WAIVER
THIS
WAIVER (this “Waiver”)
is dated as of May 27, 2009, by and between CHINA BROADBAND, INC., a Nevada
corporation, (the “Company”) and the holders
named on the signature page hereto (the “Holder”).
BACKGROUND
WHEREAS, the Company issued to
Holders the Promissory Notes dated as of January 11, 2008 in the aggregate
principal amount of $4,850,000, (as amended, restated, supplemented or otherwise
modified from time to time, the “Notes”) pursuant to a
Subscription Agreement dated as of January 11, 2008 (the “Subscription
Agreement”).
WHEREAS, commencing about June
of 2009 the Company intends to issue between 1,666,667 and 3,333,334
shares of common stock to new investors at a price per share of $0.15 resulting
in gross proceeds of between $250,000 and $500,000 (the “Financing”).
WHEREAS, the Company has
requested that the Holder consent to the Financing and waive its rights under
Section 12 of the Subscription Agreement as it relates to this Financing
only. The Holder is willing to do so on the terms and conditions
hereinafter set forth.
NOW, THEREFORE, in
consideration of any loan or advance or grant of credit heretofore or hereafter
made to or for the account of the Company by the Holder, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. All
capitalized terms not otherwise defined herein shall have the meanings given to
them in the Subscription Agreement and Note.
2. Each
Holder hereby consents to the Financing and waives all rights to the
anti-dilution protection under Sections 12(a)-(d) of the Subscription Agreement
arising as a result of the Financing proposed to be entered into by the
Company. The Company hereby acknowledges that the Holder is not
waiving any other rights under the Subscription Agreement, including, without
limitation, any future application of the antidilution provisions contained in
Section 12 of the Subscription Agreement.
3. The
Company agrees that the Conversion Price (as such term is defined in the Notes)
in the Notes shall be reduced from $0.75 to $0.25 per share, subject to further
adjustment in accordance with the Subscription Agreement or
herein. Accordingly, Section 2.1 of the Notes is hereby amended and
restated to read as follows:
“2.1.
Holder’s Conversion Rights. Subject to Section 2.2, for so long as this Note
remains outstanding and not fully paid, the Holder shall have the right, but not
the obligation, to convert all or any portion of the then aggregate outstanding
Principal Amount of this Note, together with interest, into shares of Common
Stock, subject to the terms and conditions set forth in this Article III, at the
rate of $0.25 per share of Common Stock (“Conversion Price”), as the
same may be adjusted pursuant to this Note and the Subscription Agreement. The
Holder may exercise such right by delivery to the Borrower of a written Notice
of Conversion pursuant to Section 2.3.”
4. In
the event a Holder makes an additional investment in the Company in the form of
a convertible note or any other equity or equity linked security on or prior to
July 6, 2009 (the “Additional
Investment”), such Holder’s Conversion Price in the Notes shall be
further reduced $0.20 or such lower price as may result from the application of
the provisions of Section 12 of the Subscription Agreement.
5. The
Company agrees and covenants that, if it raises capital in excess of $10,000,000
and up to $20,000,000 it will repay the Notes, on a pari pasu basis based on
outstanding principal and interest, a minimum of 12.5% of the net proceeds
raised. The amount paid by the Company shall be paid towards
reduction from the principal debt currently owed to each Holder on a pari pasu
basis. The Company agrees that if it raises capital in excess of
$20,000,000 the amount of the Notes that it shall be required to repay shall be
a minimum of 15.0% of the net proceeds raised. The amount paid by the
Company shall be paid towards reduction from the principal debt currently owed
to each Holder on a pari
pasu basis.
6. Each
Holder who makes an Additional Investment, agrees to enter into an agreement
with Xxxxx Xx, whereby Xx. Xx will be given, upon request, all voting control
and power over the shares of common stock underlying the convertible note or
other equity or equity linked security purchased.
7. The
Company hereby represents, warrants and covenants as follows:
(a) This
Waiver constitute legal, valid and binding obligations of the Company and is
enforceable against the Company in accordance with its respective
terms.
(b) Except
as set forth in this Waiver, the Company hereby reaffirms, as of the date hereof
(or if any such representation, covenant or warranty is expressly stated to have
been made as of a specific date, as of such specific date), all covenants,
representations and warranties made in the Subscription Agreement, the Notes,
related Warrants (including Placement Agent Warrants) and all documents,
instruments and agreements entered into in connection with the transactions
contemplated thereby (collectively, the “Purchase
Documents”).
(c) Except
as set forth in this Waiver, all terms and conditions of the Purchase Documents
shall continue unchanged and in full force and effect, including, without
limitation, the provisions set forth in Section 12 of the Subscription
Agreement.
(d) No
Event of Default has occurred and is continuing or would exist after giving
effect to this Waiver.
8. The
Holder hereby represents and warrants as follows:
(a) It
has the power and authority to execute, deliver and perform this Waiver and that
this Waiver is a legal, valid and binding obligation, enforceable against
it.
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(b) It
owns, of record and beneficially, and has valid title to, the Note, free and
clear of any and all liens.
9. The
execution, delivery and effectiveness of this Waiver shall not operate as a
waiver of any right, power or remedy of the Holder, nor constitute a waiver of
any provision of any Purchase Documents.
10. Each
party agrees to execute and deliver promptly any and all such further reasonable
documents, instruments and certificates, and to undertake all such further acts,
as may be necessary, desirable or appropriate to effectuate the terms of this
Waiver, including, without limitation, the execution of an amendment to the
Note, if such amendment is deemed necessary or desirable by legal counsel to the
Company, to effectuate the intention of the foregoing provisions.
11. Each
party agrees that it will reasonably cooperate with the other party to
effectuate the intention of this Waiver. The waivers and other
agreements contained herein by the Holder are irrevocable.
12. This
Waiver constitutes the entire understanding of the parties relating to the
subject matter hereof and supersedes all prior agreements and understandings,
whether oral or written.
13. This
Waiver shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and assigns and shall be governed by and construed
in accordance with the laws of the State of New York.
14. Section
headings in this Waiver are included herein for convenience of reference only
and shall not constitute a part of this Waiver for any other
purpose.
15. This
Waiver may be executed by the parties hereto in one or more counterparts, each
of which shall be deemed an original and all of which when taken together shall
constitute one and the same agreement. Any signature delivered by a
party by facsimile transmission shall be deemed to be an original signature
hereto.
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[Counter
Part Signature Page to Waiver Agreement of China Broadband, Inc. ]
IN
WITNESS WHEREOF, this Waiver has been duly executed as of the day and year first
written above.
CHINA
BROADBAND, INC.
By:
_____________________
Name: Xxxx
Xxxxxx
Title: President
Globis
Capital Partners LP
By:___________________,
as General Partner
By:
_____________________
Name:
Title:
Globis
Overseas Fund, Ltd.
By:
_____________________
Name:
Title:
Globis
Asia, LLC
By:
_____________________
Name
Title:
Xxxxxx
Xxxxxxxxx
By:
_____________________
Name
Title:
Xxxxxxxx
Capital, LLC
By:
_____________________
Name
Title:
|
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[Counter
Part Signature Page to Waiver Agreement of China Broadband, Inc.
Continued]
Xxxxxx
Xxxxx
By:
_____________________
Name
Title:
Xxxx
Xxxxx
By:
_____________________
Name
Title:
Chardan
Capital Markets, LLC
By:
_____________________
Name
Title:
Xxxxx
Xxxxxxx, XXX
By:
_____________________
Name
Title:
|