DEBENTURE EXTENSION AGREEMENT
Exhibit
10.1
This
Debenture Extension Agreement (“Agreement”) is made
and entered into as of December 8, 2008, by and among, China Digital Media
Corporation, a Nevada corporation (“Company”) and Vision Opportunity Master
Fund, Ltd., a Cayman corporation (“Vision”).
WHEREAS, on
November 17, 2006, the Company issued to Vision, and Vision purchased from the
Company, a Debenture in the amount of Two Million One Hundred Fifty Thousand
Dollars ($2,150,000), which carries interest thereon at a rate of four percent
(4%) per annum and is convertible at $0.45 per share (the
“Debenture”). The Debenture carries penalty interest, payable in cash
and monthly, at a simple rate of 1.5% per month until the principal and interest
has been paid in full;
WHEREAS,
Vision is the holder of three (3) warrants issued to Vision by the Company
consisting of (i) a Class A Warrant to purchase 4,777,773 common shares at an
exercise price of $0.80 per share, (ii) a Class B Warrant to purchase 4,777,773
common shares at an exercise price of $1.20 per share, and (iii) a Class C
Warrant to purchase 2,388,887 common shares at an exercise price of $2.25
(collectively, the “Warrants”);
WHEREAS, the
Company agreed, but has failed, to pay in full all unpaid principal in the
amount of $2,015,000.00, net of converted amount $135,000.00 (the “Principal”),
and all remaining accrued interest on the Debenture in the amount
of $30,672.81, such Principal and interest totaling $2,045,672.80
(the “Outstanding Balance”), on May 17, 2008 (“Maturity Date”);
WHEREAS, the
Company wishes for Vision to extend the date for repayment of the Outstanding
Balance of the Debenture until June 30, 2010 and Vision has, therefore,
requested as consideration for this extension, that all interest pursuant to the
Debenture be paid in accordance with the Extension Repayment Table as detailed
below, that the conversion price of the Debenture be reduced to $0.25 and that
five percent (5%) of the then outstanding principal be paid in cash on or before
March 31, 2009.
FOR AND IN
CONSIDERATION of the premises and the respective covenants, agreements
and obligations hereinafter set forth, Company and Vision do hereby agree as
follows:
[REMAINDER
OF THE PAGE INTENTIONALLY LEFT BLANK]
|
1)
|
Extension Repayment
Table and Interest Calculation. Company and Vision hereby agree
that Company shall pay interest on the Principal pursuant to the
structured extension table below. Interest hereunder shall be calculated
on the basis of a 365-day year and the actual number of days elapsed, to
the extent permitted by applicable law. Interest hereunder shall be paid,
commencing on March 31, 2009 and quarterly thereafter, on the last day of
each quarter, in cash.
|
|
Period
|
Interest
Rate
|
|
|
01/01/2008
– 05/17/2008 (A)
|
4%
per annum
|
|
|
05/18/2008
– 12/31/2008 (B)
|
10%
per annum
|
|
|
01/01/2009
– 12/31/2009
|
13%
per annum
|
|
|
01/01/2010
– 06/30/2010
|
14%
per annum
|
(A) Interest for this Period
shall be due and payable in cash on or before December 23, 2008. The
interest due for this period totals $30,252.60.
(B) Interest for this Period
shall be due and payable in cash in two parts, with $62,934.00 becoming due and
payable in cash on or before January 31, 2009 and the remaining $62,934.49
becoming due and payable in cash on or before February 28, 2009. The
aggregate interest due for this period totals $125,868.49.
|
2)
|
Reduction of
Conversion Price of Debenture. Company and Vision hereby agree that
the conversion price of the Debenture shall be reduced to
$0.25.
|
|
3)
|
Five Percent (5%) of
Principal Payment. Company and Vision hereby agree that Company
shall pay Vision, on or before March 31, 2009, in cash, an amount equal to
five percent (5%) of the then outstanding principal amount of the
Debenture.
|
|
4)
|
Defaults.
Failure to timely pay any interest pursuant to the terms of this Agreement
or failure to pay the aforementioned five percent (5%) of the then
outstanding principal amount of the Debenture on or before March 31, 2009,
shall be considered an “Event of Default” as defined in the
Debenture.
|
|
5)
|
Waiver of Penalty
Interest. Vision hereby agrees to waive any penalty interest, as
defined in the Debenture, until the earlier of (i) June 30, 2010 and (ii)
the occurrence of any Event of
Default.
|
|
6)
|
Prepayments.
Company shall be entitled to prepay principal at anytime throughout the
extension period. In the event any amount of principal is prepaid by
Company before June 30, 2010, interest payments thereafter shall be
calculated on the then outstanding principal after partial repayment in
accordance with the aforementioned structured extension table located in
Item 1 of this Agreement.
|
|
7)
|
Terms and Conditions
of Debenture and Warrants. Except as expressly set forth
herein, all of the terms and conditions to the Debenture shall continue in
full force and effect after the execution of this Agreement and shall not
be in any way changed, modified or superseded by the terms set forth
herein.
|
[REMAINDER
OF THE PAGE INTENTIONALLY LEFT BLANK]
- 2
-
IN WITNESS WHEREOF, Company
and Vision have executed this Agreement as of the date set forth
above.
| CHINA DIGITAL MEDIA CORPORATION | |
|
By:
|
|
|
Name:
|
|
|
Its:
|
|
|
Date:
|
|
|
VISION
OPPORTUNITY MASTER FUND LTD.
|
|
|
By:
|
|
|
Name:
|
|
|
Its:
|
|
|
Date:
|
- 3
-
