Document:

Exhibit
10.3

THIS
WARRANT AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THIS WARRANT AND
THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT UNDER SAID ACT OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO SUN NEW MEDIA, INC. THAT SUCH REGISTRATION IS NOT REQUIRED.

	
  

  	
  Right to Purchase           
  shares of Common Stock of Sun New Media, Inc. (subject to adjustment as
  provided herein)

  

 

CLASS A COMMON STOCK PURCHASE WARRANT

	
  No. 2007-A-002

  	
  Issue Date: March         ,
  2007

  

 

SUN NEW
MEDIA, INC., a corporation organized under the laws of the State of Minnesota
(the “Company”), hereby certifies that, for value received, the Holder is
entitled, subject to the terms set forth below, to purchase from the Company at
any time after the Issue Date until 5:00 p.m., E.S.T on the fifth (5th)
anniversary of the Issue Date (the “Expiration Date”), up to       
fully paid and nonassessable shares of Common Stock at a per share purchase
price of $1.00.  The aforedescribed
purchase price per share, as adjusted from time to time as herein provided, is
referred to herein as the “Purchase Price.” 
The number and character of such shares of Common Stock and the Purchase
Price are subject to adjustment as provided herein.  The Company may reduce the Purchase Price
without the consent of the Holder. 
Capitalized terms used and not otherwise defined herein shall have the
meanings set forth in that certain Subscription Agreement (the “Subscription Agreement”), dated March     ,
2007, entered into by the Company and Holders of the Warrants.

As
used herein the following terms, unless the context otherwise requires, have
the following respective meanings:

(a)           The term “Company”
shall include Sun New Media, Inc. and any corporation which shall succeed or
assume the obligations of Sun New Media, Inc. hereunder.

(b)           The term “Common Stock”
includes (a) the Company’s Common Stock, $0.01 par value per share, as
authorized on the date of the Subscription Agreement, and (b) any other
securities into which or for which any of the securities described in
(a) may be converted or exchanged pursuant to a plan of recapitalization,
reorganization, merger, sale of assets or otherwise.

(c)           The term “Other
Securities” refers to any stock (other than Common Stock) and other
securities of the Company or any other person (corporate or otherwise) which
the holder of the Warrant at any time shall be entitled to receive, or shall
have received, on the exercise of the Warrant, in lieu of or in addition to
Common Stock, or which at any time shall be issuable or shall have been issued
in exchange for or in replacement of Common Stock or Other Securities pursuant
to Section 5 or otherwise.

(d)           The term “Warrant
Shares” shall mean the Common Stock issuable upon exercise of this
Warrant.

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1.             Exercise of Warrant.

1.1.          Number of Shares Issuable upon
Exercise.  From and after the Issue
Date through and including the Expiration Date, the Holder hereof shall be
entitled to receive, upon exercise of this Warrant in whole in accordance with
the terms of subsection 1.2 or upon exercise of this Warrant in part in
accordance with subsection 1.3: (A) shares of Common Stock of the Company,
subject to adjustment pursuant to Section 4; and (B) a Class C Warrant to
purchase that number of shares of Common Stock equal to the Warrant Shares issued
upon exercise of this Warrant.  This
Class C Warrant will be on the same terms and conditions as this Warrant,
except for the Purchase Price which shall be $2.00 (subject to adjustment as
provided herein).

1.2.          Full Exercise.  This Warrant may be exercised in full by the
Holder hereof by delivery of an original or facsimile copy of the form of
subscription attached as Exhibit A hereto (the “Subscription Form”) duly
executed by such Holder and surrender of the original Warrant within four (4)
days of exercise, to the Company at its principal office or at the office of
its Warrant Agent (as provided hereinafter), accompanied by payment, in cash,
wire transfer or by certified or official bank check payable to the order of
the Company, in the amount obtained by multiplying the number of shares of
Common Stock for which this Warrant is then exercisable by the Purchase Price
then in effect.

1.3.          Partial Exercise.  This Warrant may be exercised in part (but
not for a fractional share) by surrender of this Warrant in the manner and at
the place provided in subsection 1.2 except that the amount payable by the
Holder on such partial exercise shall be the amount obtained by multiplying
(a) the number of whole shares of Common Stock designated by the Holder in
the Subscription Form by (b) the Purchase Price then in effect.  On any such partial exercise, the Company, at
its expense, will forthwith issue and deliver to or upon the order of the
Holder hereof a new Warrant of like tenor, in the name of the Holder hereof or
as such Holder (upon payment by such Holder of any applicable transfer taxes)
may request, the whole number of remaining shares of Common Stock for which
such Warrant may still be exercised.

1.4.          Fair Market Value. Fair Market
Value of a share of Common Stock as of a particular date (the “Determination
Date”) shall mean:

(a)           If the Company’s
Common Stock is traded on an exchange or is quoted on the National Association
of Securities Dealers, Inc. Automated Quotation (“NASDAQ”),
National Market System, the NASDAQ SmallCap Market or the American Stock
Exchange, LLC, then the closing or last sale price, respectively, reported for
the last business day immediately preceding the Determination Date;

(b)           If the Company’s
Common Stock is not traded on an exchange or on the NASDAQ National Market
System, the NASDAQ SmallCap Market or the American Stock Exchange, Inc., but is
traded in the over-the-counter market, then the average of the closing bid and
ask prices reported for the last business day immediately preceding the
Determination Date;

(c)           Except as provided
in clause (d) below, if the Company’s Common Stock is not publicly traded,
then as the Holder and the Company agree, or in the absence of such an
agreement, by arbitration in accordance with the rules then standing of the
American Arbitration Association, before a single arbitrator to be chosen from
a panel of persons qualified by education and training to pass on the matter to
be decided; or

(d)           If the Determination
Date is the date of a liquidation, dissolution or winding up, or any event
deemed to be a liquidation, dissolution or winding up pursuant to the Company’s
charter, then all amounts to be payable per share to holders of the Common
Stock pursuant to the charter in the event of such liquidation, dissolution or
winding up, plus all other amounts to be 

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payable per share in respect of the Common Stock in
liquidation under the charter, assuming for the purposes of this clause
(d) that all of the shares of Common Stock then issuable upon exercise of
all of the Warrants are outstanding at the Determination Date.

1.5.          Company Acknowledgment. The
Company will, at the time of the exercise of the Warrant, upon the request of
the Holder hereof acknowledge in writing its continuing obligation to afford to
such Holder any rights to which such Holder shall continue to be entitled after
such exercise in accordance with the provisions of this Warrant. If the Holder
shall fail to make any such request, such failure shall not affect the
continuing obligation of the Company to afford to such Holder any such rights.

1.6.          Trustee for Warrant Holders. In
the event that a bank or trust company shall have been appointed as trustee for
the Holder of the Warrants pursuant to Subsection 3.2, such bank or trust
company shall have all the powers and duties of a warrant agent (as hereinafter
described) and shall accept, in its own name for the account of the Company or
such successor person as may be entitled thereto, all amounts otherwise payable
to the Company or such successor, as the case may be, on exercise of this
Warrant pursuant to this Section 1.

1.7           Delivery of Stock
Certificates, etc. on Exercise. The Company agrees that the shares of
Common Stock purchased upon exercise of this Warrant shall be deemed to be
issued to the Holder hereof as the record owner of such shares as of the close
of business on the date on which this Warrant shall have been surrendered and
payment made for such shares as aforesaid. As soon as practicable after the
exercise of this Warrant in full or in part, and in any event within five (5)
business days thereafter, the Company at its expense (including the payment by
it of any applicable issue taxes) will cause to be issued in the name of and
delivered to the Holder hereof, or as such Holder (upon payment by such Holder
of any applicable transfer taxes) may direct in compliance with applicable
securities laws, a certificate or certificates for the number of duly and
validly issued, fully paid and nonassessable shares of Common Stock (or Other
Securities) to which such Holder shall be entitled on such exercise, plus, in
lieu of any fractional share to which such Holder would otherwise be entitled,
cash equal to such fraction multiplied by the then Fair Market Value of one
full share of Common Stock, together with any other stock or other securities
and property (including cash, where applicable) to which such Holder is
entitled upon such exercise pursuant to Section 1 or otherwise.

 2.            Cashless
Exercise.

(a)           Except as described below, if a
Registration Statement (as defined in the Subscription Agreement) (“Registration
Statement”) is effective and the Holder may sell its shares of Common Stock
upon exercise hereof pursuant to the Registration Statement, this Warrant may
be exercisable in whole or in part for cash only as set forth in Section 1
above.  Beginning on March     ,
2008, if no such Registration Statement is available, or if after the Maturity
Date (accelerated or otherwise) of the Note issued pursuant to the Subscription
Agreement any sums due under the Note remains unpaid after any applicable cure
period, then payment upon exercise may be made at the option of the Holder
either in (i) cash, by wire transfer or certified or official bank check
payable to the order of the Company equal to the applicable aggregate Purchase
Price, (ii) by cashless exercise in accordance with Section (b) below
or (iii) by a combination of any of the foregoing methods, for the number
of Common Stock specified in such form (as such exercise number shall be
adjusted to reflect any adjustment in the total number of shares of Common
Stock issuable to the holder per the terms of this Warrant) and the holder
shall thereupon be entitled to receive the number of duly authorized, validly
issued, fully-paid and non-assessable shares of Common Stock (or Other
Securities) determined as provided herein.

(b)    If the Notice of Exercise form elects a “cashless” exercise, the Holder shall thereby be entitled to receive a number of shares of Common Stock equal to (x) the excess of the Current Market Value (as defined below) over the total cash exercise price of the portion of the Warrant then 

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being exercised, divided by (y) the Market Price of
the Common Stock as of the trading day immediately prior to the date of
exercise. For the purposes of this Warrant, the term “Current
Market Value” shall be an amount equal to the Market Price of the
Common Stock as of the trading day immediately prior to the Exercise Date,
multiplied by the number of shares of Common Stock specified in such Notice of
Exercise Form, and “Market Price of the Common Stock” shall be the average of
the closing bid price of the Common Stock (as reported by Bloomberg L.P. for
the Principal Market) for the 5 Trading days prior to the exercise date.

(c)           The Holder may
employ the cashless exercise feature described in Section (b) above only during
the pendency of a Non-Registration Event as described in Section 11 of the
Subscription Agreement or after the Maturity Date of the Note (accelerated or
otherwise) at a time when any sums due under the Note remains unpaid after any
applicable cure period.  For purposes of
Rule 144 promulgated under the 1933 Act, it is intended, understood and
acknowledged that the Warrant Shares issued in a cashless exercise transaction
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 Subscription Agreement.

3.             Adjustment for Reorganization,
Consolidation, Merger, etc.

3.1.          Reorganization, Consolidation,
Merger, etc.  In case at any time or
from time to time, the Company shall (a) effect a reorganization,
(b) consolidate with or merge into any other person or (c) transfer
all or substantially all of its properties or assets to any other person under
any plan or arrangement contemplating the dissolution of the Company, then, in
each such case, as a condition to the consummation of such a transaction,
proper and adequate provision shall be made by the Company whereby the Holder
of this Warrant, on the exercise hereof as provided in Section 1, at any
time after the consummation of such reorganization, consolidation or merger or
the effective date of such dissolution, as the case may be, shall receive, in
lieu of the Common Stock (or Other Securities) issuable on such exercise prior
to such consummation or such effective date, the stock and other securities and
property (including cash) to which such Holder would have been entitled upon
such consummation or in connection with such dissolution, as the case may be,
if such Holder had so exercised this Warrant, immediately prior thereto, all
subject to further adjustment thereafter as provided in Section 4.

3.2.          Dissolution.  In the event of any dissolution of the Company
following the transfer of all or substantially all of its properties or assets,
the Company, prior to such dissolution, shall at its expense deliver or cause
to be delivered the stock and other securities and property (including cash,
where applicable) receivable by the Holder of the Warrants after the effective
date of such dissolution pursuant to this Section 3 to a bank or trust
company (a “Trustee”) having its principal
office in New York, NY, as trustee for the Holder of the Warrants.

3.3.          Continuation of Terms.  Upon any reorganization, consolidation,
merger or transfer (and any dissolution following any transfer) referred to in
this Section 3, this Warrant shall continue in full force and effect and
the terms hereof shall be applicable to the Other Securities and property
receivable on the exercise of this Warrant after the consummation of such
reorganization, consolidation or merger or the effective date of dissolution
following any such transfer, as the case may be, and shall be binding upon the
issuer of any Other Securities, including, in the case of any such transfer,
the person acquiring all or substantially all of the properties or assets of
the Company, whether or not such person shall have expressly assumed the terms
of this Warrant as provided in Section 4. 
In the event this Warrant does not continue in full force and effect
after the consummation of the transaction described in this Section 3,
then only in such event will the Company’s securities and property (including
cash, where applicable) receivable by the Holder of the Warrants be delivered
to the Trustee as contemplated by Section 3.2.

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3.4           Share Issuance.  Until the Expiration Date, if the Company
shall issue any Common Stock except for the Excepted Issuances (as defined in
the Subscription Agreement), prior to the complete exercise of this Warrant for
a consideration less than the Purchase Price that would be in effect at the
time of such issue, then, and thereafter successively upon each such issue, the
Purchase Price shall be reduced to such other lower issue price.  For purposes of this adjustment, the issuance
of any security or debt instrument of the Company carrying the right to convert
such security or debt instrument into Common Stock or of any warrant, right or
option to purchase Common Stock shall result in an adjustment to the Purchase
Price upon the issuance of the above-described security, debt instrument,
warrant, right, or option and again at any time upon any subsequent issuances
of shares of Common Stock upon exercise of such conversion or purchase rights
if such issuance is at a price lower than the Purchase Price in effect upon
such issuance.  The reduction of the
Purchase Price described in this Section 3.4 is in addition to the other rights
of the Holder described in the Subscription Agreement.

4.             Extraordinary Events Regarding
Common Stock.  In the event that the
Company shall (a) issue additional shares of the Common Stock as a
dividend or other distribution on outstanding Common Stock, (b) subdivide
its outstanding shares of Common Stock, or (c) combine its outstanding
shares of the Common Stock into a smaller number of shares of the Common Stock,
then, in each such event, the Purchase Price shall, simultaneously with the
happening of such event, be adjusted by multiplying the then Purchase Price by
a fraction, the numerator of which shall be the number of shares of Common
Stock outstanding immediately prior to such event and the denominator of which
shall be the number of shares of Common Stock outstanding immediately after
such event, and the product so obtained shall thereafter be the Purchase Price
then in effect. The Purchase Price, as so adjusted, shall be readjusted in the
same manner upon the happening of any successive event or events described
herein in this Section 4. The number of shares of Common Stock that the
Holder of this Warrant shall thereafter, on the exercise hereof as provided in
Section 1, be entitled to receive shall be adjusted to a number determined
by multiplying the number of shares of Common Stock that would otherwise (but
for the provisions of this Section 4) be issuable on such exercise by a
fraction of which (a) the numerator is the Purchase Price that would
otherwise (but for the provisions of this Section 4) be in effect, and
(b) the denominator is the Purchase Price in effect on the date of such
exercise.

5.             Certificate as to Adjustments.  In each case of any adjustment or
readjustment in the shares of Common Stock (or Other Securities) issuable on
the exercise of the Warrants, the Company at its expense will promptly cause
its Chief Financial Officer or other appropriate designee to compute such
adjustment or readjustment in accordance with the terms of the Warrant and
prepare a certificate setting forth such adjustment or readjustment and showing
in detail the facts upon which such adjustment or readjustment is based,
including a statement of (a) the consideration received or receivable by
the Company for any additional shares of Common Stock (or Other Securities)
issued or sold or deemed to have been issued or sold, (b) the number of
shares of Common Stock (or Other Securities) outstanding or deemed to be
outstanding, and (c) the Purchase Price and the number of shares of Common
Stock to be received upon exercise of this Warrant, in effect immediately prior
to such adjustment or readjustment and as adjusted or readjusted as provided in
this Warrant. The Company will forthwith mail a copy of each such certificate
to the Holder of the Warrant and any Warrant Agent of the Company (appointed
pursuant to Section 11 hereof).

6.             Reservation of Stock, etc.
Issuable on Exercise of Warrant; Financial Statements.   The Company will at all times reserve and
keep available, solely for issuance and delivery on the exercise of the
Warrants, all shares of Common Stock (or Other Securities) from time to time
issuable on the exercise of the Warrant. 
This Warrant entitles the Holder hereof to receive copies of all
financial and other information distributed or required to be distributed to
the holders of the Company’s Common Stock.

7.             Assignment; Exchange of Warrant.  Subject to compliance with applicable
securities laws, this Warrant, and the rights evidenced hereby, may be
transferred by any registered holder hereof (a “Transferor”).
On the surrender for exchange of this Warrant, with the Transferor’s
endorsement in the 

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form of Exhibit B attached hereto (the “Transferor Endorsement Form”) and together with an opinion
of counsel reasonably satisfactory to the Company that the transfer of this
Warrant will be in compliance with applicable securities laws, the Company at
its expense, twice, only, but with payment by the Transferor of any applicable
transfer taxes, will issue and deliver to or on the order of the Transferor
thereof a new Warrant or Warrants of like tenor, in the name of the Transferor
and/or the transferee(s) specified in such Transferor Endorsement Form (each a “Transferee”), calling in the aggregate on the face or faces
thereof for the number of shares of Common Stock called for on the face or
faces of the Warrant so surrendered by the Transferor.  No such transfers shall result in a public
distribution of the Warrant.

8.             Replacement of Warrant.  On receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and, in the case of any such loss, theft or destruction of this
Warrant, on delivery of an indemnity agreement or security reasonably
satisfactory in form and amount to the Company or, in the case of any such
mutilation, on surrender and cancellation of this Warrant, the Company at its
expense, twice only, will execute and deliver, in lieu thereof, a new Warrant
of like tenor.

9.             Registration Rights.  The Holder of this Warrant has been granted
certain registration rights by the Company. 
These registration rights are set forth in the Subscription Agreement.

10.           Maximum Exercise.  The Holder shall not be entitled to exercise
this Warrant on an exercise date, in connection with that number of shares of
Common Stock which would be in excess of the sum of (i) the number of
shares of Common Stock beneficially owned by the Holder and its affiliates on
an exercise date, and (ii) the number of shares of Common Stock issuable
upon the exercise of this Warrant with respect to which the determination of
this limitation is being made on an exercise date, which would result in
beneficial ownership by the Holder and its affiliates of more than 4.99% of the
outstanding shares of Common Stock on such date.  For the purposes of the immediately preceding
sentence, beneficial ownership shall be determined in accordance with
Section 13(d) of the Securities Exchange Act of 1934, as amended, and
Regulation 13d-3 thereunder.  Subject to
the foregoing, the Holder shall not be limited to aggregate exercises which
would result in the issuance of more than 4.99%.  The restriction described in this
paragraph may be waived, in whole or in part, upon sixty-one (61) days
prior notice from the Holder to the Company. 
The Holder may decide whether to convert a Note or exercise this Warrant
to achieve an actual 4.99% ownership position.

11.           Warrant Agent.  The Company may, by written notice to the
Holder of the Warrant, appoint an agent (a “Warrant
Agent”) for the purpose of issuing Common Stock (or Other
Securities) on the exercise of this Warrant pursuant to Section 1,
exchanging this Warrant pursuant to Section 7, and replacing this Warrant
pursuant to Section 8, or any of the foregoing, and thereafter any such
issuance, exchange or replacement, as the case may be, shall be made at such
office by such Warrant Agent.

12.           Transfer on the Company’s Books.  Until this Warrant is transferred on the
books of the Company, the Company may treat the registered holder hereof as the
absolute owner hereof for all purposes, notwithstanding any notice to the
contrary.

13.           Notices.   All notices, demands, requests, consents,
approvals, and other communications required or permitted hereunder shall be in
writing and, unless otherwise specified herein, shall be (i) personally served,
(ii) deposited in the mail, registered or certified, return receipt requested,
postage prepaid, (iii) delivered by reputable air courier service with charges
prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile,
addressed as set forth below or to such other address as such party shall have
specified most recently by written notice. 
Any notice or other communication required or permitted to be given
hereunder shall be deemed effective (a) upon hand delivery or delivery by
facsimile, with accurate confirmation generated by the transmitting facsimile
machine, at the address or number designated below (if delivered on a business
day during normal business hours where such notice is to be 

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received), or the first business day following such
delivery (if delivered other than on a business day during normal business
hours where such notice is to be received) or (b) on the second business day
following the date of mailing by express courier service, fully prepaid,
addressed to such address, or upon actual receipt of such mailing, whichever
shall first occur or (c) three business days after deposited in the mail if
delivered pursuant to subsection (ii) above. 
The addresses for such communications shall be: (i) if to the Company
to: Sun New Media, Inc., 1120 Avenue of the Americas, 4th Floor, New York, NY 10036, Attn: Bruno Wu
Zheng, Chief Executive Officer, telecopier: +86 10 8518 9797, and (ii) if to
the Holder, to the addresses and telecopier number set forth in the first
paragraph of this Warrant, with an additional copy by telecopier only to:
Spectrum Law Group, LLP, 1900 Main Street, Suite 125, Irvine, CA 92614,
Attention: Gregory R. Carney, Esq., telecopier number: (949) 851-5940.

14.           Miscellaneous.  This Warrant and any term hereof may be changed,
waived, discharged or terminated only by an instrument in writing signed by the
party against which enforcement of such change, waiver, discharge or
termination is sought. This Warrant shall be construed and enforced in
accordance with and governed by the laws of New York.  Any dispute relating to this Warrant shall be
adjudicated in New York County in the State of New York.  The headings in this Warrant are for purposes
of reference only, and shall not limit or otherwise affect any of the terms
hereof.  The invalidity or
unenforceability of any provision hereof shall in no way affect the validity or
enforceability of any other provision.

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IN
WITNESS WHEREOF, the Company has executed this Warrant as of the date first
written above. 

	
  

  	
  SUN NEW MEDIA, INC. 

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name: Dr. Bruno Wu Zheng 

  
	
   

  	
   

  	
  Title: Chairman and Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
  Witness:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
					

 

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Exhibit A

FORM
OF SUBSCRIPTION

(to be signed only on exercise of Warrant)

TO:  SUN NEW MEDIA, INC.

The
undersigned, pursuant to the provisions set forth in the attached Warrant (No.        ),
hereby irrevocably elects to purchase (check applicable box):

                                
shares of the Common Stock covered by such Warrant; or

                the maximum number of shares of Common
Stock covered by such Warrant pursuant to the cashless exercise procedure set
forth in Section 2.

The
undersigned herewith makes payment of the full purchase price for such shares
at the price per share provided for in such Warrant, which is $                      .  Such payment takes the form of (check
applicable box or boxes):

                $                    
in lawful money of the United States; and/or

                the
cancellation of the Warrant to the extent necessary, in accordance with the
formula set forth in Section 2, to exercise this Warrant with respect to
the maximum number of shares of Common Stock purchasable pursuant to the
cashless exercise procedure set forth in Section 2.

The undersigned requests that the certificates for
such shares be issued in the name of, and delivered to                                   
                                                                                                          
whose address is                                                                  
                                                                                                                                                                                                                                                                                  

Number
of Shares of Common Stock Beneficially Owned on the date of exercise: Less than
five percent (5%) of the outstanding Common Stock of Sun New Media, Inc.

The
undersigned represents and warrants that the representations and warranties in
Section 4 of the Subscription Agreement (as defined in this Warrant) are true
and accurate with respect to the undersigned on the date hereof.

The undersigned represents
and warrants that all offers and sales by the undersigned of the securities
issuable upon exercise of the within Warrant shall be made pursuant to
registration of the Common Stock under the Securities Act of 1933, as amended
(the “Securities Act”), or pursuant to an exemption from registration under the
Securities Act.

	
  Dated:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (Signature must conform to name of holder as

  specified on the face of the Warrant) 

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (Address)

  	
   

  

 

 9

Exhibit B

FORM OF TRANSFEROR ENDORSEMENT

(To be signed only on transfer of Warrant)

For value received, the undersigned hereby sells, assigns, and
transfers unto the person(s) named below under the heading “Transferees” the
right represented by the within Warrant to purchase the percentage and number
of shares of Common Stock of SUN NEW MEDIA, INC. to which the within Warrant
relates specified under the headings “Percentage Transferred” and “Number
Transferred,” respectively, opposite the name(s) of such person(s) and appoints
each such person Attorney to transfer its respective right on the books of SUN
NEW MEDIA, INC. with full power of substitution in the premises.

	
  Transferees

  	
   

  	
  Percentage Transferred

  	
   

  	
  Number Transferred

  	
   

  
	
          

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
    

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
    

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

	
  Dated:

  	
   

  	
  ,

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  (Signature must conform to name of holder as
  specified

  
	
   

  	
   

  	
  on the face of the warrant)

  
	
   

  	
   

  	
   

  
	
  Signed in the presence of: 

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  (Name)

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (address)

  
	
   

  	
   

  	
   

  
	
  ACCEPTED AND AGREED:

  	
   

  	
   

  	
   

  
	
  [TRANSFEREE]

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (address)

  
	
   

  	
   

  	
   

  
	
  (Name)Exhibit
10.4

THIS
WARRANT AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THIS WARRANT AND
THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT UNDER SAID ACT OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO SUN NEW MEDIA, INC. THAT SUCH REGISTRATION IS NOT REQUIRED.

	
  

  	
  Right to Purchase                
  shares of Common Stock of Sun

  New Media, Inc. (subject to adjustment as provided herein)

  

 

CLASS B COMMON STOCK PURCHASE WARRANT

	
  No. 2007-B-003

  	
  Issue Date: March
             , 2007

  

 

SUN NEW
MEDIA, INC., a corporation organized under the laws of the State of Minnesota
(the “Company”), hereby certifies that, for value received, the “Holder”, is
entitled, subject to the terms set forth below, to purchase from the Company at
any time after the Issue Date until 5:00 p.m., E.S.T on the fifth (5th)
anniversary of the Issue Date (the “Expiration Date”), up to           
fully paid and nonassessable shares of Common Stock at a per share purchase
price of $1.50.  The aforedescribed
purchase price per share, as adjusted from time to time as herein provided, is
referred to herein as the “Purchase Price.” 
The number and character of such shares of Common Stock and the Purchase
Price are subject to adjustment as provided herein.  The Company may reduce the Purchase Price
without the consent of the Holder. 
Capitalized terms used and not otherwise defined herein shall have the
meanings set forth in that certain Subscription Agreement (the “Subscription Agreement”), dated March       ,
2007, entered into by the Company and Holders of the Warrants.

As
used herein the following terms, unless the context otherwise requires, have
the following respective meanings:

(a)           The term “Company”
shall include Sun New Media, Inc. and any corporation which shall succeed or
assume the obligations of Sun New Media, Inc. hereunder.

(b)           The term “Common Stock”
includes (a) the Company’s Common Stock, $0.01 par value per share, as
authorized on the date of the Subscription Agreement, and (b) any other
securities into which or for which any of the securities described in
(a) may be converted or exchanged pursuant to a plan of recapitalization,
reorganization, merger, sale of assets or otherwise.

(c)           The term “Other
Securities” refers to any stock (other than Common Stock) and other
securities of the Company or any other person (corporate or otherwise) which
the holder of the Warrant at any time shall be entitled to receive, or shall
have received, on the exercise of the Warrant, in lieu of or in addition to
Common Stock, or which at any time shall be issuable or shall have been issued
in exchange for or in replacement of Common Stock or Other Securities pursuant
to Section 5 or otherwise.

(d)           The term “Warrant
Shares” shall mean the Common Stock issuable upon exercise of this
Warrant.

 1
 

1.             Exercise of Warrant.

1.1.          Number of Shares Issuable upon
Exercise.  From and after the Issue
Date through and including the Expiration Date, the Holder hereof shall be
entitled to receive, upon exercise of this Warrant in whole in accordance with
the terms of subsection 1.2 or upon exercise of this Warrant in part in
accordance with subsection 1.3: (A) shares of Common Stock of the Company,
subject to adjustment pursuant to Section 4; and (B) a Class C Warrant to
purchase that number of shares of Common Stock equal to the Warrant Shares
issued upon exercise of this Warrant. 
This Class C Warrant will be on the same terms and conditions as this
Warrant, except for the Purchase Price which shall be $2.00 (subject to
adjustment as provided herein).

1.2.          Full Exercise.  This Warrant may be exercised in full by the
Holder hereof by delivery of an original or facsimile copy of the form of
subscription attached as Exhibit A hereto (the “Subscription Form”) duly
executed by such Holder and surrender of the original Warrant within four (4)
days of exercise, to the Company at its principal office or at the office of
its Warrant Agent (as provided hereinafter), accompanied by payment, in cash,
wire transfer or by certified or official bank check payable to the order of
the Company, in the amount obtained by multiplying the number of shares of
Common Stock for which this Warrant is then exercisable by the Purchase Price
then in effect.

1.3.          Partial Exercise.  This Warrant may be exercised in part (but
not for a fractional share) by surrender of this Warrant in the manner and at
the place provided in subsection 1.2 except that the amount payable by the
Holder on such partial exercise shall be the amount obtained by multiplying
(a) the number of whole shares of Common Stock designated by the Holder in
the Subscription Form by (b) the Purchase Price then in effect.  On any such partial exercise, the Company, at
its expense, will forthwith issue and deliver to or upon the order of the
Holder hereof a new Warrant of like tenor, in the name of the Holder hereof or
as such Holder (upon payment by such Holder of any applicable transfer taxes)
may request, the whole number of remaining shares of Common Stock for which
such Warrant may still be exercised.

1.4.          Fair Market Value. Fair Market
Value of a share of Common Stock as of a particular date (the “Determination
Date”) shall mean:

(a)           If the Company’s
Common Stock is traded on an exchange or is quoted on the National Association
of Securities Dealers, Inc. Automated Quotation (“NASDAQ”),
National Market System, the NASDAQ SmallCap Market or the American Stock
Exchange, LLC, then the closing or last sale price, respectively, reported for
the last business day immediately preceding the Determination Date;

(b)           If the Company’s
Common Stock is not traded on an exchange or on the NASDAQ National Market
System, the NASDAQ SmallCap Market or the American Stock Exchange, Inc., but is
traded in the over-the-counter market, then the average of the closing bid and
ask prices reported for the last business day immediately preceding the
Determination Date;

(c)           Except as provided
in clause (d) below, if the Company’s Common Stock is not publicly traded,
then as the Holder and the Company agree, or in the absence of such an
agreement, by arbitration in accordance with the rules then standing of the
American Arbitration Association, before a single arbitrator to be chosen from
a panel of persons qualified by education and training to pass on the matter to
be decided; or

(d)           If the Determination
Date is the date of a liquidation, dissolution or winding up, or any event
deemed to be a liquidation, dissolution or winding up pursuant to the Company’s
charter, then all amounts to be payable per share to holders of the Common
Stock pursuant to the charter in the event of such liquidation, dissolution or
winding up, plus all other amounts to be

 2
 

payable per share in respect of the Common Stock in
liquidation under the charter, assuming for the purposes of this clause
(d) that all of the shares of Common Stock then issuable upon exercise of
all of the Warrants are outstanding at the Determination Date.

1.5.          Company Acknowledgment. The
Company will, at the time of the exercise of the Warrant, upon the request of
the Holder hereof acknowledge in writing its continuing obligation to afford to
such Holder any rights to which such Holder shall continue to be entitled after
such exercise in accordance with the provisions of this Warrant. If the Holder
shall fail to make any such request, such failure shall not affect the
continuing obligation of the Company to afford to such Holder any such rights.

1.6.          Trustee for Warrant Holders. In
the event that a bank or trust company shall have been appointed as trustee for
the Holder of the Warrants pursuant to Subsection 3.2, such bank or trust
company shall have all the powers and duties of a warrant agent (as hereinafter
described) and shall accept, in its own name for the account of the Company or
such successor person as may be entitled thereto, all amounts otherwise payable
to the Company or such successor, as the case may be, on exercise of this
Warrant pursuant to this Section 1.

1.7           Delivery of Stock Certificates,
etc. on Exercise. The Company agrees that the shares of Common Stock
purchased upon exercise of this Warrant shall be deemed to be issued to the
Holder hereof as the record owner of such shares as of the close of business on
the date on which this Warrant shall have been surrendered and payment made for
such shares as aforesaid. As soon as practicable after the exercise of this Warrant
in full or in part, and in any event within five (5) business days thereafter,
the Company at its expense (including the payment by it of any applicable issue
taxes) will cause to be issued in the name of and delivered to the Holder
hereof, or as such Holder (upon payment by such Holder of any applicable
transfer taxes) may direct in compliance with applicable securities laws, a
certificate or certificates for the number of duly and validly issued, fully
paid and nonassessable shares of Common Stock (or Other Securities) to which
such Holder shall be entitled on such exercise, plus, in lieu of any fractional
share to which such Holder would otherwise be entitled, cash equal to such
fraction multiplied by the then Fair Market Value of one full share of Common
Stock, together with any other stock or other securities and property
(including cash, where applicable) to which such Holder is entitled upon such
exercise pursuant to Section 1 or otherwise.

2.             Cashless Exercise.

(a)           Except as described below, if a
Registration Statement (as defined in the Subscription Agreement) (“Registration
Statement”) is effective and the Holder may sell its shares of Common Stock
upon exercise hereof pursuant to the Registration Statement, this Warrant may
be exercisable in whole or in part for cash only as set forth in Section 1
above.  Beginning on March      ,
2008, if no such Registration Statement is available, or if after the Maturity
Date (accelerated or otherwise) of the Note issued pursuant to the Subscription
Agreement any sums due under the Note remains unpaid after any applicable cure
period, then payment upon exercise may be made at the option of the Holder
either in (i) cash, by wire transfer or certified or official bank check
payable to the order of the Company equal to the applicable aggregate Purchase
Price, (ii) by cashless exercise in accordance with Section (b) below
or (iii) by a combination of any of the foregoing methods, for the number
of Common Stock specified in such form (as such exercise number shall be
adjusted to reflect any adjustment in the total number of shares of Common
Stock issuable to the holder per the terms of this Warrant) and the holder
shall thereupon be entitled to receive the number of duly authorized, validly
issued, fully-paid and non-assessable shares of Common Stock (or Other
Securities) determined as provided herein.

(b)           If the Notice of Exercise form elects a “cashless” exercise, the Holder shall thereby be entitled to receive a number of shares of Common Stock equal to (x) the excess of the Current Market Value (as defined below) over the total cash exercise price of the portion of the Warrant then

 3
 

being exercised, divided by (y) the Market Price of the Common Stock as of the trading day immediately prior to the date of exercise. For the purposes of this Warrant, the term “Current Market Value” shall be an amount equal to the Market Price of the Common Stock as of the trading day immediately prior to the Exercise Date, multiplied by the number of shares of Common Stock specified in such Notice of Exercise Form, and “Market Price of the Common Stock” shall be the average of the closing bid price of the Common Stock (as reported by Bloomberg L.P. for the Principal Market) for the 5 Trading days prior to the exercise date.

(c)           The Holder may
employ the cashless exercise feature described in Section (b) above only during
the pendency of a Non-Registration Event as described in Section 11 of the
Subscription Agreement or after the Maturity Date of the Note (accelerated or
otherwise) at a time when any sums due under the Note remains unpaid after any
applicable cure period.  For purposes of
Rule 144 promulgated under the 1933 Act, it is intended, understood and
acknowledged that the Warrant Shares issued in a cashless exercise transaction 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 Subscription Agreement.

3.             Adjustment for Reorganization, Consolidation,
Merger, etc.

3.1.          Reorganization, Consolidation,
Merger, etc.  In case at any time or
from time to time, the Company shall (a) effect a reorganization,
(b) consolidate with or merge into any other person or (c) transfer
all or substantially all of its properties or assets to any other person under
any plan or arrangement contemplating the dissolution of the Company, then, in
each such case, as a condition to the consummation of such a transaction,
proper and adequate provision shall be made by the Company whereby the Holder
of this Warrant, on the exercise hereof as provided in Section 1, at any
time after the consummation of such reorganization, consolidation or merger or
the effective date of such dissolution, as the case may be, shall receive, in
lieu of the Common Stock (or Other Securities) issuable on such exercise prior
to such consummation or such effective date, the stock and other securities and
property (including cash) to which such Holder would have been entitled upon
such consummation or in connection with such dissolution, as the case may be,
if such Holder had so exercised this Warrant, immediately prior thereto, all
subject to further adjustment thereafter as provided in Section 4.

3.2.          Dissolution.  In the event of any dissolution of the
Company following the transfer of all or substantially all of its properties or
assets, the Company, prior to such dissolution, shall at its expense deliver or
cause to be delivered the stock and other securities and property (including
cash, where applicable) receivable by the Holder of the Warrants after the
effective date of such dissolution pursuant to this Section 3 to a bank or
trust company (a “Trustee”)
having its principal office in New York, NY, as trustee for the Holder of
the Warrants.

3.3.          Continuation of Terms.  Upon any reorganization, consolidation,
merger or transfer (and any dissolution following any transfer) referred to in
this Section 3, this Warrant shall continue in full force and effect and
the terms hereof shall be applicable to the Other Securities and property
receivable on the exercise of this Warrant after the consummation of such
reorganization, consolidation or merger or the effective date of dissolution
following any such transfer, as the case may be, and shall be binding upon the
issuer of any Other Securities, including, in the case of any such transfer,
the person acquiring all or substantially all of the properties or assets of
the Company, whether or not such person shall have expressly assumed the terms
of this Warrant as provided in Section 4. 
In the event this Warrant does not continue in full force and effect
after the consummation of the transaction described in this Section 3,
then only in such event will the Company’s securities and property (including
cash, where applicable) receivable by the Holder of the Warrants be delivered
to the Trustee as contemplated by Section 3.2.

 4
 

3.4           Share Issuance.  Until the Expiration Date, if the Company
shall issue any Common Stock except for the Excepted Issuances (as defined in
the Subscription Agreement), prior to the complete exercise of this Warrant for
a consideration less than the Purchase Price that would be in effect at the
time of such issue, then, and thereafter successively upon each such issue, the
Purchase Price shall be reduced to such other lower issue price.  For purposes of this adjustment, the issuance
of any security or debt instrument of the Company carrying the right to convert
such security or debt instrument into Common Stock or of any warrant, right or
option to purchase Common Stock shall result in an adjustment to the Purchase
Price upon the issuance of the above-described security, debt instrument,
warrant, right, or option and again at any time upon any subsequent issuances
of shares of Common Stock upon exercise of such conversion or purchase rights
if such issuance is at a price lower than the Purchase Price in effect upon
such issuance.  The reduction of the
Purchase Price described in this Section 3.4 is in addition to the other rights
of the Holder described in the Subscription Agreement.

4.             Extraordinary Events Regarding
Common Stock.  In the event that the
Company shall (a) issue additional shares of the Common Stock as a
dividend or other distribution on outstanding Common Stock, (b) subdivide
its outstanding shares of Common Stock, or (c) combine its outstanding
shares of the Common Stock into a smaller number of shares of the Common Stock,
then, in each such event, the Purchase Price shall, simultaneously with the
happening of such event, be adjusted by multiplying the then Purchase Price by
a fraction, the numerator of which shall be the number of shares of Common
Stock outstanding immediately prior to such event and the denominator of which
shall be the number of shares of Common Stock outstanding immediately after
such event, and the product so obtained shall thereafter be the Purchase Price
then in effect. The Purchase Price, as so adjusted, shall be readjusted in the
same manner upon the happening of any successive event or events described
herein in this Section 4. The number of shares of Common Stock that the
Holder of this Warrant shall thereafter, on the exercise hereof as provided in
Section 1, be entitled to receive shall be adjusted to a number determined
by multiplying the number of shares of Common Stock that would otherwise (but
for the provisions of this Section 4) be issuable on such exercise by a
fraction of which (a) the numerator is the Purchase Price that would
otherwise (but for the provisions of this Section 4) be in effect, and
(b) the denominator is the Purchase Price in effect on the date of such
exercise.

5.             Certificate as to Adjustments.  In each case of any adjustment or
readjustment in the shares of Common Stock (or Other Securities) issuable on
the exercise of the Warrants, the Company at its expense will promptly cause
its Chief Financial Officer or other appropriate designee to compute such
adjustment or readjustment in accordance with the terms of the Warrant and
prepare a certificate setting forth such adjustment or readjustment and showing
in detail the facts upon which such adjustment or readjustment is based,
including a statement of (a) the consideration received or receivable by
the Company for any additional shares of Common Stock (or Other Securities)
issued or sold or deemed to have been issued or sold, (b) the number of
shares of Common Stock (or Other Securities) outstanding or deemed to be
outstanding, and (c) the Purchase Price and the number of shares of Common
Stock to be received upon exercise of this Warrant, in effect immediately prior
to such adjustment or readjustment and as adjusted or readjusted as provided in
this Warrant. The Company will forthwith mail a copy of each such certificate
to the Holder of the Warrant and any Warrant Agent of the Company (appointed
pursuant to Section 11 hereof).

6.             Reservation of Stock, etc.
Issuable on Exercise of Warrant; Financial Statements.   The Company will at all times reserve and
keep available, solely for issuance and delivery on the exercise of the Warrants,
all shares of Common Stock (or Other Securities) from time to time issuable on
the exercise of the Warrant.  This
Warrant entitles the Holder hereof to receive copies of all financial and other
information distributed or required to be distributed to the holders of the
Company’s Common Stock.

7.             Assignment; Exchange of Warrant.  Subject to compliance with applicable
securities laws, this Warrant, and the rights evidenced hereby, may be
transferred by any registered holder hereof (a “Transferor”).
On the surrender for exchange of this Warrant, with the Transferor’s
endorsement in the

 5
 

form of Exhibit B attached hereto (the “Transferor
Endorsement Form”) and together with an opinion of counsel
reasonably satisfactory to the Company that the transfer of this Warrant will
be in compliance with applicable securities laws, the Company at its expense,
twice, only, but with payment by the Transferor of any applicable transfer
taxes, will issue and deliver to or on the order of the Transferor thereof a
new Warrant or Warrants of like tenor, in the name of the Transferor and/or the
transferee(s) specified in such Transferor Endorsement Form (each a “Transferee”), calling in the aggregate on the face or faces
thereof for the number of shares of Common Stock called for on the face or
faces of the Warrant so surrendered by the Transferor.  No such transfers shall result in a public
distribution of the Warrant.

8.             Replacement of Warrant.  On receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and, in the case of any such loss, theft or destruction of this
Warrant, on delivery of an indemnity agreement or security reasonably
satisfactory in form and amount to the Company or, in the case of any such mutilation,
on surrender and cancellation of this Warrant, the Company at its expense,
twice only, will execute and deliver, in lieu thereof, a new Warrant of like
tenor.

9.             Registration Rights.  The Holder of this Warrant has been granted
certain registration rights by the Company. 
These registration rights are set forth in the Subscription Agreement.

10.           Maximum Exercise.  The Holder shall not be entitled to exercise
this Warrant on an exercise date, in connection with that number of shares of
Common Stock which would be in excess of the sum of (i) the number of
shares of Common Stock beneficially owned by the Holder and its affiliates on
an exercise date, and (ii) the number of shares of Common Stock issuable
upon the exercise of this Warrant with respect to which the determination of
this limitation is being made on an exercise date, which would result in
beneficial ownership by the Holder and its affiliates of more than 4.99% of the
outstanding shares of Common Stock on such date.  For the purposes of the immediately preceding
sentence, beneficial ownership shall be determined in accordance with
Section 13(d) of the Securities Exchange Act of 1934, as amended, and
Regulation 13d-3 thereunder.  Subject to
the foregoing, the Holder shall not be limited to aggregate exercises which
would result in the issuance of more than 4.99%.  The restriction described in this
paragraph may be waived, in whole or in part, upon sixty-one (61) days
prior notice from the Holder to the Company. 
The Holder may decide whether to convert a Note or exercise this Warrant
to achieve an actual 4.99% ownership position.

11.           Warrant Agent.  The Company may, by written notice to the
Holder of the Warrant, appoint an agent (a “Warrant
Agent”) for the purpose of issuing Common Stock (or Other
Securities) on the exercise of this Warrant pursuant to Section 1,
exchanging this Warrant pursuant to Section 7, and replacing this Warrant
pursuant to Section 8, or any of the foregoing, and thereafter any such
issuance, exchange or replacement, as the case may be, shall be made at such
office by such Warrant Agent.

12.           Transfer on the Company’s Books.  Until this Warrant is transferred on the
books of the Company, the Company may treat the registered holder hereof as the
absolute owner hereof for all purposes, notwithstanding any notice to the
contrary.

13.           Notices.   All notices, demands, requests, consents,
approvals, and other communications required or permitted hereunder shall be in
writing and, unless otherwise specified herein, shall be (i) personally served,
(ii) deposited in the mail, registered or certified, return receipt requested,
postage prepaid, (iii) delivered by reputable air courier service with charges
prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile,
addressed as set forth below or to such other address as such party shall have
specified most recently by written notice. 
Any notice or other communication required or permitted to be given
hereunder shall be deemed effective (a) upon hand delivery or delivery by facsimile,
with accurate confirmation generated by the transmitting facsimile machine, at
the address or number designated below (if delivered on a business day during
normal business hours where such notice is to be

 6
 

received), or the first business day following such delivery (if
delivered other than on a business day during normal business hours where such
notice is to be received) or (b) on the second business day following the date
of mailing by express courier service, fully prepaid, addressed to such address,
or upon actual receipt of such mailing, whichever shall first occur or (c)
three business days after deposited in the mail if delivered pursuant to
subsection (ii) above.  The addresses for
such communications shall be: (i) if to the Company to: Sun New Media, Inc.,
1120 Avenue of the Americas, 4th Floor, New York, NY 10036, Attn: Bruno Wu
Zheng, Chief Executive Officer, telecopier: +86 10 8518 9797, and (ii) if to
the Holder, to the addresses and telecopier number set forth in the first
paragraph of this Warrant, with an additional copy by telecopier only to:
Spectrum Law Group, LLP, 1900 Main Street, Suite 125, Irvine, CA 92614,
Attention: Gregory R. Carney, Esq., telecopier number: (949) 851-5940.

14.           Miscellaneous.  This Warrant and any term hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of such change, waiver, discharge
or termination is sought. This Warrant shall be construed and enforced in
accordance with and governed by the laws of New York.  Any dispute relating to this Warrant shall be
adjudicated in New York County in the State of New York.  The headings in this Warrant are for purposes
of reference only, and shall not limit or otherwise affect any of the terms
hereof.  The invalidity or
unenforceability of any provision hereof shall in no way affect the validity or
enforceability of any other provision.

 7
 

IN
WITNESS WHEREOF, the Company has executed this Warrant as of the date first
written above. 

	
  

  	
  SUN NEW MEDIA, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name: Dr. Bruno
  Wu Zheng

  
	
   

  	
  Title: Chairman
  and Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
  Witness:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
				

 8
 

Exhibit A

FORM OF SUBSCRIPTION

(to be signed only on exercise of Warrant)

TO:  SUN NEW MEDIA, INC.

The
undersigned, pursuant to the provisions set forth in the attached Warrant (No.        ),
hereby irrevocably elects to purchase (check applicable box):

                   
               
shares of the Common Stock covered by such Warrant; or

             
         the maximum number of shares of
Common Stock covered by such Warrant pursuant to the cashless exercise
procedure set forth in Section 2.

The
undersigned herewith makes payment of the full purchase price for such shares
at the price per share provided for in such Warrant, which is $                  .  Such payment takes the form of (check
applicable box or boxes):

                       $                   
in lawful money of the United States; and/or

                       the cancellation of the Warrant to
the extent necessary, in accordance with the formula set forth in
Section 2, to exercise this Warrant with respect to the maximum number of
shares of Common Stock purchasable pursuant to the cashless exercise procedure
set forth in Section 2.

The
undersigned requests that the certificates for such shares be issued in the
name of, and delivered to                                                                                                                  
whose address is                                                                                                                                                                                                                                                                                                                                                     

Number
of Shares of Common Stock Beneficially Owned on the date of exercise: Less than
five percent (5%) of the outstanding Common Stock of Sun New Media, Inc.

The
undersigned represents and warrants that the representations and warranties in
Section 4 of the Subscription Agreement (as defined in this Warrant) are true
and accurate with respect to the undersigned on the date hereof.

The
undersigned represents and warrants that all offers and sales by the
undersigned of the securities issuable upon exercise of the within Warrant
shall be made pursuant to registration of the Common Stock under the Securities
Act of 1933, as amended (the “Securities Act”), or pursuant to an exemption
from registration under the Securities Act.

	
  Dated:

  	
   

  	
   

  	
   

  	
   

  
	
  

  	
   

  	
  (Signature must conform to name of holder as

  specified on the face of the Warrant)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Address)

  

 

 9

Exhibit B

FORM OF TRANSFEROR ENDORSEMENT

(To be signed only on transfer of Warrant)

For value received, the undersigned hereby sells, assigns, and
transfers unto the person(s) named below under the heading “Transferees” the
right represented by the within Warrant to purchase the percentage and number
of shares of Common Stock of SUN NEW MEDIA, INC. to which the within Warrant
relates specified under the headings “Percentage Transferred” and “Number
Transferred,” respectively, opposite the name(s) of such person(s) and appoints
each such person Attorney to transfer its respective right on the books of SUN
NEW MEDIA, INC. with full power of substitution in the premises.

	
  Transferees

  	
   

  	
  Percentage Transferred

  	
   

  	
  Number Transferred

  
	
     

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

	
  Dated:
  

  	
   

  	
  ,

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  

  	
   

  	
  (Signature must conform to name of holder as
  specified

  on the face of the warrant)

  
	
   

  	
   

  	
   

  
	
  Signed in the presence of:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (Name)

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (address)

  
	
   

  	
   

  	
   

  
	
  ACCEPTED AND AGREED:

  	
   

  	
   

  	
   

  
	
  [TRANSFEREE]

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (address)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  (Name)

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