REGISTRATION RIGHTS AGREEMENT
Exhibit 99.6
This Registration Rights Agreement (the “Agreement”) is dated as of October 30, 2009, by and among SearchMedia Holdings Limited, a company with limited liability organized
under the laws of the Cayman Islands, or its successors (the “Company” or “ID
Cayman”), and the shareholders and other security holders of the Company listed on Schedule A
of this Agreement. Each of the shareholders and other security holders listed on Schedule A is
sometimes referred to herein as a “Shareholder”, and collectively as the
“Shareholders”.
RECITALS
WHEREAS, the Company has entered into an Agreement and Plan of Merger, Conversion and Share
Exchange which contemplates the (i) merger of Ideation Acquisition Corp. into its wholly owned
Arizona subsidiary (“ID Arizona”) pursuant to Section 253 of the General Corporate Law of
the State of Delaware and Section 10-1104 of the Arizona Revised Statutes, (ii) the subsequent
conversion of ID Arizona into a Cayman Islands company by a transfer of domicile pursuant to
Section 10-226 of the Arizona Revised Statutes, (iii) the registration and continuation of ID
Arizona as a Cayman Islands company pursuant to Section 221 of the Cayman Companies Law, and (iv)
the acquisition by ID Cayman of the operations and business of SearchMedia International Limited, a
limited company incorporated in the Cayman Islands, by way of a share exchange (collectively, the
“Business Combination”).
WHEREAS, the Company and the Shareholders desire to enter into this Agreement in order to,
among other things, reflect the registration rights to be provided to the Shareholders in
connection with the shares of ID Cayman and warrants to purchase shares of ID Cayman to be issued
to the Shareholders in connection with the Business Combination and certain other transactions
contemplated in connection therewith.
NOW, THEREFORE, in consideration of the mutual promises and covenants and agreements set forth
herein, the Company and the Shareholders hereby agree as follows:
AGREEMENT
| 1. | Registration Rights. |
1.1 Definitions. For purposes of this Section 1:
(a) Adverse Disclosure. The term “Adverse Disclosure” means public disclosure
of material non-public information, which disclosure in the good faith judgment of the board of
directors of the Company after consultation with counsel to the Company (i) would be required to be
made in any Registration Statement (as defined in subsection 1.1(l)) so that such Registration
Statement would not be materially misleading, (ii) would not be required to be made at such time
but for the filing of such Registration Statement and (iii) the Company has a bona fide business
purpose for not disclosing publicly.
(b) Business Day. The term “Business Day” means a day, excluding a Saturday,
Sunday, legal holiday or other day on which banks are required to be closed in the PRC, Hong Kong
or New York.
(c) Demand Notice. The term “Demand Notice” means a written notice executed
by either (i) Holders of more than 37% of the Registrable Securities Then Outstanding (as defined
in subsection 1.1(n) below) (the “Requesting Holders”) or (ii) Frost Gamma Investments
Trust.
(d) Effective Date. The term “Effective Date” means with respect to any
Registration Statement the earlier of (i) the one hundred twentieth (120th) day
following the Filing Date (as defined below) or (ii) in the event the Registration Statement
receives a “full review” by the SEC, the one hundred fiftieth (150th) day following the
Filing Date or (iii) the date which is within three Business Days after the date on which the SEC
informs the Company the (x) the SEC will not review a Registration Statement or (y) the Company may
request the acceleration of the effectiveness of a Registration Statement and the Company makes
such request; provided, that, in any event (i), (ii) or (iii), if the Effective Date falls
on a Saturday, Sunday or any other day that is a legal holiday or a day on which the SEC is
authorized or required by law or other government action to close, the Effective Date shall be the
following Business Day.
(e) Filing Date. The term “Filing Date” means the sixtieth (60th)
day following the delivery date of a Demand Notice or such later date as specified in the Demand
Notice or as agreed by the Requesting Holders or Frost Gamma Investments Trust, as applicable;
provided, that, if the Filing Date falls on a Saturday, Sunday or any other day that is a
legal holiday or a day on which the SEC is authorized or required by law or other government action
to close, the Filing Date shall be the following Business Day.
(f) Holder. For purposes of this Section 1 and Section 2 hereof, the term
“Holder” or “Holders” means any Person or Persons owning of record Registrable
Securities (as defined in subsection 1.1(m) below) or any assignee of record of such Registrable
Securities to whom rights under this Section 1 have been duly assigned in accordance with this
Agreement; provided, however, that for purposes of this Agreement, a record holder
of securities convertible into such Registrable Securities shall be deemed to be the Holder of such
Registrable Securities.
(g) Interim Notes. The term “Interim Notes” means those certain promissory notes of
SearchMedia International Limited, dated as of March 18, 2009 or March 19, 2009, in favor of
certain of the Shareholders to be converted into securities of the Company in connection with the
Business Combination.
(h) Management Shareholders. The term “Management Shareholders” means Xxxxxxx Xxx, Xx
Xxxx, Xuebao Yang, Xxxxxxx Xxxxx and Xxx Xx.
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(i) New Warrants. The term “New Warrants” means (i) the warrants to acquire Ordinary
Shares issued to China Seed Ventures, L.P. as a result of the Business Combination, (ii) the
warrants to acquire Ordinary Shares issued to Deutsche Bank AG, Hong Kong Branch, as a result of
the Business Combination, (iii) the warrants to acquire Ordinary
Shares issued to Linden Ventures II (BVI) Ltd. as a result of the Business Combination and
upon conversion of the Linden Note (as defined in the Share Exchange Agreement), (iv) the warrants
to acquire Ordinary Shares issued to certain of the Shareholders as a result of the conversion of
the Interim Notes and (v) the warrants to acquire Ordinary Shares issued to Frost Gamma Investments
Trust pursuant to the Share Exchange Agreement in respect of its Acquired Shares (as defined
therein).
(j) Ordinary Shares. The term “Ordinary Shares” refers to the ordinary shares, par
value US$0.0001 per share, in the capital of ID Cayman.
(k) Registration. The terms “register,” “registered,” and
“registration” refer to a registration effected by preparing and filing a Registration
Statement in compliance with the Securities Act, and the declaration or ordering of effectiveness
of such Registration Statement.
(l) Registration Statement. A “Registration Statement” is any registration
statement filed pursuant to Section 1.2 of this Agreement.
(m) Registrable Securities. The term “Registrable Securities” means: (i) any
and all Ordinary Shares beneficially owned by the Shareholders as a result of the Business
Combination and/or the transactions contemplated thereby or the conversion of the Interim Notes or
the Linden Note (as defined in the Share Exchange Agreement), (ii) any Ordinary Shares issued as
(or issuable upon the conversion or exercise of any warrant, right or other security which is
issued as) a dividend or other distribution with respect to, in exchange for or in replacement of,
all such Ordinary Shares described in clause (i) of this subsection (m), and (iii) any Ordinary
Shares issued or issuable to the Shareholders pursuant to the New Warrants;
provided, however, that Registrable Securities shall cease to be Registrable
Securities upon the earlier of (i) when, with respect to any Holder of Registrable Securities, in
the reasonable opinion of counsel to the Company, all Registrable Securities proposed to be sold by
such Holder may then be sold pursuant to Rule 144 without any limitations and (ii) the date as of
which all of the Registrable Securities have been sold pursuant to a Registration Statement;
provided further, that “Registrable Securities” shall exclude in all cases any
Registrable Securities transferred by a Holder of Registrable Securities or any other Person in a
transaction other than an assignment pursuant to Section 2.11; and provided further
that, notwithstanding the foregoing, with respect to Management Shareholders, only the Ordinary
Shares beneficially owned by them as a result of the conversion of the Interim Notes or exercise of
the New Warrants issued to them as a result of the conversion of the Interim Notes shall be
Registrable Securities hereunder.
(n) Registrable Securities Then Outstanding. The term “Registrable Securities
Then Outstanding” means the number of Ordinary Shares of the Company that are Registrable
Securities and are then issued and outstanding or would be outstanding assuming full conversion of
all securities, warrants or other rights which are, directly or indirectly, convertible,
exercisable or exchangeable into or for Registrable Securities.
(o) Rule 415. The term “Rule 415” means Rule 415 promulgated by the SEC
pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule
or regulation hereafter adopted by the SEC having substantially the same effect as such Rule.
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(p) Securities Act. The term “Securities Act” means the Securities Act of
1933, as amended.
(q) SEC. The term “SEC” means the United States Securities and Exchange
Commission.
(r) Share Exchange Agreement. The term “Share Exchange Agreement” means that certain
Agreement and Plan of Merger, Conversion and Share Exchange dated as of March 31, 2009, as amended,
by and among Ideation, ID Arizona Corp., SearchMedia International Limited (“SM Cayman”), Shanghai
Jingli Advertising Co., Ltd., the subsidiaries of SM Cayman named therein, the shareholders and
warrantholders of SM Cayman named therein, SM Cayman shareholders representatives and the other
parties named therein.
1.2 Demand Registration.
(a) Registration. If a Demand Notice is delivered by the Requesting Holders or Frost
Gamma Investments Trust, then on or prior to the Filing Date, the Company shall use its
commercially reasonable efforts to prepare and file with the SEC a “resale” Registration Statement
providing for the resale of all Registrable Securities for an offering to be made on a continuous
basis pursuant to Rule 415. Such Registration Statement shall be on Form F-3 (except if the
Company is not then eligible to register the Registrable Securities on Form F-3, such registration
shall be on an appropriate form in accordance herewith and the Securities Act and the rules
promulgated thereunder). The Company shall use its commercially reasonable efforts to cause such
Registration Statement to be declared effective under the Securities Act as promptly as possible
after the filing thereof, but in any event prior to the Effective Date, and to keep such
Registration Statement continuously effective under the Securities Act until such date as is the
earlier of (x) the date when all Registrable Securities covered by such Registration Statement have
been sold or (y) the date on which the Registrable Securities may be sold without any restriction
pursuant to Rule 144 of the Securities Act as determined by the counsel to the Company pursuant to
a written opinion letter, addressed to the Company’s transfer agent to such effect (the
“Effective Period”). The Company shall request that the effective time of any such
Registration Statement be no later than 5:00 p.m. Eastern Time on the Effective Date.
(b) In the event that the Company is unable to register all of the Registrable Securities for
resale under Rule 415 due to limits imposed by the SEC’s interpretation of Rule 415, the Company
will file a Registration Statement under the Securities Act with the SEC covering the resale by the
Holders of such lesser amount of the Registrable Securities as the Company is able to register
pursuant to the SEC’s interpretation of Rule 415 and use its commercially reasonable efforts to
have such Registration Statement declared effective as promptly as possible and, when permitted to
do so by the SEC, to file subsequent registration statement(s) under the Securities Act with the
SEC covering the resale of any Registrable Securities that were omitted from previous registration
statement(s) and use its commercially reasonable efforts to have such registration declared
effective as promptly as possible thereafter. In furtherance of the Company’s obligations set
forth in the preceding sentence, the parties agree that in the event that any Holder shall deliver
to the Company a written notice at any time after the later of (x) the date which is six months
after the Effective Date of the latest Registration Statement filed pursuant to Section 1.2(a) or
1.2(b) hereof, as applicable, or (y) the date on which
all Registrable Securities registered on all of the prior Registration Statements filed
pursuant to Section 1.2(a) and 1.2(b) hereof are sold, that the Company shall file, within thirty
(30) days following the date of receipt of such written notice, an additional Registration
Statement registering all Registrable Securities that were omitted from the initial Registration
Statement.
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(c) The Company shall pay all expenses incurred in complying with Sections 1.2 and 1.3 hereof
(other than taxes and underwriting discounts and commissions related to the sale of Registrable
Securities), including, without limitation, all registration and filing fees, printing,
duplicating, word processing, facsimile and delivery expenses, fees and disbursements of counsel
for the Company, reasonable fees and disbursements of one counsel representing all Holders
participating in the Registration, “blue sky” fees and expenses and the expense of any special
audits incident to or required by any such registration (but excluding the compensation of regular
employees of the Company which shall be paid in any event by the Company). Notwithstanding the
foregoing, the Company shall not be required to pay the expenses of any registration proceeding
begun pursuant to this Section 1.2 if the registration request is subsequently withdrawn at the
request of the Holders of at least 37% of the Registrable Securities Then Outstanding to be
registered.
(d) Notwithstanding anything to the contrary contained in this Agreement, if the filing,
initial effectiveness or continued use of the Registration Statement referred to in this Section
1.2 at any time would require the Company to make an Adverse Disclosure or would require the
inclusion in such Registration Statement of financial statements that are unavailable to the
Company for reasons beyond the Company’s control, the Company may, upon giving prompt written
notice of such action to the Holders, delay the filing or initial effectiveness of, or suspend use
of, the Registration Statement; provided, however, that the Company shall not be permitted to do so
for more than 90 consecutive days during any 12 month period. In the event the Company exercises
its rights under the preceding sentence, the Holders agree to suspend, immediately upon their
receipt of the notice referred to above, their use of the prospectus relating to the Registration
in connection with any sale or offer to sell Registrable Securities. The Company shall immediately
notify the Holders upon the expiration of any period during which it exercised its rights under
this Section 1.2(d).
1.3 Piggyback Registrations.
(a) If at any time during the Effective Period there is not an effective registration
statement covering all the Registrable Securities and the Company shall determine to file a
registration statement under the Securities Act for purposes of effecting a public offering of
securities of the Company (including, but not limited to, registration statements relating to
secondary offerings of securities of the Company, but excluding registration statements relating to
(i) any employee benefit plan or (ii) a corporate reorganization, merger or acquisition), then the
Company shall notify all Holders in writing at least thirty (30) calendar days prior to such filing
and will afford each such Holder an opportunity to include in such registration statement all or
any part of the Registrable Securities then held by such Holder. Each Holder desiring to include
in any such registration statement all or any part of the Registrable Securities held by such
Holder shall, within twenty (20) calendar days after receipt of the above-described notice from the
Company, so notify the Company in writing, and in such notice shall inform the Company of the
number of Registrable Securities such Holder wishes to include in such
registration statement. If a Holder decides not to include all of its Registrable Securities
in any registration statement thereafter filed by the Company, such Holder shall nevertheless
continue to have the right to include its Registrable Securities in any subsequent registration
statement or registration statements as may be filed by the Company with respect to offerings of
its securities, all upon the terms and conditions set forth herein.
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(b) If a registration statement under which the Company gives notice under this Section 1.3 is
for an underwritten offering, then the Company shall so advise the Holders of Registrable
Securities. In such event, the right of any such Holder to include its Registrable Securities in a
registration pursuant to this Section 1.3 shall be conditioned upon such Holder’s participation in
such underwriting and the inclusion of such Holder’s Registrable Securities in the underwriting to
the extent provided herein. All Holders proposing to distribute their Registrable Securities
through such underwriting shall enter into an underwriting agreement in customary form with the
managing underwriter or underwriter(s) selected by the Company for such underwriting.
Notwithstanding any other provision of this Agreement, if the managing underwriter(s) determine(s)
in good faith that marketing factors require a limitation of the number of shares to be
underwritten, then the managing underwriter(s) may exclude shares (including Registrable
Securities) from the registration and the underwriting, and the number of shares that may be
included in the registration and the underwriting shall be allocated, (i) with respect to a
registration statement initiated by the Company for its own account, first, to the Company,
second, to the holders of securities who have obtained piggy-back registration rights prior
to or at the date of this Agreement, if any, including the Registrable Securities, as to which
registration has been requested pursuant to written contractual piggy-back registration rights (pro
rata in accordance with the number of securities which each such Person has actually requested to
be included in such registration, regardless of the number of securities with respect to which such
Persons have the right to request such inclusion), and third, to holders of other
securities of the Company, provided that the number of shares of Registrable Securities to be
included in such underwriting and registration shall not be reduced unless all shares that are not
Registrable Securities and are held by any person who is an employee, officer or director of the
Company or any subsidiary of the Company are first entirely excluded from the underwriting and
registration; and (ii) with respect to a registration statement initiated by the Company for the
account of third parties exercising demand registration rights, first, to such third
parties, second, to the holders of securities who have obtained piggy-back registration
rights prior to or at the date of this Agreement, if any, including the Registrable Securities, as
to which registration has been requested pursuant to written contractual piggy-back registration
rights (pro rata in accordance with the number of securities which each such Person has actually
requested to be included in such registration, regardless of the number of securities with respect
to which such Persons have the right to request such inclusion), and third, to holders of
other securities of the Company, provided that the number of shares of Registrable Securities to be
included in such underwriting and registration shall not be reduced unless all shares that are not
Registrable Securities and are held by any person who is an employee, officer or director of the
Company or any subsidiary of the Company are first entirely excluded from the underwriting and
registration. If any Holder disapproves of the terms of any such underwriting, such Holder may
elect to withdraw therefrom by written notice to the Company and the underwriter, delivered at
least ten (10) Business Days prior to the Effective Date of the registration statement. Any
Registrable Securities excluded or withdrawn from such underwriting shall be excluded and withdrawn
from the registration.
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(c) With respect to a Registration Statement initiated by the Company for its own account, the
Company shall have the right to terminate or withdraw such Registration anytime prior to the
effectiveness of the Registration Statement, whether or not any Holder has elected to participate
therein.
(d) With respect to a registration statement initiated by the Company for the account of third
parties exercising demand registration rights, if the filing, initial effectiveness or continued
use of the Registration Statement referred to in this Section 1.3 at any time would require the
Company to make an Adverse Disclosure or would require the inclusion in such Registration Statement
of financial statements that are unavailable to the Company for reasons beyond the Company’s
control, the Company may, upon giving prompt written notice of such action to the Holders, delay
the filing or initial effectiveness of, or suspend use of, the Registration Statement,
provided that such delay shall be subject to the restrictions pursuant to the registration
rights agreement between the Company and such third parties. In the event the Company exercises its
rights under the preceding sentence, the Holders agree to suspend, immediately upon their receipt
of the notice referred to above, their use of the prospectus relating to the Registration in
connection with any sale or offer to sell Registrable Securities. The Company shall immediately
notify the Holders upon the expiration of any period during which it exercised its rights under
this Section 1.3(d).
1.4 Obligations of the Company. Whenever required to effect the registration of any
Registrable Securities under this Agreement, the Company shall, subject to Section 1.2(d) and
Sections 1.3(c) and 1.3(d), as expeditiously as commercially reasonably possible:
(a) prepare and file with the SEC a registration statement with respect to such Registrable
Securities and use its commercially reasonable efforts to cause such registration statement to
become effective, and keep such registration statement effective until the end of the Effective
Period;
(b) prepare and file with the SEC such amendments and supplements to such registration
statement and the prospectus used in connection with such registration statement as may be
necessary to comply with the provisions of the Securities Act with respect to the disposition of
all securities covered by such registration statement;
(c) furnish to the Holders such number of copies of a prospectus, including a preliminary
prospectus, in conformity with the requirements of the Securities Act, and such other documents as
they may reasonably request in order to facilitate the disposition of the Registrable Securities
owned by them that are included in such registration;
(d) use its commercially reasonable efforts to register and qualify the securities covered by
such registration statement under such other securities laws of such jurisdictions as shall be
reasonably requested by the Holders, provided that the Company shall not be required in connection
therewith or as a condition thereto to qualify to do business or to file a general consent to
service of process in any such jurisdictions;
(e) in the event of any underwritten public offering, enter into and perform its obligations
under an underwriting agreement, in usual and customary form, with the managing
underwriter(s) of such offering (it being understood and agreed that, as a condition to the
Company’s obligations under this clause (e), each Holder participating in such underwriting shall
also enter into and perform its obligations under such an agreement);
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(f) make commercially reasonable efforts to notify (at least one Business Day in advance) each
Holder of Registrable Securities covered by such registration statement at any time when a
prospectus relating thereto is required to be delivered under the Securities Act of the happening
of any event as a result of which the prospectus included in such registration statement, as then
in effect, includes an untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein not misleading in the
light of the circumstances then existing, and the Company will use commercially reasonable efforts
to amend or supplement such prospectus in order to cause such prospectus not to include any untrue
statement of a material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of the circumstances then
existing;
(g) furnish, at the request of any Holder requesting registration of Registrable Securities,
on the date that such Registrable Securities are delivered to the underwriters for sale, if such
securities are being sold through underwriters, or, if such securities are not being sold through
underwriters, on the date that the registration statement with respect to such securities becomes
effective, (i) an opinion, dated as of such date, of the counsel representing the Company for the
purposes of such registration, in form and substance as is customarily given to underwriters in an
underwritten public offering and reasonably satisfactory to a majority in interest of the Holders
of Registrable Securities Then Outstanding requesting registration, addressed to the underwriters,
if any, and to the Holders requesting registration of Registrable Securities and (ii) a “comfort”
letter dated as of such date, from the independent certified public accountants of the Company, in
form and substance as is customarily given by independent certified public accountants to
underwriters in an underwritten public offering and reasonably satisfactory to a majority in
interest of the Holders of Registrable Securities Then Outstanding requesting registration,
addressed to the underwriters, if any, and to the Holders requesting registration of Registrable
Securities;
(h) the Company may require each selling Holder to furnish to the Company information
regarding such Holder and the distribution of such Registrable Securities as is required by law to
be disclosed in any registration statement, prospectus, or any amendment or supplement thereto, and
the Company may exclude from such registration the Registrable Securities of any such Holder who
unreasonably fails to furnish such information within a reasonable time after receiving such
request; and
(i) use its commercially reasonable efforts to list such Registrable Securities on each
securities exchange on which the Ordinary Shares (including American depositary shares representing
the Ordinary Shares) are then listed.
1.5 Furnish Information. It shall be a condition precedent to the obligations of the
Company to take any action pursuant to Sections 1.2 or 1.3 hereof that the selling Holders shall
furnish to the Company such information regarding themselves, the Registrable Securities held
by them and the intended method of disposition of such securities as shall be reasonably
required to timely effect the registration of their Registrable Securities.
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1.6 Review by Counsel. In connection with the preparation and filing of each
Registration Statement registering Registrable Securities under the Securities Act, each Holder of
Registrable Securities and counsel for such Holder shall be permitted to review such Registration
Statement, each prospectus included therein or filed with the SEC, and each amendment thereof or
supplement thereto a reasonable period of time (but not less than 5 Business Days) prior to their
filing with the SEC.
1.7 Delay of Registration. No Holder shall have any right to obtain or seek an
injunction restraining or otherwise delaying any such registration as the result of any controversy
that might arise with respect to the interpretation or implementation of this Section 1.
1.8 Indemnification. In the event any Registrable Securities are included in a
registration statement under Sections 1.2 or 1.3 hereof:
(a) By the Company. Except as prohibited by law, the Company will indemnify and hold
harmless each Holder, the partners, officers and directors of each Holder, any underwriter (as
defined in the Securities Act) for such Holder and each Person, if any, who controls such Holder or
underwriter within the meaning of the Securities Act or the Securities Exchange Act of 1934, as
amended, (the “Exchange Act”), against all losses, claims, damages, or liabilities (joint
or several) to which they may become subject under the Securities Act, the Exchange Act or other
federal or state law, insofar as such losses, claims, damages, or liabilities (or actions in
respect thereof) arise out of or are based upon any of the following statements, omissions or
violations (collectively a “Violation”):
(i) any untrue statement or alleged untrue statement of a material fact contained in such
registration statement, including any preliminary prospectus or final prospectus contained therein
or any amendments or supplements thereto;
(ii) the omission or alleged omission to state therein a material fact required to be stated
therein, or necessary to make the statements therein not misleading; or
(iii) any violation or alleged violation by the Company of the Securities Act, the Exchange
Act, any federal or state securities law or any rule or regulation promulgated under the Securities
Act, the Exchange Act or any federal or state securities law in connection with the offering
covered by such registration statement; and the Company will reimburse each such Holder, partner,
officer or director, underwriter or controlling Person for any legal or other expenses reasonably
incurred by them in connection with defending any such loss, claim, damage, liability or action;
provided, however, that the indemnity agreement contained in this subsection 1.8(a)
shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action
if such settlement is effected without the consent of the Company (which consent shall not be
unreasonably withheld), nor shall the Company be liable in any such case for any such loss, claim,
damage, liability or action to the extent that it arises out of or is based upon a Violation which
occurs in reliance upon and in conformity with written information
furnished expressly for use in connection with such registration by such Holder, partner,
officer, director, underwriter or controlling Person of such Holder.
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(b) By Selling Holders. Each selling Holder will (severally and not jointly)
indemnify and hold harmless the Company, to the full extent permitted by law, each of its
directors, each of its officers who have signed the registration statement, each Person, if any,
who controls the Company within the meaning of the Securities Act, any underwriter and any other
Holder selling securities under such registration statement or any of such other Holder’s partners,
directors or officers or any Person who controls such Holder within the meaning of the Securities
Act or the Exchange Act, against all losses, claims, damages or liabilities (joint or several) to
which the Company or any such director, officer, controlling Person, underwriter or such other
Holder, partner or director, officer or controlling Person of such other Holder may become subject
under the Securities Act, the Exchange Act or other federal or state law, insofar as such losses,
claims, damages or liabilities (or actions in respect thereto) arise out of or are based upon any
Violation, in each case to the extent (and only to the extent) that such Violation occurs in
reliance upon and in conformity with written information furnished by such Holder under an
instrument duly executed by such Holder and stated to be expressly for use in connection with such
registration; and each such Holder will reimburse any legal or other expenses reasonably incurred
by the Company or any such director, officer, controlling Person, underwriter or other Holder,
partner, officer, director or controlling Person of such other Holder in connection with defending
any such loss, claim, damage, liability or action; provided, however, that the
indemnity agreement contained in this subsection 1.8(b) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such settlement is effected
without the consent of the Holder, which consent shall not be unreasonably withheld; and provided
further, that the total amounts payable in indemnity by a Holder under this Section 1.8(b) in
respect of any Violation shall not exceed the net proceeds received by such Holder in the
registered offering out of which such Violation arises.
(c) Notice. Promptly after receipt by an indemnified party under this Section 1.8 of
notice of the commencement of any action (including any governmental action), such indemnified
party will, if a claim in respect thereof is to be made against any indemnifying party under this
Section 1.8, deliver to the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent the indemnifying
party so desires, jointly with any other indemnifying party similarly noticed, to assume the
defense thereof with counsel mutually satisfactory to the parties; provided,
however, that an indemnified party shall have the right to retain its own counsel, with the
fees and expenses to be paid by the indemnifying party, if representation of such indemnified party
by the counsel retained by the indemnifying party would be inappropriate due to actual or potential
conflict of interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the indemnifying party within
a reasonable time of the commencement of any such action, if prejudicial to its ability to defend
such action, shall relieve such indemnifying party of any liability to the indemnified party under
this Section 1.8.
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(d) Contribution. If the indemnification provided for in this Section 1.8 is held by
a court of competent jurisdiction to be unavailable to an indemnified party with respect to any
losses, claims, damages or liabilities referred to herein, the indemnifying party, in lieu of
indemnifying such indemnified party thereunder, shall to the extent permitted by applicable
law contribute to the amount paid or payable by such indemnified party as a result of such loss,
claim, damage or liability in such proportion as is appropriate to reflect the relative fault of
the indemnifying party on the one hand and of the indemnified party on the other in connection with
the Violation(s) that resulted in such loss, claim, damage or liability, as well as any other
relevant equitable considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by a court of law by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the omission to state a
material fact relates to information supplied by the indemnifying party or by the indemnified party
and the parties’ relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission; provided, that in no event shall any contribution by a Holder
hereunder exceed the net proceeds from the offering received by such Holder.
(e) Survival. The obligations of the Company and Holders under this Section 1.8 shall
survive the completion of any offering of Registrable Securities in a registration statement, and
otherwise.
1.9 Rule 144 Reporting. With a view to making available the benefits of certain rules
and regulations of the SEC which may at any time permit the sale of the Registrable Securities to
the public without registration, after such time as a public market exists for the Ordinary Shares,
the Company agrees to use its commercially reasonable efforts to:
(a) make and keep public information available, as those terms are understood and defined in
Rule 144 under the Securities Act, at all times after the effective date of the first registration
under the Securities Act filed by the Company for an offering of its securities to the general
public;
(b) file with the SEC in a timely manner all reports and other documents required of the
Company under the Securities Act and the Exchange Act (at any time after it has become subject to
such reporting requirements); and
(c) as long as a Holder owns Registrable Securities, to furnish to the Holder forthwith upon
request a written statement by the Company as to its compliance with the reporting requirements of
said Rule 144 (at any time after ninety (90) days after the effective date of the first
registration statement filed by the Company for an offering of its securities to the general
public), and of the Securities Act and the Exchange Act (at any time after it has become subject to
the reporting requirements of the Exchange Act), a copy of the most recent periodic report of the
Company and such other reports and documents of the Company as a Holder may reasonably request in
availing itself of any rule or regulation of the SEC allowing a Holder to sell any such securities
without registration (at any time after the Company has become subject to the reporting
requirements of the Exchange Act).
1.10 Termination of the Company’s Obligations. The Company shall have no obligations
pursuant to Sections 1.2 or 1.3 with respect to any securities that have ceased to be Registrable
Securities in accordance with this Agreement. Notwithstanding anything to the contrary contained
in this Agreement, the Company’s obligations under Section 1.2 and 1.3 with respect to any
Registrable Securities proposed to be sold by a Holder in a registration statement
pursuant to Section 1.2 or 1.3 shall terminate on the fifth anniversary of the closing of the
Business Combination.
11
| 2. | General Provisions. |
2.1 Notices. All notices, requests, waivers and other communications made pursuant to
this Agreement will be in writing, at the addresses set forth on the signature pages hereto (or at
such other address for a party as shall be specified in writing to all other parties), and will be
conclusively deemed to have been duly given (i) when hand delivered to the recipient party; (ii)
upon receipt, when sent by facsimile with written confirmation of transmission; or (iii) the next
Business Day after deposit with a national overnight delivery service, postage prepaid, with next
Business Day delivery guaranteed. Each Person making a communication hereunder by facsimile will
promptly confirm by telephone to the Person to whom such communication was addressed each
communication made by it by facsimile pursuant hereto.
2.2 Entire Agreement; Third-Party Beneficiaries. This Agreement, together with the
Share Exchange Agreement and all other Exhibits, Annexes and Schedules thereto (a) constitute the
entire agreement, and supersede all prior agreements and understandings, both written and oral,
among the Parties with respect to the Transactions and (b) are not intended to confer upon any
Person other than the Parties any rights or remedies. This Agreement shall supersede and replace
the provisions of any other agreement entered into prior to the date hereof between the Company,
SearchMedia International Limited, or any of their respective predecessors or affiliates and any
Shareholder relating to the grant or exercise of registration rights.
2.3 Governing Law. This Agreement shall be governed by, and construed in accordance
with, the laws of the State of New York regardless of the laws that might otherwise govern under
applicable principles of conflicts of laws thereof.
2.4 Dispute Resolution. Any controversy or claim arising out of or relating to this
Agreement, or the breach thereof, shall be determined by arbitration administered by the
International Centre for Dispute Resolution in accordance with its International Arbitration Rules.
The number of arbitrators shall be three. The place of arbitration shall be Xxx Xxxx Xxxx, Xxx
Xxxx, Xxxxxx Xxxxxx of America. The language of the arbitration shall be English.
2.5 Severability. If any term or other provision of this Agreement is invalid,
illegal or incapable of being enforced by any rule or Law, or public policy, all other conditions
and provisions of this Agreement shall nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated by this Agreement is not affected in
any manner materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties shall negotiate in good
faith to modify this Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner to the end that the transactions contemplated by this Agreement
are fulfilled to the extent possible.
2.6 Successors and Assigns. Subject to Section 2.11, the provisions of this Agreement
shall inure to the benefit of, and shall be binding upon, the successors and permitted assigns of
the parties hereto.
12
2.7 Interpretation. Unless the express context otherwise requires:
(a) The headings contained in this Agreement are intended solely for convenience and shall not
affect the rights of the parties to this Agreement;
(b) the words “hereof,” “herein,” and “hereunder” and words of similar import, when used in
this Agreement, shall refer to this Agreement as a whole and not to any particular provision of
this Agreement;
(c) terms defined in the singular shall have a comparable meaning when used in the plural, and
vice versa;
(d) the terms “Dollars” and “$” mean United States Dollars;
(e) references herein to a specific Section, Subsection, Schedule, Annex or Exhibit shall
refer, respectively, to Sections, Subsections, the Schedules, Annexes or Exhibits of this
Agreement;
(f) wherever the word “include,” “includes,” or “including” is used in this Agreement, it
shall be deemed to be followed by the words “without limitation”;
(g) references herein to any gender shall include each other gender;
(h) references herein to any Person shall include such Person’s heirs, executors, personal
representatives, administrators, successors and assigns; provided, however, that
nothing contained in this clause (h) is intended to authorize any assignment or transfer not
otherwise permitted by this Agreement;
(i) references herein to a Person in a particular capacity or capacities shall exclude such
Person in any other capacity;
(j) references herein to any contract or agreement (including this Agreement) mean such
contract or agreement as amended, supplemented or modified from time to time in accordance with the
terms thereof;
(k) references herein to any Law or any license mean such Law or license as amended, modified,
codified, reenacted, supplemented or superseded in whole or in part, and in effect from time to
time; and
(l) references herein to any Law shall be deemed also to refer to all rules and regulations
promulgated thereunder.
2.8 Counterparts; Facsimile Execution. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and shall become
effective when one or more counterparts have been signed by each of the parties and delivered to
the other parties. Facsimile execution and delivery of this Agreement is legal, valid and binding
for all purposes.
13
2.9 Adjustments for Stock Splits and Certain Other Changes. Wherever in this
Agreement there is a reference to a specific number of shares of the Company, then, upon the
occurrence of any subdivision, combination or stock dividend of such class or series of stock, the
specific number of shares so referenced in this Agreement shall automatically be proportionally
adjusted to reflect the affect on the outstanding shares of such class or series of stock by such
subdivision, combination or stock dividend.
2.10 Aggregation of Stock. All shares deemed to be “beneficially owned” (as such term
is defined under Rule 13d-3 of the Exchange Act) by any entity or Person, shall be aggregated
together for the purpose of determining the availability of any rights under this Agreement.
2.11 Assignment. Notwithstanding anything herein to the contrary, the rights of a
Shareholder or any other Holder herein may be assigned only to (i) a party who acquires (on an
as-if converted basis) Registrable Securities representing at least 10% of the total number of
issued and outstanding Ordinary Shares or (ii) a direct or indirect stockholder, partner, member,
beneficiary or Affiliate (as such term is defined in the Securities Act) of a Shareholder;
provided, however, that no party may be assigned any of the foregoing rights unless
the Company is given written notice by the assigning party at the time of such assignment stating
the name, address and tax identification number of the assignee and identifying the securities of
the Company as to which the rights in question are being assigned; and provided further that any
such assignee (a) shall receive such assigned rights subject to all the terms and conditions of
this Agreement, including without limitation the provisions of this Section 2, and (b) is not a
direct or indirect competitor of the Company as determined in good faith by the Company’s board of
directors.
2.12 Amendment of Rights. Any provision of this Agreement may be amended and the
observance thereof may be waived (either generally or in a particular instance and either
retroactively or prospectively) only with the written consent of the Company and Holders of at
least 75% of the Registrable Securities Then Outstanding; provided that any amendment that
disproportionately affects any Holder vis-à-vis any other Holder shall require the consent of such
affected Holder. Any amendment or waiver effected in accordance with this Section 2.12 shall be
binding upon each Holder, each permitted successor or assignee of such Holder and the Company.
2.13 Termination. This Agreement shall terminate in the event the Business
Combination is not consummated or the Share Exchange Agreement is terminated.
14
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date and year
first above written.
| SearchMedia Holdings Limited |
||||
| By: | /s/ Xxxxxx X. Xxxxx | |||
| Name: | Xxxxxx X. Xxxxx | |||
| Title: | ||||
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGE FOR THE SHAREHOLDERS FOLLOWS]
SIGNATURE PAGE FOR THE SHAREHOLDERS FOLLOWS]
15
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date and year
first above written.
| Deutsche Bank AG, Hong Kong Branch |
||||
| By: | /s/ Xxxxx Xxxxxx | |||
| Name: | Xxxxx Xxxxxx | |||
| Title: | Managing Director | |||
| By: | /s/ Xxxxxxxx Xxxxx | |||
| Name: | Xxxxxxxx Xxxxx | |||
| Title: | Director | |||
16
| China Seed Ventures Management Limited as general partner for and on behalf of China Seed Ventures, L.P. |
||||
| By: | /s/ Xxxx Xxxxx-Xxx Xxx | |||
| Name: | Xxxx Xxxxx-Xxx Xxx | |||
| Title: | Managing Director | |||
17
| Vervain Equity Investment Limited |
||||
| By: | /s/ Xxxxxx Xxxxx Tih Loh | |||
| Name: | Xxxxxx Xxxxx Tih Xxx | |||
| Title: | Director | |||
| By: | /s/ Xxx Xxxxxxxxx Tun Lu | |||
| Name: | Xxx Xxxxxxxxx Xxx Xx | |||
| Title: | Director | |||
| Sun Hing Associates Ltd. |
||||
| By: | /s/ Xxxx Xxx Xxx | |||
| Name: | Xxxx Xxx Xxx | |||
| Title: | Director | |||
| By: | /s/ Xxxx Yui Wing | |||
| Name: | Xxxx Yui Wing | |||
| Title: | Director | |||
18
| Linden Ventures II (BVI) Ltd. |
||||
| By: | /s/ Xxxxx Xxxxxx | |||
| Name: | Xxxxx Xxxxxx | |||
| Title: | Authorized Signatory | |||
19
Frost Gamma Investments Trust
By: Dr. Xxxxxxx Xxxxx, M.D., Sole Trustee
| By: | /s/ Xxxxxxx Xxxxx, M.D. | |||
| Name: | Xxxxxxx Xxxxx, M.D. | |||
| Title: | Trustee | |||
20
| Chardan Securities LLC |
||||
| By: | /s/ Xxxxx Xxxxxx | |||
| Name: | Xxxxx Xxxxxx | |||
| Title: | President | |||
21
| /s/ Xxxxxx Xxxxx | ||||
| Xxxxxx Xxxxx | ||||
22
| /s/ Xxx Xxxxxxxx | ||||
| Xxx Xxxxxxxx | ||||
23
| Halpryn Capital Partners, LLC |
||||
| By: | /s/ Xxxxx X. Xxxxxxx | |||
| Name: | Xxxxx X. Xxxxxxx | |||
| Title: | Member | |||
24
| /s/ Xxxxxxx Xxx | ||||
| Xxxxxxx Xxx | ||||
25
| /s/ Le Xxxx | ||||
| Xx Xxxx | ||||
26
| /s/ Xuebao Yang | ||||
| Xuebao Yang | ||||
27
| /s/ Xxxxxxx Xxxxx | ||||
| Xxxxxxx Xxxxx | ||||
28
| /s/ Xxx Xx | ||||
| Xxx Xx | ||||
29
