstanding Common Share as determined by the Board of Directors in good faith. In either
case the adjustments shall be described in a statement provided to the Holder of the portion
of assets or evidences of indebtedness so distributed or such subscription rights applicable
to one Common Share. Such adjustment shall be made whenever any such distribution is made
and shall become effective immediately after the record date mentioned above.
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d) Fundamental Transaction. If, at any time while this Warrant is outstanding,
(i) the Company, directly or indirectly, in one or more related transactions effects any
merger or consolidation of the Company with or into another Person, (ii) the Company,
directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance
or other disposition of all or substantially all of its assets in one or a series of related
transactions, (iii) the Company, directly or indirectly, in one or more related transactions
effects any reclassification, reorganization or recapitalization of the Common Shares or any
compulsory share exchange pursuant to which all of the Common Shares are effectively
converted into or exchanged for other securities, cash or property (other than a
redomiciling of the Company or a transaction described in Section 3(a), 3(b) or 3(c)), or
(iv) the Company, directly or indirectly, in one or more related transactions consummates a
share or share purchase agreement or other business combination (including, without
limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with
another Person whereby such other Person acquires all of the outstanding Common Shares (not
including any Common Shares held by the other Person or other Persons making or party to, or
associated or affiliated with the other Persons making or party to, such share purchase
agreement or other business combination) (each a “Fundamental Transaction”), then,
upon any subsequent exercise of this Warrant, the Holder shall have the right to receive,
for each Warrant Share that would have been issuable upon such exercise immediately prior to
the occurrence of such Fundamental Transaction, at the option of the Holder (without regard
to any limitation in Section 2(e) on the exercise of this Warrant), the number of Common
Shares of the successor or acquiring corporation or of the Company, if it is the surviving
corporation, and any additional consideration (the “Alternate Consideration”)
receivable as a result of such Fundamental Transaction by a holder of the number of Common
Shares for which this Warrant is exercisable immediately prior to such Fundamental
Transaction (without regard to any limitation in Section 2(e) on the exercise of this
Warrant). For purposes of any such exercise, the determination of the Exercise Price shall
be appropriately adjusted to apply to such Alternate Consideration based on the amount of
Alternate Consideration issuable in respect of one share of Common Shares in such
Fundamental Transaction, and the Company shall apportion the Exercise Price among the
Alternate Consideration in a reasonable manner reflecting the relative value of any
different components of the Alternate Consideration. If holders of Common Shares are given
any choice as to the securities, cash or property to be received in a Fundamental
Transaction, then the Holder shall, to the extent reasonably practicable, be given the same
choice as to the Alternate Consideration it receives upon any exercise of this Warrant
following such Fundamental Transaction. Notwithstanding anything to the contrary, in the event of a Fundamental Transaction that is (1) an
all cash transaction, (2) a “Rule 13e-3 transaction” as defined in Rule 13e-3 under the Exchange
Act, or (3) a Fundamental Transaction involving a person or entity not traded on a national
securities exchange, the Company or any Successor Entity (as defined below) shall, at the Holder’s
option, exercisable at any time concurrently with, or within 30 days after, the consummation of the
Fundamental Transaction, purchase this Warrant from the Holder by paying to the Holder an amount of
cash equal to the Black Scholes Value of the remaining unexercised portion of this Warrant on the
date of the consummation of such Fundamental Transaction. “Black Scholes Value” means the
value of this Warrant based on the Black and Scholes Option Pricing Model obtained from the “OV”
function on Bloomberg, L.P. (“Bloomberg”) determined as of the day of consummation of the
applicable Fundamental Transaction for pricing purposes and reflecting (A) a risk-free interest
rate corresponding to the U.S. Treasury rate for a period equal to the time between the date of the
public announcement of the applicable Fundamental Transaction and the Termination Date, (B) an
expected volatility equal to the greater of 100% and the 100 day volatility obtained from the HVT
function on Bloomberg as of the Trading Day immediately following the public announcement of the
applicable Fundamental Transaction, (C) the underlying price per share used in such calculation
shall be the sum of the price per share being offered in cash, if any, plus the value of any
non-cash consideration, if any, being offered in such Fundamental Transaction and (D) a remaining
option time equal to the time between the date of the public announcement of the applicable
Fundamental Transaction and the Termination Date.
The Company shall cause any successor entity in a
Fundamental Transaction in which the Company is not the survivor (the “Successor
Entity”) to assume in writing all of the obligations of the Company under this Warrant
in accordance with the provisions of this Section 3(d) and shall, at the option of the
holder of this Warrant, deliver to the Holder in exchange for this Warrant a warrant of the
Successor Entity evidenced by a written instrument substantially similar in form and
substance to this Warrant which is exercisable for a corresponding number of capital shares
of such Successor Entity (or its parent entity) equivalent to the Common Shares acquirable
and receivable upon exercise of this Warrant (without regard to any limitations on the
exercise of this Warrant) prior to such Fundamental Transaction, and with an exercise
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price which applies the exercise price hereunder to such capital shares (but taking
into account the relative value of the Common Shares pursuant to such Fundamental
Transaction and the value of such shares of capital shares, such number of shares of capital shares and such exercise price for the purpose of protecting the economic value of this
Warrant immediately prior to the consummation of such Fundamental Transaction). Upon the
occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and
be substituted for (so that from and after the date of such Fundamental Transaction, the
provisions of this Warrant referring to the “Company” shall refer instead to the Successor
Entity), and may exercise every right and power of the Company and shall assume all of the
obligations of the Company under this Warrant with the same effect as if such Successor
Entity had been named as the Company herein.
e) Calculations. All calculations under this Section 3 shall be made to the
nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this
Section 3, the number of Common Shares deemed to be issued and outstanding as of a given
date shall be the sum of the number of Common Shares (excluding treasury shares, if any)
issued and outstanding.
f) Notice to Holder.
i. Adjustment to Exercise Price. Whenever the Exercise Price is
adjusted pursuant to any provision of this Section 3, the Company shall
promptly mail to the Holder a notice setting forth the Exercise Price after
such adjustment and setting forth a brief statement of the facts requiring
such adjustment.
ii. Notice to Allow Exercise by ▇▇▇▇▇▇. If (A) the Company
shall declare a dividend (or any other distribution in whatever form) on the
Common Shares, (B) the Company shall declare a special nonrecurring cash
dividend on or a redemption of the Common Shares, (C) the Company shall
authorize the granting to all holders of the Common Shares rights or
warrants to subscribe for or purchase any shares of capital share of any
class or of any rights, (D) the approval of any shareholders of the Company
shall be required in connection with any reclassification of the Common
Shares, any consolidation or merger to which the Company is a party, any
sale or transfer of all or substantially all of the assets of the Company,
or any compulsory share exchange whereby the Common Shares is converted into
other securities, cash or property, or (E) the Company shall authorize the
voluntary or involuntary dissolution, liquidation or winding up of the
affairs of the Company, then, in each case, the Company shall cause to be
mailed to the Holder at its last address as it shall appear upon the Warrant
Register of the Company, at least 20 calendar days prior to the applicable
record or effective date hereinafter specified, a notice stating (x) the
date on which a record is to be taken for the purpose of such dividend,
distribution, redemption, rights or warrants, or if a record is not to be
taken, the date as of which the holders of the Common Shares of record to be
entitled to such dividend, distributions,
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redemption, rights or warrants are to be determined or (y) the date on
which such reclassification, consolidation, merger, sale, transfer or share
exchange is expected to become effective or close, and the date as of which
it is expected that holders of the Common Shares of record shall be entitled
to exchange their shares of the Common Shares for securities, cash or other
property deliverable upon such reclassification, consolidation, merger,
sale, transfer or share exchange; provided that the failure to mail such
notice or any defect therein or in the mailing thereof shall not affect the
validity of the corporate action required to be specified in such notice;
provided, however, that nothing in this Section 3(f)(ii) shall require the
Company to disclose information to the Holder prior to the date on which
such information is publicly disclosed to the Company’s shareholders. The
Holder shall remain entitled to exercise this Warrant during the period
commencing on the date of such notice to the effective date of the event
triggering such notice except as may otherwise be expressly set forth
herein.
Section 4. Transfer of Warrant.
a) Transferability. This Warrant and all rights hereunder are transferable, in
whole or in part, upon surrender of this Warrant at the office of the Company set forth on
the signature page attached to the Purchase Agreement or its designated agent, together with
a written assignment of this Warrant substantially in the form attached hereto duly executed
by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes
payable upon the making of such transfer. Upon such surrender and, if required, such
payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the
assignee or assignees, as applicable, and in the denomination or denominations specified in
such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the
portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. The
Warrant, if properly assigned in accordance herewith, may be exercised by a new holder for
the purchase of Warrant Shares without having a new Warrant issued. Notwithstanding
anything to the contrary in this Agreement, this Warrant is not transferable to an Affiliate
of the Company.
b) New Warrants. This Warrant may be divided or combined with other Warrants
upon presentation hereof at the aforesaid office of the Company, together with a written
notice specifying the names and denominations in which new Warrants are to be issued, signed
by the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any
transfer which may be involved in such division or combination, the Company shall execute
and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided
or combined in accordance with such notice. All Warrants issued on transfers or exchanges
shall be dated the initial issuance date set forth on the first page of this Warrant and
shall be identical with this Warrant except as to the number of Warrant Shares issuable
pursuant thereto.
c) Warrant Register. The Company shall register this Warrant, upon records to
be maintained by the Company for that purpose (the “Warrant Register”), in the name
10
of the record Holder hereof 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.
d) Understandings or Arrangements. Such Holder is acquiring this Warrant as
principal for its own account and has no direct or indirect arrangement or understandings
with any other persons to distribute or regarding the distribution of such Warrant (this
representation and warranty not limiting such Holder’s right to sell the Warrant pursuant to
the F-3 Registration Statement or otherwise in compliance with applicable federal and state
securities laws.) Such Holder is acquiring this Warrant hereunder in the ordinary course of
its business.
Section 5. Miscellaneous.
a) No Rights as Shareholder Until Exercise. This Warrant does not entitle the
Holder to any voting rights, dividends or other rights as a shareholder of the Company prior
to the exercise hereof as set forth in Section 2(d)(i).
b) Loss, Theft, Destruction or Mutilation of Warrant. Subject to the Memorandum
and Articles of Association of the Company, the Company covenants that upon receipt by the
Company of evidence reasonably satisfactory to it of the loss, theft, destruction or
mutilation of this Warrant or any share certificate relating to the Warrant Shares, and in
case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it
(which, in the case of the Warrant, shall not include the posting of any bond), and upon
surrender and cancellation of such Warrant or share certificate, if mutilated, the Company
will make and deliver a new Warrant or share certificate of like tenor and dated as of such
cancellation, in lieu of such Warrant or share certificate.
c) Saturdays, Sundays, Holidays, etc. If the last or appointed day for the
taking of any action or the expiration of any right required or granted herein shall not be
a Business Day, then, such action may be taken or such right may be exercised on the next
succeeding Business Day.
d) Authorized Shares.
The Company covenants that, during the period the Warrant is outstanding, it
will reserve from its authorized and unissued Common Shares a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any
purchase rights under this Warrant. The Company further covenants that its issuance
of this Warrant shall constitute full authority to its officers who are charged with
the duty of executing share certificates to execute and issue the necessary
certificates for the Warrant Shares upon the exercise of the purchase rights under
this Warrant. The Company will take all such reasonable action as may be necessary
to assure that such Warrant Shares may be issued as provided herein without
violation of any applicable law or regulation, or of any requirements of the Trading
Market upon which the
11
Common Shares or ADSs may be listed. The Company covenants that all Warrant
Shares and ADSs which may be issued upon the exercise of the purchase rights
represented by this Warrant will, upon exercise of the purchase rights represented
by this Warrant and payment for such Warrant Shares in accordance herewith, be duly
authorized, validly issued, fully paid and nonassessable and free from all taxes,
liens and charges created by the Company in respect of the issue thereof (other than
taxes in respect of any transfer occurring contemporaneously with such issue).
Except and to the extent as waived or consented to by the Holder, the Company
shall not by any action, including, without limitation, amending its certificate of
incorporation or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities 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 actions as may be necessary or appropriate to
protect the rights of Holder as set forth in this Warrant against impairment.
Without limiting the generality of the foregoing, the Company will (i) not increase
the par value of any Warrant Shares above the amount payable therefor upon such
exercise immediately prior to such increase in par value, (ii) take all such action
as may be necessary or appropriate in order that the Company may validly and legally
issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant
and (iii) use commercially reasonable efforts to obtain all such authorizations,
exemptions or consents from any public regulatory body having jurisdiction thereof,
as may be, necessary to enable the Company to perform its obligations under this
Warrant.
Before taking any action which would result in an adjustment in the number of
Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the
Company shall obtain all such authorizations or exemptions thereof, or consents
thereto, as may be necessary from any public regulatory body or bodies having
jurisdiction thereof.
e) Jurisdiction. All questions concerning the construction, validity,
enforcement and interpretation of this Warrant shall be determined in accordance with the
provisions of the Purchase Agreement.
f) Restrictions. The Holder acknowledges that the Warrant Shares acquired upon
the exercise of this Warrant, if not registered and the Holder does not utilize cashless
exercise, and/or if held by an Affiliate of the Company, (i) will have restrictions upon
resale imposed by state and federal securities laws and (ii) may not be able to be deposited
with the Depositary or the Depositary’s Custodian as contemplated in Section 2(d)(i), except
pursuant to an exemption from, or a transaction not subject to, the registration
requirements of the Securities Act.
12
g) Nonwaiver and Expenses. No course of dealing or any delay or failure to
exercise any right hereunder on the part of Holder shall operate as a waiver of such right
or otherwise prejudice Holder’s rights, powers or remedies.
h) Notices. Any notice, request or other document required or permitted to be
given or delivered to the Holder by the Company or by the Holder to the Company shall be
delivered in accordance with the notice provisions of the Purchase Agreement.
i) Limitation of Liability. No provision hereof, in the absence of any
affirmative action by ▇▇▇▇▇▇ 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 Shares or as a shareholder of the Company,
whether such liability is asserted by the Company or by creditors of the Company.
j) Remedies. The Holder, in addition to being entitled to exercise all rights
granted by law, including recovery of damages, will be entitled to specific performance of
its rights under this Warrant.
k) Successors and Assigns. Subject to applicable securities laws, this Warrant
and the rights and obligations evidenced hereby shall inure to the benefit of and be binding
upon the successors and permitted assigns of the Company and the successors and permitted
assigns of the Holder. The provisions of this Warrant are intended to be for the benefit of
any Holder from time to time of this Warrant and shall be enforceable by the Holder or
holder of Warrant Shares.
l) Amendment. This Warrant may be modified or amended or the provisions hereof
waived with the written consent of the Company and the Holder.
m) Severability. Wherever possible, each provision of this Warrant shall be
interpreted in such manner as to be effective and valid under applicable law, but if any
provision of this Warrant shall be prohibited by or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provisions or the remaining provisions of this Warrant.
n) Headings. The headings used in this Warrant are for the convenience of
reference only and shall not, for any purpose, be deemed a part of this Warrant.
********************
(Signature Pages Follow)
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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer
thereunto duly authorized as of the date first above indicated.
| XINHUA SPORTS & ENTERTAINMENT LIMITED |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
NOTICE OF EXERCISE
TO: XINHUA SPORTS & ENTERTAINMENT LIMITED
(1) The undersigned
hereby elects to purchase _________ Warrant Shares of the Company pursuant
to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of
the exercise price in full, together with all applicable transfer taxes, if any.
(2) The undersigned is not an affiliate of the Company, as that term is defined in Rule 405
under the Securities Act of 1933, as amended.
(3) This is a Share Exercise/ADS Exercise (delete one).
(4) Payment shall take the form of (check applicable box):
| o | in lawful money of the United States; or | ||
| o | [if permitted] the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection 2(c), to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure set forth in subsection 2(c). |
(5) In the case of a Share Exercise, please issue a certificate or certificates representing
said Warrant Shares in the name of the undersigned or in such other name as is specified below:
Name: |
|||
Address: |
|||
(The above information will be entered into the Company’s register of members)
(6) In the case of an ADS Exercise, either
| o | (A) for uncertificated ADSs, they shall be delivered to my account at ________________________ (name of broker) through DTC as follows: |
• Name of broker:
|
||||
• DTC participant name:
|
||||
• DTC participant number:
|
||||
• Beneficial account name with DTC participant:
|
||||
• Beneficial account number with DTC participant:
|
||||
• Additional references on ADS delivery:
|
||||
• DTC participant contact:
|
| 1. | Name: | ||
| 2. | telephone number: | ||
| 3. | fax number: | ||
| 4. | email address: |
• Method of Payment:
|
o Delivery vs. Payment | |
| o Others (please specify): |
or
| o | (B) for certificated ADSs evidenced by Receipts (as defined in the Deposit Agreement), the physical certificate should be issued and delivered as follows: |
• Full name of registrant (in whose name the ADSs will be registered):
|
||||
• Address of registrant:
|
||||
• Tax ID, if any, of registrant:
|
||||
• The name and address to which the physical certificate is to be delivered:
|
||||
(6) In the case of an ADS Exercise, for the avoidance of doubt, to the extent the Company so
instructs the transfer agent of the Company’s Common Shares, it is hereby confirmed to such
transfer agent that the Common Shares to be issued under this Notice of Exercise may be registered
directly in the name of The Bank of New York Mellon for the purpose of depositing the Common Shares
with The Bank of New York Mellon for the issuance of the corresponding ADSs pursuant to the Deposit
Agreement.
[SIGNATURE OF HOLDER]
Name of Investing Entity: |
||
Signature of Authorized Signatory of Investing Entity: |
||
Name of Authorized Signatory: |
||
Title of Authorized Signatory: |
||
Date: |
||
Address: |
||
ASSIGNMENT FORM
(To assign the foregoing warrant, execute
this form and supply required information.
Do not use this form to exercise the warrant.)
this form and supply required information.
Do not use this form to exercise the warrant.)
FOR VALUE RECEIVED,
[___] all of or [_________] shares of the foregoing Warrant and all rights
evidenced thereby are hereby assigned to
| whose address is | ||||
| . | ||||
Dated: ______________, _______
Holder’s Signature: |
||
Holder’s Address: |
||
Signature Guaranteed: _____________________________________________________
NOTE: The signature to this Assignment Form must correspond with the name as it appears on the
face of the Warrant, without alteration or enlargement or any change whatsoever, and must be
guaranteed by a bank or trust company. Officers of corporations and those acting in a fiduciary or
other representative capacity should file proper evidence of authority to assign the foregoing
Warrant.