REGISTRATION RIGHTS AGREEMENT
Exhibit
4.4
This
REGISTRATION RIGHTS
AGREEMENT (this “Agreement”), dated July 30,
2010, is between China Broadband, Inc., a Nevada corporation (the “Company”), and each purchaser
identified on Schedule
A hereto (each, including their respective successors and assigns, an
“Investor” and
collectively, the “Investors”).
WHEREAS, in connection with
the Securities Purchase Agreement by and among the parties hereto of even date
herewith (the “Securities
Purchase Agreement”), the Company has agreed, upon the terms and subject
to the conditions set forth in the Securities Purchase Agreement, to issue and
sell to each Investor Units comprised of (i) up to 300,000,000 shares
(collectively, the “Shares”) of the Company’s
common stock, $0.001 par value per share (the “Common Stock”) and (ii)
warrants (the “Warrants”), which will be
exercisable to purchase shares of Common Stock (as exercised collectively, the
“Warrant Shares”);
and
WHEREAS, in accordance with
the terms of the Securities Purchase Agreement, the Company has agreed to
provide certain registration rights under the Securities Act of 1933, as
amended, and the rules and regulations thereunder, or any similar successor
statute (collectively, the “Securities Act”), and
applicable state securities laws.
NOW, THEREFORE, in
consideration of the premises and the mutual covenants contained herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Company and each of the Investors hereby agree as
follows:
1. Definitions.
Capitalized
terms used herein and not otherwise defined herein shall have the respective
meanings set forth in the Securities Purchase Agreement. As used in
this Agreement, the following terms shall have the following
meanings:
(a) “Additional Effectiveness Date”
means the date the Additional Registration Statement is declared effective by
the SEC.
(b) “Additional Effectiveness
Deadline” means the date which is sixty (60) calendar days after the
Additional Filing Date or, in the event that the Registration Statement is
subject to a review by the SEC, one hundred twenty (120) calendar days after the
Additional Filing Date.
(c) “Additional Filing Date” means
the date on which the Additional Registration Statement is filed with the
SEC.
(d) “Additional Filing Deadline”
means if Cutback Shares are required to be included in the Additional
Registration Statement, one hundred eighty (180) days from the Initial
Effectiveness Date or the last Additional Effectiveness Date, as
applicable.
(e) “Additional Registrable
Securities” means, (i) any Cutback Shares not previously included on a
Registration Statement and (ii) any shares of Common Stock of the Company issued
or issuable with respect to the Shares, the Warrants or the Warrant Shares, as
applicable, as a result of any stock split, stock dividend, recapitalization,
exchange or similar event or otherwise, without regard to any limitations on
exercises of the Warrants.
(f) “Additional Registration
Statement” means a registration statement or registration statements of
the Company filed under the Securities Act covering any Additional Registrable
Securities.
(g) “Additional Required Registration
Amount” means any Cutback Shares not previously included on a
Registration Statement, all subject to adjustment as provided in Section 2(f),
without regard to any limitations on exercises of the Warrants, if
any.
(h) “Business Day” means any day
(i) other than (A) Saturday, (B) Sunday or (C) any day on which commercial banks
in New York City are authorized or required by law to remain closed and (ii)
that the SEC is open for business.
(i) “Closing Date” shall have the
meaning set forth in the Securities Purchase Agreement.
(j) “Cutback Shares” means any of
the Initial Required Registration Amount of Registrable Securities not included
in all Registration Statements previously declared effective hereunder as a
result of a limitation on the maximum number of shares of Common Stock of the
Company permitted to be registered by the staff of the SEC pursuant to Rule
415.
(k) “Effectiveness Date” means the
Initial Effectiveness Date and the Additional Effectiveness Date, as
applicable.
(l) “Effectiveness Deadline” means
the Initial Effectiveness Deadline and the Additional Effectiveness Deadline, as
applicable.
(m) “Exchange Act” means the
Securities and Exchange Act of 1934, as amended, and the rules and regulations
thereunder, or any similar successor statute.
(n) “Filing Deadline” means the
Initial Filing Deadline and the Additional Filing Deadline, as
applicable.
(o) “Initial Effectiveness Date”
means the date that the Initial Registration Statement has been declared
effective by the SEC.
(p) “Initial Effectiveness
Deadline” means the date that is one hundred eighty (180) days following
the final Closing Date; provided, however, in the event the SEC
informs the Company (i) that the SEC will not review such Registration Statement
or (ii) that the
Company may request the acceleration of the effectiveness of such Registration
Statement and the Company makes such request, the Initial Effectiveness Deadline
shall mean the date that is within five (5) Business Days the Company is so
informed pursuant to either clause (i) or (ii) hereof; provided, further, that if the Initial
Effectiveness Date falls on a day other than a Business Day, the Initial
Effectiveness Deadline shall be the following Business Day.
2
(q) “Initial Filing Deadline” means
the date that is forty five (45) calendar days after the final Closing
Date.
(r) “Initial Registrable
Securities” means (i) the shares of Common Stock, (ii) the
Warrant Shares and (iii) any capital stock of the Company issued or issuable,
with respect to the Warrant Shares or the Warrants as a result of any stock
split, stock dividend, recapitalization, exchange or similar event or otherwise,
without regard to any limitations on exercises of the Warrants.
(s) “Initial Required Registration
Amount” means (i) the sum of (A) the number of shares of Common Stock
issued as of the Trading Day immediately preceding the applicable date of
determination, and (B) the number of Warrant Shares issued and issuable pursuant
to the Warrants as of the Trading Day immediately preceding the applicable date
of determination, all subject to adjustment as provided in Section 2(f), without
regard to any limitations on exercises of the Warrants, if any or (ii) such
other amount as may be required by the staff of the SEC pursuant to Rule
415.
(t) “Initial Registration
Statement” means the registration statement of the Company initially
filed under the Securities Act covering the Initial Registrable
Securities.
(u) “Investor” means an Investor or
any transferee or assignee thereof to whom a Investor assigns its rights under
this Agreement and who agrees to become bound by the provisions of this
Agreement in accordance with Section 9 and any transferee or assignee thereof to
whom a transferee or assignee assigns its rights under this Agreement and who
agrees to become bound by the provisions of this Agreement in accordance with
Section 9.
(v) “Person” means an individual, a
limited liability company, a partnership, a joint venture, a corporation, a
trust, an unincorporated organization and a government or any department or
agency thereof.
(w) “register,” “registered,” and “registration” refer to a
registration effected by preparing and filing one or more Registration
Statements in compliance with the Securities Act and pursuant to Rule 415 and
the declaration or ordering of effectiveness of such Registration Statement(s)
by the SEC.
(x) “Registrable Securities” means
the Initial Registrable Securities and the Additional Registrable
Securities.
(y) “Registration Statement” means
a registration statement or registration statements, including the Initial
Registration Statement and any Additional Registration Statements, of the
Company filed under the Securities Act covering the Registrable
Securities.
(z) “Required Holders” means the
holders of at least a majority of the Registrable Securities or the Investor
Representative acting on behalf of such requisite number of
holders.
(aa) “Required Registration Amount”
means either the Initial Required Registration Amount or the Additional Required
Registration Amount, as applicable.
3
(bb) “Rule 415” means Rule 415 under
the Securities Act or any successor rule providing for offering securities on a
continuous or delayed basis.
(cc) “SEC” means the United States
Securities and Exchange Commission.
2. Registration.
(a) Mandatory
Registration. The Company shall prepare, and use its
commercially reasonable efforts to file with the SEC, on or before the Initial
Filing Deadline, the Registration Statement on Form S-3 (or Form S-1 or any
other applicable form, if Form S-3 is not available to the Company) covering the
resale of all of the Registrable Securities. The Registration
Statement prepared pursuant hereto shall register for resale at least the number
of shares of Common Stock equal to the Required Registration Amount determined
as of the date the Registration Statement is initially filed with the
SEC. The Registration Statement shall contain customary “Selling
Stockholders” and “Plan of Distribution” sections. The Company shall
use its commercially reasonable efforts to have the Registration Statement
declared effective by the SEC as soon as practicable, but in no event later than
the Initial Effectiveness Deadline. By 9:30 a.m. New York City time
on the Business Day following the Effective Date, the Company shall file with
the SEC in accordance with Rule 424 under the Securities Act the final
prospectus to be used in connection with sales pursuant to such Registration
Statement.
(b) Additional Mandatory
Registrations. The Company shall prepare, and, as soon as
practicable but in no event later than the Additional Filing Deadline, file with
the SEC an Additional Registration Statement on Form S-3 (or Form S-1 or any
other applicable form, if Form S-3 is not available to the Company) covering the
resale of all of the Additional Registrable Securities not previously registered
on an Additional Registration Statement hereunder. To the extent the
staff of the SEC does not permit the Additional Required Registration Amount to
be registered on an Additional Registration Statement, the Company shall file
Additional Registration Statements successively trying to register on each such
Additional Registration Statement the maximum number of remaining Additional
Registrable Securities until the Additional Required Registration Amount has
been registered with the SEC. Each Additional Registration Statement
prepared pursuant hereto shall register for resale at least that number of
shares of Common Stock equal to the Additional Required Registration Amount as
of date the Registration Statement is initially filed with the
SEC. Each Additional Registration Statement shall contain customary
“Selling Stockholders” and “Plan of Distribution” sections. The
Company shall use its commercially reasonable efforts to have each Additional
Registration Statement declared effective by the SEC as soon as practicable, but
in no event later than the Additional Effectiveness Deadline. By 9:30
a.m. New York time on the date following the Additional Effective Date, the
Company shall file with the SEC in accordance with Rule 424 under the Securities
Act the final prospectus to be used in connection with sales pursuant to such
Registration Statement.
4
(c) Allocation of Registrable
Securities. The initial number of Registrable Securities
included in any Registration Statement and any increase in the number of
Registrable Securities included therein shall be allocated pro rata among the
Investors based on the number of Registrable Securities held by each Investor at
the time the Registration Statement covering such initial number of Registrable
Securities or increase thereof is declared effective by the SEC. In
the event that an Investor sells or otherwise transfers any of such Investor’s
Registrable Securities, each transferee shall be allocated a pro rata portion of
the then remaining number of Registrable Securities included in such
Registration Statement for such transferor. Any shares of Common
Stock included in a Registration Statement and which remain allocated to any
Person which ceases to hold any Registrable Securities covered by such
Registration Statement shall be allocated to the remaining Investors, pro rata
based on the number of Registrable Securities then held by such Investors which
are covered by such Registration Statement. In no event shall the
Company include any securities other than Registrable Securities on any
Registration Statement without the prior written consent of the Required Holders
or the Investor Representative. If the SEC requires that
the Company register less than the amount of Registrable Securities originally
included on any Registration Statement at the time it was filed, the Registrable
Securities on such Registration Statement shall be decreased on a pro rata basis
and, unless otherwise requested by an Investor with respect to its Shares and
Warrant Shares, the Warrant Shares included on such Registration Statement shall
be decreased first.
(d) Sufficient Number of Shares
Registered. In the event the number of shares available under
a Registration Statement filed pursuant to Section 2(a) is insufficient to cover
all of the Registrable Securities required to be covered by such Registration
Statement or an Investor’s allocated portion of the Registrable Securities
pursuant to Section 2(c), the Company shall amend the applicable Registration
Statement, or file a new Registration Statement on Form S-3 (or Form S-1 or any
other applicable form, if Form S-3 is not available to the Company), or both, so
as to cover at least the Required Registration Amount as of the Trading Day
immediately preceding the date of the filing of such amendment or new
Registration Statement, in each case, as soon as practicable, but in any event
not later than fifteen (15) Business Days after the necessity therefor
arises. The Company shall use its commercially reasonable efforts to
cause such amendment and/or new Registration Statement to become effective as
soon as practicable following the filing thereof. For purposes of the
foregoing provision, the number of shares available under a Registration
Statement shall be deemed “insufficient to cover all of the Registrable
Securities” if at any time the number of shares of Common Stock available for
resale under the Registration Statement is less than the product determined by
multiplying (i) the Required Registration Amount as of such time by (ii)
0.90.
3. Related
Obligations. At such time as the Company is obligated to file
a Registration Statement with the SEC pursuant to Section 2(a) or 2(d) hereof,
the Company will use its commercially reasonable efforts to effect the
registration of the Registrable Securities in accordance with the intended
method of disposition thereof and, pursuant thereto, the Company shall have the
following obligations:
(a) The
Company shall promptly prepare and file with the SEC a Registration Statement
with respect to the Registrable Securities and use its commercially reasonable
efforts to cause such Registration Statement relating to the Registrable
Securities to become effective as soon as practicable after such filing (but in
no event later than the Effectiveness Deadline). The Company shall
keep each Registration Statement effective pursuant to Rule 415 at all times
until the earlier of: (i) the date as of which the Investors may sell all of the
Registrable Securities covered by such Registration Statement without
restriction pursuant to Rule 144 (or any successor thereto) promulgated under
the Securities Act (“Rule
144”) or (ii) the date on which the Investors shall have sold all of the
Registrable Securities covered by such Registration Statement (the “Registration
Period”). The Company shall ensure that each Registration
Statement (including any amendments or supplements thereto and prospectuses
contained therein) shall not contain 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 (in the case of prospectuses, in the light of the
circumstances in which they were made) not misleading.
5
(b) The
Company shall prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to a Registration Statement and the
prospectus used in connection with such Registration Statement, which prospectus
is to be filed pursuant to Rule 424 promulgated under the Securities Act, as may
be necessary to keep such Registration Statement effective at all times during
the Registration Period, and, during such period, comply with the provisions of
the Securities Act with respect to the disposition of all Registrable Securities
of the Company covered by such Registration Statement until such time as all of
such Registrable Securities shall have been disposed of in accordance with the
intended methods of disposition by the seller or sellers thereof as set forth in
such Registration Statement.
(c) The
Company shall use its commercially reasonable efforts to: (i) register and
qualify, unless an exemption from registration and qualification applies, the
resale by Investors of the Registrable Securities covered by a Registration
Statement under such other securities or “blue sky” laws of all applicable
jurisdictions in the United States, (ii) prepare and file in those
jurisdictions, such amendments (including post-effective amendments) and
supplements to such registrations and qualifications as may be necessary to
maintain the effectiveness thereof during the Registration Period, (iii) take
such other actions as may be necessary to maintain such registrations and
qualifications in effect at all times during the Registration Period, and (iv)
take all other actions reasonably necessary or advisable to qualify the
Registrable Securities for sale in such jurisdictions; provided, however, that the Company
shall not be required in connection therewith or as a condition thereto to (x)
qualify to do business in any jurisdiction where it would not otherwise be
required to qualify but for this Section 3(c), (y) subject itself to general
taxation in any such jurisdiction, or (z) file a general consent to service of
process in any such jurisdiction. The Company shall promptly notify
the Investor Representative of the receipt by the Company of any
notification with respect to the suspension of the registration or qualification
of any of the Registrable Securities for sale under the securities or “blue sky”
laws of any jurisdiction in the United States or its receipt of actual notice of
the initiation or threatening of any proceeding for such purpose.
(d) The
Company shall notify the Investor Representative in writing of the
happening of any event, as promptly as practicable after becoming aware of such
event, as a result of which the prospectus included in a Registration Statement,
as then in effect, includes an untrue statement of a material fact or omission
to state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading (provided that in no event shall such notice contain any
material, nonpublic information), and, subject to Section 3(m), promptly prepare
a supplement or amendment to such Registration Statement to correct such untrue
statement or omission. The Company shall also promptly notify the
Investor Representative in writing when a prospectus or any prospectus
supplement or post-effective amendment has been filed, and when a Registration
Statement or any post-effective amendment has become effective.
6
(e) The
Company shall use its commercially reasonable efforts to prevent the issuance of
any stop order or other suspension of effectiveness of a Registration Statement,
or the suspension of the qualification of any of the Registrable Securities for
sale in any jurisdiction and, if such an order or suspension is issued, to
obtain the withdrawal of such order or suspension at the earliest possible
moment and to notify the Investor Representative of the issuance of such order
and the resolution thereof or its receipt of actual notice of the initiation or
threat of any proceeding for such purpose.
(f) If
any Investor is required under applicable securities laws to be described in the
Registration Statement as an underwriter, at the reasonable request of such
Investor, the Company shall furnish to such Investor, on the date of the
effectiveness of the Registration Statement and thereafter from time to time on
such dates as an Investor may reasonably request: (i) a letter, dated such date,
from the Company’s independent certified public accountants in form and
substance as is customarily given by independent certified public accountants to
underwriters in an underwritten public offering, addressed to the Investors; and
(ii) an opinion, dated as of such date, of counsel representing the Company for
purposes of such Registration Statement, in form, scope and substance reasonably
acceptable to such counsel and as is customarily given in an underwritten public
offering, addressed to the Investors.
(g) The
Company shall hold in confidence and not make any disclosure of information
concerning an Investor provided to the Company unless: (i) disclosure of such
information is necessary to comply with federal or state securities laws; (ii)
the disclosure of such information is necessary to avoid or correct a
misstatement or omission in any Registration Statement; (iii) the release of
such information is ordered pursuant to a subpoena or other final,
non-appealable order from a court or governmental body of competent
jurisdiction; or (iv) such information has been made available to the public
other than by disclosure in violation of this Agreement or any other Transaction
Document. The Company agrees that it shall, upon learning that
disclosure of such information concerning an Investor is sought in or by a court
or governmental body of competent jurisdiction or through other means, give
prompt written notice to such Investor and allow such Investor, at the
Investor’s expense, to undertake appropriate action to prevent disclosure of, or
to obtain a protective order for, such information.
(h) The
Company shall use its commercially reasonable efforts either to: (i) cause all
of the Registrable Securities covered by a Registration Statement to be listed
on each national securities exchange on which securities of the same class or
series issued by the Company are then listed, if any, if the listing of such
Registrable Securities is then permitted under the rules of such
exchange. The Company shall pay all fees and expenses in connection
with satisfying its obligation under this Section 3(h).
(i) The
Company shall cooperate with the Investors who hold Registrable Securities being
offered and, to the extent applicable, facilitate the timely preparation and
delivery of certificates (not bearing any restrictive legend) representing the
Registrable Securities to be offered pursuant to a Registration Statement and
enable such certificates to be in such denominations or amounts, as the case may
be, as the Investors may reasonably request and registered in such names as the
Investors may request.
7
(j) If
requested by an Investor, the Company shall as soon as practicable: (i)
incorporate in a prospectus supplement or post-effective amendment such
information as an Investor reasonably requests to be included therein relating
to the sale and distribution of Registrable Securities, including, without
limitation, information with respect to the number of Registrable Securities
being offered or sold, the purchase price being paid therefor and any other
terms of the offering of the Registrable Securities to be sold in such offering;
(ii) make all required filings of such prospectus supplement or post-effective
amendment after being notified of the matters to be incorporated in such
prospectus supplement or post-effective amendment; and (iii) supplement or make
amendments to any Registration Statement if reasonably requested by an Investor
holding any Registrable Securities.
(k) The
Company shall use its commercially reasonable efforts to cause the Registrable
Securities covered by a Registration Statement to be registered with or approved
by such other governmental agencies or authorities as may be necessary to
consummate the disposition of such Registrable Securities.
(l)
The Company shall otherwise use its commercially reasonable efforts to comply
with all applicable rules and regulations of the SEC in connection with any
registration hereunder.
(m) Notwithstanding
anything to the contrary herein, at any time after the Effective Date, the
Company may delay the disclosure of material, non-public information concerning
the Company the disclosure of which at the time is not, in the good faith
opinion of the Board of Directors of the Company and its counsel, in the best
interest of the Company and, in the opinion of counsel to the Company, otherwise
required (a “Grace
Period”); provided, that the Company
shall promptly: (i) notify the Investor Representative in writing of the
existence of material, non-public information giving rise to a Grace Period
(provided that in each notice the Company will not disclose the content of such
material, non-public information to the Investors) and the date on which the
Grace Period will begin, and (ii) notify Investor Representative in writing
of the date on which the Grace Period ends; and, provided further, that no
Grace Period shall exceed twenty (20) consecutive days and during any three
hundred sixty five (365) day period such Grace Periods shall not exceed an
aggregate of sixty (60) days and the first day of any Grace Period must be at
least five (5) Trading Days (as defined in the Securities Purchase Agreement)
after the last day of any prior Grace Period (each, an “Allowable Grace
Period”). For purposes of determining the length of a Grace
Period above, the Grace Period shall begin on and include the date the Investor
Representative receives the notice referred to in clause (i) and shall end on
and include the later of the date the Investor Representative receives the notice
referred to in clause (ii) and the date referred to in such
notice. The Company’s obligations under Section 3(f) shall not be
applicable during and Allowable Grace Period.
8
4. Obligations of the
Investors.
(a) At
least five (5) Business Days prior to the first anticipated filing date of a
Registration Statement, the Company shall notify the Investor
Representative in
writing of the information the Company requires from each Investor if such
Investor elects to have any of such Investor’s Registrable Securities included
in such Registration Statement. It shall be a condition precedent to
the obligations of the Company to complete the registration pursuant to this
Agreement with respect to the Registrable Securities of a particular Investor
that such Investor shall, within five (5) Business Days of the Company’s
request, furnish to the Company such information regarding itself, the
Registrable Securities held by it and the intended method of disposition of the
Registrable Securities held by it, as shall be reasonably required to effect and
maintain the effectiveness of the registration of such Registrable Securities
and shall execute such documents in connection with such registration as the
Company may reasonably request.
(b) Each
Investor, by such Investor’s acceptance of the Registrable Securities, agrees to
cooperate with the Company as reasonably requested by the Company in connection
with the preparation and filing of any Registration Statement hereunder, unless
such Investor has notified the Company in writing of such Investor’s election to
exclude all of such Investor’s Registrable Securities from such Registration
Statement.
(c) Each
Investor agrees that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 3(d) or 3(e), such
Investor will immediately discontinue disposition of Registrable Securities
pursuant to any Registration Statement(s) covering such Registrable Securities
until such Investor’s receipt of the copies of the supplemented or amended
prospectus or receipt of notice that no supplement or amendment is
required.
(d) Each
Investor covenants and agrees that it will comply with the prospectus delivery
requirements of the Securities Act as applicable to it or an exemption therefrom
in connection with sales of Registrable Securities pursuant to the Registration
Statement.
5. Expenses of
Registration. All reasonable expenses, other than underwriting
discounts and commissions, incurred in connection with registrations, filings or
qualifications pursuant to Sections 2 and 3 hereof, including, without
limitation, all registration, listing and qualifications fees, printers and
accounting fees, and fees and disbursements of counsel for the Company shall be
paid by the Company.
6. Indemnification. In
the event any Registrable Securities are included in a Registration Statement
under this Agreement:
9
(a) To
the fullest extent permitted by law, the Company will, and hereby does,
indemnify, hold harmless and defend each Investor, the directors, officers,
members, partners, employees, agents, representatives of, and each Person, if
any, who controls any Investor within the meaning of the Securities Act or the
Exchange Act (each, an “Indemnified Person”), against
any losses, claims, damages, liabilities, judgments, fines, penalties, charges,
costs, reasonable attorneys’ fees, amounts paid in settlement or expenses, joint
or several, (collectively, “Claims”) incurred in
investigating, preparing or defending any action, claim, suit, inquiry,
proceeding, investigation or appeal taken from the foregoing by or before any
court or governmental, administrative or other regulatory agency, body or the
SEC, whether pending or threatened, whether or not an indemnified party is or
may be a party thereto (“Indemnified Damages”), to
which any of them may become subject insofar as such Claims (or actions or
proceedings, whether commenced or threatened, in respect thereof) arise out of
or are based upon: (i) any untrue statement or alleged untrue
statement of a material fact in a Registration Statement or any post-effective
amendment thereto or in any filing made in connection with the qualification of
the offering under the securities or other “blue sky” laws of any jurisdiction
in which Registrable Securities are offered (“Blue Sky Filing”), or the
omission or alleged omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, (ii) any
untrue statement or alleged untrue statement of a material fact contained in any
preliminary prospectus if used prior to the effective date of such Registration
Statement, or contained in the final prospectus (as amended or supplemented, if
the Company files any amendment thereof or supplement thereto with the SEC) or
the omission or alleged omission to state therein any material fact necessary to
make the statements made therein, in light of the circumstances under which the
statements therein were made, not misleading or (iii) any violation or alleged
violation by the Company of the Securities Act, the Exchange Act, any other law,
including, without limitation, any state securities law, or any rule or
regulation thereunder relating to the offer or sale of the Registrable
Securities pursuant to a Registration Statement (the matters in the foregoing
clauses (i) through (iii) being, collectively, “Violations”). Subject
to Section 6(c), the Company shall reimburse the Indemnified Persons, promptly
as such expenses are incurred and are due and payable, for any reasonable legal
fees and reasonable expenses incurred by them in connection with investigating
or defending any such Claim. Notwithstanding anything to the contrary
contained herein, the indemnification agreement contained in this Section
6(a): (i) shall not apply to a Claim by an Indemnified Person arising
out of or based upon a Violation which occurs in reliance upon and in conformity
with information furnished in writing to the Company by such Indemnified Person
for such Indemnified Person expressly for use in connection with the preparation
of the Registration Statement or any such amendment thereof or supplement
thereto, if such prospectus was timely made available by the Company pursuant to
Section 3(d); and (ii) shall not apply to amounts paid in settlement of any
Claim if such settlement is effected without the prior written consent of the
Company, which consent shall not be unreasonably withheld or
delayed. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of the Indemnified Person
and shall survive the transfer of the Registrable Securities by the Investors
pursuant to Section 9.
(b) In
connection with any Registration Statement in which an Investor is
participating, each such Investor agrees to severally and not jointly indemnify,
hold harmless and defend, to the same extent and in the same manner as is set
forth in Section 6(a), the Company, each of its directors, each of its officers
who signs the Registration Statement and each Person, if any, who controls the
Company within the meaning of the Securities Act or the Exchange Act (each, an
“Indemnified Party”),
against any Claim or Indemnified Damages to which any of them may become
subject, under the Securities Act, the Exchange Act or otherwise, insofar as
such Claim or Indemnified Damages 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 to the
Company by such Investor expressly for use in connection with such Registration
Statement; and, subject to Section 6(c), such Investor will reimburse any legal
or other expenses reasonably incurred by an Indemnified Party in connection with
investigating or defending any such Claim; provided, however, that the indemnity
agreement contained in this Section 6(b) and the agreement with respect to
contribution contained in Section 7 shall not apply to amounts paid in
settlement of any Claim if such settlement is effected without the prior written
consent of such Investor, which consent shall not be unreasonably withheld or
delayed; provided,
further, however, that the Investor
shall be liable under this Section 6(b) for only that amount of a Claim or
Indemnified Damages as does not exceed the net proceeds to such Investor as a
result of the sale of Registrable Securities pursuant to such Registration
Statement. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of such Indemnified Party
and shall survive the transfer of the Registrable Securities by the Investors
pursuant to Section 9.
10
(c) Promptly
after receipt by an Indemnified Person or Indemnified Party under this Section 6
of notice of the commencement of any action or proceeding (including any
governmental action or proceeding) involving a Claim, such Indemnified Person or
Indemnified Party shall, if a Claim in respect thereof is to be made against any
indemnifying party under this Section 6, 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
control of the defense thereof with counsel mutually satisfactory to the
indemnifying party and the Indemnified Person or the Indemnified Party, as the
case may be; provided,
however, that an
Indemnified Person or Indemnified Party shall have the right to retain its own
counsel with the fees and expenses of not more than one counsel for all such
Indemnified Person or Indemnified Party to be paid by the indemnifying party,
if, in the reasonable opinion of counsel retained by the indemnifying party, the
representation by such counsel of the Indemnified Person or Indemnified Party
and the indemnifying party would be inappropriate due to actual or potential
differing interests between such Indemnified Person or Indemnified Party and any
other party represented by such counsel in such proceeding. In the
case of an Indemnified Person, legal counsel referred to in the immediately
preceding sentence shall be selected by the Investors holding at least a
majority in
interest of the Registrable Securities included in the Registration Statement to
which the Claim relates. The Indemnified Party or Indemnified Person
shall cooperate reasonably with the indemnifying party in connection with any
negotiation or defense of any such action or Claim by the indemnifying party and
shall furnish to the indemnifying party all information reasonably available to
the Indemnified Party or Indemnified Person which relates to such action or
Claim. The indemnifying party shall keep the Indemnified Party or
Indemnified Person fully apprised at all times as to the status of the defense
or any settlement negotiations with respect thereto. No indemnifying
party shall be liable for any settlement of any action, claim or proceeding
effected without its prior written consent, provided, however, that the
indemnifying party shall not unreasonably withhold, delay or condition its
consent. No indemnifying party shall, without the prior written
consent of the Indemnified Party or Indemnified Person, consent to entry of any
judgment or enter into any settlement or other compromise which does not include
as an unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party or Indemnified Person of a release from all liability in
respect to such Claim or litigation, and such settlement shall not include any
admission as to fault on the part of the Indemnified Party. Following
indemnification as provided for hereunder, the indemnifying party shall be
subrogated to all rights of the Indemnified Party or Indemnified Person with
respect to all third parties, firms or corporations relating to the matter for
which indemnification has been made. The failure to deliver written
notice to the indemnifying party within a reasonable time of the commencement of
any such action shall not relieve such indemnifying party of any liability to
the Indemnified Person or Indemnified Party under this Section 6, except to the
extent that the indemnifying party is prejudiced in its ability to defend such
action.
11
(d) The
indemnification required by this Section 6 shall be made by periodic payments of
the amount thereof during the course of the investigation or defense, as and
when bills are received or Indemnified Damages are incurred.
(e) The
indemnity agreements contained herein shall be in addition to: (i) any cause of
action or similar right of the Indemnified Party or Indemnified Person against
the indemnifying party or others, and (ii) any liabilities the indemnifying
party may be subject to pursuant to the law.
7. Contribution. To
the extent any indemnification by an indemnifying party is prohibited or limited
by law, the indemnifying party agrees to make the maximum contribution with
respect to any amounts for which it would otherwise be liable under Section 6 to
the fullest extent permitted by law; provided, however, that: (i) no Person
involved in the sale of Registrable Securities which Person is guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) in connection with such sale shall be entitled to contribution
from any Person involved in such sale of Registrable Securities who was not
guilty of fraudulent misrepresentation; and (ii) contribution by any seller of
Registrable Securities shall be limited in amount to the net amount of proceeds
received by such seller from the sale of such Registrable Securities pursuant to
such Registration Statement.
8. Reports Under the Exchange
Act. With a view to making available to the Investors the
benefits of Rule 144 or any other similar rule or regulation of the SEC that may
at any time permit the Investors to sell securities of the Company to the public
without registration, the Company agrees, for so long as Registrable Securities
are outstanding, to:
(a) make
and keep public information available, as those terms are understood and defined
in Rule 144;
(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 so long as the Company
remains subject to such requirements and the filing of such reports and other
documents is required for the applicable provisions of Rule 144;
and
(c) furnish
to each Investor so long as such Investor owns Registrable Securities, promptly
upon request, such information as may be reasonably and customarily requested to
permit the Investors to sell such securities pursuant to Rule 144 without
registration.
9. Assignment of Registration
Rights. The rights under this Agreement shall be automatically
assignable by the Investors to any permitted transferee of all or any portion of
such Investor’s Registrable Securities if: (i) the Investor agrees in writing
with the transferee or assignee to assign such rights, and a copy of such
agreement is furnished to the Company within five (5) Business Days after such
assignment; (ii) the Company is, within five (5) Business Days after such
transfer or assignment, furnished with written notice of (a) the name and
address of such transferee or assignee, and (b) the securities with respect to
which such registration rights are being transferred or assigned; (iii)
immediately following such transfer or assignment the further disposition of
such securities by the transferee or assignee is restricted under the Securities
Act or applicable state securities laws; (iv) at or before the time the Company
receives the written notice contemplated by clause (ii) of this sentence the
transferee or assignee agrees in writing with the Company to be bound by all of
the provisions contained herein; and (v) such transfer shall have been made in
accordance with the applicable requirements of the Securities Purchase
Agreement.
12
10. Amendment of Registration
Rights. Provisions 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 the Investor Representative who shall have obtained the consent of the
Required Holders. Any amendment or waiver effected in accordance with
this Section 10 shall be binding upon each Investor and the
Company. No such amendment shall be effective to the extent that it
applies to less than all of the holders of the Registrable
Securities. No consideration shall be offered or paid to any Person
to amend or consent to a waiver or modification of any provision of this
Agreement unless the same consideration also is offered to all of the parties to
this Agreement.
11. Miscellaneous.
(a) A
Person is deemed to be a holder of Registrable Securities whenever such Person
owns or is deemed to own of record such Registrable Securities. If
the Company receives conflicting instructions, notices or elections from two or
more Persons with respect to the same Registrable Securities, the Company shall
act upon the basis of instructions, notice or election received from such record
owner of such Registrable Securities.
(b) Any
notices, consents, waivers or other communications required or permitted to be
given under the terms of this Agreement must be in writing and will be deemed to
have been delivered if delivered in accordance with Section 10.2 of the
Securities Purchase Agreement.
(c) Failure
of any party to exercise any right or remedy under this Agreement or otherwise,
or delay by a party in exercising such right or remedy, shall not operate as a
waiver thereof.
(d) All
questions concerning the construction, validity, enforcement and interpretation
of the Transaction Documents shall be governed by and construed and enforced in
accordance with the internal laws of the State of New York, without regard to
the principles of conflicts of law thereof.
(e) Each
party agrees that all legal proceedings concerning the interpretations,
enforcement and defense of the transactions contemplated by this Note (whether
brought against a party hereto or its respective affiliates, directors,
officers, shareholders, employees or agents) shall be commenced exclusively in
the state and federal courts sitting in the City of New York. Each
party hereto hereby irrevocably submits to the exclusive jurisdiction of the
state and federal courts sitting in the City of New York, New York for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein (including with respect to
the enforcement of this Note, and hereby irrevocably waives, and agrees not to
assert in any suit, action or proceeding, any claim that it is not personally
subject to the jurisdiction of any such court, that such suit, action or
proceeding is improper. Each party hereto hereby irrevocably waives
personal service of process and consents to process being served in any such
suit, action or proceeding by mailing a copy thereof via registered or certified
mail or overnight delivery (with evidence of delivery) to such party at the
address in effect for notices to it under this Note and agrees that such service
shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way
any right to serve process in any manner permitted by law. EACH PARTY
HERETO (INCLUDING ITS AFFILIATES, AGENTS, OFFICERS, DIRECTORS AND EMPLOYEES)
HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR
RELATING TO THIS NOTE OR THE TRANSACTIONS CONTEMPLATED HEREBY.
13
(f)
This Agreement, the other Transaction Documents (as defined in the Securities
Purchase Agreement) and the instruments referenced herein and therein constitute
the entire agreement among the parties hereto with respect to the subject matter
hereof and thereof. There are no restrictions, promises, warranties
or undertakings, other than those set forth or referred to herein and
therein. This Agreement, the other Transaction Documents and the
instruments referenced herein and therein supersede all prior agreements and
understandings among the parties hereto with respect to the subject matter
hereof and thereof.
(g) Subject
to the requirements of Section 9, this Agreement shall inure to the benefit of
and be binding upon the permitted successors and assigns of each of the parties
hereto.
(h) The
headings in this Agreement are for convenience of reference only and shall not
limit or otherwise affect the meaning hereof.
(i)
This Agreement may be executed in identical counterparts, each of which shall be
deemed an original but all of which shall constitute one and the same
agreement. This Agreement, once executed by a party, may be delivered
to the other party hereto by facsimile transmission of a copy of this Agreement
bearing the signature of the party so delivering this Agreement.
(j)
Each party shall do and perform, or cause to be done and
performed, all such further acts and things, and shall execute and deliver all
such other agreements, certificates, instruments and documents as any other
party may reasonably request in order to carry out the intent and accomplish the
purposes of this Agreement and the consummation of the transactions contemplated
hereby.
(k) All
consents and other determinations required to be made by the Investors pursuant
to this Agreement shall be made, unless otherwise specified in this Agreement,
by the Investor Representative.
(l)
The language used in this Agreement will be deemed to be the language chosen by
the parties to express their mutual intent and no rules of strict construction
will be applied against any party.
14
(m) This
Agreement is intended for the benefit of the parties hereto and their respective
permitted successors and assigns, and is not for the benefit of, nor may any
provision hereof be enforced by, any other Person.
(n) The
obligations of each Investor hereunder are several and not joint with the
obligations of any other Investor, and no provision of this Agreement is
intended to confer any obligations on any Investor vis-à-vis any other
Investor. Nothing contained herein, and no action taken by any
Investor pursuant hereto, shall be deemed to constitute the Investors as a
partnership, an association, a joint venture or any other kind of entity, or
create a presumption that the Investors are in any way acting in concert or as a
group with respect to such obligations or the transactions contemplated
herein.
(o) The
Lead Placement Agent and any co-placement agent are intended third party
beneficiaries of this Agreement and have all of the rights of an “Investor”
under this Agreement and the shares of Common Stock issuable upon the exercise
of the Warrants issued to the Lead Placement Agent and any co-placement agent,
except for the Warrants issued pursuant to Section 10.1(c) of the Securities
Purchase Agreement, (and any capital stock of the Company issued or issuable,
with respect to the warrants issued to the Lead Placement Agent or any
co-placement agent as a result of any stock split, stock dividend,
recapitalization, exchange, anti-dilution adjustment or similar event or
otherwise, without regard to any limitations on exercises of the warrants, if
any) constitute Registrable Securities for all purposes of this
Agreement. Notwithstanding the foregoing, neither the Lead Placement
Agent nor the co-placement agent are entitled to any Registration Delay
Payments.
[Signature
Page Follows]
15
IN WITNESS WHEREOF, the
parties hereto have caused this Registration Rights Agreement to be duly
executed by their respective authorized signatories as of the date first
indicated above.
COMPANY:
|
||
CHINA
BROADBAND, INC.
|
||
By:
|
||
Name:
|
||
Title:
|
||
INVESTORS:
|
||
The
Investors executing the Signature Page in the form attached hereto as
Annex A
and delivering the same to the Company or its agents shall be deemed to
have executed this Agreement and agreed to the terms
hereof.
|
||
LEAD
PLACEMENT AGENT:
|
||
CHARDAN
CAPITAL MARKETS, LLC
|
||
By:
|
||
Name:
|
||
Title:
|
Signature
Page
Annex
A
Investor
Counterpart Signature Page
The
undersigned, desiring to: (i) enter into this Registration Rights Agreement,
dated as of _________________, 2010 (the “Agreement”), between the
undersigned, China Broadband, Inc., a Nevada corporation (the “Company”), and the other
parties thereto, in or substantially in the form furnished to the undersigned
and (ii) purchase the securities of the Company appearing below, hereby agrees
to purchase such securities from the Company as of the Closing and further
agrees to join the Agreement as a party thereto, with all the rights and
privileges appertaining thereto, and to be bound in all respects by the terms
and conditions thereof. Capitalized terms used herein but not
otherwise defined shall have the meaning as set forth in the
Agreement.
IN WITNESS WHEREOF, the
undersigned has executed the Agreement as of _____________________,
2010.
Name
and Address, Fax No. and Social Security No./EIN of
Investor:
|
|
Fax No.:
|
Soc. Sec. No./EIN:
|
If
a partnership, corporation, trust or other business
entity:
|
||
By:
|
||
Name:
|
||
Title:
|
If
an individual:
|
|
Signature
|
Schedule
A
SCHEDULE
OF INVESTORS
Investor
|
Shares of Common
Stock
|
Warrants
|
||||||
|
||||||||
|
||||||||
TOTAL:
|