Attached files
| file | filename |
|---|---|
| 10-Q - China Housing & Land Development, Inc. | v193456_10q.htm |
| EX-4.3 - China Housing & Land Development, Inc. | v193456_ex4-3.htm |
| EX-4.1 - China Housing & Land Development, Inc. | v193456_ex4-1.htm |
| EX-32.2 - China Housing & Land Development, Inc. | v193456_ex32-2.htm |
| EX-31.2 - China Housing & Land Development, Inc. | v193456_ex31-2.htm |
| EX-31.1 - China Housing & Land Development, Inc. | v193456_ex31-1.htm |
| EX-32.1 - China Housing & Land Development, Inc. | v193456_ex32-1.htm |
NEITHER
THIS NOTE NOR THE SECURITIES ISSUABLE ON CONVERSION HEREOF HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY
STATE OF THE UNITED STATES (COLLECTIVELY, THE “ACTS”). THE SECURITIES
MAY NOT BE SOLD, DISTRIBUTED, OFFERED, PLEDGED, ENCUMBERED, ASSIGNED OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF THE FOLLOWING: (1) AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE ACTS COVERING THE
TRANSACTION, (2) THE COMPANY RECEIVES AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE
ACTS, OR (3) THE COMPANY OTHERWISE SATISFIES ITSELF THAT REGISTRATION IS NOT
REQUIRED UNDER THE ACTS. NOTWITHSTANDING THE FOREGOING, THE
SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.
CHINA
HOUSING & LAND DEVELOPMENT, INC.
AMENDED
AND RESTATED
5%
SENIOR SECURED CONVERTIBLE NOTE
Due: January
28, 2013
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US$
_____
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June
, 2010
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For value
received, the undersigned, China Housing & Land Development, Inc., a Nevada
corporation (the “Company”), hereby promises to pay to the order of __________
(together with its successors and assigns, the “Holder”), at its principal
office in the City of _____, Minnesota, the principal sum of _____ Million
Dollars and no cents (US$_____) (the “Face Amount”) in
lawful money of the United States on January 28, 2013 (the “Maturity Date”),
together with interest thereon (calculated with reference to the applicable
currency exchange rates), as more fully provided below.
This Amended and Restated 5% Senior
Secured Convertible Note (the “Convertible Note”)
shall bear interest at a rate of 5% per annum (computed based on the actual days
elapsed in a period of 360 days) of the RMB Notional Principal Amount, payable
quarterly in arrears in lawful money of the United States (“U.S. Dollars”) on
the first business day of each calendar quarter and on the Maturity Date, in
each case in an amount equal to the amount of such interest as expressed in RMB
multiplied by the US$/RMB Exchange Rate as of the applicable Interest Exchange
Rate Determination Date.
As used herein:
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“Interest Exchange Rate
Determination Date” means, with respect to any interest accrued
hereunder, the earlier of (a) the 45th calendar day of the quarter with
respect to which such interest accrued (or, if such day is a Saturday or
Sunday or a regularly-scheduled bank holiday in Beijing, People’s Republic
of China (any day that is not such a day being referred to herein as a
“Beijing Business Day”), the next succeeding Beijing Business Day) and (b)
the fifth Beijing Business Day preceding the Maturity Date or other
applicable date fixed for payment of the such interest or, in the absence
of such a date, the fifth Beijing Business Day preceding the date on which
such payment is made.
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“RMB Notional Principal
Amount” means, as of a specified date, an amount of RMB equal to
the product of (a) an amount of U.S. Dollars equal to (i) the Face
Amount hereof, minus (ii) the
aggregate amount of any prior partial payments of principal or redemptions
hereof, minus (iii) the
aggregate amount of any portions of the Face Amount previously converted
into Common Stock of the Company, times
(b) the RMB/US$ Exchange Rate as of the Closing
Date.
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“RMB/US$ Exchange
Rate” means, as of any date of determination, the RMB/U.S. Dollar
official fixing rate, expressed as the amount of RMB per one U.S. Dollar,
for settlement in two business days reported by the People’s Bank of
China, Beijing, People’s Republic of China, that appears on the Reuters
Screen “SAEC” Page opposite the symbol “USDCNY=” at approximately 9:15
a.m. Beijing time on such date (or, if on such date it is not possible to
obtain such rate for such date, the RMB/U.S. Dollar exchange rate as of
such date as determined by and in the discretion of the Investors taking
into account one or more sources selected by the Investors in the
Investors’ discretion).
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“US$/RMB Exchange
Rate” means, as of any date of determination, the inverse of the
RMB/US$ Exchange Rate with respect to such
date.
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This Convertible Note has been issued
under the terms and provisions of a Securities Purchase Agreement dated as of
January 28, 2008, among the Company and the Investors named on the signature
pages thereto, as amended by a First Amendment dated May __, 2010 (as so amended
and as hereafter amended, restated or otherwise modified, the “Purchase
Agreement”). Capitalized terms used herein and not otherwise
defined have the meanings set forth in the Purchase Agreement.
Upon the occurrence of any one or more
of the Events of Default specified in Article VIII of the Purchase Agreement,
all amounts then remaining unpaid on this Convertible Note, including any
accrued but unpaid interest, may be declared to be or shall become immediately
due and payable as provided in the Purchase Agreement.
No
pre-payment of any of the Face Amount of this Convertible Note may be made at
the option of the Company except as provided in paragraph 8
hereof.
2
All
payments hereunder shall be made in U.S. Dollars, free and clear of and without
reduction for any taxes as set forth in Section 1.6 of the Purchase
Agreement.
This Convertible Note is subject to the
following additional provisions, terms and conditions:
1.
Right to
Convert.
(a) Subject
to paragraph 3 hereof, up to the lesser of (i) US$ _____ **[INSERT AMOUNT EQUAL TO 45% OF THE
FACE AMOUNT] of this Convertible Note and (ii) 100% of the outstanding
principal amount of this Convertible Note shall be convertible at the option of
the Holder, in whole or from time to time in part, at any time prior to the
Maturity Date into such number of fully paid and non-assessable shares of Common
Stock of the Company as is determined by dividing the principal amount of this
Convertible Note that is being converted by US$5.57 per share (the “Initial Conversion
Price”).
(b) In
addition to the rights of the Holder under paragraph 1(a), subject to paragraph
3 hereof, up to the lesser of (i) US$_____ **[INSERT AMOUNT EQUAL TO 55% OF THE
FACE AMOUNT] of this Convertible Note and (ii) 100% of the outstanding
principal amount of the Convertible Note shall be convertible at the option of
the Holder in whole or in part, at any time prior to the Maturity Date into such
number of fully paid and non-assessable shares of Common Stock of the Company as
is determined by dividing the principal amount of this Convertible Note that is
being converted by the Initial Conversion Price. The rights of the
Holder under this paragraph 1(b) will expire on the date that is 5 business days
following the date the post effective amendment referred to in paragraph 5 of
the First Amendment dated May __, 2010 to the Purchase Agreement has been
declared effective and the Company has given written notice thereof to the
Holder unless by the end of such 5 business day period the Holder and its
affiliates have converted in the aggregate at least 55% of the aggregate Face
Amount of Convertible Notes held by the Holder and its affiliates into Common
Stock of the Company.
(c) The
rights to convert this Convertible Note under paragraphs 1(a) and 1(b) are
separate and independent rights, and the conversion of this Convertible Note
under one such paragraph shall not reduce the amount that may be converted under
the other paragraph. Until such time as this Convertible Note is
converted or paid off, the Initial Conversion Price is subject to adjustment as
hereinafter provided, except that if the Company exercises its option to redeem
the Convertible Note as provided for in paragraph 8 below (and payment is made
or provided for on the proposed redemption date), then only the portion of the
Convertible Note that was not redeemed may be converted.
3
2.
Conversion
Procedure.
(a) Before
any holder of this Convertible Note shall be entitled to convert the same into
shares of Common Stock, such holder shall give written notice to the Company at
its principal corporate office, of the election to convert the same and shall
state therein the portion of the principal amount being converted and the name
or names in which the certificate or certificates for shares of Common Stock are
to be issued. The portion of this Convertible Note so converted shall
be deemed to have been so converted on the day of such notice in accordance with
the foregoing provisions, and at such time the rights of the holder as to the
portion of this Convertible Note to be converted, as such holder, shall cease
and such holder shall be treated for all purposes as the record holder of the
Common Stock of the Company issuable upon conversion. Within five
business days of the conversion date, the Company or its transfer agent shall
issue a certificate or certificates for the number of full shares of Common
Stock issuable upon conversion.
(b) Upon
receipt of a certificate or certificates for the number of full shares of Common
Stock issuable upon conversion as herein provided, this Convertible Note shall
no longer be deemed to be outstanding as to the portion so converted and all
rights with respect to the converted portion of this Convertible Note shall
immediately cease and terminate other than the right of the Holder to receive
Common Stock in exchange therefor.
3.
Initial Conversion Price
Adjustments of Convertible Note for Certain Dilutive Issuances, Splits and
Combinations.
The
Initial Conversion Price of the Convertible Note shall be subject to adjustment
from time to time as follows:
(i) Upon each
adjustment of the conversion price, the holder of this Convertible Note shall
thereafter be entitled to receive the number of shares obtained by multiplying
the conversion price in effect immediately prior to such adjustment by the
number of shares issuable pursuant to conversion immediately prior to such
adjustment, and dividing the product thereof by the conversion price resulting
from such adjustment.
(ii) If at any
time, the Company
shall issue or sell any shares of its Common Stock or Convertible Securities (as
hereinafter defined) for a consideration per share less than the conversion
price in effect immediately prior to the time of such issue or sale, then,
forthwith upon such issue or sale, the conversion price shall be reduced to such
lesser price.
(iii) For the
purposes of paragraph (ii), the following provisions (A) to (E), inclusive,
shall also be applicable:
4
(A) In case
at any time, the Company shall grant (whether directly or by assumption in a
merger or otherwise) any rights to subscribe for or to purchase, or any options
for the purchase of, (aa) Common Stock or (bb) any obligations or any
shares of stock of the Company which are convertible into or exchangeable for
Common Stock (any of such obligations or shares of stock being hereinafter
called “Convertible Securities”) whether or not such rights or options or the
right to convert or exchange any such Convertible Securities are immediately
exercisable, and the price per share for which Common Stock is issuable upon the
exercise of such rights or options or upon conversion or exchange of such
Convertible Securities (determined by dividing (aa) the total amount, if
any, received or receivable by the Company as consideration for the granting of
such rights or options (determined in accordance with clause (C) below), plus
the minimum aggregate amount of additional consideration payable to the Company
upon the exercise of such rights or options, plus, in the case of such rights or
options which relate to Convertible Securities, the minimum aggregate amount of
additional consideration, if any, payable upon the issue or sale of such
Convertible Securities and upon the conversion or exchange thereof, by
(bb) the total maximum number of shares of Common Stock issuable upon the
exercise of such rights or options or upon the conversion or exchange of all
such Convertible Securities issuable upon the exercise of such rights or
options) shall be less than the conversion price in effect immediately prior to
the time of the granting of such rights or options, then the total maximum
number of shares of Common Stock issuable upon the exercise of such rights or
options or upon conversion or exchange of the total maximum amount of such
Convertible Securities issuable upon the exercise of such rights or options
shall (as of the date of granting of such rights or options) be deemed to have
been issued for such price per share. Except as provided in
paragraph (vi) below, no further adjustments of the conversion price shall
be made upon the actual issue of such Common Stock or of such Convertible
Securities upon exercise of such rights or options or upon the actual issue of
such Common Stock upon conversion or exchange of such Convertible
Securities.
(B) In case
the Company shall issue or sell (whether directly or by assumption in a merger
or otherwise), any Convertible Securities, whether or not the rights to exchange
or convert thereunder are immediately exercisable, and the price per share for
which Common Stock is issuable upon such conversion or exchange (determined by
dividing (aa) the total amount received or receivable by the Company as
consideration for the issue or sale of such Convertible Securities (determined
in accordance with clause (C) below), plus the minimum aggregate amount of
additional consideration, if any, payable to the Company upon the conversion or
exchange thereof, by (bb) the total maximum number of shares of Common
Stock issuable upon the conversion or exchange of all such Convertible
Securities) shall be less than the conversion price in effect immediately prior
to the time of such issue or sale, then the total maximum number of shares of
Common Stock issuable upon conversion or exchange of all such Convertible
Securities shall (as of the date of the issue or sale of such Convertible
Securities) be deemed to be outstanding and to have been issued for such price
per share, provided that (x) except as provided in paragraph (vi)
below, no further adjustments of the conversion price shall be made upon the
actual issue of such Common Stock upon conversion or exchange of such
Convertible Securities, and (y) if any such issue or sale of such
Convertible Securities is made upon exercise of any rights to subscribe for or
to purchase or any option to purchase any such Convertible Securities for which
adjustments of the conversion price have been or are to be made pursuant to
other provisions of this paragraph (iii), no further adjustment of the
conversion price shall be made by reason of such issue or
sale.
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(C) In case
any shares of Common Stock or Convertible Securities or any rights or options to
purchase any such Common Stock or Convertible Securities shall be issued or sold
for cash, the consideration received therefor shall be deemed to be the amount
received by the Company therefor, without deduction therefrom of any expenses
incurred or any underwriting commissions, discounts or concessions paid or
allowed by the Company in connection therewith. In case any shares of
Common Stock or Convertible Securities or any rights or options to purchase any
such Common Stock or Convertible Securities shall be issued or sold for a
consideration other than cash, the amount of the consideration other than cash
received by the Company shall be deemed to be the fair value of such
consideration as determined in good faith by the Board of Directors of the
Company, without deducting therefrom of any expenses incurred or any
underwriting commissions, discounts or concessions paid or allowed by the
Company in connection therewith. In case any shares of Common Stock
or Convertible Securities or any rights or options to purchase such Common Stock
or Convertible Securities shall be issued in connection with any merger or
consolidation in which the Company is the surviving corporation, the amount of
consideration therefor shall be deemed to be the fair value as determined in
good faith by the Board of Directors of the Company of such portion of the
assets and business of the non-surviving corporation or corporations as such
Board shall determine to be attributable to such Common Stock, Convertible
Securities, rights or options, as the case may be. In the event of
any consolidation or merger of the Company in which the Company is not the
surviving corporation or in the event of any sale of all or substantially all of
the assets of the Company for stock or other securities of any other
corporation, the Company shall be deemed to have issued a number of shares of
its Common Stock for stock or securities of the other corporation computed on
the basis of the actual exchange ratio on which the transaction was predicated
and for a consideration equal to the fair market value on the date of such
transaction of such stock or securities of the other corporation, and if any
such calculation results in adjustment of the conversion price, the
determination of the number of shares of Common Stock issuable upon conversion
immediately prior to such merger, conversion or sale, for purposes of
paragraph (vii) below, shall be made after giving effect to such adjustment
of the conversion price.
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(D) In case
the Company shall take a record of the holders of its Common Stock for the
purpose of entitling them (aa) to receive a dividend or other distribution
payable in Common Stock or in Convertible Securities, or in any rights or
options to purchase any Common Stock or Convertible Securities, or (bb) to
subscribe for or purchase Common Stock or Convertible Securities, then such
record date shall be deemed to be the date of the issue or sale of the shares of
Common Stock deemed to have been issued or sold upon the declaration of such
dividend or the making of such other distribution or the date of the granting of
such rights of subscription or purchase, as the case may be.
(E) The
number of shares of Common Stock outstanding at any given time shall not include
shares owned or held by or for the account of the Company, and the disposition
of any such shares shall be considered an issue or sale of Common Stock for the
purposes of this paragraph (iii).
(iv) In case
the Company shall (A) declare a dividend upon the Common Stock payable in
Common Stock (other than a dividend declared to effect a subdivision of the
outstanding shares of Common Stock, as described in paragraph (v) below) or
Convertible Securities, or in any rights or options to purchase Common Stock or
Convertible Securities, or (B) declare any other dividend or make any other
distribution upon the Common Stock payable otherwise than out of earnings or
earned surplus, then thereafter the holder of this Convertible Note upon the
conversion hereof will be entitled to receive the number of shares of Common
Stock to which such holder shall be entitled upon such conversion, and, in
addition and without further payment therefor, (1) each dividend described in
clause (A) above and (2) each dividend or distribution described in
clause (B) above which such holder would have received by way of dividends
or distributions if continuously since such holder became the record holder of
this Convertible Note such holder (A) had been the record holder of the
number of shares of Common Stock then received, and (B) had retained all
dividends or distributions in stock or securities (including Common Stock or
Convertible Securities, and any rights or options to purchase any Common Stock
or Convertible Securities) payable in respect of such Common Stock or in respect
of any stock or securities paid as dividends or distributions and originating
directly or indirectly from such Common Stock. For the purposes of
the foregoing, a dividend or distribution other than in cash shall be considered
payable out of earnings or earned surplus only to the extent that such earnings
or earned surplus are charged an amount equal to the fair value of such dividend
or distribution as determined by the Board of Directors of the
Company.
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(v)
In case
the Company shall at any time subdivide its outstanding shares of Common Stock
into a greater number of shares, the conversion price in effect immediately
prior to such subdivision shall be proportionately reduced, and conversely, in
case the outstanding shares of Common Stock of the Company shall be combined
into a smaller number of shares, the conversion price in effect immediately
prior to such combination shall be proportionately increased.
(vi) If
(A) the purchase price provided for in any right or option referred to in
clause (A) of paragraph (iii), or (B) the additional
consideration, if any, payable upon the conversion or exchange of Convertible
Securities referred to in clause (A) or clause (B) of
paragraph (iii), or (C) the rate at which any Convertible Securities
referred to in clause (A) or clause (B) of paragraph (iii) are
convertible into or exchangeable for Common Stock shall change at any time
(other than under or by reason of provisions designed to protect against
dilution), the conversion price then in effect shall forthwith be increased or
decreased to such conversion price which would have obtained had the adjustments
made upon the issuance of such rights, options or Convertible Securities been
made upon the basis of (A) the issuance of the number of shares of Common
Stock theretofore actually delivered upon the exercise of such options or rights
or upon the conversion or exchange of such Convertible Securities, and the total
consideration received therefor, and (B) the issuance at the time of such
change of any such options, rights or Convertible Securities then still
outstanding for the consideration, if any, received by the Company therefor and
to be received on the basis of such changed price; and on the expiration of any
such option or right or the termination of any such right to convert or exchange
such Convertible Securities, the conversion price then in effect hereunder shall
forthwith be increased to such conversion price which would have obtained had
the adjustments made upon the issuance of such rights or options or Convertible
Securities been made upon the basis of the issuance of the shares of Common
Stock theretofore actually delivered (and the total consideration received
therefor) upon the exercise of such rights or options or upon the conversion or
exchange of such Convertible Securities. If the purchase price
provided for in any such right or option referred to in clause (A) of
paragraph (iii) or the rate at which any Convertible Securities referred to
in clause (A) or clause (B) of paragraph (iii) are convertible
into or exchangeable for Common Stock shall decrease at any time under or by
reason of provisions with respect thereto designed to protect against dilution,
then in case of the delivery of Common Stock upon the exercise of any such right
or option or upon conversion or exchange of any such Convertible Security, the
conversion price then in effect hereunder shall forthwith be decreased to such
conversion price as would have obtained had the adjustments made upon the
issuance of such right, option or Convertible Securities been made upon the
basis of the issuance of (and the total consideration received for) the shares
of Common Stock delivered as aforesaid.
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(vii) If any
capital reorganization or reclassification of the capital stock of the Company,
or consolidation or merger of the Company with another corporation, or the sale
of all or substantially all of its assets to another corporation shall be
effected in such a way that holders of Common Stock shall be entitled to receive
stock, securities or assets with respect to or in exchange for Common Stock,
then, as a condition of such reorganization, reclassification, consolidation,
merger or sale, lawful and adequate provision shall be made whereby the holder
hereof shall thereafter have the right to purchase and receive, upon the basis
and upon the terms and conditions specified in this Convertible Note and in lieu
of the shares of the Common Stock of the Company immediately theretofore
receivable upon conversion hereof, such shares of stock, securities or assets as
may be issued or payable with respect to or in exchange for a number of
outstanding shares of such Common Stock equal to the number of shares of such
stock immediately theretofore receivable upon conversion hereof had such
reorganization, reclassification, consolidation, merger or sale not taken place,
and in any such case appropriate provision shall be made with respect to the
rights and interests of the holder of this Convertible Note to the end that the
provisions hereof (including without limitation provisions for adjustments of
the conversion price and of the number of shares issuable upon the conversion of
this Convertible Note) shall thereafter be applicable, as nearly as may be, in
relation to any shares of stock, securities or assets thereafter deliverable
upon the conversion hereof. The Company shall not effect any such
consolidation, merger or sale, unless prior to the consummation thereof the
successor corporation (if other than the Company) resulting from such
consolidation or merger or the corporation purchasing such assets shall assume,
by written instrument executed and mailed to the registered holder hereof at the
last address of such holder appearing on the books of the Company, the
obligation to deliver to such holder such shares of stock, securities or assets
as, in accordance with the foregoing provisions, such holder may be entitled to
receive.
(viii) Upon any
adjustment of the conversion price, then and in each such case the Company shall
give written notice thereof, by first-class mail, postage prepaid, addressed to
the registered holder of this Convertible Note at the address of such holder as
shown on the books of the Company, which notice shall state the conversion price
resulting from such adjustment and the increase or decrease, if any, in the
number of shares receivable at such price upon the conversion of this
Convertible Note, setting forth in reasonable detail the method of calculation
and the facts upon which such calculation is based.
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(ix) In case
any time:
(1) the
Company shall declare any cash dividend on its Common Stock at a rate in excess
of the rate of the last cash dividend theretofore paid;
(2) the
Company shall pay any dividend payable in stock upon its Common Stock or make
any distribution (other than regular cash dividends) to the holders of its
Common Stock;
(3) the
Company shall offer for subscription pro rata to the holders of its Common Stock
any additional shares of stock of any class or other rights;
(4) there
shall be any capital reorganization, or reclassification of the capital stock of
the Company, or consolidation or merger of the Company with, or sale of all or
substantially all of its assets to, another corporation; or
(5) there
shall be a voluntary or involuntary dissolution, liquidation or winding up of
the Company;
then, in
any one or more of said cases, the Company shall give written notice, by
first-class mail, postage prepaid, addressed to the registered holder of this
Convertible Note at the address of such holder as shown on the books of the
Company, of the date on which (aa) the books of the Company shall close or
a record shall be taken for such dividend, distribution or subscription rights,
or (bb) such reorganization, reclassification, consolidation, merger, sale,
dissolution, liquidation or winding up shall take place, as the case may
be. Such notice shall also specify the date as of which the holders
of Common Stock of record shall participate in such dividend, distribution or
subscription rights, or shall be entitled to exchange their Common Stock for
securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding up, as the case may be. Such written notice shall be given at
least 20 days prior to the action in question and not less than 20 days prior to
the record date or the date on which the Company’s transfer books are closed in
respect thereto.
(x)
No
fractional shares of Common Stock shall be issued upon the conversion of this
Convertible Note, but, instead of any fraction of a share which would otherwise
be issuable, the Company shall pay a cash adjustment in respect of such fraction
in an amount equal to the same fraction of the market price per share of Common
Stock as of the close of business on the date of the notice required by
paragraph 2 above. “Market price” for purposes of this
paragraph (x) shall mean, if the Common Stock is traded on a securities
exchange or on NASDAQ, the closing price of the Common Stock on such exchange or
NASDAQ, or, if the Common Stock is otherwise traded in the over-the-counter
market, the closing bid price, in each case averaged over a period of 20
consecutive business days prior to the date as of which “market price” is being
determined. If at any time the Common Stock is not traded on an
exchange or NASDAQ, or otherwise traded in the over-the-counter market, the
“market price” shall be deemed to be the higher of (i) the book value
thereof as determined by any firm of independent public accountants of
recognized standing selected by the Board of Directors of the Company as of the
last day of any month ending within 60 days preceding the date as of which the
determination is to be made, or (ii) the fair value thereof determined in
good faith by the Board of Directors of the Company as of a date which is within
15 days of the date as of which the determination is to be
made.
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(xi)
As used
herein, the term “Common Stock” shall mean and include the Company’s presently
authorized Common Stock and shall also include any capital stock of any class of
the Company hereafter authorized which shall not be limited to a fixed sum or
percentage in respect of the rights of the holders thereof to participate in
dividends or in the distribution of assets upon the voluntary or involuntary
liquidation, dissolution or winding up of the Company; provided that the shares
issuable upon conversion of this Convertible Note shall include shares
designated as Common Stock of the Company on the date of original issue of this
Convertible Note or, in the case of any reclassification of the outstanding
shares thereof, the stock, securities or assets provided for in
paragraph (vii) above.
(xii) If any
event occurs as to which in the opinion of the Board of Directors of the Company
the other provisions of this paragraph 3 are not strictly applicable or if
strictly applicable would not fairly protect the rights of the holder of this
Convertible Note or of Common Stock in accordance with the essential intent and
principles of such provisions, then the Board of Directors shall make an
adjustment in the application of such provisions, in accordance with such
essential intent and principles, so as to protect such rights as
aforesaid.
4.
Change in Control Put
Option.
(a) In
the event of a Change in Control (as hereinafter defined) of the Company, the
holder hereof shall have the option (the “Change in Control Put
Option”) to require that this Convertible Note be redeemed by the Company
in whole (but not in part), at 100% of the outstanding principal amount, plus
all unpaid interest accrued thereon to the redemption date.
The Company shall give the holder of
this Convertible Note written notice of such impending transaction not later
than 20 days prior to the shareholders’ meeting of the Company called to approve
such transaction, or 20 days prior to the closing of such transaction, whichever
is earlier, and shall also notify such holder in writing of the final approval
of such transaction. The first of such notices shall give the
proposed effective date of the transaction (the “Effective Date”) and shall
describe the material terms and conditions of the transaction and of this
paragraph 4(a) (including, without limiting the generality of the
foregoing, a description of the value of the consideration, if any, being
offered to the holders of the outstanding securities of the Company), and the
Company shall thereafter give such holder prompt notice of any material changes
to such terms and conditions. Notwithstanding anything to the
contrary herein, the outstanding principal amount of this Convertible Note may
not be pre-paid following the delivery of the first notice delivered pursuant to
this Section 4(a) except in an amount equal to 100% of the then unpaid principal
amount. The transaction shall in no event take place sooner than 20
days after the mailing by the Company of the first notice provided for herein or
sooner than 10 days after the mailing by the Company of any notice of material
changes provided for herein.
11
Any election to exercise the Change in
Control Put Option shall be made by the holder hereof giving written notice
thereof to the Company at least two days before the Effective Date (if no such
notice is given, the provisions of paragraph 3(vii) shall
apply). Upon receipt of such notice, the Company shall, on the
Effective Date, redeem this Convertible Note in whole (but not in part) at 100%
of the outstanding principal amount, plus all unpaid interest accrued thereon to
the Effective Date.
For purposes of this Convertible Note,
a “Change in
Control” of the Company shall be deemed to occur if any of the following
occur:
(i)
Approval by the shareholders of the Company of a
reorganization, merger or consolidation of the Company or a statutory exchange
of outstanding securities entitled to vote generally in the election of
directors (“Voting Securities”) of the Company, unless, immediately following
such reorganization, merger, consolidation or exchange, all or substantially all
of the persons who were the beneficial owners, respectively, of Voting
Securities and shares of the Company immediately prior to such reorganization,
merger, consolidation or exchange beneficially own, directly or indirectly, more
than 50% of, respectively, the combined voting power of the then outstanding
voting securities entitled to vote generally in the election of directors and
the then outstanding shares of common stock, as the case may be, of the
corporation that is the issuer of such securities held by the shareholders of
the Company after such reorganization, merger, consolidation or exchange in
substantially the same proportions as their ownership, immediately prior to such
reorganization, merger, consolidation or exchange, of the Voting Securities and
shares of the Company, as the case may be;
(ii) Approval
by the shareholders of the Company of (x) a complete liquidation or
dissolution of the Company or (y) the sale or other disposition of all or
substantially all of the assets of the Company (in one or a series of
transactions); or
(iii)
the Company shall cease to own 100% of the outstanding Capital Stock of
Xinxing.
(b) Nothing
hereinabove set forth in this paragraph 4 shall affect in any way the right of
the holder of this Convertible Note to convert this Convertible Note at any time
and from time to time in accordance with paragraph 1
hereof.
12
(c) In
the event that the holder hereof fails to exercise its Change in Control Put
Option as provided for herein within 20 days after the Effective Date, then the
Change in Control Put Option shall be deemed to be null and void, and the holder
hereof shall be deemed to have irrevocably waived its right to exercise the
Change in Control Put Option and the Change in Control Put Option shall be of no
further force or effect.
5.
Required
Prepayments. The Company shall prepay the Convertible Notes in
an amount equal to 100% of the proceeds from (i) any sale of any collateral,
(ii) any insurance proceeds arising from the any damage or
destruction of any collateral, and (iii) any proceeds from any condemnation or
other taking of any collateral. All such prepayments shall be applied
to all Convertible Notes, pro rata, based on
the respective Face Amounts thereof.
6.
Other
Agreements. The Company covenants and agrees that the holder
of this Convertible Note shall have the rights of an Investor under the Purchase
Agreement and Registration Rights Agreement, each dated as of January 28, 2008
among the Company and the Investors named on the signature pages
thereto. This Convertible Note shall be secured by the Security
Documents.
7.
Restrictions Upon
Conversion. The Holder shall not have the right to exercise
this Convertible Note, to the extent that after giving effect to such exercise,
the Holder (together with its affiliates) would beneficially own in excess of
9.99% of the shares of the Common Stock outstanding immediately after giving
effect to such exercise. For purposes of the foregoing sentence, the
aggregate number of shares of Common Stock beneficially owned by the Holder and
its affiliates shall include the number of shares of Common Stock issuable upon
conversion of this Convertible Note with respect to which the determination of
such sentence is being made, but shall exclude shares of Common Stock which
would be issuable upon (i) exercise of the remaining, unconverted portion of
this Convertible Note beneficially owned by the Holder and its affiliates and
(ii) exercise or conversion of the unexercised or unconverted portion of any
other securities of the Company beneficially owned by the Holder and its
affiliates (including, without limitation, any convertible notes or convertible
preferred stock or warrants) subject to a limitation on conversion or exercise
analogous to the limitation contained herein. Except as set forth in
the preceding sentence, for purposes of this paragraph, beneficial ownership
shall be calculated in accordance with Section 13(d) of the Securities Exchange
Act of 1934, as amended. For purposes of this Convertible Note, 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 (1) the
Company’s most recent Quarterly Report on Form 10-Q, Annual Report on Form 10-K
or other public filing with the SEC, as the case may be, (2) a more recent
public announcement by the Company or (3) any other notice by the Company or its
transfer agent setting forth the number of shares of Common Stock
outstanding. For any reason at any time, upon the written or oral
request of the Holder, the Company shall, within three business days, confirm
orally or in writing to the Investor the number of shares of Common Stock then
outstanding. In any case, the number of outstanding shares of Common
Stock shall be determined after giving effect to the conversion or exercise of
securities of the Company by the Holder and its affiliates since the date as of
which such number of outstanding shares of Common Stock was
reported. The restriction described in this paragraph 7 may not be
revoked.
13
8.
Company Call
Option.
(a) At
any time, the Company shall have the option (the “Call Option”) to redeem at
par, in its sole and absolute discretion (in whole or in part), up to an amount
equal to (i) 55% of the Face Amount of this Convertible Note, less (ii) any
principal previously converted into Common Stock pursuant to paragraph 1(b) (the
“Redemption
Amount”). To make such prepayment, the Company must give
written irrevocable notice to the holder hereof of its intent to redeem the
Convertible Note not later than 20 days prior to the date fixed by the Company
to redeem the Convertible Note (the “Call Option Redemption
Date”). The Redemption Amount and any unpaid interest accrued
thereon as of the Call Option Redemption Date shall become due and payable on
the Call Option Redemption Date. All redemptions pursuant to this
paragraph 8 shall be applied to all Convertible Notes, pro rata, based on
the respective Face Amounts thereof.
(b) Nothing
hereinabove set forth shall affect in any way the right of the holder of this
Convertible Note to convert this Convertible Note at any time and from time to
time in accordance with paragraph 1 hereof.
9.
Mandatory
Conversion. Subject to the limitations of paragraph 7 and
provided that the registration statement referred to in Article II of the
Registration Rights Agreement is effective, the holder of this Convertible Note
shall be required, at the option of the Company (i) to convert pursuant to
paragraph 1(a) US$______ **[INSERT AMOUNT EQUAL TO 22.5% OF
THE FACE AMOUNT], less any amounts previously converted pursuant to
paragraph 1(a), of
this Convertible Note into Common Stock if the VWAP exceeds US$10.00 for any
30-day period after the effective day of the registration statement and on or
prior to the date of such conversion the Company has prepaid pursuant to
paragraph 8(a) at least 27.5% of the Face Amount of this Convertible Note, and
(ii) to convert pursuant to paragraph 1(a) US$_______ **[INSERT AMOUNT EQUAL TO 45% OF THE
FACE AMOUNT], less any amounts previously converted pursuant to paragraph
1(a), of this
Convertible Note into Common Stock if at least 180 days after any conversion
pursuant to clause (i) VWAP exceeds US$12.00 for any 30-day period and the
Company has prepaid pursuant to paragraph 8(a) at least 55% of the Face Amount
of this Convertible Note.
14
10.
Miscellaneous.
(a) The
Company will not, by amendment of its articles or 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
Convertible Note, but will at all times in good faith assist in the
carrying out of all such items and in the taking of all such action as may be
necessary or appropriate in order to protect the rights of the holder hereof
against dilution or other impairment. Without limiting the generality
of the foregoing, the Company will not increase the par value of any shares of
stock receivable on the conversion of this Convertible Note above the amount
payable therefor on such conversion.
(b) This
Convertible Note shall be governed and construed according to the laws of the
State of New York without giving effect to the choice of laws provisions
thereof. All disputes, differences, controversies and claims arising
out of or relating to this Convertible Note shall be resolved in accordance with
Section 11.17 of the Purchase Agreement.
(c) If
this Convertible Note is lost, stolen, mutilated or destroyed, the Company
shall, upon the making of an affidavit of the fact that the person claiming the
Warrant to be lost, stolen, mutilated or destroyed and on such terms as to
indemnity or otherwise as the Company may reasonably impose (which shall, in the
case of a mutilated Convertible Note, include the surrender thereof), issue a
new Convertible Note of like denomination and tenor as the Convertible Note so
lost, stolen, mutilated or destroyed
11.
Amendment
and Restatement. This Convertible Note amends and restates that
certain $_______ Convertible Note dated January 28, 2008 of the Company payable
to the Holder (the “Original
Convertible Note”), and does not constitute a novation, repayment and
reborrowing, or termination of the obligations under the Original Convertible
Note. The obligations under the Original Convertible Note are in all
respects continuing as amended and restated hereby.
[signature
page follows]
15
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CHINA
HOUSING & LAND
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DEVELOPMENT,
INC.
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By:
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Name:
|
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Title:
|
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[signature
page to convertible note]
[FORM OF
CONVERSION NOTICE]
The
undersigned owner of the 5% Senior Secured Convertible Note due January 28, 2013
(the “Convertible Note”) in the Face Amount of $______________ issued by China
Housing & Land Development, Inc. (the “Company”) hereby irrevocably
exercises its option to convert pursuant to [Circle either (a) or (b)] (a)
paragraph 1(a) of the Convertible Note or (b) paragraph 1(b) of the Convertible
Note US$____________ principal amount of the Convertible Note into shares of the
common stock, US$.01 par value, of the Company (“Common Stock”), in accordance
with the terms of the Convertible Note. The undersigned hereby instructs the
Company to convert the portion of the Convertible Note specified above into
shares of Common Stock issued at the conversion price in accordance with the
provisions of Paragraph 3 of the Convertible Note. The undersigned
directs that the Common Stock issuable and certificates therefor deliverable
upon conversion, together with any check in payment for fractional Common Stock,
be issued in the name of and delivered to the undersigned unless a different
name has been indicated below. All capitalized terms used and not
defined herein have the respective meanings assigned to them in the Convertible
Note.
By
delivering this conversion notice, the undersigned owner represents and
warrants that it does not now, nor after giving effect to this conversion
will it, beneficially own in excess of 9.99% of the outstanding shares of Common
Stock of the Company, calculated pursuant to the provisions of Paragraph 7 of
the Convertible Note.
Date
_______________
Signature:
______________________________________________________________
[Name]
Address:
_______________________________________________________________________
_______________________________________________________________________