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				EXHIBIT 10.6

				

				

			

		

		
			IRREVOCABLE TRANSFER AGENT INSTRUCTIONS

					

					

				November 23, 2005

		

		
			

				
						Pacific Stock Transfer Co.

					
	
						500 E. Warm Springs Road, #240

					
	
						Las Vegas, NV 89119

					
	
						Attention: Jodi Godfrey

					

			

			

			          RE:     XINHUA CHINA LTD

				

			Ladies and Gentlemen:
			

			Reference is made to that certain Securities Purchase Agreement (the “Securities Purchase Agreement”) of even date herewith by and between Xinhua China Ltd, a Nevada corporation (the “Company”), and the Buyers set forth on Schedule I attached thereto (collectively the “Buyers”) and that certain Escrow Shares Escrow Agreement (the “Escrow Agreement”) of even date herewith among the Company, the Buyers and Gottbetter & Partners, LLP, as escrow agent (the “Escrow Agent”).  Pursuant to the Securities Purchase Agreement, the Company shall sell to the Buyers, and the Buyers shall purchase from the Company, convertible debentures (collectively, the “Debentures”) in the aggregate principal amount of Four Million Dollars ($4,000,000), plus accrued interest, which are convertible into shares of the Company’s common stock, par value $.00001 per share (the “Common Stock”), at the Buyers discretion.  These instructions relate to the following stock or proposed stock issuances or transfers:

			

				The Company has agreed to issue to the Buyers (i) up to 10,000,000 shares of Common Stock upon conversion of the Debentures (the “Maximum Conversion”); provided, however, that upon the Maximum Conversion, the Company shall, at its option (a) increase the Maximum Conversion or (b) redeem the unconverted amount of all of the Convertible Debentures in whole at one hundred thirty five percent (135%) of the unconverted amount of such Convertible Debentures being redeemed plus accrued interest thereon, (ii) 1,035,000 shares of Common Stock upon exercise of the Warrant (as defined in the Securities Purchase Agreement) (the “Warrant Shares”) if required under the Securities Purchase Agreement, and (iii) to issue in the name of the Buyer(s) 20,000,000 shares of Common Stock as “security stock” to be held in escrow (the “Escrow Shares”) pursuant to the Securities Purchase Agreement, the Convertible Debentures and the Escrow Shares Escrow Agreement.

					

				
	The Company has issued the 20,000,000 Escrow Shares (the “Escrow Shares”) in the Buyer’s name that have been or are being delivered to the Escrow Agent pursuant to the Securities Purchase Agreement and the Escrow Agreement.
			

			

			

			

			

			

			

			

			

			

			

			

			This letter shall serve as our irrevocable authorization and direction to Pacific Stock Transfer Co. (the “Transfer Agent”) to do the following:

			
				1.      Conversion Shares. 

				

				
					a.       Instructions Applicable to Transfer Agent.  With respect to the Conversion Shares and the Warrant Shares, the Transfer Agent shall issue the Conversion Shares or the Warrant Shares to the Buyers from time to time upon delivery to the Transfer Agent of a properly completed and duly executed Conversion Notice (the “Conversion Notice”), in the form attached hereto as Exhibit I, delivered on behalf of the Company to the Transfer Agent by the Escrow Agent or a properly completed and duly executed notice of exercise substantially in the form attached to the Warrant (the “Exercise Notice”), respectively.  Upon receipt of a Conversion Notice or Exercise Notice, the Transfer Agent shall within three (3) Trading Days thereafter (i) issue and surrender to a common carrier for overnight delivery to the address as specified in the Conversion Notice or Exercise Notice, a certificate or certificates, registered in the name of the Buyers or their designees, for the number of shares of Common Stock to which the Buyers shall be entitled as set forth in the Conversion Notice or Exercise Notice or (ii) provided that the Transfer Agent is participating in The Depository Trust Company (“DTC”) Fast Automated Securities Transfer Program, upon the request of the Buyers, credit such aggregate number of shares of Common Stock to which the Buyers shall be entitled to the Buyers’ or their designees’ balance account with DTC through their Deposit Withdrawal At Custodian (“DWAC”) system provided the Buyers causes its bank or broker to initiate the DWAC transaction. For purposes hereof “Trading Day” shall mean any day on which the Nasdaq National Market is open for customary trading. 

						

						b.       The Company hereby confirms to the Transfer Agent and the Buyers that certificates representing the Conversion Shares and Warrant Shares shall not bear any legend restricting transfer and should not be subject to any stop-transfer restrictions and shall otherwise be freely transferable on the books and records of the Company; provided that counsel to the Company delivers (i) the Notice of Effectiveness set forth in Exhibit II attached hereto and (ii) an opinion of counsel in the form set forth in Exhibit III attached hereto, and that if the Conversion Shares and the Warrant Shares are not registered for resale under the Securities Act of 1933, as amended, then the provisions of paragraph 1(a)(ii), above, shall not be applicable until such shares are registered, and the certificates for the Conversion Shares and Warrant Shares shall bear the following legend:

						

						“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS.  THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL, IN A FORM REASONABLY 

					

						

					

				

			

		

		
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					ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT.”

							

						The Company hereby confirms that in the event that a stop order suspending the effectiveness of the Registration Statement has been issued by the SEC or any proceeding for that purpose are threatened by the SEC the Company will notify the Transfer Agent promptly, in light of the circumstances, of such order or notice.  In addition, the Company shall promptly inform the Transfer Agent of any voluntary suspension of the effectiveness of the Registration Statement and confirm the continued effectiveness of the Registration Statement upon inquiry by the Transfer Agent.

						

						c.       In the event that counsel to the Company fails or refuses to render an opinion as required to issue the Conversion Shares or Warrant Shares in accordance with the preceding paragraph (either with or without restrictive legends, as applicable), then the Company irrevocably and expressly authorizes counsel to the Buyers to render such opinion substantially in the form set forth in Exhibit III attached hereto.  The Transfer Agent shall accept and be entitled to rely on such opinion for the purposes of issuing the Conversion Shares and Warrant Shares.  

							

						d.      Instructions Applicable to Escrow Agent.  Upon the Escrow Agent’s receipt of a properly completed Conversion Notice and/or the Exercise Notice, the Escrow Agent shall, within one (1) Trading Day thereafter, send to the Transfer Agent a Conversion Notice and/or the Exercise Notice in the form attached hereto as Exhibit I, which shall constitute an irrevocable instruction to the Transfer Agent to process such Conversion Notice in accordance with the terms of these instructions.

					

				

				2.      Escrow Shares.

				

				
					a.       If the Escrow Agent sends the Escrow Shares to the Transfer Agent for removal of the restrictive legend pursuant to the Securities Purchase Agreement, the Company hereby confirms that the Transfer Agent shall reissue to the Escrow Agent the Escrow Shares which shall not bear any legend restricting transfer and should not be subject to any stop-transfer restrictions and shall otherwise be freely transferable on the books and records of the Company; provided that counsel to the Company delivers (i) the Notice of Effectiveness set forth in Exhibit II attached hereto and (ii) an opinion of counsel in the form set forth in Exhibit III attached hereto, or counsel to the Company shall issue a legal opinion to the Company’s Transfer Agent that the legend shall be removed pursuant to Rule 144, Rule 144(k) or applicable requirements of the Securities Act.

						

						b.      In the event that counsel to the Company fails or refuses to render an opinion as required to issue the Escrow Shares in accordance with the preceding paragraph (either with or without restrictive legends, as applicable), then the Company irrevocably and expressly authorizes Gottbetter & Partners, LLP counsel to the 

					

					

				

			

		

		
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						Buyers to render such opinion.  The Transfer Agent shall accept and be entitled to rely on such opinion for the purposes of issuing the Escrow Shares without a legend.

					

				

				3.      All Shares.

				

				
					a.       The Transfer Agent shall reserve for issuance to the Buyers the Conversion Shares and Warrant Shares.  All such shares shall remain in reserve with the Transfer Agent until the Buyers provides the Transfer Agent instructions that the shares or any part of them shall be taken out of reserve and shall no longer be subject to the terms of these instructions.

						

						b.      The Transfer Agent shall rely exclusively on the Conversion Notice and Exercise Notice and shall have no liability for relying on such instructions, nor responsibility for determining the accuracy or due execution thereof.  Any Conversion Notice delivered hereunder shall constitute an irrevocable instruction to the Transfer Agent to process such notice or notices in accordance with the terms thereof.  Such notice or notices may be transmitted to the Transfer Agent by facsimile or any commercially reasonable method.

						

						c.       The Company hereby confirms to the Transfer Agent and the Buyers that no instructions other than as contemplated herein will be given to Transfer Agent by the Company with respect to the matters referenced herein.  The Company hereby authorizes the Transfer Agent, and the Transfer Agent shall be obligated, to disregard any contrary instructions received by or on behalf of the Company.

				

			

			          Certain Notice Regarding the Escrow Agent. The Company and the Transfer Agent hereby acknowledge that the Escrow Agent is general counsel to the Buyers, the managing partner of the Escrow Agent is a director of the Buyers and counsel to the Buyers in connection with the transactions contemplated and referred herein.  The Company and the Transfer Agent agree that in the event of any dispute arising in connection with this Agreement or otherwise in connection with any transaction or agreement contemplated and referred herein, the Escrow Agent shall be permitted to continue to represent the Buyers and neither the Company nor the Transfer Agent will seek to disqualify such counsel.

				

				          The Company hereby agrees that it shall not replace the Transfer Agent as the Company’s Transfer Agent without the prior written consent of the Buyers.

			          If for any reason the Transfer Agent desires to resign as transfer agent of the Company, the Transfer Agent shall first provide the Company and the Buyers with sixty (60) days prior written notice (“Notice Period”).  Notwithstanding the aforementioned, the Transfer Agent may resign as transfer agent to the Company and will be under no obligation to continue or provide any issuance or transfer agent services as contemplated by this Agreement if the Company is not current in all its outstanding payment obligations for services provided by the Transfer Agent during the Notice Period, provided, however, that the Buyer may pay for the costs associated with any issuance of stock contemplated by the Securities Purchase Agreement and this Agreement, and the Transfer 

			

			

		

		
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			Agent shall then continue to provide issuance and transfer agent services as stipulated by this Agreement until the end of the Notice Period.
			          The Transfer Agent acknowledges that the Company has placed a deposit of $5,000.  These funds are to be utilized for the execution of transfers/issuance/conversions pertaining to these Irrevocable Transfer Agent Instructions.  Once these funds have been extinguished, the Company agrees to place another deposit of $5,000 to continue coverage of fees due the Transfer Agent.  There is no specification as to the time period covered by such deposits.

			          The Company hereby confirms and the Transfer Agent acknowledges that while any portion of the Debenture remains unpaid and unconverted, the Company and the Transfer Agent shall not, without the prior consent of the Buyers, (i) issue any Common Stock or Preferred Stock without consideration or for a consideration per share less than the Closing Bid Price (as defined in the Securities Purchase Agreement) of the Common Stock determined immediately prior to its issuance, (ii) issue any Preferred Stock, warrant, option, right, contract, call, or other security or instrument granting the holder thereof the right to acquire Common Stock without consideration or for a consideration per share less than such Common Stock’s Closing Bid Price determined immediately prior to its issuance, (iii) issue any shares of the Company’s Common Stock pursuant to a Form S-8, which has not already been filed with the SEC on EDGAR and except as otherwise set forth in the Convertible Debenture.

			          The Company and the Transfer Agent hereby acknowledge and confirm that complying with the terms of this Agreement does not and shall not prohibit the Transfer Agent from satisfying any and all fiduciary responsibilities and duties it may owe to the Company.

			          The Company and the Transfer Agent acknowledge that the Buyers are relying on the representations and covenants made by the Company and the Transfer Agent hereunder and are a material inducement to the Buyers purchasing convertible debentures under the Securities Purchase Agreement.  The Company and the Transfer Agent further acknowledge that without such representations and covenants of the Company and the Transfer Agent made hereunder, the Buyers would not purchase the Debentures.

			          Each party hereto specifically acknowledges and agrees that in the event of a breach or threatened breach by a party hereto of any provision hereof, the Buyers will be irreparably damaged and that damages at law would be an inadequate remedy if these Irrevocable Transfer Agent Instructions were not specifically enforced.  Therefore, in the event of a breach or threatened breach by a party hereto, including, without limitation, the attempted termination of the agency relationship created by this instrument, the Buyers shall be entitled, in addition to all other rights or remedies, to an injunction restraining such breach, without being required to show any actual damage or to post any bond or other security, and/or to a decree for specific performance of the provisions of these Irrevocable Transfer Agent Instructions.

			

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			IN WITNESS WHEREOF, the parties have caused this letter agreement regarding Irrevocable Transfer Agent Instructions to be duly executed and delivered as of the date first written above.

			

			

				
						

						
						COMPANY:

					
	
						

						
						  

					
	
						

						
						XINHUA CHINA LTD

					
	
						

						
						  

					
	
						

						
						By:       /s/ Henry Jung                                       

					
	
						

						
						Name:  Henry Jung

					
	
						

						
						Title:     Chief Financial Officer

					
	
						

						
						  

					
	
						

						
						  

					
	
						

						
						GOTTBETTER & PARTNERS, LLP

					
	
						

						
						

					
	
						

						
						By:       /s/ Adam S. Gottbetter                          

					
	
						

						
						Name:  Adam S. Gottbetter

					
	
						

						
						Title:    Managing Partner

					
	
						

						  
						

					

			

			                                                                                  PACIFIC STOCK TRANSFER CO.

				

				

			                                                                                   By:          /s/ Lance Godfrey                                 

			                                                                                   Name:     Lance Godfrey ____________

			                                                                                   Title:        Vice President                                      

			

			

			

			

			

			

			

			

			

			

			

			

			

			

			

			

			

			

			

		

		
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			SCHEDULE I

						

						SCHEDULE OF BUYERS 

						

					

		

		
				
						
							Name                                              

						

						
						
							Signature                                              

						

						
						
							Address/Facsimile

									Number of Buyers                        

						

					
	
						  

						
						

						
						

					
	
						  

						
						

						
						

					
	
						Highgate House Funds, Ltd.

						
						By:          /s/ Adam S. Gottbetter                        

						
						488 Madison Ave.

					
	
						

						
						Name:     Adam S. Gottbetter

						
						New York, NY  10022

					
	
						

						
						Its:          Portfolio Manager

						
						Facsimile: (212) 400-6901

					
	
						

						  
						

						
						

					
	
						

						
						  

						
						

					
	
						

						  
						

						
						

					
	
						

						
						  

						
						

					

			

			

			

			

			

			

			

			

			

			

			

			

			

			

			

			

			

			

		

		
			SCHEDULE I-1

		

		
			

			

			

			

			

		

		
			EXHIBIT I

						

						TO IRREVOCABLE TRANSFER AGENT INSTRUCTIONS

						

						FORM OF CONVERSION NOTICE

						

					

		

		
			Reference is made to the Securities Purchase Agreement (the “Securities Purchase Agreement”) between Xinhua China Ltd, (the “Company”), and the Buyers set forth on Schedule I attached thereto dated November 23, 2005.  In accordance with and pursuant to the Securities Purchase Agreement, the undersigned hereby elects to convert convertible debentures into shares of common stock, par value $.00001 per share (the “Common Stock”), of the Company for the amount indicated below as of the date specified below.

		

		
				
						Conversion Date:

						
						                                                            

					
	
						  

						
						

					
	
						Amount to be converted:

						
						$                                                          

					
	  
						

						
						

					
	
						Conversion Price:

						
						$                                                          

					
	  
						

						
						

					
	
						Shares of Common Stock Issuable:

						
						                                                            

					
	
						  

						
						

					
	
						Amount of Debenture unconverted:

						
						$                                                          

					
	
						  

						
						

					
	
						Amount of Interest Converted:

						
						$                                                          

					
	
						  

						
						

					
	
						Conversion Price of Interest:

						
						$                                                          

					
	
						  

						
						

					
	
						Shares of Common Stock Issuable:

						
						                                                            

					
	
						  

						
						

					
	
						Shares of Common Stock Issuable:

						
						                                                            

					
	
						  

						
						

					
	
						Total Number of shares of Common Stock to be issued:

						
						                                                            

					
	
						  

						
						

					

			

			

			Please issue the shares of Common Stock in the following name and to the following address:

			

				
						Issue to:

						
						                                                                        

					
	
						  

						
						

					
	
						Authorized Signature:

						
						                                                                        

					
	
						  

						
						

					
	
						Name:

						
						                                                                        

					
	
						  

						
						

					
	
						Title:

						
						                                                                        

					
	
						  

						
						

					

			

			

			

		

		
			EXHIBIT I-1

			

		

		
			

			

			

			

			

				
						Phone #:

						
						                                                                        

					
	
						  

						
						

					
	
						Broker DTC Participant Code:

						
						                                                                        

					
	
						  

						
						

					
	
						Account Number*:

						
						                                                                        

					
	
						  

						
						

					

			

				

				* Note that receiving broker must initiate transaction on DWAC System.

			

			

			

			

			

			

			

			

			

			

			

			

			

			

			

			

			

			

			

			

		

		
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			EXHIBIT II

						

						TO IRREVOCABLE TRANSFER AGENT INSTRUCTIONS

						

						FORM OF NOTICE OF EFFECTIVENESS

							OF REGISTRATION STATEMENT

		

		
			

			_________, 2005

			

			________

			

			

			Attention:         

			

			RE:     XINHUA CHINA LTD

			

			Ladies and Gentlemen:

			

			          We are counsel to Xinhua China Ltd, (the “Company”), and have represented the Company in connection with that certain Securities Purchase Agreement, dated as of October 11, 2005 (the “Securities Purchase Agreement”), entered into by and among the Company and the Buyers set forth on Schedule I attached thereto (collectively the “Buyers”) pursuant to which the Company has agreed to sell to the Buyers (i) Four Million Dollars ($4,000,000) of secured convertible debentures, which shall be convertible into shares (the “Conversion Shares”) of the Company’s common stock, par value $.00001 per share (the “Common Stock”), (ii) 1,035,000 shares of common stock pursuant to a warrant in accordance with the terms of the Securities Purchase Agreement (the “Warrant Shares”) and (iii) 20,000,000 shares of Common Stock held in escrow (the “Escrow Shares”).  Pursuant to the Securities Purchase Agreement, the Company also has entered into a Registration Rights Agreement, dated as of November 23, 2005, with the Buyers (the “Investor Registration Rights Agreement”) pursuant to which the Company agreed, among other things, to register the Conversion Shares, the Escrow Shares and the Warrant Shares under the Securities Act of 1933, as amended (the “1933 Act”).  In connection with the Company’s obligations under the Securities Purchase Agreement and the Registration Rights Agreement, on _______, 2005, the Company filed a Registration Statement (File No. ___-_________) (the “Registration Statement”) with the Securities and Exchange Commission (the “SEC”) relating to the sale of the Conversion Shares, the Escrow Shares and the Warrant Shares.

			

			          In connection with the foregoing, we advise the Transfer Agent that a member of the SEC’s staff has advised us by telephone that the SEC has entered an order declaring the Registration Statement effective under the 1933 Act at ____ P.M. on __________, 2005 and we have no knowledge, after telephonic inquiry of a member of the SEC’s staff, that any stop order suspending its effectiveness has been issued or that any proceedings for that purpose are pending before, or threatened by, the SEC and the Conversion Shares, the Escrow Shares and the Warrant Shares are available for sale under the 1933 Act pursuant to the Registration Statement.

			

			

			

			

			

		

		
			EXHIBIT II-1

		

		
			

			

			

			

			

			          The Buyers has confirmed it shall comply with all securities laws and regulations applicable to it including applicable prospectus delivery requirements upon sale of the Conversion Shares, the Escrow Shares and the Warrant Shares.
			

			                                                                                                    Very truly yours,

				

				

				

				                                                                                                    By:                                                                   

					

					

					

					

					

					

					

					

					

					

					

					

					

					

					

					

					

					

					

					

					

					

					

					

					

					

				

			
				EXHIBIT II-2

			

			

			

			

			

			

		

		
			EXHIBIT III

						

						TO IRREVOCABLE TRANSFER AGENT INSTRUCTIONS

						

						FORM OF OPINION

		

		
			

			________________ 2005

			

			VIA FACSIMILE AND REGULAR MAIL

			

			________

			

			

			Attention:         

			

			          RE:     XINHUA CHINA LTD

			

			Ladies and Gentlemen:

			

			We have acted as special counsel to Xinhua China Ltd (the “Company”), in connection with the registration of ___________shares (the “Shares”) of its common stock with the Securities and Exchange Commission (the “SEC”).  We have not acted as your counsel.  This opinion is given at the request and with the consent of the Company.

			In rendering this opinion we have relied on the accuracy of the Company’s Registration Statement on Form SB-2, as amended (the “Registration Statement”), filed by the Company with the SEC on _________ ___, 2005.  The Company filed the Registration Statement on behalf of certain selling stockholders (the “Selling Stockholders”).  This opinion relates solely to the Selling Shareholders listed on Exhibit “A” hereto and number of Shares set forth opposite such Selling Stockholders’ names.  The SEC declared the Registration Statement effective on __________ ___, 2005.

			We understand that the Selling Stockholders acquired the Shares in a private offering exempt from registration under the Securities Act of 1933, as amended.  Information regarding the Shares to be resold by the Selling Shareholders is contained under the heading “Selling Stockholders” in the Registration Statement, which information is incorporated herein by reference.  This opinion does not relate to the issuance of the Shares to the Selling Stockholders.  The opinions set forth herein relate solely to the resale or transfer by the Selling Stockholders pursuant to the Registration Statement under the Federal laws of the United States of America.  We do not express any opinion concerning any law of any state or other jurisdiction.

			In rendering this opinion we have relied upon the accuracy of the foregoing statements.

			Based on the foregoing, it is our opinion that the Shares have been registered with the Securities and Exchange Commission under the Securities Act of 1933, as amended, and that the Transfer Agent may issue the Shares without restrictive legends or the Transfer 

				

				

				

			

			
				EXHIBIT III-1

			

			

			

			

			

			

			Agent may remove the restrictive legends contained on the Shares. This opinion relates solely to the number of Shares set forth opposite the Selling Stockholders listed on Exhibit “A” hereto.
			This opinion is furnished to Transfer Agent specifically in connection with the issuance of the Shares, and solely for your information and benefit.  This letter may not be relied upon by Transfer Agent in any other connection, and it may not be relied upon by any other person or entity for any purpose without our prior written consent.  This opinion may not be assigned, quoted or used without our prior written consent.  The opinions set forth herein are rendered as of the date hereof and we will not supplement this opinion with respect to changes in the law or factual matters subsequent to the date hereof.

			Very truly yours,

				

				

				

				

				

				

				

				

				

				

				

				

				

				

				

				

				

				

				

				

				

				

			

			
				EXHIBIT III-2

			

			

			

			

			

			

		

		
			EXHIBIT “A”

						

						(LIST OF SELLING STOCKHOLDERS)

		

		

			
					
						Name:                                                                                                         

					

					
					
						No. of Shares:                                  

					

				
	
					   

					
					   

				
	
					   

					
					   

				
	
					   

					
					   

				
	
					   

					
					   

				
	
					 

					
					 

				
	
					 

					
					 

				
	
					 

					
					 

				
	
					 

					
					 

				
	
					 

					
					 

				

		

			

			

			

			

			

			

			

			

			

			

			

			

			

			

			

			

			

			

			

			

			

			

			

			

		

		
			M-1Untitled Page

		

			

			EXHIBIT 10.7

			

			

			THIS WARRANT, AND THE SECURITIES INTO WHICH IT IS EXERCISABLE (COLLECTIVELY, THE “SECURITIES”), HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF ANY STATE.  THE SECURITIES MAY NOT BE OFFERED OR SOLD UNLESS THE SECURITIES ARE REGISTERED UNDER THE ACT OR PURSUANT TO AVAILABLE EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND THE COMPANY WILL BE PROVIDED WITH OPINION OF COUNSEL OR OTHER SUCH INFORMATION AS IT MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH EXEMPTIONS ARE AVAILABLE.

			

			

		

		
			Void after 5:00 p.m., New York Time on November 23, 2010

					Warrant to Purchase 1,035,000 Shares of Common Stock

					

					WARRANT TO PURCHASE COMMON STOCK

					

						OF

					

						XINHUA CHINA LTD

					

					

				

		

		
			THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE PURSUANT TO THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND ARE BEING ISSUED PURSUANT TO RULE 506 OF REGULATION D PROMULGATED UNDER THE SECURITIES ACT.

				

				          FOR VALUE RECEIVED, Xinhua China Ltd, a corporation organized under the laws of Nevada (the “Company”), grants the following rights to Highgate House Funds, Ltd. and/or its assigns (the “Holder”):

				

			

		

		
			ARTICLE 1.  DEFINITIONS

		

		          Capitalized terms used and not otherwise defined herein shall have the meanings given such terms in the Securities Purchase Agreement by and between the Company and the Holder and entered into on November 23, 2005 (the “Purchase Agreement”).  As used in this Agreement, the following terms shall have the following meanings:

		          “Corporate Office” shall mean the office of the Company (or its successor) at which at any particular time its principal business shall be administered.

		          “Exercise Date” shall mean any date on which the Holder gives the Company a Notice of Exercise in compliance with the terms of Exhibit E to the Purchase Agreement.

		

		

		

		

		

		

		

		

		

		          “Exercise Price” shall mean the Fixed Price per share of Common Stock, subject to adjustment as provided herein.
		          “Expiration Date” shall mean 5:00 p.m. (New York time) on November 22, 2010.

			

			          “Fair Market Value” shall have the meaning set forth in Section 2.2(b).

			

			           “Fixed Price” shall mean US$0.00001.

			

			          “Market Value” shall have the meaning set forth in Section 2.2(b).

			

			          “SEC” shall mean the United States Securities and Exchange Commission.

			

			          “Warrant Shares” shall mean the shares of the Common Stock issuable upon exercise of this Warrant.

			

		

		
			ARTICLE 2.  EXERCISE AND AGREEMENTS

		

		          2.1     Exercise of Warrant; Sale of Warrant and Warrant Shares.  (a) This Warrant shall entitle the Holder to purchase, at the Exercise Price, 1,035,000 shares of Common Stock.  This Warrant shall be exercisable at any time and from time to time from the date hereof and prior to the Expiration Date (the “Exercise Period”).  This Warrant and the right to purchase Warrant Shares hereunder shall expire and become void on the Expiration Date. 

			

			          2.2     Manner of Exercise.

			

			                    (a)      The Holder may exercise this Warrant at any time and from time to time during the Exercise Period, in whole or in part (but not in denominations of fewer than 10,000 Warrant Shares, except upon an exercise of this Warrant with respect to the remaining balance of Warrant Shares purchasable hereunder at the time of exercise), by delivering to the Company pursuant to the Escrow Agreement incorporated herein by reference  (i) a duly executed Notice of Exercise in substantially the form attached as Appendix I hereto, (ii) the certificate representing the Warrants and (iii) a bank cashier’s or certified check for the aggregate Exercise Price of the Warrant Shares being purchased and a Notice of Exercise to the Transfer Agent pursuant to the Irrevocable Transfer Agent Instructions.

			

			                    (b)      The Holder may, at its option, in lieu of paying cash for the Warrant Shares, exercise this Warrant by an exchange, in whole or in part (a “Warrant Exchange”), by delivery to the Escrow Agent of (i) a duly executed Notice of Exercise electing a Warrant Exchange and (ii) the certificate representing this Warrant and a Notice of Exercise to the Transfer Agent pursuant to the Irrevocable Transfer Agent Instructions.  In connection with any Warrant Exchange, the Holder shall be deemed to have paid for the Warrant Shares an amount equal to the Fair Market Value of each Warrant delivered, and the Warrants shall be deemed exercised for the amount so paid. For this purpose, the Fair Market Value of each Warrant is the difference between the Market Value of a share of Common Stock and the Exercise Price on the Exercise Date. 

			

			

			

		

		

		

		

		

		

		Market Value shall mean the average Closing Bid Price of a share of Common Stock during the ten (10) Trading Days ending on the Exercise Date. 

		

		          2.3     Termination.  All rights of the Holder in this Warrant, to the extent they have not been exercised, shall terminate on the Expiration Date.

		

		          2.4     No Rights Prior to Exercise.  This Warrant shall not entitle the Holder to any voting or other rights as a stockholder of the Company.

		

		          2.5     Fractional Shares.  No fractional shares shall be issuable upon exercise of this Warrant, and the number of Warrant Shares to be issued shall be rounded up to the nearest whole number.  If, upon exercise of this Warrant, the Holder hereof would be entitled to receive any fractional share, the Company shall issue to the Holder one additional share of Common Stock in lieu of such fractional share.

		

		          2.6     Adjustments to Exercise Price and Number of Securities.

		

		                    (a)    Computation of Adjusted Exercise Price.  In case the Company shall at any time after the date hereof and until this Warrant is fully exercised issue or sell any shares of Common Stock (other than the issuances or sales referred to in Section 2.6 (f) hereof), including shares held in the Company’s treasury and shares of Common Stock issued upon the exercise of any options, rights or warrants to subscribe for shares of Common Stock and shares of Common Stock issued upon the direct or indirect conversion or exchange of securities for shares of Common Stock (excluding shares of Common Stock issuable upon exercise of options, warrants or conversion rights granted as of the date hereof), for a consideration per share less than the Exercise Price on the date immediately prior to the issuance or sale of such shares, or without consideration, then forthwith upon such issuance or sale, the Exercise Price shall (until another such issuance or sale) be reduced to the price equal to the quotient derived by dividing (A) an amount equal to the sum of (X) the product of (a) the Exercise Price on the date immediately prior to the issuance or sale of such shares, multiplied by (b) the total number of shares of Common Stock outstanding immediately prior to such issuance or sale plus, (Y) the aggregate of the amount of all consideration, if any, received by the Company upon such issuance or sale, by (B) the total number of shares of Common Stock outstanding immediately after such issuance or sale; provided, however, that in no event shall the Exercise Price be adjusted pursuant to this computation to an amount in excess of the Exercise Price in effect immediately prior to such computation, except in the case of a combination of outstanding shares of Common Stock, as provided by Section 2.6 (c) hereof.

		

		          For the purposes of any computation to be made in accordance with this Section 2.6(a), the following provisions shall be applicable:
		
			          (i)         In case of the issuance or sale of shares of Common Stock for a consideration part or all of which shall be cash, the amount of cash consideration therefor shall be deemed to be the amount of cash received by the Company for such shares (or, if shares of Common Stock are offered by the Company for subscription, the subscription price, or if either of such securities shall be sold to underwriters or dealers for public offering without a subscription offering, the initial public offering price) before deducting therefrom any compensation paid or 

			

		

		

		

		

		

		
			

				

				

				

				discount allowed in the sale, underwriting or purchase thereof by underwriters or dealers or others performing similar services, or any expenses incurred in connection therewith.

				

				          (ii)        In case of the issuance or sale (otherwise than as a dividend or other distribution on any stock of the Company) of shares of Common Stock for a consideration part or all of which shall be other than cash, the amount of the consideration therefor other than cash shall be deemed to be the value of such consideration as determined in good faith by the Board of Directors of the Company.

				

				          (iii)       Shares of Common Stock issuable by way of dividend or other distribution on any stock of the Company shall be deemed to have been issued immediately after the opening of business on the day following the record date for the determination of stockholders entitled to receive such dividend or other distribution and shall be deemed to have been issued without consideration.

				

				          (iv)       The reclassification of securities of the Company other than shares of the Common Stock into securities including shares of Common Stock shall be deemed to involve the issuance of such shares of Common Stock for a consideration other than cash immediately prior to the close of business on the date fixed for the determination of security holders entitled to receive such shares, and the value of the consideration allocable to such shares of Common Stock shall be determined as provided in subsection (ii) of this Section 2.6(a).

				

				          (v)        The number of shares of Common Stock at any one time outstanding shall include the aggregate number of shares issued or issuable (subject to readjustment upon the actual issuance thereof) upon the exercise of options, rights, warrants and upon the conversion or exchange of convertible or exchangeable securities; provided, however, that shares issuable upon the exercise of the Warrants shall not be included in such calculation.

		

		                    (b)      Options, Rights, Warrants and Convertible and Exchangeable Securities.  In case the Company shall at any time after the date hereof and until this Warrant is fully exercised issue options, rights or warrants to subscribe for shares of Common Stock, or issue any securities convertible into or exchangeable for shares of Common Stock, for a consideration per share less than the Exercise Price immediately prior to the issuance of such options, rights or warrants (excluding shares of Common Stock issuable upon exercise of options, warrants or conversion rights granted as of the date hereof and shares of Common Stock issuable upon exercise of stock options at or above the closing market price per share of Common Stock under any stock option plan of the Company), or such convertible or exchangeable securities, or without consideration, the Exercise Price in effect immediately prior to the issuance of such options, rights or warrants, or such convertible or exchangeable securities, as the case may be, shall be reduced to a price determined by making a computation in accordance with the provision of Section 2.6(a) hereof, provided that:

		

		

		

		

		

		

		

		
			          (i)         The aggregate maximum number of shares of Common Stock, as the case may be, issuable under such options, rights or warrants shall be deemed to be issued and outstanding at the time such options, rights or warranties were issued, and for a consideration equal to the minimum purchase price per share provided for in such options, rights or warrants at the time of issuance, plus the consideration (determined in the same manner as consideration received on the issue or sale of shares in accordance with the terms of the Warrants), if any, received by the Company for such options, rights or warrants.

				

				          (ii)        The aggregate maximum number of shares of Common Stock issuable upon conversion or exchange of any convertible or exchangeable securities shall be deemed to be issued and outstanding at the time of issuance of such securities, and for a consideration equal to the consideration (determined in the same manner as consideration received on the issue or sale of shares of Common Stock in accordance with the terms of the Warrants) received by the Company for such securities, plus the minimum consideration, if any, receivable by the Company upon the conversion or exchange thereof.

				

				          (iii)       If any change shall occur in the price per share provided for in any of the options, rights or warrants referred to in subsection (a) of this Section 2.6, or in the price per share at which the securities referred to in subsection (b) of this Section 2.6 are convertible or exchangeable, such options, rights or warrants or conversion or exchange rights, as the case may be, shall be deemed to have expired or terminated on the date when such price change became effective in respect of shares not theretofore issued pursuant to the exercise or conversion or exchange thereof, and the Company shall be deemed to have issued upon such date new options, rights or warrants or convertible or exchangeable securities at the new price in respect of the number of shares issuable upon the exercise of such options, rights or warrants or the conversion or exchange of such convertible or exchangeable securities.

				

				          (iv)       If any options, rights or warrants referred to in subsection (a) of this Section 2.6, or any convertible or exchangeable securities referred to in subsection (b) of this Section 2.6, expire or terminate without exercise or conversion, as the case may be, then the Exercise Price of the remaining outstanding Warrant shall be readjusted as if such options, rights or warrants or convertible or exchangeable securities, as the case may be, had never been issued.

		

		                    (c)      Subdivision and Combination.  In case the Company shall at any time subdivide or combine the outstanding shares of Common Stock, the Exercise Price shall forthwith be proportionately decreased in the case of subdivision or increased in the case of combination.

			

			                    (d)      Adjustment in Number of Securities.  Upon each adjustment of the Exercise Price pursuant to the provisions of this Section 2.6, the number of Warrant Shares issuable upon the exercise of each Warrant shall be adjusted to the nearest whole number by multiplying a number equal to the Exercise Price in effect immediately prior to such adjustment by the number of Warrant Shares issuable upon exercise of the 

		

		

		

		

		

		

		

		

		Warrants immediately prior to such adjustment and dividing the product so obtained by the adjusted Exercise Price.
		                    (e)     Merger or Consolidation.  In case of any consolidation of the Company with, or merger of the Company with, or merger of the Company into, another corporation (other than a consolidation or merger which does not result in any reclassification or change of the outstanding Common Stock), the corporation formed by such consolidation or merger shall execute and deliver to the Holder a supplemental warrant agreement providing that the Holder of each Warrant then outstanding or to be outstanding shall have the right thereafter (until the expiration of such Warrant) to receive, upon exercise of such Warrant, the kind and amount of shares of stock and other securities and property (except in the event the property is cash, then the Holder shall have the right to exercise the Warrant and receive cash in the same manner as other stockholders) receivable upon such consolidation or merger, by a holder of the number of shares of Common Stock of the Company for which such warrant might have been exercised immediately prior to such consolidation, merger, sale or transfer. Such supplemental warrant agreement shall provide for adjustments which shall be identical to the adjustments provided in Section 2.6. The foregoing provisions of this paragraph (e) shall similarly apply to successive consolidations or mergers.

			

			                    (f)       No Adjustment of Exercise Price in Certain Cases.  No adjustment of the Exercise Price shall be made upon the issuance of the Warrant Shares or upon the exercise of any options, rights, or warrants outstanding as of the date of the Purchase Agreement and disclosed in Section 3.1(c) therein.

			

			                    (g)      Dividends and Other Distributions.  In the event that the Company shall at any time prior to the exercise of all Warrants declare a dividend (other than a dividend consisting solely of shares of Common Stock) or otherwise distribute to its stockholders any assets, property, rights, evidences of indebtedness, securities (other than shares of Common Stock), whether issued by the Company or by another, or any other thing of value, the Holders of the unexercised Warrants shall thereafter be entitled, in addition to the shares of Common Stock or other securities and property receivable upon the exercise thereof, to receive, upon the exercise of such Warrants, the same property, assets, rights, evidences of indebtedness, securities or any other thing of value that they would have been entitled to receive at the time of such dividend or distribution as if the Warrants had been exercised immediately prior to such dividend or distribution. At the time of any such dividend or distribution, the Company shall make appropriate reserves to ensure the timely performance of the provisions of this subsection 2.6 (g).  Nothing contained herein shall provide for the receipt or accrual by a Holder of cash dividends prior to the exercise by such Holder of the Warrants.

			

			          2.7     Registration Rights.  The Holder shall have the registration rights in the Investor Registration Rights Agreement.

			

		

		
			ARTICLE 3.  MISCELLANEOUS

					

				

		

		
			          3.1     Transfer.  This Warrant may not be offered, sold, transferred, pledged, assigned, hypothecated or otherwise disposed of, in whole or in part, at any time, except 

			

			

			

			

			

			

			

			

			in compliance with applicable federal and state securities laws by the transferor and the transferee (including, without limitation, the delivery of an investment representation letter and a legal opinion reasonably satisfactory to the Company).

			

			          3.2     Transfer Procedure.  Subject to the provisions of Section 3.1, the Holder may transfer or assign this Warrant by giving the Company notice setting forth the name, address and taxpayer identification number of the transferee or assignee, if applicable (the “Transferee”), and surrendering this Warrant to the Company for reissuance to the Transferee and, in the event of a transfer or assignment of this Warrant in part, the Holder.  (Each of the persons or entities in whose name any such new Warrant shall be issued are herein referred to as a “Holder”).

			

			          3.3     Loss, Theft, Destruction or Mutilation.  If this Warrant shall become mutilated or defaced or be destroyed, lost or stolen, the Company shall execute and deliver a new Warrant in exchange for and upon surrender and cancellation of such mutilated or defaced Warrant or, in lieu of and in substitution for such Warrant so destroyed, lost or stolen, upon the Holder filing with the Company an affidavit that such Warrant has been so mutilated, defaced, destroyed, lost or stolen.  However, the Company shall be entitled, as a condition to the execution and delivery of such new Warrant, to demand reasonably acceptable indemnity to it and payment of the expenses and charges incurred in connection with the delivery of such new Warrant.  Any Warrant so surrendered to the Company shall be canceled.

			

			          3.4     Notices.  All notices and other communications from the Company to the Holder or vice versa shall be deemed delivered and effective when given personally, by facsimile transmission with confirmation sheet at such address and/or facsimile number as may have been furnished to the Company or the Holder, as the case may be, in writing by the Company or the Holder from time to time.

			

			          3.5     Waiver.  This Warrant and any term hereof may be changed, waived, or terminated only by an instrument in writing signed by the party against which enforcement of such change, waiver, discharge or termination is sought.

			

			          3.6     Governing Law.  This Warrant shall be governed by and construed in accordance with the laws of the State of New York, without giving effect to its principles regarding conflicts of law.  Any action to enforce the terms of this Warrant shall be exclusively heard in the county, state and federal Courts of New York and Country of the United States of America.

			

			          3.7     Signature.  In the event that any signature on this Warrant is delivered by facsimile transmission, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) the same, with the same force and effect as if such facsimile signature page were an original thereof.

			

			          3.8       Legal Fees.  In the event any Person commences a legal action or proceeding to enforce its rights under this Warrant, the non-prevailing party to such 

			

			

			

			

			

			

			

			action or proceeding shall pay all reasonable and necessary costs and expenses (including reasonable and necessary attorney’s fees) incurred in enforcing such rights.

			

			

			Dated:   November 23, 2005

			

			XINHUA CHINA LTD

				

				

			By:         /s/ Henry Jung               

			           Name: Henry Jung

			           Title:  Chief Financial Officer

			

			

			Attest:

			

			

			                                                                        

			Name: 

			Title:   

		

			

			

			

			

			

			

			

			

			

			

			

			

			

			

			

			

			

			

			

		
		

		

		

		

		

		
			APPENDIX I

					

					NOTICE OF EXERCISE

						

					

		

		
			1.       The undersigned hereby elects (please check the appropriate box and fill in the blank spaces):

				

			

		

		
			
				[  ]  to purchase ______ shares of Common Stock, $.00001 par value per share, of Xinhua China Ltd at $.00001 per share for a total of $______ and pursuant to the terms of the attached Warrant, and tenders herewith payment of the aggregate Exercise Price of such Warrant Shares in full; or

					

					[  ]  to purchase _______ shares of Common Stock, $.00001 par value per share, of Xinhua China Ltd pursuant to the cashless exercise provision under Section 2.2 (b) of the attached Warrant, and tenders herewith the number of Warrant Shares to purchase such Warrant Shares based upon the formula set forth in Section 2.2 (b).

			

		

		2.       Please issue a certificate or certificates representing said Warrant Shares in the name of the undersigned or in such other name as is specified below:

			

			

			Dated:                                                              By:                                                                   

				

				

			                                                                        Name: ______________________________

			

				Title: _______________________________

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