EQUITY REGISTRATION RIGHTS AGREEMENT DATED AS OF JANUARY 11, 2008 BY AND BETWEEN CHINA MOBILE MEDIA TECHNOLOGY INC. AND ABAX LOTUS LTD.
EXECUTION
VERSION
DATED
AS
OF JANUARY 11, 2008
BY
AND
BETWEEN
CHINA
MOBILE MEDIA TECHNOLOGY INC.
AND
ABAX
LOTUS LTD.
THIS
EQUITY REGISTRATION RIGHTS AGREEMENT (the “Agreement”)
is
made and entered into as of January 11, 2008, by and between (i) China Mobile
Media Technology Inc., a Nevada corporation (the “Company”)
and
(ii) Abax Lotus Ltd. (“Abax”,
the
“Purchaser”).
RECITALS
WHEREAS,
this
Agreement is made pursuant to the Securities Purchase Agreement, dated as of
December 28, 2007, by and among the Company, the Purchaser and the other parties
thereto (the “Purchase
Agreement”), pursuant
to which the Purchaser has agreed to purchase up to RMB170,000,000 in an
aggregate principal amount of the Guaranteed Senior Notes due 2014 (the
“Notes”)
of
Magical Insight Investments Limited, a British Virgin Islands corporation and
a
wholly-owned subsidiary of the Company,
and
six-year warrants to purchase a total of 12,000,000 shares of the Company’s
Common Stock, par value $0.001 (the “Common
Stock”)
at an
exercise price of $2.00 per share, pursuant to the Purchase Agreement and the
Warrant Agreement.
WHEREAS,
in
consideration of Purchaser’s entering into the Purchase Agreement, the Company
has agreed to provide the registration rights set forth in this Agreement.
WHEREAS,
the
execution and delivery of this Agreement is a condition to the obligations
of
the Purchaser set forth in Section
3
of the
Purchase Agreement. Capitalized terms used herein and not otherwise defined
shall have the meanings ascribed to them in the Purchase Agreement.
AGREEMENT
The
parties hereby agree as follows:
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SECTION
1.
|
DEFINITIONS.
|
As
used
in this Agreement, the following capitalized terms shall have the following
meanings:
“Affiliate”:
As
defined in Rule 144 of the Securities Act.
“Closing
Date”:
The
date hereof.
“Common
Stock”:
As
defined in the Recitals.
“Company”:
As
defined in the Preamble.
“Exchange
Act”:
The
Securities Exchange Act of 1934, as amended.
“Existing
Registration Rights”
means
that certain registration rights granted under (i) agreement dated February
8,
2007 by and among General Components, Inc. and the purchasers defined therein
and (ii) the Subscription Agreement dated June 15, 2007 by and among Hi-Tech
Wealth Inc. and the subscribers identified therein.
1
“Holder”:
Any
Person who holds Warrants or Registrable Securities. A Person is deemed to
be a
Holder whenever such Person owns Warrants or Registrable Securities or has
the
right to acquire such Registrable Securities by exercising Warrants held by
such
Person, whether or not such acquisition has actually been effected.
“Indemnified
Party”:
As
defined in Section
7
hereof.
“Inspectors”:
As
defined in Section
3
hereof.
“Liquidated
Damages Period”:
As
defined in Section
4
hereof.
“Notes”:
As
defined in the Recitals.
“Person”:
Any
individual, corporation, partnership, joint venture, association, joint-stock
company, trust, unincorporated organization, government or any agency or
political subdivision thereof or any other entity.
“Principals’
Shares”:
The
Common Stock or other securities that any Holder may acquire directly or
indirectly from any of Gain Thousand Limited, Develop Good International Limited
or Brightcenter Group Limited, together with any other securities which such
Holder may acquire on account of any such securities, including, without
limitation, as the result of any dividend or other distribution on Common Stock
or any split or combination of such Common Stock.
“Prospectus”:
The
prospectus included in a Registration Statement at the time such Registration
Statement is declared effective, as supplemented by any prospectus supplement,
and all material incorporated by reference into such prospectus.
“Purchase
Agreement”:
As
defined in the Recitals.
“Purchaser”:
As
defined in the Recitals.
“Recommencement
Date”:
As
defined in Section
5
hereof.
“Registrable
Securities”:
At any
time, any of (i) the Warrant Shares (whether or not the related Warrants have
been exercised), (ii) Principals’ Shares and (iii) any other securities issued
or issuable with respect to any Warrant Shares or Principals’ Shares by way of
stock dividends or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization or otherwise.
As
to any particular Registrable Securities, such securities shall cease to be
Registrable Securities when (a) a Registration Statement with respect to the
offering of such securities by the Holder thereof shall have been declared
effective under the Securities Act and such securities shall have been disposed
of by such Holder pursuant to such Registration Statement, (b) such securities
have been sold to the public pursuant to Rule 144(k) (or any similar provisions
then in force, but not Rule 144A) promulgated under the Securities Act, (c)
such
securities may be sold without restriction under Rule 144 (or successor rule),
including following the existence of any cashless exercise provision of the
Warrants, (d) such securities shall have been otherwise transferred by the
Holder thereof and new certificates for such securities not bearing a legend
restricting further transfer shall have been delivered by the Company or its
transfer agent and subsequent disposition of such securities shall not require
registration or qualification under the Securities Act or any similar state
law
then in force or (e) such securities shall have ceased to be
outstanding.
2
“Registration
Default”:
As
defined in Section
4
hereof.
“Registration
Statement”:
Any
registration statement of the Company relating to the registration for resale
of
Registrable Securities (in an amount permissible under the Rule 415 Interpretive
Position) that is filed pursuant to the provisions of this Agreement, including
the Prospectus included therein, all amendments thereto (including
post-effective amendments) and all exhibits and all material incorporated by
reference therein.
“Rule
415”:
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 purpose and effect as such
Rule.
“Rule
415 Interpretative Position”:
The
then-current interpretation of the staff of the SEC regarding the availability
of Rule 415 for continuous or delayed offerings of securities for the account
of
selling securityholders.
“SEC”:
The
Securities and Exchange Commission.
“Securities
Act”:
The
Securities Act of 1933, as amended.
“Shelf
Registration”:
As
defined in Section
2
hereof.
“Suspension
Notice”:
As
defined in Section
5
hereof.
“Warrant
Agreement”:
The
Warrant Agreement dated the Closing Date by and between the Company and The
Hongkong and Shanghai Banking Corporation, as Warrant Agent.
“Warrant
Shares”:
The
Common Stock or other securities that any Holder may acquire upon exercise
of a
Warrant, together with any other securities which such Holder may acquire on
account of any such securities, including, without limitation, as the result
of
any dividend or other distribution on Common Stock or any split or combination
of such Common Stock as provided for in the Warrant Agreement.
“Warrants”:
The
warrants of the Company issued and sold pursuant to the Purchase Agreement
and
the Warrant Agreement, together with any warrants issued in substitution or
replacement therefor.
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SECTION
2.
|
FILING
OF REGISTRATION STATEMENT.
|
(a) Subject
solely to the limitation set forth in Section
7(c)
of the
Existing Registration Rights Agreement, as soon as reasonably practicable after
the Closing Date, the Company shall prepare and cause to be filed with the
SEC
pursuant to Rule 415 a Registration Statement on the appropriate form relating
to resales of all Registrable Securities (the “Shelf
Registration”)
provided,
that
the Company shall only be required to register registrable securities up to
an
amount permitted to be registered by the SEC pursuant to the Rule 415
Interpretive Position. The Company shall use its best efforts to cause any
such
Registration Statement to be declared effective by the SEC as soon as reasonably
practicable and no later than June 9, 2008. In the event any Registrable
Securities are excluded from the Registration Statement due to the Rule 415
Interpretative Position, the Registrable Securities to be excluded shall be
allocated among all Holders on a pro
rata
basis
based on the total number of Registrable Securities proposed to be included
in
such Registration Statement.
3
To
the
extent necessary to ensure that the Registration Statement is available for
sales of Registrable Securities by the Holders thereof entitled to the benefit
of this Section
2(a),
the
Company shall use its reasonable best efforts to keep any Registration Statement
required by this Section
2(a)
continuously effective, supplemented, amended and current as required by and
subject to the provisions of Section
2(a)
hereof
and in conformity with the requirements of this Agreement, the Securities Act
and the rules and regulations of the SEC promulgated thereunder from time to
time (including (A) preparing and filing with the SEC such amendments and
post-effective amendments to the Registration Statement as may be necessary
to
keep such Registration Statement effective; (B) cause the Prospectus to be
supplemented by any required Prospectus supplement, and as so supplemented
to be
filed pursuant to Rule 424 under the Securities Act, and complying fully with
Rules 424, 430A and 462, as applicable, under the Securities Act in a timely
manner; and (C) comply with the provisions of the Securities Act with respect
to
the disposition of all securities covered by such Registration Statement),
until
the date when all Registrable Securities covered by the Registration Statement
(i) have been sold pursuant thereto or (ii) may be sold without volume
restrictions pursuant to Rule 144(k) as determined by the counsel to the Company
pursuant to a written opinion letter to such effect, addressed and acceptable
to
the Company’s transfer agent and the affected Holders.
(b) No
Holder
may include any of its Registrable Securities in any Registration Statement
pursuant to this Agreement unless and until such Holder furnishes in writing
to
the Company within 10 business days of a request therefor, such information
as
is requested by the Company regarding such Holder, the Registrable Securities
held by such Holder and the intended method of disposition of the Registrable
Securities held by such Holder, as shall be reasonably required (but in no
event
shall such information provided be less than the information required by
Regulation S-K and other applicable SEC rules, regulations and interpretations
or such as is requested by the staff of the SEC pursuant to any comment letter
with respect to the Registration Statement) to effect the registration of such
Registrable Securities. Each selling Holder agrees to promptly furnish (but
in
no event more than 5 business days following the Company’s request) additional
information required to be disclosed in order to make the information previously
furnished to the Company by such Holder not materially misleading. The Company
shall not have any obligation to include in a Registration Statement Registrable
Securities held by a Holder that does not furnish the information requested
by
the Company pursuant to this Section
2(b).
(c) The
Company shall be deemed not to have used its reasonable best efforts to keep
the
Registration Statement effective during the requisite period if it voluntarily
takes any action that would result in Holders of Registrable Securities covered
thereby not being able to offer and sell such Registrable Securities during
that
period, unless such action is required by applicable law or this
Agreement.
4
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SECTION
3.
|
REGISTRATION
PROCEDURES.
|
In
connection with the Shelf Registration, the following provisions shall
apply:
(a) The
Company shall (i) furnish to the Holders, prior to the filing thereof with
the
SEC, an electronic copy of the Registration Statement and each amendment thereof
(and if a Holder so requests in writing, an electronic copies of all documents
incorporated therein by reference) and each supplement, if any, to the
Prospectus, which documents will be subject to the review and comment of such
Holders in connection with such sale, if any, for a period of at least five
business days, and the Company will not file any such Registration Statement
or
related Prospectus or any amendment or supplement to any such Registration
Statement or Prospectus to which Holders of a majority of the Registrable
Securities shall reasonably object within two business days after the receipt
thereof; and (ii) include the names of the Holders who propose to sell
Registrable Securities pursuant to the Registration Statement as selling
securityholders. A Holder’s objection shall be deemed to be a reasonable
objection to such filing if such Registration Statement, amendment, related
Prospectus or supplement, as applicable, as proposed to be filed, contains
an
untrue statement of a material fact or omits to state any material fact
necessary to make the statements therein (in the case of the Prospectus, in
light of the circumstances under which they were made) not misleading or fails
to comply with the applicable requirements of the Securities Act.
(b) The
Company shall give written notice to the Holders:
(i) when
the
Registration Statement or any amendment thereto has been filed with the SEC
and
when the Registration Statement or any post-effective amendment thereto has
become effective;
(ii) of
any
request by the SEC for amendments or supplements to the Registration Statement
or the Prospectus or for additional information;
(iii) of
the
issuance by the SEC of any stop order suspending the effectiveness of the
Registration Statement or the initiation of any proceedings for that
purpose;
(iv) of
the
receipt by the Company or its legal counsel of any notification with respect
to
the suspension of the qualification of the Registrable Securities for sale
in
any jurisdiction or the initiation or threatening of any proceeding for such
purpose; and
(v) of
the
occurrence of any event that requires the Company to make changes in the
Registration Statement or the Prospectus in order that the Registration
Statement or the Prospectus does not contain an untrue statement of a material
fact nor omit to state a material fact required to be stated therein or
necessary to make the statements therein (in the case of the Prospectus, in
light of the circumstances under which they were made) not
misleading.
(c) The
Company shall make every commercially reasonable effort to obtain the withdrawal
at the earliest possible time, of any order suspending the effectiveness of
the
Registration Statement.
5
(d) The
Company shall furnish to each Holder, without charge, at least one electronic
copy of the Registration Statement and any post-effective amendment thereto,
including financial statements and schedules, and if the Holder so request
in
writing, all exhibits thereto (including those, if any, incorporated by
reference) after the filing of such documents with the SEC.
(e) The
Company shall, during the period which the Registration Statement is effective,
deliver to each Holder an electronic copy of the Prospectus (including each
preliminary Prospectus) included in the Registration Statement as such Holder
may reasonably request. The Company consents, subject to the provisions of
this
Agreement, to the use of the Prospectus by each of the Holders in connection
with the offering and sale of Registrable Securities except after the giving
of
any notice pursuant to Sections
3(b)(ii)-(v).
(f) Prior
to
any public offering of the Registrable Securities pursuant to any Registration
Statement the Company shall use commercially reasonable efforts to register
or
qualify or cooperate with the Holders and their respective counsel in connection
with the registration or qualification of the Registrable Securities for offer
and sale under the securities or “blue sky” laws of such states of the United
States as any Holder reasonably requests in writing and do any and all other
acts or things necessary or advisable to enable the offer and sale in such
jurisdictions of the Registrable Securities; provided,
however,
that
the Company shall not be required to (i) qualify generally to do business in
any
jurisdiction where it is not then so qualified or (ii) take any action which
would subject it to general service of process or to taxation in more than
a
nominal amount in any jurisdiction where it is not then so subject.
(g) If
requested by the Holders, the Company shall cooperate with the Holders or
underwriters to facilitate the preparation and delivery of certificates
representing the Registrable Securities to be sold pursuant to any Registration
Statement free of any restrictive legends and in such denominations and
registered in such names as the Holders may request a reasonable period of
time
prior to sales of the Registrable Securities pursuant to such Registration
Statement.
(h) Upon
the
occurrence of any event contemplated by paragraphs (ii) through (v) of
Section
3(b)
above
during the period for which the Company is required to maintain an effective
Registration Statement, the Company shall as promptly as reasonably possible
prepare and file a post-effective amendment to the Registration Statement or
a
supplement to the related Prospectus and any other required document so that,
as
thereafter delivered to Holders or purchasers of Securities, the Prospectus
will
not contain an untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.
(i) Not
later
than the effective date of the Registration Statement, the Company will provide
a CUSIP number for the Registrable Securities and provide The Depository Trust
Company with printed certificates for the Registrable Securities, in a form
eligible for deposit with The Depository Trust Company.
(j) Use
its
commercially reasonable efforts to cause all such Registrable Securities to
be
quoted on Nasdaq (if the Common Stock is so quoted), and enter into such
customary agreements including a listing application and indemnification
agreement in customary form, provided that the applicable listing requirements
are satisfied, and to provide a transfer agent and registrar for such
Registrable Securities covered by such registration statement no later than
the
effective date of such registration statement.
6
(k) Upon
their execution of commercially customary confidentiality agreements for
securities offerings, the Company will make available for inspection by the
selling Holders, any underwriter participating in any disposition pursuant
to
any Registration Statement, and any attorney, accountant or other agent retained
by any Holder or underwriter (collectively, the “Inspectors”),
all
financial and other records, pertinent corporate documents and properties of
the
Company and its subsidiaries, if any, as shall be reasonably necessary to enable
them to exercise their due diligence responsibility, and cause the Company’s and
its subsidiaries’ officers, directors and employees to supply all information
and respond to all inquiries reasonably requested by any such Inspector in
connection with such registration statement.
(l) If
requested by the managing underwriter or underwriters or any Holder, promptly
incorporate in a prospectus supplement or post-effective amendment such
information as the managing underwriters, each selling Holder and the Company
agree should be included therein relating to the plan of distribution with
respect to such Registrable Securities, including, without limitation,
information with respect to the number of Registrable Securities being sold
to
such underwriters, the purchase price being paid therefor by such underwriters
and with respect to any other terms of the underwritten (or best efforts
underwritten) offering of the Registrable Securities to be sold in such
offering; and make all required filings of such prospectus supplement or
post-effective amendment as soon as practicable after being notified of the
matters to be incorporated in such prospectus supplement or post-effective
amendment.
(m) Cooperate
with the selling Holders and each underwriter or agent participating in the
disposition of such Registrable Securities and their respective counsel in
connection with any filings required to be made with or any other securities
exchange and/or the Financial Industry Regulatory Authority;
(n) The
Company will comply with all applicable rules and regulations of the SEC and
make available to its security holders, within the required time periods, an
earning statement covering a period of at least twelve months, beginning with
the first month after the effective date of the registration statement (as
the
term “effective date” is defined in Rule 158(c) under the Securities Act), which
earning statement shall satisfy the provisions of Section 11(a) of the
Securities Act and Rule 158 thereunder or any successor provisions
thereto.
7
SECTION
4. REGISTRATION
DEFAULT.
(a) The
Company agrees that, in the event that (i) the Registration Statement has not
been declared effective by the SEC on or before July 11, 2008, or (ii) if
effectiveness of the Registration Statement is suspended at any time other
than
pursuant to a Suspension Notice while any Registrable Securities remain
outstanding (each, a “Registration
Default”,
and
July 11, 2008 or the time when the Registration Statement is suspended,
as
the
case may be, the
“Registration Default Date”), the Company shall pay an aggregate of $80,000 to
the Holders for each thirty-day period after such Registration Default Date
until July 11, 2009 during which the Registration Default remains uncured,
and
thereafter the Company shall pay an aggregate of $500,000 to the Holders for
each six-month period (such six-month period or thirty-day period, the
“Liquidated
Damages Period”)
until
June 30, 2014 during which the Registration Default remains uncured; each such
cash payment shall be made on a pro rata basis in accordance with each Holder’s
percentage holding of the then outstanding Registrable Securities
and, in
the case of amounts accruing after July 11, 2009 shall be payable on the last
day of such six-month period;
provided,
however, that
if a
Holder fails to provide the Company with any information that is required to
be
provided in the Registration Statement with respect to such Holder as set forth
herein, then the Registration Default Date as to such Holder shall be extended
until five (5) business days following the date of receipt by the Company of
such required information; provided
further that
the
amount payable to any Holder hereunder for any partial Liquidated Damages Period
shall be prorated for the number of actual days during such Liquidated Damages
Period during which a Registration Default remains uncured.
(b) The
Company shall deliver said cash payment to the Holders by the seventh business
day after the Registration Default and for any subsequent Liquidated Damages
Period, the Company shall make said cash payment no later than the seventh
business day after the end of each such monthly Liquidated Damages Period.
If
the Company fails to pay said cash payment to the Holders in full by the seventh
business day after the Registration Default or the end of such Liquidated
Damages Period, as the case may be, the Company will pay interest thereon at
a
rate of 10% per annum (or such lesser maximum amount that is permitted to be
paid by applicable law) to the Holders, accruing daily from the date such
liquidated damages are due until such amounts, plus all such interest thereon,
are paid in full.
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SECTION
5.
|
LIMITATIONS,
CONDITIONS AND QUALIFICATIONS TO OBLIGATIONS UNDER REGISTRATION
COVENANTS.
|
The
obligations of the Company described in Section
2
of this
Agreement are subject to each of the following limitations, conditions and
qualifications:
(a) Subject
to the next sentence of this paragraph, the Company shall be entitled to
postpone, for a reasonable period of time, the filing of effectiveness of,
or
suspend the right of any Holder to make sales pursuant to, any Registration
Statement otherwise required to be prepared, filed and made and kept effective
by it under the registration covenants described in Section
2
hereof;
provided,
however,
that
the duration of such postponement or suspension may not exceed 90 days in any
365-day period. Such postponement or suspension may be effected only if (i)
(A)
an event or circumstance occurs and is continuing as a result of which such
Registration Statement, any related Prospectus or any document incorporated
therein by reference as then amended or supplemented or proposed to be filed
would, in the Company’s good faith judgment, contain an untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein (in the case of the Prospectus, in the light of the
circumstances under which they were made) not misleading and (B)(1) the Company
determines in its good faith judgment that the disclosure of the event at that
time would have a material adverse effect on the business, operations or
prospects of the Company or (2) the disclosure otherwise relates to a material
business transaction or development that has not yet been publicly disclosed
or
(ii) the Company shall have received a notice referred to Sections
3b(ii)-(iv)
hereof.
If the Company shall so postpone the filing or effectiveness of, or suspend
the
rights of any Holders to make sales pursuant to, a Registration Statement it
shall, as promptly as possible, notify the Holders of such determination (in
each case, a “Suspension
Notice”).
Upon
receipt of such Suspension Notice, each Holder will forthwith discontinue
disposition of Registrable Securities pursuant to the Registration Statement
until (i) such Holder has received copies of the supplemented or amended
Prospectus contemplated by Section
3(h)
hereof,
or (ii) such Holder is advised in writing by the Company that the use of the
Prospectus may be resumed, and has received copies of any additional or
supplemental filings that are incorporated by reference in the Prospectus (in
each case, the “Recommencement
Date”).
Each
Holder receiving a Suspension Notice hereby agrees that it will either (i)
destroy any Prospectuses, other than permanent file copies, then in such
Holder’s possession which have been replaced by the Company with more recently
dated Prospectuses or (ii) deliver to the Company (at the Company’s expense) all
copies, other than permanent file copies, then in such Holder’s possession of
the Prospectus covering such Registrable Securities that was current at the
time
of receipt of the Suspension Notice.
8
(b) The
Company’s obligations shall be subject to the obligations of the Holders to
furnish all information and materials and to take any and all actions as may
be
required under federal and state securities laws and regulations (including
any
comments issued by the SEC staff with respect to the Registration Statement
or
the matters related thereto) to permit the Company to comply with all applicable
requirements of the SEC and to obtain any acceleration of the effective date
of
such Registration Statement.
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SECTION
6.
|
REGISTRATION
EXPENSES.
|
(a) All
expenses incident to the Company’s performance of and compliance with this
Agreement will be borne by the Company, including without limitation:
(i) all
registration and filing fees and expenses;
(ii) all
fees
and expenses of compliance with federal securities and state “blue sky” or
securities laws;
(iii) all
expenses of printing (including printing certificates for the Registrable
Securities and printing of prospectuses), messenger and delivery services and
telephone usage;
9
(iv) all
fees
and expenses customarily paid by an issuer in connection with an underwritten
offering (which shall include reasonable legal fees and disbursements payable
to
one counsel for all of the Holders, if appointed, but in no event including
any
expenses in connection with any “roadshow” or similar expenses);
(v) all
fees
and disbursements of counsel for the Company;
(vi) all
fees
and disbursements of independent certified public accountants of the Company
(including the expenses of any special audit required by or incident to such
performance); and
(vii) all
other
reasonable out-of-pocket expenses of any Holder which are customarily paid
by an
issuer.
(b) The
Company will bear its internal expenses (including, without limitation, all
salaries and expenses of its officers and employees performing legal or
accounting duties), the expenses of any annual audit and the fees and expenses
of any Person, including special experts, retained by the Company.
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SECTION
7.
|
INDEMNIFICATION.
|
(a) The
Company agrees to indemnify and hold harmless each Holder and each Person,
if
any, who controls such Holder within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act from and against any losses, claims,
damages or liabilities, joint or several, or any actions in respect thereof
(including, but not limited to, any losses, claims, damages, liabilities or
actions relating to purchases and sales of the Registrable Securities) to which
each Indemnified Party (as defined in Section
7(c)
below)
may become subject under the Securities Act, the Exchange Act or otherwise,
insofar as such losses, claims, damages, liabilities or actions arise out of
or
are based upon any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement or Prospectus or in any amendment
or supplement thereto or in any preliminary Prospectus relating to a
Registration, or arise out of, or are based upon, the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein (in the case of the Prospectus, in
light of the circumstances under which they were made) not misleading, and
shall
reimburse, as incurred, the Indemnified Parties for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action in respect thereof; provided,
however,
(i)
that the Company shall not be liable (A)in any such case to the extent that
such
loss, claim, damage or liability arises out of or is based upon any untrue
statement or alleged untrue statement or omission or alleged omission made
in
the Registration Statement or Prospectus or in any amendment or supplement
thereto or in any preliminary Prospectus relating to a Registration Statement
in
reliance upon and in conformity with written information pertaining to such
Holder or such Holder’s proposed method of distribution of Registrable
Securities and furnished to the Company by or on behalf of such Holder
specifically for inclusion therein; (B) in the case of an occurrence of an
event
of the type specified in Section
3(b)(ii)-(v),
the use
by such Holder of an outdated or defective Prospectus after the Company has
notified such Holder in writing that the Prospectus is outdated or defective;
and (ii) with respect to any untrue statement or omission or alleged untrue
statement or omission made in any preliminary Prospectus relating to the
Registration Statement, the indemnity agreement contained in this subsection
(a)
shall not inure to the benefit of any Holder from whom the Person asserting
any
such losses, claims, damages or liabilities purchased the Registrable Securities
concerned, to the extent that the Prospectus was required to be delivered by
such Holder under the Securities Act in connection with such purchase and any
such loss, claim, damage or liability of such Holder results from the fact
that
there was not sent or given to such Person, at or prior to the written
confirmation of the sale of such Registrable Securities to such Person, a copy
of the final Prospectus if the Company had previously furnished copies thereof
to such Holder; provided
further, however,
that
this indemnity agreement will be in addition to any liability which the Company
may otherwise have to such Indemnified Party.
10
(b) Each
Holder of the Registrable Securities, severally and not jointly, will indemnify
and hold harmless the Company and each other Holder and each Person, if any,
who
controls the Company or any such other Holder within the meaning of Section
15
of the Securities Act or Section 20 of the Exchange Act from and against any
losses, claims, damages or liabilities or any actions in respect thereof, to
which the Company, such other Holder or any such controlling Person may become
subject under the Securities Act, the Exchange Act or otherwise, insofar as
such
losses, claims, damages, liabilities or actions arise out of or are based upon
any untrue statement or alleged untrue statement of a material fact contained
in
a Registration Statement or Prospectus or in any amendment or supplement thereto
or in any preliminary Prospectus relating to a Registration Statement, or arise
out of or are based upon the omission or alleged omission to state therein
a
material fact necessary to make the statements therein (in the case of the
Prospectus, in light of the circumstances under which they were made) not
misleading, but in each case only (i) to the extent that the untrue statement
or
omission or alleged untrue statement or omission was made in reliance upon
and
in conformity with written information pertaining to such Holder or such
Holder’s proposed method of distribution of Registrable Securities and furnished
to the Company by or on behalf of such Holder specifically for inclusion therein
or (ii) in the case of an occurrence of an event of the type specified in
Section
3(b)(ii)-(v),
as a
result of the use by such Holder of an outdated or defective Prospectus after
the Company has notified such Holder in writing that the Prospectus is outdated
or defective; and, subject to the limitation set forth immediately preceding
this clause, shall reimburse, as incurred, the Company and each such other
Holder for any legal or other expenses reasonably incurred by the Company,
such
other Holder or any such controlling Person in connection with investigating
or
defending any loss, claim, damage, liability or action in respect thereof.
This
indemnity agreement will be in addition to any liability which such Holder
may
otherwise have to the Company, such other Holder or any such controlling
Persons. No Holder shall be liable under this Section
7(b)
for any
amounts exceeding the net proceeds received by such Holder from the sale of
Registrable Securities pursuant to the Registration Statement giving rise to
the
indemnification obligation.
(c) Promptly
after receipt by any Person in respect of which indemnity may be sought pursuant
to Section
7(a)
or
(b)
(any
such Person, an “Indemnified
Party”)
under
this Section
7
of
notice of the commencement of any action or proceeding (including a governmental
investigation), such Indemnified Party will, if a claim in respect thereof
is to
be made against the indemnifying party under this Section
7,
notify
the indemnifying party of the commencement thereof; but the omission so to
notify the indemnifying party will not, in any event, relieve the indemnifying
party from any obligations to any Indemnified Party unless the indemnifying
party is materially prejudiced. In case any such action is brought against
any
Indemnified Party, and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate therein and,
to
the extent that it may wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel reasonably satisfactory
to
such Indemnified Party (who shall not, except with the consent of the
indemnified party, be counsel to the indemnifying party), and after notice
from
the indemnifying party to such Indemnified Party of its election so to assume
the defense thereof the indemnifying party will not be liable to such
Indemnified Party under this Section
7
for any
legal expenses, other than reasonable costs of investigation, subsequently
incurred by such Indemnified Party in connection with the defense thereof.
No
indemnifying party shall, without the prior written consent of the Indemnified
Party, effect any settlement of any pending or threatened action in respect
of
which any Indemnified Party is or could have been a party and indemnity could
have been sought hereunder by such Indemnified Party unless such settlement
includes an unconditional release of such Indemnified Party from all liability
on any claims that are the subject matter of such action, and does not include
a
statement as to or an admission of fault, culpability or a failure to act by
or
on behalf of any Indemnified Party. The indemnifying party shall not be liable
for the costs and expenses of any settlement of such action effected by such
Indemnified Party without the consent of the indemnifying party, which consent
shall not be unreasonably withheld.
11
(d) If
the
indemnification provided for in this Section
7
is
unavailable or insufficient to hold harmless an Indemnified Party under
subsections (a) or (b) above, then each indemnifying party shall contribute
to
the amount paid or payable by such Indemnified Party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to
in
subsection (a) or (b) above (i) in such proportion as is appropriate to reflect
the relative benefits received by the indemnifying party or parties on the
one
hand and the Indemnified Party on the other from the sale of the Registrable
Securities by the Holders, or (ii) if the allocation provided by the foregoing
clause (i) is not permitted by applicable law or not applicable as where the
Company is the indemnifying party and no securities are sold by the Company
in
the transaction which is the subject of the action or proceeding, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the indemnifying party
or
parties on the one hand and the Indemnified Party on the other in connection
with the statements or omissions that resulted in such losses, claims, damages
or liabilities (or actions in respect thereof) as well as any other relevant
equitable considerations. The relative fault of the parties shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company on the one hand
or
such Holder or such other Indemnified Party, as the case may be, on the other,
and the parties’ relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The amount paid
by
an Indemnified Party as a result of the losses, claims, damages or liabilities
referred to in the first sentence of this subsection (d) shall be deemed to
include any legal or other expenses reasonably incurred by such Indemnified
Party in connection with investigating or defending any action or claim which
is
the subject of this subsection (d). Notwithstanding any other provision of
this
Section
7(d),
the
Holders of the Registrable Securities shall not be required to contribute any
amount in excess of the amount by which the net proceeds received by such
Holders from the sale of the Registrable Securities pursuant to the Registration
Statement exceeds the amount of damages that such Holders have otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. No Person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation. For purposes of this paragraph (d), each Person, if any,
who
controls such Indemnified Party within the meaning of the Securities Act or
the
Exchange Act shall have the same rights to contribution as such Indemnified
Party, and each Person, if any, who controls the Company within the meaning
of
the Securities Act or the Exchange Act shall have the same rights to
contribution as the Company.
12
(e) The
agreements contained in this Section
7
shall
survive the sale of the Registrable Securities pursuant to the Registration
Statement and shall remain in full force and effect, regardless of any
termination or cancellation of this Agreement or any investigation made by
or on
behalf of any Indemnified Party.
|
SECTION
8.
|
RULE
144.
|
The
Company shall use its best efforts to file the reports required to be filed
by
it under the Exchange Act in a timely manner and, if at any time the Company
is
not required to file such reports, it will, upon the request of any Holder,
make
publicly available other information so long as necessary to permit sales of
their securities pursuant to Rule 144. The Company covenants that it will take
such further action as any Holder may reasonably request, all to the extent
required from time to time to enable such Holder to sell Registrable Securities
without registration under the Securities Act within the limitation of the
exemptions provided by Rule 144. Upon the request of any Holder, the Company
shall deliver to such Holder a written statement as to whether it has complied
with such requirements.
|
SECTION
9.
|
MISCELLANEOUS.
|
(a) Remedies.
The
Company acknowledges and agrees that any failure by the Company to comply with
its obligations under Section
2
hereof
may result in material irreparable injury to the Holders for which there is
no
adequate remedy at law, that it will not be possible to measure damages for
such
injuries precisely and that, in the event of any such failure, any Holder may
obtain such relief as may be required to specifically enforce the Company’s
obligations under Section
2
hereof.
The Company further agrees to waive the defense in any action for specific
performance that a remedy at law would be adequate.
(b) No
Inconsistent Agreements.
The
Company will not on or after the date of this Agreement enter into any agreement
with respect to its securities that is inconsistent with the rights granted
to
the Holders in this Agreement or otherwise conflicts with the provisions hereof.
The rights granted to the Holders hereunder do not in any way conflict with
and
are not inconsistent with the rights granted to the holders of the Company’s
securities under any agreement in effect on the Closing Date. Notwithstanding
anything to the contrary herein, the registration rights granted herein are
subordinated in all respects to the registration rights granted pursuant to
the
Existing Registration Rights, including with respect to the timing, inclusion
and priority of the amount of securities so registered. For the avoidance of
doubt, the liquidated damages payable by the Company in the event of
Registration Default shall not be affected by the subordination as mentioned
in
the prior sentence, except that the Registration Default is occurred as a result
of the delay in or failure to obtain the effectiveness of the registration
statement in form SB-2 filed with the U.S. Securities and Exchange Commission
on
September 20, 2007 (Registration No. 333-144283) due to the interpretation
of
the staff of the U.S. Securities and Exchange Commission that Rule 415 is not
available for continuous or delayed offerings of securities for the account
of
selling security-holders.
13
(c) Amendments
and Waivers.
The
provisions of this Agreement may not be amended, modified or supplemented,
and
waivers or consents to departures from the provisions hereof may not be given,
except by the Company and the written consent of the Holders of a majority
of
the Registrable Securities affected by such amendment, modification, supplement,
waiver or consent.
(d) Notices.
All
notices and other communications provided for or permitted hereunder shall
be
made in writing by hand delivery, first-class mail, facsimile transmission,
or
air courier which guarantees overnight delivery:
(1) if
to a
Holder of the Securities, at the most current address given by such Holder
to
the Company or Warrant Agent.
(2) if
to the
Company, at its address as follows:
China
Mobile Media Technology Inc.
0xx
Xxxxx, Xxxxx X, Xxxxxx-Xxxxxx
Xx.00
Xxxxxxxxxxxx Xxxx Xxxx
Xxxxxxx
Xxxxxxxx
Xxxxxxx,
Xxxxx 100083
Attention:
Chief Financial Officer
Facsimile
No.: x00 00 0000 0000
with
a
copy to:
Loeb
& Loeb LLP
000
Xxxx
Xxxxxx, Xxx Xxxx, XX 00000
Attention:
Xxxxxxxx X. Xxxxxxxx, Esq.
Facsimile
No.: x0 000 000 0000
(3) if
to the
Purchaser, at its address as indicated on Schedule I to the Purchase
Agreement.
All
such
notices and communications shall be deemed to have been duly given: at the
time
delivered by hand, if personally delivered; three business days after being
deposited in the mail, postage prepaid, if mailed; when receipt is acknowledged
by the recipient’s facsimile machine operator, if sent by facsimile
transmission; and on the day delivered, if sent by overnight air courier
guaranteeing next day delivery.
(e) Successors
and Assigns.
This
Agreement shall be binding upon and shall inure to the benefit the Company,
the
Holders and their respective successors and assigns. In addition, and whether
or
not any express assignment shall have been made, the provisions of this
Agreement which are for the benefit of the Purchaser shall also be for the
benefit of and enforceable by any subsequent Holder, subject to the terms and
conditions contained in this Agreement. The Purchaser and any Holder shall
provide written notice to the Company of any assignment of their rights
hereunder or any transfer of Registrable Securities which are entitled to such
rights under the terms of this Agreement; provided
that the
failure to provide such notice shall not affect any such rights of the Purchaser
or any Holder.
14
(f) Counterparts.
This
Agreement may be executed in any number of counterparts and by the parties
hereto in separate counterparts, each of which when so executed shall be deemed
to be an original and all of which taken together shall constitute one and
the
same agreement.
(g) Headings.
The
headings in this Agreement are for convenience of reference only and shall
not
limit or otherwise affect the meaning hereof.
(h) Governing
Law; Jurisdiction.
THIS
AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
OF
THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS. The
Company agrees that any suit, action or proceeding against it arising out of
or
based upon this Agreement or the transactions contemplated hereby may be
instituted in any State or U.S. federal court in The City of New York and County
of New York, and waives any objection which it may now or hereafter have to
the
laying of venue of any such proceeding, and irrevocably submits to the
non-exclusive jurisdiction of such courts in any suit, action or
proceeding.
(i) Severability.
If any
one or more of the provisions contained herein, or the application thereof
in
any circumstance, is held invalid, illegal or unenforceable, the validity,
legality and enforceability of any such provision in every other respect and
of
the remaining provisions contained herein shall not be affected or impaired
thereby.
(j) Securities
Held by the Company.
Whenever the consent or approval of Holders of a specified percentage of
Registrable Securities is required hereunder, Registrable Securities held by
the
Company or its Affiliates (other than subsequent Holders of Registrable
Securities if such subsequent Holders are deemed to be Affiliates solely by
reason of their holdings of such Registrable Securities) shall not be counted
in
determining whether such consent or approval was given by the Holders of such
required percentage.
(k) Business
Combinations.
Without
the prior written consent of the Holders, the Company shall not consolidate
with
or enter into any merger, consolidation or other business combination
transaction (for the purposes of this Section
9(k),
a
“business
combination”)
with
another Person (whether or not the Company is the surviving entity) or sell,
transfer or distribute all or substantially all of its assets, whether in a
single transaction or through a series of related transactions, to another
Person or group of affiliated Persons or permit any of its subsidiaries to
enter
into any such transaction or transactions, where the business combination or
sale, transfer or distribution involves the payment by any Person of any
securities to, or the exchange by any Person of any securities with, the Company
or any holders of Common Stock of the Company, unless the issuer of such
securities agrees to be bound by the terms of this Agreement with Holders
relating to such securities or otherwise enters into a new registration rights
agreement which shall contain terms substantially similar to this Agreement
and
shall otherwise be in a form satisfactory to the Holders.
15
(l) Independent
Nature of Holders’ Obligations and Rights.
The
obligations of each Holder hereunder are several and not joint with the
obligations of any other Holder hereunder, and no Holder shall be responsible
in
any way for the performance of the obligation of any other Holder hereunder.
Nothing contained herein or in any other agreement of document delivered at
any
closing, and no action taken by any Holder pursuant hereto or thereto, shall
be
deemed to constitute the Holders as a partnership, an association, a joint
venture or any other kind of entity, or create a presumption that the Holders
are in any way acting in concert with respect to such obligations or the
transactions contemplated by this Agreement. Each Holder shall be entitled
to
protect and enforce its rights, including without limitation the rights arising
out of this Agreement, and it shall not be necessary for any other Holder to
be
joined as an additional party in any proceeding for such purpose.
[Signature
Page Follows]
16
IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date first
written above.
| CHINA MOBILE MEDIA TECHNOLOGY INC. | ||
| |
|
|
| By: | ||
|
Name: |
||
| Title: | ||
ABAX
LOTUS LTD.
By:_________________________________
Name:
Title:
Authorized Signatory
