China Information Technology, Inc.: Exhibit 4.1 - Filed by newsfilecorp.com






EXECUTION VERSION

[FORM OF SERIES [A][B] WARRANT] 

THE NUMBER OF ORDINARY SHARES ISSUABLE UPON EXERCISE OF THIS
WARRANT MAY BE LESS THAN THE AMOUNTS SET FORTH ON THE FACE HEREOF PURSUANT TO
SECTION 1(a) OF THIS WARRANT. 

CHINA INFORMATION
TECHNOLOGY, INC.


SERIES [A][B] WARRANT
TO PURCHASE ORDINARY
SHARES 

Warrant No.:

Date of Issuance:
[          ], 2015 (“Issuance
Date”) 

China Information Technology, Inc., a company incorporated
under the laws of the British Virgin Islands (the “Company”), hereby
certifies that, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, [BUYER], the registered holder hereof or its
permitted assigns (the “Holder”), is entitled, subject to the terms set
forth below, to purchase by way of subscription from the Company, at the
Exercise Price (as defined below) then in effect, upon exercise of this Warrant
to Purchase Ordinary Shares (including any Warrants to Purchase Ordinary Shares
issued in exchange, transfer or replacement hereof, the “Warrant”), at
any time or times on or after the Issuance Date, but not after 11:59 p.m., New
York time, on the Expiration Date (as defined below), _________________1
(subject to adjustment as provided herein) fully paid and non-assessable
Ordinary Shares (as defined below) (the “Warrant Shares”, and such
number of Warrant Shares, the “Warrant Number”). Except as otherwise
defined herein, capitalized terms in this Warrant shall have the meanings set
forth in Section 17. This Warrant is one of the Warrants to Purchase Ordinary
Shares (the “Registered Warrants”) issued pursuant to (i) Section 1 of
that certain Securities Purchase Agreement, dated as of May 20, 2015 (the
“Subscription Date”), by and among the Company and the investors (the
“Buyers”) referred to therein, as amended from time to time (the
“Securities Purchase Agreement”) and (ii) the Company’s Registration
Statement on Form F-3 (File number 333- 196755) (the “Registration
Statement”). 

___________________________
Series A Warrant: Insert 25%
Warrant coverage 
Series B Warrant: Insert 50% Warrant coverage 







	1. 	
      EXERCISE OF WARRANT.




(a)                
Mechanics of Exercise. Subject to the terms and conditions hereof
(including, without limitation, the limitations set forth in Section 1(f)), this
Warrant may be exercised by the Holder on any day on or after the Issuance Date
(an “Exercise Date”), in whole or in part, by delivery (whether via
facsimile or otherwise) of a written notice, in the form attached hereto as
Exhibit A (the “Exercise Notice”), of the Holder’s election
to exercise this Warrant. Within one (1) Trading Day following an exercise of
this Warrant as aforesaid, the Holder shall deliver payment to the Company of an
amount equal to the Exercise Price in effect on the date of such exercise
multiplied by the number of Warrant Shares as to which this Warrant was so
exercised

(the “Aggregate Exercise Price”) in cash or via wire
transfer of immediately available funds if the Holder did not notify the Company
in such Exercise Notice that such exercise was made pursuant to a Cashless
Exercise (as defined in Section 1(d)) [INSERT IN SERIES B WARRANT ONLY: or
Alternate Cashless Exercise (as defined in Section 1(d))] (each such exercise, a
“Cash Exercise”). The Holder shall not be required to deliver the
original of this Warrant in order to effect an exercise hereunder. Execution and
delivery of an Exercise Notice with respect to less than all of the Warrant
Shares shall have the same effect as cancellation of the original of this
Warrant and issuance of a new Warrant evidencing the right to purchase the
remaining number of Warrant Shares. Execution and delivery of an Exercise Notice
for all of the then-remaining Warrant Shares shall have the same effect as
cancellation of the original of this Warrant after delivery of the Warrant
Shares in accordance with the terms hereof. On or before the first
(1st) Trading Day following the date on which the Company has
received an Exercise Notice, the Company shall transmit by facsimile or
electronic mail an acknowledgment of confirmation of receipt of such Exercise
Notice, in the form attached hereto as Exhibit B, to the Holder
and the Company’s transfer agent (the “Transfer Agent”), which
confirmation shall constitute an instruction to the Transfer Agent to process
such Exercise Notice in accordance with the terms herein. On or before the later
of (1) the third (3rd) Trading Day following the date on which the
Company has received such Exercise Notice (or such earlier date as required
pursuant to the 1934 Act or other applicable law, rule or regulation for the
settlement of a trade of such Warrant Shares initiated on the applicable
Exercise Date) or (2) the first (1st) Trading Day following the date
on which the Company has received the Aggregate Exercise Price, the Company
shall (i) provided that the Transfer Agent is participating in The Depository
Trust Company (“DTC”) Fast Automated Securities Transfer Program, upon
the request of the Holder, credit such aggregate number of Ordinary Shares to
which the Holder is entitled pursuant to such exercise to the Holder’s or its
designee’s balance account with DTC through its Deposit/Withdrawal at Custodian
system, or (ii) if the Transfer Agent is not participating in the DTC Fast
Automated Securities Transfer Program, upon the request of the Holder, issue and
deliver (via reputable overnight courier) to the address as specified in the
Exercise Notice, a certificate, registered in the name of the Holder or its
designee, for the number of Ordinary Shares to which the Holder shall be
entitled pursuant to such exercise and in respect of which the Holder or its
designee shall have been recorded in the register of members of the Company as
the holder thereof. Upon delivery of an Exercise Notice, the Holder shall be
deemed for all corporate purposes to have become the holder of record of the
Warrant Shares with respect to which this Warrant has been exercised,
irrespective of the date such Warrant Shares are credited to the Holder’s DTC
account or the date of delivery of the certificates evidencing such Warrant
Shares and related update to the Company’s register of members (as the case may
be). If the original of this Warrant is submitted in connection with any
exercise pursuant to this Section 1(a) and the number of Warrant Shares
represented by this Warrant submitted for exercise is greater than the number of
Warrant Shares being acquired upon an exercise and upon surrender of this
Warrant to the Company by the Holder, then, at the request of the Holder, the
Company shall as soon as practicable and in no event later than three (3)
Business Days after any exercise and at its own expense, issue and deliver to
the Holder (or its designee) a new Warrant (in accordance with Section 7(d))
representing the right to purchase the number of Warrant Shares purchasable
immediately prior to such exercise under this Warrant, less the number of
Warrant Shares with respect to which this Warrant is exercised. No fractional
Ordinary Shares are to be issued upon the exercise of this Warrant, but rather
the number of Ordinary Shares to be issued shall be rounded up to the nearest whole number. The Company shall pay
any and all transfer, stamp, issuance and similar taxes, costs and expenses
(including, without limitation, fees and expenses of the Transfer Agent) that
may be payable with respect to the issuance and delivery of Warrant Shares upon
exercise of this Warrant. Notwithstanding the foregoing, the Company’s failure
to deliver Warrant Shares to the Holder on or prior to the later of (i) three
(3) Trading Days after the Company’s receipt of the applicable Exercise Notice
(or such earlier date as required pursuant to the 1934 Act or other applicable
law, rule or regulation for the settlement of a trade of such Warrant Shares
initiated on the applicable Exercise Date) and (ii) solely with respect to a
Cash Exercise in which the Aggregate Exercise Price is received by the Company
after the second (2nd) Trading Day after the Company’s receipt of the
applicable Exercise Notice, one (1) Trading Day after the Company’s receipt of
the Aggregate Exercise Price (such later date, the “Share Delivery
Deadline”) shall not be deemed to be a breach of this Warrant.


2





(b)                
Exercise Price. For purposes of this Warrant, “Exercise Price”
means $[ ]2, subject to adjustment as provided herein. 

(c)                
Company’s Failure to Timely Deliver Securities. If the Company shall
fail, for any reason or for no reason, on or prior to the Share Delivery
Deadline, either (i) if the Transfer Agent is not participating in the DTC Fast
Automated Securities Transfer Program, to issue and deliver to the Holder (or
its designee) a certificate for the number of Warrant Shares to which the Holder
is entitled and register such Warrant Shares on the Company’s share register or,
if the Transfer Agent is participating in the DTC Fast Automated Securities
Transfer Program, to credit the balance account of the Holder or the Holder’s
designee with DTC for such number of Warrant Shares to which the Holder is
entitled upon the Holder’s exercise of this Warrant (as the case may be) or (ii)
if the Registration Statement (or prospectus contained therein) covering the
issuance of the Warrant Shares that are the subject of the Exercise Notice (the
“Unavailable Warrant Shares”) is not available for the issuance of such
Unavailable Warrant Shares and the Company fails to promptly (x) so notify the
Holder and (y) deliver the Warrant Shares electronically without any restrictive
legend by crediting such aggregate number of Warrant Shares to which the Holder
is entitled pursuant to such exercise to the Holder’s or its designee’s balance
account with DTC through its Deposit/Withdrawal at Custodian system (the event
described in the immediately foregoing clause (ii) is hereinafter referred as a
“Notice Failure” and together with the event described in clause (i)
above, a “Delivery Failure”), then, in addition to all other remedies
available to the Holder, (A) the Company shall pay in cash to the Holder on each
day after the Share Delivery Deadline and during such Delivery Failure an amount
equal to 1% of the product of (X) the sum of the number of Ordinary Shares not
issued to the Holder on or prior to the Share Delivery Deadline and to which the
Holder is entitled, multiplied by (Y) any Closing Sale Price of the Ordinary
Shares selected by the Holder in writing as in effect at any time during the
period beginning on the applicable Exercise Date and ending on the applicable
Share Delivery Deadline, and (B) the Holder, upon written notice to the Company,
may void its Exercise Notice with respect to, and retain or have returned, as
the case may be, any portion of this Warrant that has not been exercised
pursuant to such Exercise Notice; provided that the voiding of an Exercise Notice shall not affect the Company’s
obligations to make any payments which have accrued prior to the date of such
notice pursuant to this Section 1(c) or otherwise. In addition to the foregoing,
if on or prior to the Share Delivery Deadline either (I) the Transfer Agent is
not participating in the DTC Fast Automated Securities Transfer Program, the
Company shall fail to issue and deliver to the Holder (or its designee) a
certificate and register such Ordinary Shares on the Company’s register of
members or, if the Transfer Agent is participating in the DTC Fast Automated
Securities Transfer Program, the Transfer Agent shall fail to credit the balance
account of the Holder or the Holder’s designee with DTC for the number of
Ordinary Shares to which the Holder is entitled upon the Holder’s exercise
hereunder or pursuant to the Company’s obligation pursuant to clause (ii) below
or (II) a Notice Failure occurs, and if on or after such Share Delivery Deadline
the Holder purchases (in an open market transaction or otherwise) Ordinary
Shares to deliver in satisfaction of a sale by the Holder of all or any portion
of the number of Ordinary Shares issuable upon such exercise that the Holder
anticipated receiving from the Company (a “Buy-In”), then, in addition to
all other remedies available to the Holder, the Company shall, within three (3)
Business Days after the Holder’s request and in the Holder’s discretion, either
(i) pay cash to the Holder in an amount equal to the Holder’s total purchase
price (including brokerage commissions and other out-of-pocket expenses, if any)
for the Ordinary Shares so purchased (including, without limitation, by any
other Person in respect, or on behalf, of the Holder) (the “Buy-In
Price”), at which point the Company’s obligation to so issue and deliver
such certificate (and to issue such Ordinary Shares) or credit the balance
account of such Holder or such Holder’s designee, as applicable, with DTC for
the number of Warrant Shares to which the Holder is entitled upon the Holder’s
exercise hereunder (as the case may be) (and to issue such Warrant Shares) shall
terminate, or (ii) promptly honor its obligation to so issue and deliver to the
Holder a certificate or certificates representing such Warrant Shares or credit
the balance account of such Holder or such Holder’s designee, as applicable,
with DTC for the number of Warrant Shares to which the Holder is entitled upon
the Holder’s exercise hereunder (as the case may be) and pay cash to the Holder
in an amount equal to the excess (if any) of the Buy-In Price over the product
of (A) such number of Warrant Shares multiplied by (B) the lowest Closing Sale
Price of the Ordinary Shares on any Trading Day during the period commencing on
the date of the applicable Exercise Notice and ending on the date of such
issuance and payment under this clause (ii) (the “Buy-In Payment
Amount”). Nothing shall limit the Holder’s right to pursue any other
remedies available to it hereunder, at law or in equity, including, without
limitation, a decree of specific performance and/or injunctive relief with
respect to the Company’s failure to timely deliver certificates representing
Ordinary Shares (or to electronically deliver such Ordinary Shares) upon the
exercise of this Warrant as required pursuant to the terms hereof. 

_______________________________________
2 Insert
in Series A Warrants: $7.73
Insert in Series B Warrants: $7.09


3




 

	 	(d) 	
      Cashless Exercise.



[INSERT IN SERIES B WARRANT ONLY: (i)
General.] Notwithstanding anything contained herein to the contrary (other than
Section 1(f) below), if at the time of exercise hereof the Registration
Statement is not effective (or the prospectus contained therein is not available
for use) for the issuance of all of the Warrant Shares, then the Holder may, in
its sole discretion, exercise this Warrant in whole or in part and, in lieu of
making the cash payment otherwise contemplated to be made to the Company upon
such exercise in payment of the Aggregate Exercise Price, elect instead to
receive upon such exercise the “Net Number” of Warrant Shares determined according to the
following formula (a “Cashless Exercise”): 

4





Net Number = (A x B) - (A x C)

                                     
D 


For purposes of the foregoing formula:


A= the total number of shares with
respect to which this Warrant is then being exercised. 

B = the quotient of (x) the sum of the
VWAP of the Ordinary Shares of each of the twenty (20) Trading Days ending at
the close of business on the Principal Market immediately prior to the time of
exercise as set forth in the applicable Exercise Notice, divided by (y) twenty
(20). 

C = the Exercise Price then in effect
for the applicable Warrant Shares at the time of such exercise. 

D = as applicable: (i) the Closing
Sale Price of the Ordinary Shares on the Trading Day immediately preceding the
date of the applicable Exercise Notice if such Exercise Notice is (1) both
executed and delivered pursuant to Section 1(a) hereof on a day that is not a
Trading Day or (2) both executed and delivered pursuant to Section 1(a) hereof
on a Trading Day prior to the opening of “regular trading hours” (as defined in
Rule 600(b)(64) of Regulation NMS promulgated under the federal securities laws)
on such Trading Day, (ii) the Bid Price of the Ordinary Shares as of the time of
the Holder’s execution of the applicable Exercise Notice if such Exercise Notice
is executed during “regular trading hours” on a Trading Day and is delivered
within two (2) hours thereafter pursuant to Section 1(a) hereof, or (iii) the
Closing Sale Price of the Ordinary Shares on the date of the applicable Exercise
Notice if the date of such Exercise Notice is a Trading Day and such Exercise
Notice is both executed and delivered pursuant to Section 1(a) hereof after the
close of “regular trading hours” on such Trading Day. 

[INSERT IN SERIES A WARRANT ONLY: For
purposes of Rule 144(d) promulgated under the 1933 Act, as in effect on the
Subscription Date, it is intended that the Warrant Shares issued in a Cashless
Exercise shall be deemed to have been acquired by the Holder, and the holding
period for the Warrant Shares shall be deemed to have commenced, on the date
this Warrant was originally issued pursuant to the Securities Purchase
Agreement. In addition, if Warrant Shares are issued in Cashless Exercise, the
parties acknowledge and agree that in accordance with Section 3(a)(9) of the
Securities Act, the Warrant Shares shall take on the registered characteristics
of the Warrants being exercised. The Company agrees not to take any position
contrary to this Section 1(d).] 

5




[INSERT IN SERIES B WARRANT ONLY: (ii)
Alternate Cashless Exercise of Series B Warrants. In addition to
the rights set forth in Section 1(c)(i) above, on any Trading Day after [ ,
2015]3 (the “Alternate Exercise Eligibility Date”), the Holder
may, in its sole discretion, exercise this Warrant (each, an “Alternate
Exercise”), in whole or in part and, in lieu of making the cash payment
otherwise contemplated to be made to the Company upon such exercise in payment
thereof and in lieu of making a Cashless Exercise, elect instead to receive upon
such exercise the “net number” of Ordinary Shares (the “Alternate Net
Number”) determined according to the following formula (the “Alternate
Cashless Exercise”): 

                                                          
[ (A x
B)             
] 
Alternate Net Number = 185% of [ -------------- - A
] 
                                                           [
C                       ]



For purposes of the foregoing formula:


A= the total number of shares with
respect to which this Warrant is then being exercised. 

B= $6.44 (as adjusted for share splits, share distributions,
recapitalizations or similar events) 

C= Market Price Percentage of the
Market Price. 

Notwithstanding the foregoing, if, with
respect to any given Alternate Cashless Exercise, the applicable Market Price is
less than $4.00 (as adjusted for share splits, share distributions,
recapitalizations or similar events) (the “Market Floor Price”), and the
Company has previously delivered a Net Cash Settlement Notice (as defined below)
to the Holder (which has not been withdrawn in writing by the Company on or
prior to the time of each applicable exercise on such applicable Exercise Date),
the applicable Market Price shall be replaced with the Market Floor Price and on
the applicable Share Delivery Deadline, the Company shall pay the Holder an
amount in cash, in U.S. dollars and immediately available funds, equal to the
product of (A) the Net Cash Settlement Price and (B) the difference between (x)
the applicable Alternate Net Number calculated without adjusting the Market
Price to the Market Floor Price in accordance with this paragraph and (y) the
Alternate Net Number calculated with a Market Price equal to the Market Floor
Price (a “Net Cash Settlement”). If the Company has not paid the Net Cash
Settlement on or prior to the Share Delivery Deadline, no later than one Trading
Day following the Share Delivery Deadline, the Company shall deliver to the
Holder the shares of Common Stock that the Company would have been required to
be delivered to the Holder under this Warrant as if the Company had never
delivered a Net Cash Settlement Notice. The Company may elect to have Alternate
Cashless Exercises net settled in cash by delivering written notice to each
holder of Registered Warrants (each, a “Net Cash Settlement Notice”).
Each Net Cash Settlement Notice shall be effective upon receipt by each holder
of Registered Warrants unless withdrawn in writing by the Company by written
notice to each holder of Registered Warrants. For the avoidance of doubt, if the
Company has not delivered a Net Cash Settlement Notice to each holder of
Registered Warrants on or prior to the time of each applicable exercise on the
applicable Exercise Date of the Holder’s Alternate Cashless Exercise, the
Company shall have no right to effect a Net Cash Settlement with respect to such
Alternate Cashless Exercise without the written consent of the Holder. 

_______________________________
3 Insert
40th calendar day after the Closing Date 


6





For example, if 10,000 Warrant Shares
are being exercised, the Market Price is $2.50, the VWAP on the applicable
Exercise Date is $2.75 and (solely for purposes of this example) “B” is $5.50, without regard to the Market Floor
Price and at least 26,723 Warrant Shares remain available to be issued under the
Exchange Cap (as defined below), the Holder would be entitled to receive 26,723
Warrant Shares. If the Company has previously delivered a Net Cash Settlement
Notice, after giving effect to the Market Floor Price (or only 9,764 Warrant
Shares remain available under the Exchange Cap), the Holder will receive 9,764
Warrant Shares and a cash payment of $46,637.25 (calculated as the difference of
26,723 less 9,764, multiplied by $2.75 (the Net Cash Settlement Price equal to
the greater of the Market Price and the VWAP on the applicable Exercise Date)).


(iii)               
 For purposes of Rule 144(d) promulgated under the 1933 Act, as in effect
on the date hereof, it is intended that the Warrant Shares issued in a Cashless
Exercise or an Alternate Cashless Exercise shall be deemed to have been acquired
by the Holder, and the holding period for the Warrant Shares shall be deemed to
have commenced, on the date this Warrant was originally issued pursuant to the
Securities Purchase Agreement. In addition, if Warrant Shares are issued in
Cashless Exercise or an Alternate Cashless Exercise, the parties acknowledge and
agree that in accordance with Section 3(a)(9) of the Securities Act, the Warrant
Shares shall take on the registered characteristics of the Warrants being
exercised. The Company agrees not to take any position contrary to this Section
1(d).] 

(e)          
       Disputes. In the case of a dispute
as to the determination of the Exercise Price or the arithmetic calculation of
the number of Warrant Shares to be issued pursuant to the terms hereof, the
Company shall promptly issue to the Holder the number of Warrant Shares that are
not disputed and resolve such dispute in accordance with Section 13. 



7




(f)              
    Limitations on Exercises.
(i)                
 Beneficial Ownership. The Company shall not effect the exercise of
any portion of this Warrant, and the Holder shall not have the right to exercise
any portion of this Warrant, pursuant to the terms and conditions of this
Warrant and any such exercise shall be null and void and treated as if never
made, to the extent that after giving effect to such exercise, the Holder
together with the other Attribution Parties collectively would beneficially own
in excess of 4.99% (the “Maximum Percentage”) of the Ordinary Shares
outstanding immediately after giving effect to such exercise. For purposes of
the foregoing sentence, the aggregate number of Ordinary Shares beneficially
owned by the Holder and the other Attribution Parties shall include the number
of Ordinary Shares held by the Holder and all other Attribution Parties plus the number
of Ordinary Shares issuable upon exercise of this Warrant with respect to which
the determination of such sentence is being made, but shall exclude Ordinary
Shares which would be issuable upon (A) exercise of the remaining, unexercised
portion of this Warrant beneficially owned by the Holder or any of the other
Attribution Parties and (B) exercise or conversion of the unexercised or
unconverted portion of any other securities of the Company (including, without
limitation, any convertible notes or convertible preferred shares or warrants,
including other Registered Warrants) beneficially owned by the Holder or any
other Attribution Party subject to a limitation on conversion or exercise
analogous to the limitation contained in this Section 1(f)(i). For purposes of
this Section 1(f)(i), beneficial ownership shall be calculated in accordance
with Section 13(d) of the 1934 Act. For purposes of determining the number of
outstanding Ordinary Shares the Holder may acquire upon the exercise of this
Warrant without exceeding the Maximum Percentage, the Holder may rely on the
number of outstanding Ordinary Shares as reflected in (x) the Company’s most
recent Annual Report on Form 20-F, Report on Form 6-K or other public filing
with the SEC, as the case may be, (y) a more recent public announcement by the
Company or (z) any other written notice by the Company or the Transfer Agent, if
any, setting forth the number of Ordinary Shares outstanding (the “Reported
Outstanding Share Number”). If the Company receives an Exercise Notice from
the Holder at a time when the actual number of outstanding Ordinary Shares is
less than the Reported Outstanding Share Number, the Company shall (i) notify
the Holder in writing of the number of Ordinary Shares then outstanding and, to
the extent that such Exercise Notice would otherwise cause the Holder’s
beneficial ownership, as determined pursuant to this Section 1(f)(i), to exceed
the Maximum Percentage, the Holder must notify in writing the Company of a
reduced number of Warrant Shares to be acquired pursuant to such Exercise Notice
(the number of shares by which such purchase is reduced, the “Reduction
Shares”) and (ii) as soon as reasonably practicable, the Company shall
return to the Holder any exercise price paid by the Holder for the Reduction
Shares. For any reason at any time, upon the written request of the Holder
delivered at any time during the period commencing on 9:30 A.M. New York time
and ending on 5:30 P.M., New York time on a Business Day, the Company shall, no
later than the next Business Day, confirm orally and in writing or by electronic
mail to the Holder the number of Ordinary Shares then outstanding. In any case,
the number of outstanding Ordinary Shares shall be determined after giving
effect to the conversion or exercise of securities of the Company, including
this Warrant, by the Holder and any other Attribution Party since the date as of
which the Reported Outstanding Share Number was reported. In the event that the
issuance of Ordinary Shares to the Holder upon exercise of this Warrant results
in the Holder and the other Attribution Parties being deemed to beneficially
own, in the aggregate, more than the Maximum Percentage of the number of
outstanding Ordinary Shares (as determined under Section 13(d) of the 1934 Act),
the number of shares so issued by which the Holder’s and the other Attribution
Parties’ aggregate beneficial ownership exceeds the Maximum Percentage (the
“Excess Shares”) shall be deemed null and void and shall be cancelled ab
initio, and the Holder shall not have the power to vote or to transfer the
Excess Shares. As soon as reasonably practicable after the issuance of the
Excess Shares has been deemed null and void, the Company shall return to the
Holder the exercise price paid by the Holder for the Excess Shares. Upon delivery of a written notice to the
Company, the Holder may from time to time increase (with such increase not
effective until the sixty-first (61st) day after delivery of such
notice) or decrease the Maximum Percentage to any other percentage not in excess
of 9.99% as specified in such notice; provided that (i) any such increase in the
Maximum Percentage will not be effective until the sixty-first (61st)
day after such notice is delivered to the Company and (ii) any such increase or
decrease will apply only to the Holder and the other Attribution Parties and not
to any other holder of Registered Warrants that is not an Attribution Party of
the Holder. For purposes of clarity, the Ordinary Shares issuable pursuant to
the terms of this Warrant in excess of the Maximum Percentage shall not be
deemed to be beneficially owned by the Holder for any purpose including for
purposes of Section 13(d) or Rule 16a-1(a)(1) of the 1934 Act. No prior
inability to exercise this Warrant pursuant to this paragraph shall have any
effect on the applicability of the provisions of this paragraph with respect to
any subsequent determination of exercisability. The provisions of this paragraph
shall be construed and implemented in a manner otherwise than in strict
conformity with the terms of this Section 1(f)(i) to the extent necessary to
correct this paragraph or any portion of this paragraph which may be defective
or inconsistent with the intended beneficial ownership limitation contained in
this Section 1(f)(i) or to make changes or supplements necessary or desirable to
properly give effect to such limitation. The limitation contained in this
paragraph may not be waived and shall apply to a successor holder of this
Warrant. 


8





(ii)                
Principal Market Regulation. The Company shall not issue any Ordinary
Shares upon the exercise of this Warrant if the issuance of such Ordinary Shares
(taken together with the New Ordinary Shares (as defined in the Securities
Purchase Agreement) issued pursuant to the Securities Purchase Agreement and the
issuance of such shares upon the exercise of the other Registered Warrants)
would exceed the aggregate number of Ordinary Shares which the Company may issue
without breaching the Company’s obligations under the rules or regulations of
the Principal Market (the number of shares which may be issued without violating
such rules and regulations, the “Exchange Cap”), except that such
limitation shall not apply in the event that the Company (A) obtains the
approval of its shareholders as required by the applicable rules of the
Principal Market for issuances of Ordinary Shares in excess of such amount or
(B) obtains a written opinion from outside counsel to the Company that such
approval is not required, which opinion shall be reasonably satisfactory to the
Holder. Until such approval or such written opinion is obtained, no Buyer shall
be issued in the aggregate, upon exercise of any of the Registered Warrants,
Ordinary Shares in an amount greater than the product of (i) the Exchange Cap as
of the Issuance Date multiplied by (ii) the quotient of (1) the aggregate number
of New Ordinary Shares issued to such Buyer pursuant to the Securities Purchase
Agreement on the Closing Date (as defined in the Securities Purchase Agreement)
divided by (2) the aggregate number of New Ordinary Shares issued to the Buyers
pursuant to the Securities Purchase Agreement on the Closing Date (with respect
to each Buyer, the “Exchange Cap Allocation”). In the event that any
Buyer shall sell or otherwise transfer any of such Buyer’s Registered Warrants,
the transferee shall be allocated a pro rata portion of such Buyer’s Exchange
Cap Allocation with respect to such portion of such Registered Warrants so
transferred, and the restrictions of the prior sentence shall apply to such
transferee with respect to the portion of the Exchange Cap Allocation so allocated to such transferee. Upon exercise in
full of a holder’s Registered Warrants, the difference (if any) between such
holder’s Exchange Cap Allocation and the number of Ordinary Shares actually
issued to such holder upon such holder’s exercise in full of such Registered
Warrants shall be allocated, to the respective Exchange Cap Allocations of the
remaining holders of Registered Warrants on a pro rata basis in proportion to
the Ordinary Shares underlying Registered Warrants then held by each such holder
of Registered Warrants. In the event that the Company is then prohibited from
issuing any Ordinary Shares pursuant to this Section 1(f)(ii) (the “Exchange
Cap Shares”), in lieu of issuing and delivering such Exchange Cap Shares to
the Holder, the Company shall pay cash to the Holder in exchange for the
cancellation of such portion of this Warrant exercisable into such Exchange Cap
Shares (the “Exchange Cap Payment Amount”) at a price equal to the sum of
(x) the product of (A) such number of Exchange Cap Shares and (B) the applicable
Net Cash Settlement Price of the Ordinary Shares on any Trading Day during the
period commencing on the date the Holder delivers the applicable Exercise Notice
with respect to such Exchange Cap Shares to the Company and ending on the date
of such payment under this Section 1(f)(ii) and (y) to the extent the Holder
purchases (in an open market transaction or otherwise) Ordinary Shares to
deliver in satisfaction of a sale by the Holder of Exchange Cap Shares, any
Buy-In Payment Amount, any brokerage commissions and other out-of-pocket
expenses, if any, of the Holder incurred in connection therewith. 

9




 

	 	(g) 	
      Reservation of Shares.



(i)                 
Required Reserve Amount. So long as this Warrant remains outstanding, the
Company shall at all times keep reserved for issuance under this Warrant a
number of Ordinary Shares at least equal to 200% of the maximum number of
Ordinary Shares as shall be necessary to satisfy the Company’s obligation to
issue Ordinary Shares under the Registered Warrants then outstanding (without
regard to any limitations on exercise) (the “Required Reserve Amount”);
provided that at no time shall the number of Ordinary Shares reserved pursuant
to this Section 1(g)(i) be reduced other than proportionally in connection with
any exercise or redemption of Registered Warrants or such other event covered by
Section 2(a) below. The Required Reserve Amount (including, without limitation,
each increase in the number of shares so reserved) shall be allocated pro rata
among the holders of the Registered Warrants based on number of Ordinary Shares
issuable upon exercise of Registered Warrants held by each holder on the Closing
Date (without regard to any limitations on exercise) or increase in the number
of reserved shares, as the case may be (the “Authorized Share
Allocation”). In the event that a holder shall sell or otherwise transfer
any of such holder’s Registered Warrants, each transferee shall be allocated a
pro rata portion of such holder’s Authorized Share Allocation. Any Ordinary
Shares reserved and allocated to any Person which ceases to hold any Registered
Warrants shall be allocated to the remaining holders of Registered Warrants, pro
rata based on the number of Ordinary Shares issuable upon exercise of the
Registered Warrants then held by such holders (without regard to any limitations
on exercise). 

10




(ii)                 
Insufficient Authorized Shares. If, notwithstanding Section 1(g)(i)
above, and not in limitation thereof, at any time while any of the Registered
Warrants remain outstanding, the Company does not have a sufficient number of
authorized and unreserved Ordinary Shares to satisfy its obligation to reserve
the Required Reserve Amount (an “Authorized Share Failure”), then the
Company shall immediately take all action necessary to increase the Company’s
authorized Ordinary Shares to an amount sufficient to allow the Company to
reserve the Required Reserve Amount for all the Registered Warrants then
outstanding. Without limiting the generality of the foregoing sentence, as soon
as practicable after the date of the occurrence of an Authorized Share Failure,
but in no event later than ninety (90) days after the occurrence of such
Authorized Share Failure, the Company shall hold a meeting of its shareholders
for the approval of an increase in the number of authorized Ordinary Shares. In
connection with such meeting, the Company shall provide each shareholder with a
proxy statement or otherwise equivalent meeting materials and shall use its best
efforts to solicit its shareholders’ approval of such increase in authorized
Ordinary Shares and to cause its board of directors to recommend to the
shareholders that they approve such proposal. In the event that the Company is
prohibited from issuing Ordinary Shares upon an exercise of this Warrant due to
the failure by the Company to have sufficient Ordinary Shares available out of
the authorized but unissued Ordinary Shares (such unavailable number of Ordinary
Shares, the “Authorization Failure Shares”), in lieu of delivering such
Authorization Failure Shares to the Holder, the Company shall pay cash in
exchange for the cancellation of such portion of this Warrant exercisable into
such Authorization Failure Shares at a price equal to the sum of (i) the product
of (x) such number of Authorization Failure Shares and (y) the applicable Net
Cash Settlement Price of the Ordinary Shares on any Trading Day during the
period commencing on the date the Holder delivers the applicable Exercise Notice
with respect to such Authorization Failure Shares to the Company and ending on
the date of such issuance and payment under this Section 1(g)(ii); and (ii) to
the extent the Holder purchases (in an open market transaction or otherwise)
Ordinary Shares to deliver in satisfaction of a sale by the Holder of
Authorization Failure Shares, any Buy-In Payment Amount, brokerage commissions
and other out-of-pocket expenses, if any, of the Holder incurred in connection
therewith. Nothing contained in this Section 1(g)(ii) shall limit any
obligations of the Company under any provision of the Securities Purchase
Agreement. 

2.           
        ADJUSTMENT OF EXERCISE PRICE AND
NUMBER OF WARRANT SHARES. The Exercise Price and number of Warrant Shares
issuable upon exercise of this Warrant are subject to adjustment from time to
time as set forth in this Section 2. 

(a)                 
Share Dividends and Splits. Without limiting any provision of Section
2(b) or Section 4, if the Company, at any time on or after the Subscription
Date, (i) pays a share dividend on one or more classes of its then outstanding
Ordinary Shares or otherwise makes a distribution on any class of shares that is
payable in Ordinary Shares, (ii) subdivides (by any share split, share dividend,
recapitalization or otherwise) one or more classes of its then outstanding
Ordinary Shares into a larger number of shares or (iii) combines (by
combination, reverse share split or otherwise) one or more classes of its then
outstanding Ordinary Shares into a smaller number of shares, then in each such
case the Exercise Price shall be multiplied by a fraction of which the numerator shall
be the number of Ordinary Shares outstanding immediately before such event and
of which the denominator shall be the number of Ordinary Shares outstanding
immediately after such event. Any adjustment made pursuant to clause (i) of this
paragraph shall become effective immediately after the record date for the
determination of shareholders entitled to receive such dividend or distribution,
and any adjustment pursuant to clause (ii) or (iii) of this paragraph shall
become effective immediately after the effective date of such subdivision or
combination. If any event requiring an adjustment under this paragraph occurs
during the period that an Exercise Price is calculated hereunder, then the
calculation of such Exercise Price shall be adjusted appropriately to reflect
such event. 

11





(b)              
 Adjustment Upon Issuance of Shares of Ordinary Shares. If and
whenever on or after the Subscription Date, the Company issues or sells, or in
accordance with this Section 2 is deemed to have issued or sold, any Ordinary
Shares (including the issuance or sale of Ordinary Shares owned or held by or
for the account of the Company, but excluding any Excluded Securities issued or
sold or deemed to have been issued or sold) for a consideration per share (the
“New Issuance Price”) less than a price equal to the Exercise Price in
effect immediately prior to such issuance or sale or deemed issuance or sale
(such Exercise Price then in effect is referred to herein as the “Applicable
Price”) (the foregoing a “Dilutive Issuance”), then immediately after
such Dilutive Issuance, the Exercise Price then in effect shall be reduced to an
amount equal to the New Issuance Price. For all purposes of the foregoing
(including, without limitation, determining the adjusted Exercise Price and the
New Issuance Price under this Section 2(b)), the following shall be
applicable:

(i)                
 Issuance of Options. If the Company in any manner grants or sells
any Options and the lowest price per share for which one Ordinary Share is at
any time issuable upon the exercise of any such Option or upon conversion,
exercise or exchange of any Convertible Securities issuable upon exercise of any
such Option or otherwise pursuant to the terms thereof is less than the
Applicable Price, then such Ordinary Share shall be deemed to be outstanding and
to have been issued and sold by the Company at the time of the granting or sale
of such Option for such price per share. For purposes of this Section 2(b)(i),
the “lowest price per share for which one Ordinary Share is issuable upon the
exercise of any such Options or upon conversion, exercise or exchange of any
Convertible Securities issuable upon exercise of any such Option or otherwise
pursuant to the terms thereof” shall be equal to (1) the lower of (x) the sum of
the lowest amounts of consideration (if any) received or receivable by the
Company with respect to any one Ordinary Share upon the granting or sale of such
Option, upon exercise of such Option and upon conversion, exercise or exchange
of any Convertible Security issuable upon exercise of such Option or otherwise
pursuant to the terms thereof and (y) the lowest exercise price set forth in
such Option for which one Ordinary Share is issuable upon the exercise of any
such Options or upon conversion, exercise or exchange of any Convertible
Securities issuable upon exercise of any such Option or otherwise pursuant to
the terms thereof minus (2) the sum of all amounts paid or payable to the holder
of such Option (or any other Person) upon the granting or sale of such Option,
upon exercise of such Option and upon conversion, exercise or exchange of any
Convertible Security issuable upon exercise of such Option or otherwise pursuant
to the terms thereof plus the value of any other consideration received or
receivable by, or benefit conferred on, the holder of such Option (or any other Person). Except as
contemplated below, no further adjustment of the Exercise Price shall be made
upon the actual issuance of such Ordinary Shares or of such Convertible
Securities upon the exercise of such Options or otherwise pursuant to the terms
of or upon the actual issuance of such Ordinary Shares upon conversion, exercise
or exchange of such Convertible Securities. 

12





(ii)               
 Issuance of Convertible Securities. If the Company in any manner
issues or sells any Convertible Securities and the lowest price per share for
which one Ordinary Share is at any time issuable upon the conversion, exercise
or exchange thereof or otherwise pursuant to the terms thereof is less than the
Applicable Price, then such Ordinary Share shall be deemed to be outstanding and
to have been issued and sold by the Company at the time of the issuance or sale
of such Convertible Securities for such price per share. For the purposes of
this Section 2(b)(ii), the “lowest price per share for which one Ordinary Share
is issuable upon the conversion, exercise or exchange thereof or otherwise
pursuant to the terms thereof” shall be equal to (1) the lower of (x) the sum of
the lowest amounts of consideration (if any) received or receivable by the
Company with respect to one Ordinary Share upon the issuance or sale of the
Convertible Security and upon conversion, exercise or exchange of such
Convertible Security or otherwise pursuant to the terms thereof and (y) the
lowest conversion price set forth in such Convertible Security for which one
Ordinary Share is issuable upon conversion, exercise or exchange thereof or
otherwise pursuant to the terms thereof minus (2) the sum of all amounts paid or
payable to the holder of such Convertible Security (or any other Person) upon
the issuance or sale of such Convertible Security plus the value of any other
consideration received or receivable by, or benefit conferred on, the holder of
such Convertible Security (or any other Person). Except as contemplated below,
no further adjustment of the Exercise Price shall be made upon the actual
issuance of such Ordinary Shares upon conversion, exercise or exchange of such
Convertible Securities or otherwise pursuant to the terms thereof, and if any
such issuance or sale of such Convertible Securities is made upon exercise of
any Options for which adjustment of this Warrant has been or is to be made
pursuant to other provisions of this Section 2(b), except as contemplated below,
no further adjustment of the Exercise Price shall be made by reason of such
issuance or sale. 

(iii)              
 Change in Option Price or Rate of Conversion. If the purchase or
exercise price provided for in any Options, the additional consideration, if
any, payable upon the issue, conversion, exercise or exchange of any Convertible
Securities, or the rate at which any Convertible Securities are convertible into
or exercisable or exchangeable for Ordinary Shares increases or decreases at any
time (other than proportional changes in conversion or exercise prices, as
applicable, in connection with an event referred to in Section 2(a)), the
Exercise Price in effect at the time of such increase or decrease shall be
adjusted to the Exercise Price which would have been in effect at such time had
such Options or Convertible Securities provided for such increased or decreased
purchase price, additional consideration or increased or decreased conversion
rate, as the case may be, at the time initially granted, issued or sold. For
purposes of this Section 2(b)(iii), if the terms of any Option or Convertible
Security that was outstanding as of the Subscription Date are increased or
decreased in the manner described in the immediately preceding sentence, then such Option or
Convertible Security and the Ordinary Shares deemed issuable upon exercise,
conversion or exchange thereof shall be deemed to have been issued as of the
date of such increase or decrease. No adjustment pursuant to this Section 2(b)
shall be made if such adjustment would result in an increase of the Exercise
Price then in effect. 

13





(iv)              
 Calculation of Consideration Received. If any Option and/or
Convertible Security and/or Adjustment Right is issued in connection with the
issuance or sale or deemed issuance or sale of any other securities of the
Company (as determined by the Holder, the “Primary Security”, and such
Option and/or Convertible Security and/or Adjustment Right, the “Secondary
Securities”), together comprising one integrated transaction, (or one or
more transactions if such issuances or sales or deemed issuances or sales of
securities of the Company either (A) have at least one investor or purchaser in
common, (B) are consummated in reasonable proximity to each other and/or (C) are
consummated under the same plan of financing) the aggregate consideration per
Ordinary Share with respect to such Primary Security shall be deemed to be equal
to the difference of (x) the lowest price per share for which one Ordinary Share
was issued (or was deemed to be issued pursuant to Section 2(b)(i) or 2(b)(ii)
above, as applicable) in such integrated transaction solely with respect to such
Primary Security, minus (y) with respect to such Secondary Securities, the sum
of (I) the Black Scholes Consideration Value of each such Option, if any, (II)
the fair market value (as determined by the Holder in good faith) or the Black
Scholes Consideration Value, as applicable, of such Adjustment Right, if any,
and (III) the fair market value (as determined by the Holder) of such
Convertible Security, if any, in each case, as determined on a per share basis
in accordance with this Section 2(b)(iv); provided, that if any value
calculated above would result in a value less than $0, then the value shall be
deemed to be $0. If any Ordinary Shares, Options or Convertible Securities are
issued or sold or deemed to have been issued or sold for cash, the consideration
received therefor (for the purpose of determining the consideration paid for
such Ordinary Shares, Option or Convertible Security, but not for the purpose of
the calculation of the Black Scholes Consideration Value) will be deemed to be
the net amount of consideration received by the Company therefor. If any
Ordinary Shares, Options or Convertible Securities are issued or sold for a
consideration other than cash, the amount of such consideration received by the
Company (for the purpose of determining the consideration paid for such Ordinary
Shares, Option or Convertible Security, but not for the purpose of the
calculation of the Black Scholes Consideration Value) will be the fair value of
such consideration, except where such consideration consists of publicly traded
securities, in which case the amount of consideration received by the Company
for such securities will be the arithmetic average of the VWAPs of such security
for each of the five (5) Trading Days immediately preceding the date of receipt.
If any Ordinary Shares, Options or Convertible Securities are issued to the
owners of the non-surviving entity in connection with any merger in which the
Company is the surviving entity, the amount of consideration therefor (for the
purpose of determining the consideration paid for such Ordinary Shares, Option
or Convertible Security, but not for the purpose of the calculation of the Black
Scholes Consideration Value) will be deemed to be the fair value of such portion
of the net assets and business of the non-surviving entity as is
attributable to such Ordinary Shares, Options or Convertible Securities (as
the case may be). The fair value of any consideration other than cash or
publicly traded securities will be determined jointly by the Company and the
Holder. If such parties are unable to reach agreement within ten (10) days after
the occurrence of an event requiring valuation (the “Valuation Event”),
the fair value of such consideration will be determined within five (5) Trading
Days after the tenth (10th) day following such Valuation Event by an
independent, reputable appraiser jointly selected by the Company and the Holder.
The determination of such appraiser shall be final and binding upon all parties
absent manifest error and the fees and expenses of such appraiser shall be borne
by the Company. 

14





(v)           
     Record Date. If the Company takes a record of
the holders of Ordinary Shares for the purpose of entitling them (A) to receive
a dividend or other distribution payable in Ordinary Shares, Options or in
Convertible Securities or (B) to subscribe for or purchase Ordinary Shares,
Options or Convertible Securities, then such record date will be deemed to be
the date of the issuance or sale of the Ordinary Shares 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 right of subscription or
purchase (as the case may be). 

(c)                
Number of Warrant Shares. Simultaneously with any adjustment to the
Exercise Price pursuant to Section 2(a), the number of Warrant Shares that may
be purchased upon exercise of this Warrant shall be increased or decreased
proportionately, so that after such adjustment the aggregate Exercise Price
payable hereunder for the adjusted number of Warrant Shares shall be the same as
the aggregate Exercise Price in effect immediately prior to such adjustment
(without regard to any limitations on exercise contained herein). 

(d)                
Holder’s Right of Alternative Exercise Price Following Issuance of
Certain Options or Convertible Securities. In addition to and not in
limitation of the other provisions of this Section 2, if the Company in any
manner issues or sells or enters into any agreement to issue or sell, any
Ordinary Shares, Options or Convertible Securities (any such securities,
“Variable Price Securities”) after the Subscription Date that are
issuable pursuant to such agreement or convertible into or exchangeable or
exercisable for Ordinary Shares at a price which varies or may vary with the
market price of the Ordinary Shares, including by way of one or more reset(s) to
a fixed price, but exclusive of such formulations reflecting customary
anti-dilution provisions (such as share splits, share combinations, share
dividends and similar transactions) (each of the formulations for such variable
price being herein referred to as, the “Variable Price”), the Company
shall provide written notice thereof via facsimile and overnight courier to the
Holder on the date of such agreement and the issuance of such Convertible
Securities or Options. From and after the date the Company enters into such
agreement or issues any such Variable Price Securities, the Holder shall have
the right, but not the obligation, in its sole discretion to substitute the
Variable Price for the Exercise Price upon exercise of this Warrant by
designating in the Exercise Notice delivered upon any exercise of this Warrant
that solely for purposes of such exercise the Holder is relying on the Variable
Price rather than the Exercise Price then in effect. The Holder’s election to
rely on a Variable Price for a particular exercise of this Warrant shall not
obligate the Holder to rely on a Variable Price for any future exercises of this
Warrant. 

15




(e)             
    Share Combination Event Adjustment. If at any time and
from time to time on or after the Issuance Date there occurs any share split,
share dividend, share combination recapitalization or other similar transaction
involving the Ordinary Shares (each, a “Share Combination Event”, and
such date thereof, the “Share Combination Event Date”) and the Event
Market Price is less than the Exercise Price then in effect (after giving effect
to the adjustment in clause (b) above), then on the sixteenth (16th) Trading Day
immediately following such Share Combination Event, the Exercise Price then in
effect on such sixteenth (16th) Trading Day (after giving effect to the
adjustment in clause (b) above) shall be reduced (but in no event increased) to
the Event Market Price. For the avoidance of doubt, if the adjustment in the
immediately preceding sentence would otherwise result in an increase in the
Exercise Price hereunder, no adjustment shall be made. 

(f)                  
Other Events. In the event that the Company (or any Subsidiary (as
defined in the Securities Purchase Agreement)) shall take any action to which
the provisions hereof are not strictly applicable, or, if applicable, would not
operate to protect the Holder from dilution or if any event occurs of the type
contemplated by the provisions of this Section 2 but not expressly provided for
by such provisions (including, without limitation, the granting of share
appreciation rights, phantom share rights or other rights with equity features),
then the Company’s board of directors shall in good faith determine and
implement an appropriate adjustment in the Exercise Price and the number of
Warrant Shares (if applicable) so as to protect the rights of the Holder,
provided that no such adjustment pursuant to this Section 2(e) will increase the
Exercise Price or decrease the number of Warrant Shares as otherwise determined
pursuant to this Section 2, provided further that if the Holder does not accept
such adjustments as appropriately protecting its interests hereunder against
such dilution, then the Company’s board of directors and the Holder shall agree,
in good faith, upon an independent investment bank of nationally recognized
standing to make such appropriate adjustments, whose determination shall be
final and binding absent manifest error and whose fees and expenses shall be
borne by the Company. 

(g)                 
Calculations. All calculations under this Section 2 shall be made by
rounding to the nearest cent or the nearest 1/100th of a share, as
applicable. The number of Ordinary Shares 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 issuance or sale of
Ordinary Shares. 

(h)                 
Voluntary Adjustment By Company. The Company may at any time during the
term of this Warrant, with the prior written consent of the Required Holders (as
defined in the Securities Purchase Agreement), reduce the then current Exercise
Price to any amount and for any period of time deemed appropriate by the board
of directors of the Company. 

3.                   
RIGHTS UPON DISTRIBUTION OF ASSETS. In addition to any adjustments
pursuant to Section 2 above, if the Company shall declare or make any dividend
or other distribution of its assets (or rights to acquire its assets) to holders
of Ordinary Shares, by way of return of capital or otherwise (including, without
limitation, any distribution of cash, share or other securities, property,
options, evidence of indebtedness or any other assets by way of a dividend, spin
off, reclassification, corporate rearrangement, scheme of arrangement or other
similar transaction) (a “Distribution”), at any time after the issuance
of this Warrant, then, in each such case, the Holder shall be entitled to
participate in such Distribution to the same extent that the Holder would have participated therein if the Holder had held the
number of Ordinary Shares acquirable upon complete exercise of this Warrant
(without regard to any limitations or restrictions on exercise of this Warrant,
including without limitation, the Maximum Percentage) immediately before the
date on which a record is taken for such Distribution, or, if no such record is
taken, the date as of which the record holders of Ordinary Shares are to be
determined for the participation in such Distribution (provided, however, that to the extent that the Holder’s right to participate in any
such Distribution would result in the Holder and the other Attribution Parties
exceeding the Maximum Percentage, then the Holder shall not be entitled to
participate in such Distribution to such extent (and shall not be entitled to
beneficial ownership of such Ordinary Shares as a result of such Distribution
(and beneficial ownership) to such extent) and the portion of such Distribution
shall be held in abeyance for the benefit of the Holder until such time or
times, if ever, as its right thereto would not result in the Holder and the
other Attribution Parties exceeding the Maximum Percentage, at which time or
times the Holder shall be granted such Distribution (and any Distributions
declared or made on such initial Distribution or on any subsequent Distribution
held similarly in abeyance) to the same extent as if there had been no such
limitation). 

16





	4. 	
      PURCHASE RIGHTS; FUNDAMENTAL
  TRANSACTIONS.



(a)                
Purchase Rights. In addition to any adjustments pursuant to Section 2
above, if at any time the Company grants, issues or sells any Options,
Convertible Securities or rights to purchase share, warrants, securities or
other property pro rata to the record holders of any class of Ordinary Shares
(the “Purchase Rights”), then the Holder will be entitled to acquire,
upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights
which the Holder could have acquired if the Holder had held the number of
Ordinary Shares acquirable upon complete exercise of this Warrant (without
regard to any limitations or restrictions on exercise of this Warrant, including
without limitation, the Maximum Percentage) immediately before the date on which
a record is taken for the grant, issuance or sale of such Purchase Rights, or,
if no such record is taken, the date as of which the record holders of Ordinary
Shares are to be determined for the grant, issuance or sale of such Purchase
Rights (provided, however, that to the extent that the Holder’s
right to participate in any such Purchase Right would result in the Holder and
the other Attribution Parties exceeding the Maximum Percentage, then the Holder
shall not be entitled to participate in such Purchase Right to such extent (and
shall not be entitled to beneficial ownership of such Ordinary Shares as a
result of such Purchase Right (and beneficial ownership) to such extent) and
such Purchase Right to such extent shall be held in abeyance for the benefit of
the Holder until such time or times, if ever, as its right thereto would not
result in the Holder and the other Attribution Parties exceeding the Maximum
Percentage, at which time or times the Holder shall be granted such right (and
any Purchase Right granted, issued or sold on such initial Purchase Right or on
any subsequent Purchase Right held similarly in abeyance) to the same extent as
if there had been no such limitation). 


17




(b)                
Fundamental Transactions. The Company shall not enter into or be party to
a Fundamental Transaction unless the Successor Entity assumes in writing all of
the obligations of the Company under this Warrant and the other Transaction
Documents (as defined in the Securities Purchase Agreement) in accordance with
the provisions of this Section 4(b) pursuant to written agreements in form and
substance satisfactory to the Holder, including agreements to deliver to the Holder in exchange for this Warrant a security
of the Successor Entity evidenced by a written instrument substantially similar
in form and substance to this Warrant, including, without limitation, which is
exercisable for a corresponding number of shares of share capital equivalent to
the Ordinary 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 price which applies the
exercise price hereunder to such shares of share capital (but taking into
account the relative value of the Ordinary Shares pursuant to such Fundamental
Transaction and the value of such shares of share capital, such adjustments to
the number of shares of share capital and such exercise price being for the
purpose of protecting the economic value of this Warrant immediately prior to
the consummation of such Fundamental Transaction). Upon the consummation of each
Fundamental Transaction, the Successor Entity shall succeed to, and be
substituted for (so that from and after the date of the applicable Fundamental
Transaction, the provisions of this Warrant and the other Transaction Documents
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 and the other Transaction
Documents with the same effect as if such Successor Entity had been named as the
Company herein. Upon consummation of each Fundamental Transaction, the Successor
Entity shall deliver to the Holder confirmation that there shall be issued upon
exercise of this Warrant at any time after the consummation of the applicable
Fundamental Transaction, in lieu of the Ordinary Shares (or other securities,
cash, assets or other property (except such items still issuable under Sections
3 and 4(a) above, which shall continue to be receivable thereafter)) issuable
upon the exercise of this Warrant prior to the applicable Fundamental
Transaction, such shares of publicly traded common stock (or its equivalent) of
the Successor Entity (including its Parent Entity) which the Holder would have
been entitled to receive upon the happening of the applicable Fundamental
Transaction had this Warrant been exercised immediately prior to the applicable
Fundamental Transaction (without regard to any limitations on the exercise of
this Warrant), as adjusted in accordance with the provisions of this Warrant.
Notwithstanding the foregoing, and without limiting Section 1(f) hereof, the
Holder may elect, at its sole option, by delivery of written notice to the
Company to waive this Section 4(b) to permit the Fundamental Transaction without
the assumption of this Warrant. In addition to and not in substitution for any
other rights hereunder, prior to the consummation of each Fundamental
Transaction pursuant to which holders of Ordinary Shares are entitled to receive
securities or other assets with respect to or in exchange for Ordinary Shares (a
“Corporate Event”), the Company shall make appropriate provision to
insure that the Holder will thereafter have the right to receive upon an
exercise of this Warrant at any time after the consummation of the applicable
Fundamental Transaction but prior to the Expiration Date, in lieu of the
Ordinary Shares (or other securities, cash, assets or other property (except
such items still issuable under Sections 3 and 4(a) above, which shall continue
to be receivable thereafter)) issuable upon the exercise of the Warrant prior to
such Fundamental Transaction, such shares, securities, cash, assets or any other
property whatsoever (including warrants or other purchase or subscription
rights) which the Holder would have been entitled to receive upon the happening
of the applicable Fundamental Transaction had this Warrant been exercised
immediately prior to the applicable Fundamental Transaction (without regard to
any limitations on the exercise of this Warrant). Provision made pursuant to the
preceding sentence shall be in a form and substance reasonably satisfactory to
the Holder. 


18




(c)                  Black
Scholes Value. Notwithstanding the foregoing and the provisions of Section
4(b) above, at the request of the Holder delivered at any time commencing on the
earliest to occur of (x) the public disclosure of any Going Private Transaction,
(y) the consummation of any Going Private Transaction and (z) the Holder first
becoming aware of any Going Private Transaction through the date that is ninety
(90) days after the public disclosure of the consummation of such Going Private
Transaction by the Company pursuant to a Report on Form 6-K filed with the SEC,
the Company or the Successor Entity (as the case may be) shall purchase this
Warrant from the Holder on the date of such request by paying to the Holder cash
in an amount equal to the Black Scholes Value. 

(d)                
Application. The provisions of this Section 4 shall apply similarly and
equally to successive Fundamental Transactions and Corporate Events and shall be
applied as if this Warrant (and any such subsequent warrants) were fully
exercisable and without regard to any limitations on the exercise of this
Warrant (provided that the Holder shall continue to be entitled to the benefit
of the Maximum Percentage, applied however with respect to shares of share
capital registered under the 1934 Act and thereafter receivable upon exercise of
this Warrant (or any such other warrant)). 

5.                  
NONCIRCUMVENTION. The Company hereby covenants and agrees that the
Company will not, by amendment of its Certificate of Incorporation (as defined
in the Securities Purchase Agreement), Bylaws (as defined in the Securities
Purchase Agreement) or through any reorganization, transfer of assets,
consolidation, merger, scheme of arrangement, dissolution, issuance 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, and will at all times in
good faith carry out all the provisions of this Warrant and take all action as
may be required to protect the rights of the Holder. Without limiting the
generality of the foregoing, the Company (a) shall not increase the par value of
any Ordinary Shares receivable upon the exercise of this Warrant above the
Exercise Price then in effect, and (b) shall take all such actions as may be
necessary or appropriate in order that the Company may validly and legally issue
fully paid and non-assessable Ordinary Shares upon the exercise of this Warrant.
Notwithstanding anything herein to the contrary, if after the sixty (60)
calendar day anniversary of the Issuance Date, the Holder is not permitted to
exercise this Warrant in full for any reason (other than pursuant to
restrictions set forth in Section 1(f) hereof), the Company shall use its best
efforts to promptly remedy such failure, including, without limitation,
obtaining such consents or approvals as necessary to permit such exercise into
Ordinary Shares. 

6.                    WARRANT
HOLDER NOT DEEMED A SHAREHOLDER. Except as otherwise specifically provided
herein, the Holder, solely in its capacity as a holder of this Warrant, shall
not be entitled to vote or receive dividends or be deemed the holder of shares
of the Company for any purpose, nor shall anything contained in this Warrant be
construed to confer upon the Holder, solely in its capacity as the Holder of
this Warrant, any of the rights of a shareholder of the Company or any right to
vote, give or withhold consent to any corporate action (whether any
reorganization, issue of shares, reclassification of shares, consolidation,
merger, conveyance or otherwise), receive notice of meetings, receive dividends
or subscription rights, or otherwise, prior to the issuance to the Holder of the
Warrant Shares which it is then entitled to receive upon the due exercise of
this Warrant. In addition, nothing contained in this Warrant shall be construed as imposing any liabilities on the Holder to purchase
any securities (upon exercise of this Warrant or otherwise) or as a shareholder
of the Company, whether such liabilities are asserted by the Company or by
creditors of the Company. Notwithstanding this Section 6, the Company shall
provide the Holder with copies of the same notices and other information given
to the shareholders of the Company generally, contemporaneously with the giving
thereof to the shareholders. 

19





	7. 	
      REISSUANCE OF WARRANTS.



(a)                 Transfer
of Warrant. If this Warrant is to be transferred, the Holder shall surrender
this Warrant to the Company, whereupon the Company will forthwith issue and
deliver upon the order of the Holder a new Warrant (in accordance with Section
7(d)), registered as the Holder may request, representing the right to purchase
the number of Warrant Shares being transferred by the Holder and, if less than
the total number of Warrant Shares then underlying this Warrant is being
transferred, a new Warrant (in accordance with Section 7(d)) to the Holder
representing the right to purchase the number of Warrant Shares not being
transferred. 

(b)                
Lost, Stolen or Mutilated Warrant. Upon receipt by the Company of
evidence reasonably satisfactory to the Company of the loss, theft, destruction
or mutilation of this Warrant (as to which a written certification and the
indemnification contemplated below shall suffice as such evidence), and, in the
case of loss, theft or destruction, of any indemnification undertaking by the
Holder to the Company in customary and reasonable form and, in the case of
mutilation, upon surrender and cancellation of this Warrant, the Company shall
execute and deliver to the Holder a new Warrant (in accordance with Section
7(d)) representing the right to purchase the Warrant Shares then underlying this
Warrant. 

(c)                
Exchangeable for Multiple Warrants. This Warrant is exchangeable, upon
the surrender hereof by the Holder at the principal office of the Company, for a
new Warrant or Warrants (in accordance with Section 7(d)) representing in the
aggregate the right to purchase the number of Warrant Shares then underlying
this Warrant, and each such new Warrant will represent the right to purchase
such portion of such Warrant Shares as is designated by the Holder at the time
of such surrender; provided, however, no warrants for fractional Ordinary Shares
shall be given. 

(d)                
Issuance of New Warrants. Whenever the Company is required to issue a new
Warrant pursuant to the terms of this Warrant, such new Warrant (i) shall be of
like tenor with this Warrant, (ii) shall represent, as indicated on the face of
such new Warrant, the right to purchase the Warrant Shares then underlying this
Warrant (or in the case of a new Warrant being issued pursuant to Section 7(a)
or Section 7(c), the Warrant Shares designated by the Holder which, when added
to the number of Ordinary Shares underlying the other new Warrants issued in
connection with such issuance, does not exceed the number of Warrant Shares then
underlying this Warrant), (iii) shall have an issuance date, as indicated on the
face of such new Warrant which is the same as the Issuance Date, and (iv) shall
have the same rights and conditions as this Warrant. 

8.                  
NOTICES. Whenever notice is required to be given under this Warrant,
unless otherwise provided herein, such notice shall be given in accordance with
Section 9(f) of the Securities Purchase Agreement. The Company shall provide the Holder with
prompt written notice of all actions taken pursuant to this Warrant (other than
the issuance of Ordinary Shares upon exercise in accordance with the terms
hereof), including in reasonable detail a description of such action and the
reason therefor. Without limiting the generality of the foregoing, the Company
will give written notice to the Holder (i) immediately upon each adjustment of
the Exercise Price and the number of Warrant Shares, setting forth in reasonable
detail, and certifying, the calculation of such adjustment(s), (ii) at least ten
Trading Days prior to the date on which the Company closes its books or takes a
record (A) with respect to any dividend or distribution upon the Ordinary
Shares, (B) with respect to any grants, issuances or sales of any Options,
Convertible Securities or rights to purchase shares, warrants, securities or
other property to holders of Ordinary Shares or (C) for determining rights to
vote with respect to any Fundamental Transaction, dissolution or liquidation,
provided in each case that such information shall be made known to the public
prior to or in conjunction with such notice being provided to the Holder, and
(iii) at least ten (10) Trading Days prior to the consummation of any
Fundamental Transaction. To the extent that any notice provided hereunder
constitutes, or contains, material, non-public information regarding the Company
or any of its Subsidiaries, the Company shall simultaneously file such notice
with the SEC (as defined in the Securities Purchase Agreement) pursuant to a
Current Report on Form 8-K. It is expressly understood and agreed that the time
of execution specified by the Holder in each Exercise Notice shall be definitive
and may not be disputed or challenged by the Company. 


20




9.                    AMENDMENT AND
WAIVER. Except as otherwise provided herein, the provisions of this Warrant
(other than Section 1(f)) may be amended and the Company may take any action
herein prohibited, or omit to perform any act herein required to be performed by
it, only if the Company has obtained the written consent of the Holder. No
waiver shall be effective unless it is in writing and signed by an authorized
representative of the waiving party. 

10.                
SEVERABILITY. If any provision of this Warrant is prohibited by law or
otherwise determined to be invalid or unenforceable by a court of competent
jurisdiction, the provision that would otherwise be prohibited, invalid or
unenforceable shall be deemed amended to apply to the broadest extent that it
would be valid and enforceable, and the invalidity or unenforceability of such
provision shall not affect the validity of the remaining provisions of this
Warrant so long as this Warrant as so modified continues to express, without
material change, the original intentions of the parties as to the subject matter
hereof and the prohibited nature, invalidity or unenforceability of the
provision(s) in question does not substantially impair the respective
expectations or reciprocal obligations of the parties or the practical
realization of the benefits that would otherwise be conferred upon the parties.
The parties will endeavor in good faith negotiations to replace the prohibited,
invalid or unenforceable provision(s) with a valid provision(s), the effect of
which comes as close as possible to that of the prohibited, invalid or
unenforceable provision(s). 

11.                
GOVERNING LAW. This Warrant shall be governed by and construed and
enforced in accordance with, and all questions concerning the construction,
validity, interpretation and performance of this Warrant shall be governed by,
the internal laws of the State of New York, without giving effect to any choice
of law or conflict of law provision or rule (whether of the State of New York or
any other jurisdictions) that would cause the application of the laws of any
jurisdictions other than the State of New York. The Company hereby irrevocably
waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof to the
Company at the address set forth in Section 9(f) of the Securities Purchase
Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. The Company hereby irrevocably submits to
the exclusive jurisdiction of the state and federal courts sitting in The City
of New York, Borough of Manhattan, for the adjudication of any dispute hereunder
or in connection herewith or with any transaction contemplated hereby or
discussed herein, and hereby irrevocably waives, and agrees not to assert in any
suit, action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is brought
in an inconvenient forum or that the venue of such suit, action or proceeding is
improper. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. Nothing contained herein shall
be deemed or operate to preclude the Holder from bringing suit or taking other
legal action against the Company in any other jurisdiction to collect on the
Company’s obligations to the Holder, to realize on any collateral or any other
security for such obligations, or to enforce a judgment or other court ruling in
favor of the Holder. The Company hereby appoints Corporation Service Company, 80
State Street, Albany, New York 12207-2543, as its agent for service of process
in New York. If service of process is effected pursuant to the above sentence,
such service will be deemed sufficient under New York law and the Company shall
not assert otherwise. THE COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY
HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY
DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS WARRANT OR ANY
TRANSACTION CONTEMPLATED HEREBY.

21





12.              
 CONSTRUCTION; HEADINGS. This Warrant shall be deemed to be jointly
drafted by the Company and the Holder and shall not be construed against any
Person as the drafter hereof. The headings of this Warrant are for convenience
of reference and shall not form part of, or affect the interpretation of, this
Warrant. Terms used in this Warrant but defined in the other Transaction
Documents shall have the meanings ascribed to such terms on the Closing Date (as
defined in the Securities Purchase Agreement) in such other Transaction
Documents unless otherwise consented to in writing by the Holder. 

	13. 	
      DISPUTE RESOLUTION.




	 	(a) 	
      Submission to Dispute
Resolution.



(i)                  In
the case of a dispute relating to the Exercise Price, the Closing Sale Price,
the Bid Price, Black Scholes Consideration Value, Black Scholes Value or fair
market value or the arithmetic calculation of the number of Warrant Shares (as
the case may be) (including, without limitation, a dispute relating to the
determination of any of the foregoing), the Company or the Holder (as the case
may be) shall submit the dispute to the other party via facsimile (A) if by the
Company, within two (2) Business Days after the occurrence of the circumstances
giving rise to such dispute or (B) if by the Holder, at any time after the
Holder learned of the circumstances giving rise to such dispute. If the Holder
and the Company are unable to promptly resolve such dispute relating to such
Exercise Price, such Closing Sale Price, such Bid Price, such Black Scholes
Consideration Value, Black Scholes Value or such fair market value or such arithmetic calculation of the number of
Warrant Shares (as the case may be), at any time after the second
(2nd) Business Day following such initial notice by the Company or
the Holder (as the case may be) of such dispute to the Company or the Holder (as
the case may be), then the Holder may, at its sole option, select an
independent, reputable investment bank to resolve such dispute. 

22





(ii)                
The Holder and the Company shall each deliver to such investment bank (A) a copy
of the initial dispute submission so delivered in accordance with the first
sentence of this Section 13 and (B) written documentation supporting its
position with respect to such dispute, in each case, no later than 5:00 p.m.
(New York time) by the fifth (5th) Business Day immediately following
the date on which the Holder selected such investment bank (the “Dispute
Submission Deadline”) (the documents referred to in the immediately
preceding clauses (A) and (B) are collectively referred to herein as the
“Required Dispute Documentation”) (it being understood and agreed
that if either the Holder or the Company fails to so deliver all of the Required
Dispute Documentation by the Dispute Submission Deadline, then the party who
fails to so submit all of the Required Dispute Documentation shall no longer be
entitled to (and hereby waives its right to) deliver or submit any written
documentation or other support to such investment bank with respect to such
dispute and such investment bank shall resolve such dispute based solely on the
Required Dispute Documentation that was delivered to such investment bank prior
to the Dispute Submission Deadline). Unless otherwise agreed to in writing by
both the Company and the Holder or otherwise requested by such investment bank,
neither the Company nor the Holder shall be entitled to deliver or submit any
written documentation or other support to such investment bank in connection
with such dispute (other than the Required Dispute Documentation). 

(iii)                 The
Company and the Holder shall cause such investment bank to determine the
resolution of such dispute and notify the Company and the Holder of such
resolution no later than ten (10) Business Days immediately following the
Dispute Submission Deadline. The fees and expenses of such investment bank shall
be borne solely by the Company, and such investment bank’s resolution of such
dispute shall be final and binding upon all parties absent manifest error. 

(b)                
Miscellaneous. The Company expressly acknowledges and agrees that (i)
this Section 13 constitutes an agreement to arbitrate between the Company and
the Holder (and constitutes an arbitration agreement) under the rules then in
effect under § 7501, et seq. of the New York Civil Practice Law and Rules
(“CPLR”) and that the Holder is authorized to apply for an order to
compel arbitration pursuant to CPLR § 7503(a) in order to compel compliance with
this Section 13, (ii) a dispute relating to the Exercise Price includes, without
limitation, disputes as to (A) whether an issuance or sale or deemed issuance or
sale of Ordinary Shares occurred under Section 2(b), (B) the consideration per
share at which an issuance or deemed issuance of Ordinary Shares occurred, (C)
whether any issuance or sale or deemed issuance or sale of Ordinary Shares was
an issuance or sale or deemed issuance or sale of Excluded Securities, (D)
whether an agreement, instrument, security or the like constitutes and Option or
Convertible Security and (E) whether a Dilutive Issuance occurred, (iii) the
terms of this Warrant and each other applicable Transaction Document shall serve
as the basis for the selected investment bank’s resolution of the applicable
dispute, such investment bank shall be entitled (and is hereby expressly
authorized) to make all findings, determinations and the like that such
investment bank determines are required to be made by such investment bank in
connection with its resolution of such dispute (including, without limitation,
determining (A) whether an issuance or sale or deemed issuance or sale of
Ordinary Shares occurred under Section 2(b), (B) the consideration per share at
which an issuance or deemed issuance of Ordinary Shares occurred, (C) whether
any issuance or sale or deemed issuance or sale of Ordinary Shares was an
issuance or sale or deemed issuance or sale of Excluded Securities, (D) whether
an agreement, instrument, security or the like constitutes and Option or
Convertible Security and (E) whether a Dilutive Issuance occurred) and in
resolving such dispute such investment bank shall apply such findings,
determinations and the like to the terms of this Warrant and any other
applicable Transaction Documents, (iv) the Holder (and only the Holder), in its
sole discretion, shall have the right to submit any dispute described in this
Section 13 to any state or federal court sitting in The City of New York,
Borough of Manhattan in lieu of utilizing the procedures set forth in this
Section 13 and (v) nothing in this Section 13 shall limit the Holder from
obtaining any injunctive relief or other equitable remedies (including, without
limitation, with respect to any matters described in this Section 13). 

23





14.                
REMEDIES, CHARACTERIZATION, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE
RELIEF. The remedies provided in this Warrant shall be cumulative and in
addition to all other remedies available under this Warrant and the other
Transaction Documents, at law or in equity (including a decree of specific
performance and/or other injunctive relief), and nothing herein shall limit the
right of the Holder to pursue actual and consequential damages for any failure
by the Company to comply with the terms of this Warrant. The Company covenants
to the Holder that there shall be no characterization concerning this instrument
other than as expressly provided herein. Amounts set forth or provided for
herein with respect to payments, exercises and the like (and the computation
thereof) shall be the amounts to be received by the Holder and shall not, except
as expressly provided herein, be subject to any other obligation of the Company
(or the performance thereof). The Company acknowledges that a breach by it of
its obligations hereunder will cause irreparable harm to the Holder and that the
remedy at law for any such breach may be inadequate. The Company therefore
agrees that, in the event of any such breach or threatened breach, the holder of
this Warrant shall be entitled, in addition to all other available remedies, to
an injunction restraining any breach, without the necessity of showing economic
loss and without any bond or other security being required. The Company shall
provide all information and documentation to the Holder that is requested by the
Holder to enable the Holder to confirm the Company’s compliance with the terms
and conditions of this Warrant (including, without limitation, compliance with
Section 2 hereof). The issuance of shares and certificates for shares as
contemplated hereby upon the exercise of this Warrant shall be made without
charge to the Holder or such shares for any issuance tax or other costs in
respect thereof, provided that the Company shall not be required to pay any tax
which may be payable in respect of any transfer involved in the issuance and
delivery of any certificate in a name other than the Holder or its agent on its
behalf. 

15.                  PAYMENT
OF COLLECTION, ENFORCEMENT AND OTHER COSTS. If (a) this Warrant is placed in
the hands of an attorney for collection or enforcement or is collected or
enforced through any legal proceeding or the holder otherwise takes action to
collect amounts due under this Warrant or to enforce the provisions of this
Warrant or (b) there occurs any bankruptcy, reorganization, receivership of the
company or other proceedings affecting company creditors’ rights and involving a
claim under this Warrant, then the Company shall pay the reasonable costs
incurred by the Holder for such collection, enforcement or action or in
connection with such bankruptcy, reorganization, receivership or other
proceeding, including, without limitation, attorneys’ fees and
disbursements.

24





16.                
TRANSFER. This Warrant may be offered for sale, sold, transferred or
assigned without the consent of the Company. 

17.               
 CERTAIN DEFINITIONS. For purposes of this Warrant, the following
terms shall have the following meanings: 


(a)                 “

1933 Act” means the
Securities Act of 1933, as amended, and the rules and regulations thereunder.


(b)                
“1934 Act” means the Securities Exchange Act of 1934, as amended, and the
rules and regulations thereunder. 

(c)                
“Adjustment Right” means any right granted with respect to any securities
issued in connection with, or with respect to, any issuance or sale (or deemed
issuance or sale in accordance with Section 2) of Ordinary Shares (other than
rights of the type described in Section 3 and 4 hereof) that could result in a
decrease in the net consideration received by the Company in connection with, or
with respect to, such securities (including, without limitation, any cash
settlement rights, cash adjustment or other similar rights). 

(d)               
“Affiliate” means, with respect to any Person, any other Person that
directly or indirectly controls, is controlled by, or is under common control
with, such Person, it being understood for purposes of this definition that
“control” of a Person means the power directly or indirectly either to vote 10%
or more of the shares having ordinary voting power for the election of directors
of such Person or direct or cause the direction of the management and policies
of such Person whether by contract or otherwise. 

(e)               
“Approved Share Plan” means any employee benefit plan which has been
approved by the board of directors of the Company prior to or subsequent to the
date hereof pursuant to which Ordinary Shares and standard options to purchase
Ordinary Shares may be issued to any employee, consultant, officer or director
for services provided to the Company in their capacity as such.

(f)               
“Attribution Parties” means, collectively, the following Persons and
entities: (i) any investment vehicle, including, any funds, feeder funds or
managed accounts, currently, or from time to time after the Issuance Date,
directly or indirectly managed or advised by the Holder’s investment manager or
any of its Affiliates or principals, (ii) any direct or indirect Affiliates of
the Holder or any of the foregoing, (iii) any Person acting or who could be
deemed to be acting as a Group together with the Holder or any of the foregoing
and (iv) any other Persons whose beneficial ownership of the Company’s Ordinary
Shares would or could be aggregated with the Holder’s and the other Attribution
Parties for purposes of Section 13(d) of the 1934 Act. For clarity, the purpose of the foregoing is to
subject collectively the Holder and all other Attribution Parties to the Maximum
Percentage.

25





(g)              
“Bid Price” means, for any security as of the particular time of
determination, the bid price for such security on the Principal Market as
reported by Bloomberg as of such time of determination, or, if the Principal
Market is not the principal securities exchange or trading market for such
security, the bid price of such security on the principal securities exchange or
trading market where such security is listed or traded as reported by Bloomberg
as of such time of determination, or if the foregoing does not apply, the bid
price of such security in the over-the-counter market on the electronic bulletin
board for such security as reported by Bloomberg as of such time of
determination, or, if no bid price is reported for such security by Bloomberg as
of such time of determination, the average of the bid prices of any market
makers for such security as reported in the “pink sheets” by OTC Markets Group
Inc. (formerly Pink Sheets LLC) as of such time of determination. If the Bid
Price cannot be calculated for a security as of the particular time of
determination on any of the foregoing bases, the Bid Price of such security as
of such time of determination shall be the fair market value as mutually
determined by the Company and the Holder. If the Company and the Holder are
unable to agree upon the fair market value of such security, then such dispute
shall be resolved in accordance with the procedures in Section 13. All such
determinations shall be appropriately adjusted for any share dividend, share
split, share combination or other similar transaction during such period. 

(h)              
 “Black Scholes Consideration Value” means the value of the
applicable Option, Convertible Security or Adjustment Right (as the case may be)
as of the date of issuance thereof calculated using the Black Scholes Option
Pricing Model obtained from the “OV” function on Bloomberg utilizing (i) an
underlying price per share equal to the Closing Sale Price of the Ordinary
Shares on the Trading Day immediately preceding the public announcement of the
execution of definitive documents with respect to the issuance of such Option or
Convertible Security (as the case may be), (ii) a risk-free interest rate
corresponding to the U.S. Treasury rate for a period equal to the remaining term
of such Option, Convertible Security or Adjustment Right (as the case may be) as
of the date of issuance of such Option, Convertible Security or Adjustment Right
(as the case may be), (iii) a zero cost of borrow and (iv) an expected
volatility equal to the greater of 100% and the 30 day volatility obtained from
the “HVT” function on Bloomberg (determined utilizing a 365 day annualization
factor) as of the Trading Day immediately following the date of issuance of such
Option, Convertible Security or Adjustment Right (as the case may be). 

(i)               
 “Black Scholes Value” means the value of the unexercised portion of
this Warrant remaining on the date of the Holder’s request pursuant to Section
4(c), which value is calculated using the Black Scholes Option Pricing Model
obtained from the “OV” function on Bloomberg utilizing (i) an underlying price
per share equal to the greater of (1) the highest Closing Sale Price of the
Ordinary Shares during the period beginning on the Trading Day immediately
preceding the announcement of the applicable Going Private Transaction (or the
consummation of the applicable Going Private Transaction, if earlier) and ending
on the Trading Day of the Holder’s request pursuant to Section 4(c) and (2) the
sum of the price per share being offered in cash in the applicable Going Private
Transaction (if any) plus the value of the non-cash consideration being offered
in the applicable Going Private Transaction (if any), (ii) a strike price equal to the Exercise Price in effect on the date of the
Holder’s request pursuant to Section 4(c), (iii) a risk-free interest rate
corresponding to the U.S. Treasury rate for a period equal to the greater of (1)
the remaining term of this Warrant as of the date of the Holder’s request
pursuant to Section 4(c) and (2) the remaining term of this Warrant as of the
date of consummation of the applicable Going Private Transaction or as of the
date of the Holder’s request pursuant to Section 4(c) if such request is prior
to the date of the consummation of the applicable Going Private Transaction,
(iv) a zero cost of borrow and (v) an expected volatility equal to the greater
of 100% and the 30 day volatility obtained from the “HVT” function on Bloomberg
(determined utilizing a 365 day annualization factor) as of the Trading Day
immediately following the earliest to occur of (A) the public disclosure of the
applicable Going Private Transaction, (B) the consummation of the applicable
Going Private Transaction and (C) the date on which the Holder first became
aware of the applicable Going Private Transaction. 

26





(j)            
      “Bloomberg” means Bloomberg, L.P. 

(k)              
   “Business Day” means any day other than Saturday, Sunday or
other day on which commercial banks in The City of New York are authorized or
required by law to remain closed. 

(l)                  
“Closing Sale Price” means, for any security as of any date, the last
closing trade price for such security on the Principal Market, as reported by
Bloomberg, or, if the Principal Market begins to operate on an extended hours
basis and does not designate the closing trade price, then the last trade price
of such security prior to 4:00:00 p.m., New York time, as reported by Bloomberg,
or, if the Principal Market is not the principal securities exchange or trading
market for such security, the last trade price of such security on the principal
securities exchange or trading market where such security is listed or traded as
reported by Bloomberg, or if the foregoing does not apply, the last trade price
of such security in the over-the-counter market on the electronic bulletin board
for such security as reported by Bloomberg, or, if no last trade price is
reported for such security by Bloomberg, the average of the ask prices of any
market makers for such security as reported in the “pink sheets” by OTC Markets
Group Inc. (formerly Pink Sheets LLC). If the Closing Sale Price cannot be
calculated for a security on a particular date on any of the foregoing bases,
the Closing Sale Price of such security on such date shall be the fair market
value as mutually determined by the Company and the Holder. If the Company and
the Holder are unable to agree upon the fair market value of such security, then
such dispute shall be resolved in accordance with the procedures in Section 13.
All such determinations shall be appropriately adjusted for any share dividend,
share split, share combination or other similar transaction during such period.


(m)                 “Ordinary
Shares” means (i) the Company’s shares of ordinary shares, $0.01 par value
per share, and (ii) any shares into which such ordinary shares shall have been
changed or any shares resulting from a reclassification of such ordinary shares.


(n)                
“Convertible Securities” means any shares or other security (other than
Options) that is at any time and under any circumstances, directly or
indirectly, convertible into, exercisable or exchangeable for, or which
otherwise entitles the holder thereof to acquire, any Ordinary Shares. 

27




(o)                 
“Eligible Market” means The New York Stock Exchange, the NYSE MKT, the
Nasdaq Global Market, the Nasdaq Capital Market or the Principal Market. 

(p)             
    “Event Market Price” means, with respect to any
Share Combination Event Date, the quotient determined by dividing (x) the sum of
the VWAP of the Ordinary Shares for each of the five (5) lowest Trading Days
during the twenty (20) consecutive Trading Day period ending and including the
Trading Day immediately preceding the sixteenth (16th) Trading Day after such
Share Combination Event Date, divided by (y) five (5). 

(q)                  “Excluded
Securities” means (i) Ordinary Shares or standard options to purchase
Ordinary Shares issued to consultants, directors, officers or employees of the
Company for services rendered to the Company in their capacity as such pursuant
to an Approved Share Plan (as defined above), provided that (A) all such
issuances (taking into account the Ordinary Shares issuable upon exercise of
such options) after the Subscription Date pursuant to this clause (i) do not, in
the aggregate, exceed more than 10% of the Ordinary Shares issued and
outstanding immediately prior to the Subscription Date and (B) the exercise
price of any such options is not lowered, none of such options are amended to
increase the number of shares issuable thereunder and none of the terms or
conditions of any such options are otherwise materially changed in any manner
that adversely affects any of the Buyers; (ii) Ordinary Shares issued upon the
conversion or exercise of Convertible Securities (other than standard options to
purchase Ordinary Shares issued pursuant to an Approved Share Plan that are
covered by clause (i) above) issued prior to the Subscription Date, provided
that the conversion price of any such Convertible Securities (other than
standard options to purchase Ordinary Shares issued pursuant to an Approved
Share Plan that are covered by clause (i) above) is not lowered, none of such
Convertible Securities (other than standard options to purchase Ordinary Shares
issued pursuant to an Approved Share Plan that are covered by clause (i) above)
are amended to increase the number of shares issuable thereunder and none of the
terms or conditions of any such Convertible Securities (other than standard
options to purchase Ordinary Shares issued pursuant to an Approved Share Plan
that are covered by clause (i) above) are otherwise materially changed in any
manner that adversely affects any of the Buyers; (iii) the Ordinary Shares
issuable upon exercise of the Registered Warrants; provided, that the terms of
the Registered Warrant are not amended, modified or changed on or after the
Subscription Date (other than antidilution adjustments pursuant to the terms
thereof in effect as of the Subscription Date) and (iv) Ordinary Shares issued
in connection with strategic alliances, strategic mergers and acquisitions and
strategic partnerships, provided that (x) the primary purpose of such issuance
is not to raise capital as determined in good faith by the Buyers, (y) the
purchaser or acquirer of Ordinary Shares in such issuance solely consists of
either (1) the actual participants in such strategic alliance or strategic
partnership, (2) the actual owners of such assets or securities acquired in such
merger or acquisition or (3) the shareholders, partners or members of the
foregoing Persons, and (z) the number or amount (as the case may be) of such
Ordinary Shares issued to such Person by the Company shall not be
disproportionate to such Person’s actual participation in such strategic
alliance or strategic partnership or ownership of such assets or securities to
be acquired by the Company (as applicable). 

28




(r)                 
“Expiration Date” means the date that is the [ ]4 anniversary
of the Issuance Date or, if such date falls on a day other than a Business Day
or on which trading does not take place on the Principal Market (a
“Holiday”), the next date that is not a Holiday; provided, that
for each Business Day that the Company cannot or does not honor any Exercise
Notice (beyond the Share Delivery Date), the Expiration Date shall be extended
by one Business Day. 

(s)                
“Fundamental Transaction” means (A) that the Company shall, directly or
indirectly, including through subsidiaries, Affiliates or otherwise, in one or
more related transactions, (i) consolidate or merge with or into (whether or not
the Company is the surviving corporation) another Subject Entity, or (ii) sell,
assign, transfer, convey or otherwise dispose of all or substantially all of the
properties or assets of the Company or any of its “significant subsidiaries” (as
defined in Rule 1-02 of Regulation S-X) to one or more Subject Entities, or
(iii) make, or allow one or more Subject Entities to make, or allow the Company
to be subject to or have its Ordinary Shares be subject to or party to one or
more Subject Entities making, a purchase, tender or exchange offer that is
accepted by the holders of at least either (x) 50% of the outstanding Ordinary
Shares, (y) 50% of the outstanding Ordinary Shares calculated as if any Ordinary
Shares held by all Subject Entities making or party to, or Affiliated with any
Subject Entities making or party to, such purchase, tender or exchange offer
were not outstanding; or (z) such number of Ordinary Shares such that all
Subject Entities making or party to, or Affiliated with any Subject Entity
making or party to, such purchase, tender or exchange offer, become collectively
the beneficial owners (as defined in Rule 13d-3 under the 1934 Act) of at least
50% of the outstanding Ordinary Shares, or (iv) consummate a stock or share
purchase agreement or other business combination (including, without limitation,
a reorganization, recapitalization, spin-off or scheme of arrangement) with one
or more Subject Entities whereby all such Subject Entities, individually or in
the aggregate, acquire, either (x) at least 50% of the outstanding Ordinary
Shares, (y) at least 50% of the outstanding Ordinary Shares calculated as if any
Ordinary Shares held by all the Subject Entities making or party to, or
Affiliated with any Subject Entity making or party to, such share purchase
agreement or other business combination were not outstanding; or (z) such number
of Ordinary Shares such that the Subject Entities become collectively the
beneficial owners (as defined in Rule 13d-3 under the 1934 Act) of at least 50%
of the outstanding Ordinary Shares, or (v) reorganize, recapitalize or
reclassify its Ordinary Shares, (B) that the Company shall, directly or
indirectly, including through subsidiaries, Affiliates or otherwise, in one or
more related transactions, allow any Subject Entity individually or the Subject
Entities in the aggregate to be or become the “beneficial owner” (as defined in
Rule 13d-3 under the 1934 Act), directly or indirectly, whether through
acquisition, purchase, assignment, conveyance, tender, tender offer, exchange,
reduction in outstanding Ordinary Shares, merger, consolidation, business
combination, reorganization, recapitalization, spin-off, scheme of arrangement,
reorganization, recapitalization or reclassification or otherwise in any manner
whatsoever, of either (x) at least 50% of the aggregate ordinary voting power
represented by issued and outstanding Ordinary Shares, (y) at least 50% of the
aggregate ordinary voting power represented by issued and outstanding Ordinary
Shares not held by all such Subject Entities as of the date of this Warrant
calculated as if any Ordinary Shares held by all such Subject Entities were not
outstanding, or (z) a percentage of the aggregate ordinary voting power represented by issued and outstanding Ordinary
Shares or other equity securities of the Company sufficient to allow such
Subject Entities to effect a statutory short form merger or other transaction
requiring other shareholders of the Company to surrender their Ordinary Shares
without approval of the shareholders of the Company or (C) directly or
indirectly, including through subsidiaries, Affiliates or otherwise, in one or
more related transactions, the issuance of or the entering into any other
instrument or transaction structured in a manner to circumvent, or that
circumvents, the intent of this definition in which case this definition shall
be construed and implemented in a manner otherwise than in strict conformity
with the terms of this definition to the extent necessary to correct this
definition or any portion of this definition which may be defective or
inconsistent with the intended treatment of such instrument or transaction. 

________________________________
4 Insert in
Series A Warrants: third (3rd) 
Insert in Series B Warrants: six
(6) month 


29





(t)                 
      “Going Private Transaction” means any
Fundamental Transaction after which this Warrant ceases to be exercisable into
shares both (i) registered pursuant to the 1934 Act and (ii) listed on an
Eligible Market. 

(u)               
       “Group” means a “group” as that term
is used in Section 13(d) of the 1934 Act and as defined in Rule 13d-5
thereunder. 

(v)                  
    “Market Price” means, with respect to any given
exercise of this Warrant, the quotient of (A) the sum of the VWAP of the
Ordinary Shares for each Trading Day of the five (5) lowest Trading Days during
the twelve (12) consecutive Trading Day period ending and including the Trading
Day immediately prior to the applicable Exercise Date, divided by (B) five (5).


(w)                   
   [INSERT IN SERIES B WARRANT ONLY: “Market Price
Percentage” means, with respect to any given exercise of this Warrant, (x)
if the Market Price is less than $5.00 (as adjusted for stock splits, stock
dividends, recapitalizations and similar events), 90% and (y) if the Market
Price is greater than or equal to $5.00 (as adjusted for stock splits, stock
dividends, recapitalizations and similar events), 88%.][INSERT IN SERIES A
WARRANT ONLY: [Intentionally Omitted].] (x) “Net Cash Settlement Price”
means, with respect to any given exercise of this Warrant, the higher of (x) the
applicable Market Price and (y) the VWAP on the Exercise Date. 

(y)                      
 “Options” means any rights, warrants or options to subscribe for or
purchase Ordinary Shares or Convertible Securities. 

(z)                       
“Parent Entity” of a Person means an entity that, directly or indirectly,
controls the applicable Person and whose common stock or equivalent equity
security is quoted or listed on an Eligible Market, or, if there is more than
one such Person or Parent Entity, the Person or Parent Entity with the largest
public market capitalization as of the date of consummation of the Fundamental
Transaction. 

(aa)                     
“Person” means an individual, a limited liability company, a partnership,
a joint venture, a corporation, a trust, an unincorporated organization, any
other entity or a government or any department or agency thereof. 

30




(bb)             
 “Principal Market” means The Nasdaq Global Select Market. 

(cc)              
 “SEC” means the United States Securities and Exchange Commission or
the successor thereto. 

(dd)              
“Subject Entity” means any Person, Persons or Group or any Affiliate or
associate of any such Person, Persons or Group. 

(ee)              
“Successor Entity” means the Person (or, if so elected by the Holder, the
Parent Entity) formed by, resulting from or surviving any Fundamental
Transaction or the Person (or, if so elected by the Holder, the Parent Entity)
with which such Fundamental Transaction shall have been entered into. 

(ff)              
 “Trading Day” means, as applicable, (x) with respect to all price
or trading volume determinations relating to the Ordinary Shares, any day on
which the Ordinary Shares are traded on the Principal Market, or, if the
Principal Market is not the principal trading market for the Ordinary Shares,
then on the principal securities exchange or securities market on which the
Ordinary Shares is then traded, provided that “Trading Day” shall not include
any day on which the Ordinary Shares are scheduled to trade on such exchange or
market for less than 4.5 hours or any day that the Ordinary Shares are suspended
from trading during the final hour of trading on such exchange or market (or if
such exchange or market does not designate in advance the closing time of
trading on such exchange or market, then during the hour ending at 4:00:00 p.m.,
New York time) unless such day is otherwise designated as a Trading Day in
writing by the Holder or (y) with respect to all determinations other than price
determinations relating to the Ordinary Shares, any day on which The New York
Stock Exchange (or any successor thereto) is open for trading of securities.

(gg)             
 “VWAP” means, for any security as of any date, the dollar
volume-weighted average price for such security on the Principal Market (or, if
the Principal Market is not the principal trading market for such security, then
on the principal securities exchange or securities market on which such security
is then traded) during the period beginning at 9:30:01 a.m., New York time, and
ending at 4:00:00 p.m., New York time, as reported by Bloomberg through its “HP”
function (set to weighted average) or, if the foregoing does not apply, the
dollar volume-weighted average price of such security in the over-the-counter
market on the electronic bulletin board for such security during the period
beginning at 9:30:01 a.m., New York time, and ending at 4:00:00 p.m., New York
time, as reported by Bloomberg, or, if no dollar volume-weighted average price
is reported for such security by Bloomberg for such hours, the average of the
highest closing bid price and the lowest closing ask price of any of the market
makers for such security as reported in the “pink sheets” by OTC Markets Group
Inc. (formerly Pink Sheets LLC). If the VWAP cannot be calculated for such
security on such date on any of the foregoing bases, the VWAP of such security
on such date shall be the fair market value as mutually determined by the
Company and the Holder. If the Company and the Holder are unable to agree upon
the fair market value of such security, then such dispute shall be resolved in
accordance with the procedures in Section 13. All such determinations shall be
appropriately adjusted for any share dividend, share split, share combination,
recapitalization or other similar transaction during such period. 

31




[signature page follows]

32




IN WITNESS WHEREOF, the Company has caused this Warrant
to Purchase Ordinary Shares to be duly executed as of the Issuance Date set out
above. 

CHINA INFORMATION TECHNOLOGY, INC.



	By:	
	 	Name: 
	 	Title: 







EXHIBIT A 

EXERCISE NOTICE 

TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS

WARRANT TO PURCHASE COMMON STOCK 


CHINA INFORMATION TECHNOLOGY, INC. 

The undersigned holder hereby exercises
the right to purchase _________________ of the Ordinary Shares (“Warrant
Shares”) of China Information Technology, Inc., a company incorporated under
the laws of the British Virgin Islands (the “Company”), evidenced by
Warrant to Purchase Ordinary Shares No. _______ (the “Warrant”).
Capitalized terms used herein and not otherwise defined shall have the
respective meanings set forth in the Warrant. 

1.                 
 Form of Exercise Price. The Holder intends that payment of the
Aggregate Exercise Price shall be made as: 

	 	__________	a “Cash Exercise” with respect to
      __________ Warrant Shares; and/or 
	 	 	  
	 	__________	a “Cashless Exercise” with respect
      to __________ Warrant Shares. 
	 	 	  
	 	[INSERT IN SERIES B WARRANT ONLY: 
	 	 	  
	 	__________	an “Alternate Cashless Exercise” with respect
      to __________ Warrant Shares.] 


In the event that the Holder has
elected a Cashless Exercise with respect to some or all of the Warrant Shares to
be issued pursuant hereto, the Holder hereby represents and warrants that (i)
this Exercise Notice was executed by the Holder at __________ [a.m.][p.m.] on
the date set forth below and (ii) if applicable, the Bid Price as of such time
of execution of this Exercise Notice was $________.

2.                  
Payment of Exercise Price. In the event that the Holder has elected a
Cash Exercise with respect to some or all of the Warrant Shares to be issued
pursuant hereto, the Holder shall pay the Aggregate Exercise Price in the sum of
$
___________________to the Company in accordance with the terms of the
Warrant. 

3.               
   Delivery of Warrant Shares. The Company shall deliver
to Holder, or its designee or agent as specified below, __________ Warrant
Shares in accordance with the terms of the Warrant. Delivery shall be made to
Holder, or for its benefit, as follows: 

[ 
]                
Check here if requesting delivery as a certificate to the following name and to
the following address: 





	 	Issue to: 	 
	 	 	 
	 	 	 


[ 
]                
Check here if requesting delivery by Deposit/Withdrawal at Custodian as
follows:

	 	DTC Participant: 	 
	 	DTC Number: 	 
	 	Account Number: 	 


Date: _____________

___________________________
Name of Registered Holder 


	By: 	 
	         	Name: 
	       	Title: 



Tax ID: ____________________________

Facsimile: __________________________

E-mail Address: _____________________





EXHIBIT B 

ACKNOWLEDGMENT 

The Company hereby acknowledges this Exercise Notice and hereby
directs ______________ to issue the above indicated number of Ordinary Shares in
accordance with the Transfer Agent Instructions dated _________, 201_,
from the Company and acknowledged and agreed to by _______________. 

CHINA INFORMATION TECHNOLOGY,
INC. 


	By: 	 
	         	Name: 
	 	Title: