REGISTRATION RIGHTS AGREEMENT
This
Registration Rights Agreement (this "Agreement") is made
and entered into as of October 29, 2010, by and among China Dredging Group Co.,
Ltd. (the “Company”), the
purchasers listed on Schedule I hereto
(the "Purchasers") and the
shareholders listed on Schedule II
hereto.
This
Agreement is being entered into pursuant to the Securities Purchase Agreement
dated as of the date hereof among the Company and the Purchasers (the "Purchase
Agreement").
The
Company and the Purchasers hereby agree as follows:
1. Definitions.
Capitalized
terms used and not otherwise defined herein shall have the meanings given such
terms in the Purchase Agreement. As used in this Agreement, the
following terms shall have the following meanings:
"Advice" shall have
meaning set forth in Section 3(m).
"Affiliate" means,
with respect to any Person, any other Person that directly or indirectly
controls or is controlled by or under common control with such
Person. For the purposes of this definition, "control," when used
with respect to any Person, means the possession, direct or indirect, of the
power to direct or cause the direction of the management and policies of such
Person, whether through the ownership of voting securities, by contract or
otherwise; and the terms of "affiliated," "controlling" and
"controlled"
have meanings correlative to the foregoing.
"Board" shall have
meaning set forth in Section 3(n).
"Business Day" means
any day except Saturday, Sunday and any day which shall be a legal holiday or a
day on which banking institutions in the State of New York generally are
authorized or required by law or other government actions to close.
“Chardan Shares” means
the 500,000 Ordinary Shares issued to the shareholders of Chardan Acquisition
Corp., pursuant to the terms of the Merger Agreement.
"Commission" means the
Securities and Exchange Commission.
"Effectiveness Date"
means with respect to the Registration Statement under Section 2(a), the one
hundred eightieth (180th) day
following the Filing Date; provided, however, that, if the
Effectiveness Date falls on a Saturday, Sunday or any other day which shall be a
legal holiday or a day on which the Commission is authorized or required by law
or other government actions to close, the Effectiveness Date shall be the
following Business Day.
"Effectiveness Period"
shall have the meaning set forth in Section 2(a).
“Escrow Shares” means
15,000,000 of the Founders’ Shares beneficially owned by Mars Harvest Co., Ltd.,
a BVI company controlled by Xx. Xxxx Xinrong.
"Event" shall have the
meaning set forth in Section 7(c).
"Event Date" shall
have the meaning set forth in Section 7(c).
"Exchange Act" means
the Securities Exchange Act of 1934, as amended.
"Filing Date" means
with respect to a Registration Statement under Section 2(a), the date that is
the sixtieth (60th) day
following the Termination Date; provided, however that if the
Filing Date falls on a Saturday, Sunday or any other day which shall be a legal
holiday or a day on which the Commission is authorized or required by law or
other government actions to close, the Filing Date shall be the following
Business Day.
“Founders’ Shares”
means 37,177,323 of the Ordinary Shares of the Company owned, prior to the
consummation of the Merger Agreement, in the aggregate by Mars Harvest Co.,
Ltd., Venus Seed Co., Ltd., Saturn Glory Co., Ltd., Regent Fill Investment Group
Limited, Poying Holdings Limited; Xx Xxxxxxxxx and Xxxx Xxx.
"Holder" or "Holders" means the
holder or holders, as the case may be, from time to time of Registrable
Securities.
"Indemnified Party"
shall have the meaning set forth in Section 5(c).
"Indemnifying Party"
shall have the meaning set forth in Section 5(c).
"Losses" shall have
the meaning set forth in Section 5(a).
“Merger Agreement”
means that certain Agreement and Plan of Merger, dated as of even date herewith,
by and among Chardan Acquisition Corp., the shareholders of Chardan Acquisition
Corp., the Company and the shareholders of the Company.
"Ordinary Shares"
means the Company's Ordinary Shares, no par value per share.
"Person" means an
individual or a corporation, partnership, trust, incorporated or unincorporated
association, joint venture, limited liability company, joint stock company,
government (or an agency or political subdivision thereof) or other entity of
any kind.
"Preferred Shares"
means shares of the Company’s Class A Convertible Preferred Shares issued to the
Purchasers pursuant to the Purchase Agreement.
"Proceeding" means an
action, claim, suit, investigation or proceeding (including, without limitation,
an investigation or partial proceeding, such as a deposition), whether commenced
or threatened.
“Purchaser
Representative” shall have the meaning as set forth in the Purchase
Agreement.
"Prospectus" means the
prospectus included in the Registration Statement (including, without
limitation, a prospectus that includes any information previously omitted from a
prospectus filed as part of an effective registration statement in reliance upon
Rule 430A promulgated under the Securities Act), as amended or supplemented by
any prospectus supplement, with respect to the terms of the offering of any
portion of the Registrable Securities covered by the Registration Statement, and
all other amendments and supplements to the Prospectus, including post-effective
amendments, and all material incorporated by reference in such
Prospectus.
"Registrable
Securities” means (i) the Ordinary Shares issuable upon the
conversion of the Preferred Shares (the “Conversion Shares”),
(ii) the Escrow Shares, (iii) the Founder Shares, (iv) the Chardan Shares and
(v) any securities issued or issuable upon any shares split, dividend or other
distribution, recapitalization or similar event with respect to the
foregoing.
"Registration
Statement" means the registration statements and any additional
registration statements contemplated by Section 2, including (in each case) the
Prospectus, amendments and supplements to such registration statement or
Prospectus, including pre- and post-effective amendments, all exhibits thereto,
and all material incorporated by reference in such registration
statement.
"Rule 144" means Rule
144 promulgated by the Commission 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 Commission having substantially the same effect as such
Rule.
"Rule 415" means Rule
415 promulgated by the Commission 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 Commission having substantially the same effect as such
Rule.
"Rule 424" means Rule
424 promulgated by the Commission 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 Commission having substantially the same effect as such
Rule.
“SEC Guidance” means
(i) any publicly-available written or oral guidance, comments, requirements or
requests of the Commission staff and (ii) the Securities Act.
"Securities Act" means
the Securities Act of 1933, as amended.
“Securities Escrow
Agreement” means that agreement dated as of even date herewith, by and
among the Company, the Purchasers, Chardan Capital Markets, LLC, Mars Harvest
Co. Ltd. and Loeb & Loeb, LLP.
"Termination Date"
means the date after which funds will no longer be accepted for the purchase of
the Preferred Shares sold pursuant to the terms of the Purchase
Agreement.
2. Registration of Registrable
Securities.
(a) Piggyback
Registration. On or prior to the Filing Date, the Company
shall use its best efforts to prepare and file with the Commission a
Registration Statement (the “Public Offering Registration Statement”) providing
for (i) the sale of Ordinary Shares of the Company by means of a firm commitment
underwritten offering (the “Underwritten Shares”)
and (ii) the resale of all of the Registrable Securities to be made on a
continuous basis pursuant to Rule 415. The Public Offering
Registration Statement shall be on Form F-1 (except if the Company is not then
eligible to use such form, in which case such registration shall be on another
appropriate form in accordance herewith and the Securities Act and the rules
promulgated thereunder). The Company shall (i) not permit any
securities other than the Underwritten Shares and the Registrable Securities to
be included in the Public Offering Registration Statement (ii) use its best
efforts to cause the Public Offering Registration Statement to be declared
effective under the Securities Act as promptly as possible after the filing
thereof, but in any event prior to the Effectiveness Date, and to keep the
Public Offering Registration Statement continuously effective under the
Securities Act until such date as is the earlier of (x) the date when all
Registrable Securities covered by the Public Offering Registration Statement
have been sold or (y) the date on which the Registrable Securities may be sold
without any restriction pursuant to Rule 144 as determined by the counsel to the
Company pursuant to a written opinion letter, addressed to the Company's
transfer agent to such effect (the "Effectiveness
Period"). If at any time and for any reason, an additional
Registration Statement is required to be filed because at such time the actual
number of Registrable Securities exceeds the number of Registrable Securities
remaining under the Public Offering Registration Statement, the Company shall
use its best efforts to file such additional Registration Statement within
twenty (20) Business Days and shall use its best efforts to cause such
additional Registration Statement to be declared effective by the Commission as
soon as possible.
(b) Resale Registration.
In the event that the Company does not file the Public Offering Registration
Statement as set forth in Section 2(a) on or prior to the Filing Date, the
Company shall prepare and file with the Commission a "resale" Registration
Statement providing for the resale of all Registrable Securities by means of an
offering to be made on a continuous basis pursuant to Rule 415 (the “Resale Registration
Statement”). The Resale Registration Statement shall be on
Form F-1 (except if the Company is not then eligible to register for resale the
Registrable Securities on Form F-1, in which case such registration shall be on
another appropriate form in accordance herewith and the Securities Act and the
rules promulgated thereunder). The Company shall use its
best efforts to cause the Resale Registration Statement to be declared effective
under the Securities Act as promptly as possible after the filing thereof, but
in any event prior to the Effectiveness Date, and to keep the Resale
Registration Statement continuously effective under the Securities Act during
the Effectiveness Period. If at any time and for any reason, an
additional Registration Statement is required to be filed because at such time
the actual number of Registrable Securities exceeds the number of Registrable
Securities remaining under the Resale Registration Statement, the Company shall
use its best efforts to file such additional Registration Statement within
twenty (20) Business Days and shall use its best efforts to cause such
additional Registration Statement to be declared effective by the Commission as
soon as possible.
(c) 415 Limitation.
Notwithstanding any other provision of this Agreement, if based upon any SEC
Guidance the Commission limits the number of Registrable Securities permitted to
be registered on a particular Registration Statement (and notwithstanding that
the Company used diligent efforts to advocate with the Commission for the
registration of all or a greater number of Registrable Securities than permitted
under such SEC Guidance), in the event the Commission does not permit the
Company to register all of the Registrable Securities in the Registration
Statement because of the Commission’s application of Rule 415, the number of
Registrable Securities owned by the Holders to be registered on such
Registration Statement will be reduced on a pro rata basis, but only after the
Founders’ Shares and the Chardan Shares to be registered on such Registration
Statement have been reduced on a pro rata basis, which reduction shall be
mutually agreed, and, if any additional reduction is necessary, the Escrow
Shares to be registered on such Registration Statement have been reduced. The
Company shall use its best efforts to file subsequent Registration Statements to
register the Registrable Securities that were not registered in the initial
Registration Statement filed by the Company covering the Registrable Securities
as promptly as possible but in no event later than on the “Additional
Registration Filing Date” (as hereinafter defined) and in a manner permitted by
the Commission. For purposes of this Section 2(c) only, “Additional Registration Filing Date”
means with respect to each subsequent Registration Statement filed pursuant
hereto, the later of (i) sixty (60) days following the sale of substantially all
of the Registrable Securities included in the initial Registration Statement or
any subsequent Registration Statement and (ii) six (6) months following the
effective date of the initial Registration Statement or any subsequent
Registration Statement, as applicable, or such earlier date as permitted by the
Commission. For purposes of this Section 2(b), “Effectiveness Date” means with respect
to each subsequent Registration Statement filed pursuant to this Section 2(c)
the ninetieth (90th) day
following the Additional Registration Filing Date of such Registration Statement
(or in the event such Registration Statement receives a “full review” by the
Commission, the one hundred twentieth (120th) day
following such filing date); provided that, if the
Effectiveness Date falls on a Saturday, Sunday or any other day which shall be a
legal holiday or a day on which the Commission is authorized or required by law
or other government actions to close, the Effectiveness Date shall be the
following Business Day.
(d) Underwriter Cutback.
Notwithstanding anything to the contrary contained herein, if the managing
underwriter(s) or underwriter(s) in an underwritten offering advises the Company
and the Holders of the Registrable Securities in writing that the dollar amount
or number of shares of Registrable Securities, taken together with all other
Ordinary Shares or other securities which the Company desires to sell in the
offering, exceeds the maximum dollar amount or maximum number of shares that can
be sold in such offering without adversely affecting the proposed offering
price, the timing, the distribution method, or the probability of success of
such offering (such maximum dollar amount or maximum number of shares, as
applicable, the “Maximum Number of Shares”), then the securities that the
Company shall include in such registration shall include: (i) first, the
Holder’s portion of the Registrable Securities (pro rata in accordance with the
number of shares that each such Holder has requested be included in such
registration, regardless of the number of shares held by each such Holder (such
proportion is referred to herein as "Pro Rata")) that can be sold without
exceeding the Maximum Number of Shares; (ii) second, to the extent that the
Maximum Number of Shares has not been reached under the foregoing clause (i),
the Escrow Shares that can be sold without exceeding the Maximum Number of
Shares, and (iii) third, to the extent that the Maximum Number of Shares has not
been reached under the foregoing clauses (i) and (ii), the Founders’ Shares and
the Chardan Shares, on a pro rata basis.
3.
Registration
Procedures for the Registrable
Securities. In connection with the Company's
registration obligations hereunder to the Holders of the Registrable Securities,
the Company shall:
(a) Disclose
the plan of distribution for the Registrable Securities in accordance with the
plan of distribution as set forth on Exhibit A hereto and
in accordance with applicable law.
(b) Not
less than five (5) Business Days prior to the filing of the Registration
Statement or any related Prospectus or any amendment or supplement thereto, the
Company shall (i) furnish to the Holders copies of all such documents proposed
to be filed, which documents will be subject to the review of such Holders, and
(ii) cause its officers and directors, counsel and independent certified public
accountants to respond to such inquiries as shall be necessary to conduct a
reasonable review of such documents. The Company shall not file the
Registration Statement or any such Prospectus or any amendments or supplements
thereto to which the Holders shall reasonably object in writing within three (3)
Business Days of their receipt thereof.
(c) (i)
Prepare and file with the Commission such amendments, including post-effective
amendments, to the Registration Statement as may be necessary to keep the
Registration Statement continuously effective as to the applicable Registrable
Securities for the Effectiveness Period and prepare and file with the Commission
such additional Registration Statements as necessary in order to register for
resale under the Securities Act all of the Registrable Securities; (ii) cause
the related Prospectus to be amended or supplemented by any required Prospectus
supplement, and as so supplemented or amended to be filed pursuant to Rule 424
(or any similar provisions then in force) promulgated under the Securities Act;
(iii) respond as promptly as possible, but in no event later than ten (10)
Business Days, to any comments received from the Commission with respect to the
Registration Statement or any amendment thereto and as promptly as possible
provide the Holders true and complete copies of all correspondence from and to
the Commission relating to the Registration Statement; (iv) file the final
prospectus pursuant to Rule 424 of the Securities Act no later than two (2)
Business Days following the date the Registration Statement is declared
effective by the Commission; and (v) comply in all material respects with the
provisions of the Securities Act and the Exchange Act with respect to the
disposition of all Registrable Securities covered by the Registration Statement
during the Effectiveness Period in accordance with the intended methods of
disposition by the Holders thereof set forth in the Registration Statement as so
amended or in such Prospectus as so supplemented.
(d) If
the Registrable Securities owned by a Holder is included in the Registration
Statement pursuant to the terms hereof, notify the Holders of Registrable
Securities as promptly as possible (i)(A) when a Prospectus or any Prospectus
supplement or post-effective amendment to the Registration Statement is filed;
(B) when the Commission notifies the Company whether there will be a "review" of
such Registration Statement and whenever the Commission comments in writing on
such Registration Statement and (C) with respect to the Registration Statement
or any post-effective amendment, when the same has become effective; (ii) of any
request by the Commission or any other Federal or state governmental authority
for amendments or supplements to the Registration Statement or Prospectus or for
additional information with respect to the Holders; (iii) of the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement covering any or all of the Registrable Securities or the initiation or
threatening of any Proceedings for that purpose; (iv) if at any time any of the
representations and warranties of the Company contained in any agreement
contemplated hereby ceases to be true and correct in all material respects; (v)
of the receipt by the Company of any notification with respect to the suspension
of the qualification or exemption from qualification of any of the Registrable
Securities for sale in any jurisdiction, or the initiation or threatening of any
Proceeding for such purpose; and (vi) of the occurrence of any event that makes
any statement made in the Registration Statement covering any or all of the
Registrable Securities or the related Prospectus thereto or any document
incorporated or deemed to be incorporated therein by reference untrue in any
material respect or that requires any revisions to such Registration Statement,
Prospectus or other documents so that, in the case of such Registration
Statement or the Prospectus, as the case may be, it will not contain any 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 the case of the
Prospectus, in the light of the circumstances under which they were made) not
misleading.
(e) Use
its best efforts to avoid the issuance of, or, if issued, obtain the withdrawal
of, as promptly as possible, (i) any order suspending the effectiveness of the
Registration Statement covering any or all of the Registrable Securities or (ii)
any suspension of the qualification (or exemption from qualification) of any of
the Registrable Securities for sale in
any jurisdiction.
(f) If
requested by the Purchaser Representative, (i) promptly incorporate in a
Prospectus supplement or post-effective amendment to the Registration Statement
covering any or all of the Registrable Securities such information as the
Company reasonably agrees should be included therein and (ii) make all required
filings of such Prospectus supplement or such post-effective amendment as soon
as practicable after the Company has received notification of the matters to be
incorporated in such Prospectus supplement or post-effective
amendment.
(g) Unless
such document cannot be obtained on the Commission’s XXXXX (Electronic Data
Gathering, Analysis, and Retrieval) system, if requested by any Holder, furnish
to such Holder, without charge, at least one conformed copy of each Registration
Statement and each amendment thereto, including financial statements and
schedules, all documents incorporated or deemed to be incorporated therein by
reference, and all exhibits to the extent requested by such Person (including
those previously furnished or incorporated by reference) promptly after the
filing of such documents with the Commission.
(h) Promptly
deliver to each Holder, without charge, as many copies of the Prospectus
covering any or all of the Registrable Securities or Prospectuses (including
each form of prospectus) and each amendment or supplement thereto as such
Persons may reasonably request; and subject to the provisions of Section 3(n),
the Company hereby consents to the use of such Prospectus and each amendment or
supplement thereto by each of the selling Holders in connection with the
offering and sale of the Registrable Securities covered by such Prospectus and
any amendment or supplement thereto.
(i)
Prior to any public offering of Registrable Securities, use its best efforts to
register or qualify or cooperate with the selling Holders in connection with the
registration or qualification (or exemption from such registration or
qualification) of such Registrable Securities for offer and sale under the
securities or Blue Sky laws of such jurisdictions within the United States as
any Holder requests in writing, to keep each such registration or qualification
(or exemption therefrom) effective during the Effectiveness Period and to do any
and all other acts or things necessary or advisable to enable the disposition in
such jurisdictions of the Registrable Securities covered by a Registration
Statement; provided, however, that the
Company shall not be required to qualify generally to do business in any
jurisdiction where it is not then so qualified or to take any action that would
subject it to general service of process in any such jurisdiction where it is
not then so subject or subject the Company to any material tax in any such
jurisdiction where it is not then so subject.
(j) Cooperate
with the Holders to facilitate the timely preparation and delivery of
certificates representing Registrable Securities, if in certificated form, to be
sold pursuant to a Registration Statement, which certificates, to the extent
permitted by the Purchase Agreement and applicable federal and state securities
laws, shall be free of all restrictive legends, and to enable such Registrable
Securities to be in registered in such denominations and registered in such
names as any Holder may request in connection with any sale of Registrable
Securities.
(k) Upon
the occurrence of any event contemplated by Section 3(d)(vi), promptly as
possible, prepare a supplement or amendment, including a post-effective
amendment, to the Registration Statement covering any or all of the Registrable
Securities or a supplement to the related Prospectus or any document
incorporated or deemed to be incorporated therein by reference, and file any
other required document so that, as thereafter delivered, neither such
Registration Statement nor such Prospectus will contain an 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 the Prospectus, in the
light of the circumstances under which they were made) not
misleading.
(l)
Use its best efforts to cause all Underwritten Shares and
Registrable Securities relating to the Registration Statement, to continued to
be quoted or listed on a securities exchange, quotation system or market, if
any, on which similar securities issued by the Company are then listed or traded
as and when required pursuant to the Purchase Agreement.
(m) The
Company (i) may require each selling Holder to furnish to the Company
information regarding such Holder and the distribution of such Registrable
Securities as is required by law to be disclosed in the Registration Statement,
Prospectus, or any amendment or supplement thereto, and to complete and execute
a selling shareholder questionnaire reflecting such information and (ii) may
exclude from such registration the Registrable Securities of any such Holder who
fails to furnish such information or questionnaire within five days
after receiving such request.
If the
Registration Statement refers to any Holder by name or otherwise as the holder
of any securities of the Company, then such Holder shall have the right to
require (if such reference to such Holder by name or otherwise is not required
by the Securities Act or any similar federal statute then in force) the deletion
of the reference to such Holder in any amendment or supplement to the
Registration Statement filed or prepared subsequent to the time that such
reference ceases to be required.
Each
Holder covenants and agrees that it will not sell any Registrable Securities
under the Registration Statement until the Company has electronically filed the
Prospectus as then amended or supplemented, as contemplated by Section 3(b) and
notice from the Company that the Registration Statement and any post-effective
amendments thereto have become effective as contemplated by Section
3(d).
Each
Holder agrees by its acquisition of such Registrable Securities that, upon
receipt of a notice from the Company of the occurrence of any event of the kind
described in Section 3(d)(ii), 3(d)(iii), 3(d)(iv), 3(d)(v), 3(d)(vi) or 3(n),
such Holder will forthwith discontinue disposition of such Registrable
Securities under the Registration Statement until such Holder's receipt of the
copies of the supplemented Prospectus and/or amended Registration Statement
contemplated by Section 3(h), or until it is advised in writing (the "Advice") by the
Company that the use of the applicable Prospectus may be resumed, and, in either
case, has received copies of any additional or supplemental filings that are
incorporated or deemed to be incorporated by reference in such Prospectus or
Registration Statement.
(n) If
(i) there is material non-public information regarding the Company which the
Company's Board of Directors (the "Board") determines
not to be in the Company's best interests to disclose and which the Company is
not otherwise required to disclose, (ii) there is a significant business
opportunity (including, but not limited to, the acquisition or disposition of
assets (other than in the ordinary course of business) or any merger,
consolidation, tender offer or other similar transaction) available to the
Company which the Board determines not to be in the Company's best interest to
disclose, or (iii) the Company is required to file a post-effective amendment to
the Registration Statement to incorporate the Company’s Exchange Act reports and
audited financial statements on Form 20-F, then the Company may (x) postpone or
suspend filing of a Registration Statement for a period not to exceed forty-five
(45) consecutive days or (y) postpone or suspend effectiveness of a registration
statement for a period not to exceed forty-five (45) consecutive days; provided that the
Company may not postpone or suspend effectiveness of a Registration Statement
under this Section 3(n) for more than ninety (90) days in the aggregate during
any three hundred sixty (360) day period; provided, however, that no such
postponement or suspension shall be permitted for consecutive twenty (20) day
periods arising out of the same set of facts, circumstances or
transactions.
4. Registration
Expenses.
All fees
and expenses incident to the performance of or compliance with this Agreement by
the Company, except as and to the extent specified in this Section 4, shall be
borne by the Company whether or not the Registration Statement is filed or
becomes effective and whether or not any Registrable Securities are sold
pursuant to the Registration Statement. The fees and expenses
referred to in the foregoing sentence shall include, without limitation, (i) all
registration and filing fees (including, without limitation, fees and expenses
(A) with respect to filings required to be made with any securities
exchange or market on which Registrable Securities are required hereunder to be
listed, if any (B) with respect to filing fees required to be paid to the
Financial Industry Regulatory Authority, Inc. (including, without limitation,
pursuant to FINRA Rule 5110) and (C) in compliance with state securities or Blue
Sky laws in such jurisdictions as the Purchaser Representative may designate)),
(ii) printing expenses (including, without limitation, printing prospectuses if
the printing of prospectuses is requested by the Purchaser Representative),
(iii) messenger, telephone and delivery expenses, (iv) Securities Act liability
insurance, if the Company so desires such insurance, and (v) fees and expenses
of all other Persons retained by the Company in connection with the consummation
of the transactions contemplated by this Agreement, including, without
limitation, the Company's independent public accountants (including the expenses
of any comfort letters or costs associated with the delivery by independent
public accountants of a comfort letter or comfort letters). In
addition, the Company shall be responsible for all of its internal expenses
incurred in connection with the consummation of the transactions contemplated by
this Agreement (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties), the expense of
any annual audit, the fees and expenses incurred in connection with the listing
of the Registrable Securities on any securities exchange if required
hereunder. The Company shall not be responsible for any discounts,
commissions, transfer taxes or other similar fees incurred by the Holders in
connection with the sale of the Registrable Securities.
5. Indemnification.
(a) Indemnification by the
Company. The Company shall, notwithstanding any termination of
this Agreement, indemnify and hold harmless each Holder, the officers,
directors, managers, partners, members, shareholders, agents, brokers,
investment advisors and employees of each of them, each Person who controls any
such Holder (within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act) and the officers, directors, agents and employees of
each such controlling Person, to the fullest extent permitted by applicable law,
from and against any and all losses, claims, damages, liabilities, costs
(including, without limitation, costs of preparation and attorneys' fees) and
expenses (collectively, "Losses"), as
incurred, arising out of or relating to any violation of securities laws or
untrue statement of a material fact contained in the Registration Statement, any
Prospectus or any form of prospectus or in any amendment or supplement thereto
or in any preliminary prospectus, or arising out of or relating to any omission
of a material fact required to be stated therein or necessary to make the
statements therein (in the case of any Prospectus or form of prospectus or
supplement thereto, in the light of the circumstances under which they were
made) not misleading, except to the extent, but only to the extent, that such
untrue statements or omissions are based solely upon information regarding such
Holder or such other Indemnified Party furnished in writing to the Company by
such Holder for use therein. The Company shall notify the Holders
promptly of the institution, threat or assertion of any Proceeding of which the
Company is aware in connection with the transactions contemplated by this
Agreement.
(b) Indemnification by
Holders. Each Holder shall, severally and not jointly,
indemnify and hold harmless the Company, its directors, officers, agents and
employees, each Person who controls the Company (within the meaning of Section
15 of the Securities Act and Section 20 of the Exchange Act), and the directors,
officers, agents and employees of such controlling Persons, to the fullest
extent permitted by applicable law, from and against all Losses, as incurred,
arising solely out of or based solely upon any untrue statement of a material
fact contained in the Registration Statement, any Prospectus, or any form of
prospectus, or in any amendment or supplement thereto, or arising solely out of
or based solely upon any omission of a material fact required to be stated
therein or necessary to make the statements therein (in the case of any
Prospectus or form of prospectus or supplement thereto, in the light of the
circumstances under which they were made) not misleading, to the extent, but
only to the extent, that such untrue statement or omission is contained in any
information so furnished in writing by such Holder or other Indemnifying Party
to the Company specifically for inclusion in the Registration Statement or such
Prospectus. Notwithstanding anything to the contrary contained
herein, each Holder shall be liable under this Section 5(b) only for the lesser
of (a) the actual damages incurred or (b) that amount as does not exceed the
gross proceeds to such Holder as a result of the sale of his/her/its Registrable
Securities pursuant to such Registration Statement.
(c) Conduct of Indemnification
Proceedings. If any Proceeding shall be brought or asserted
against any Person entitled to indemnity hereunder (an "Indemnified Party"),
such Indemnified Party promptly shall promptly notify the Person from whom
indemnity is sought (the "Indemnifying Party”)
in writing, and the Indemnifying Party shall be entitled to assume the defense
thereof, including the employment of counsel reasonably satisfactory to the
Indemnified Party and the payment of all fees and expenses incurred in
connection with defense thereof; provided that the failure of any Indemnified
Party to give such notice shall not relieve the Indemnifying Party of its
obligations or liabilities pursuant to this Agreement, except (and only) to the
extent that it shall be finally determined by a court of competent jurisdiction
(which determination is not subject to appeal or further review) that such
failure shall have proximately and materially adversely prejudiced the
Indemnifying Party.
An
Indemnified Party shall have the right to employ separate counsel in any such
Proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Party or Parties
unless: (1) the Indemnifying Party has agreed in writing to pay such fees and
expenses; or (2) the Indemnifying Party shall have failed promptly to assume the
defense of such Proceeding and to employ counsel reasonably satisfactory to such
Indemnified Party in any such Proceeding; or (3) the named parties to any such
Proceeding (including any impleaded parties) include both such Indemnified Party
and the Indemnifying Party, and such parties shall have been advised by counsel
that a conflict of interest is likely to exist if the same counsel were to
represent such Indemnified Party and the Indemnifying Party (in which case, if
such Indemnified Party notifies the Indemnifying Party in writing that it elects
to employ separate counsel at the expense of the Indemnifying Party, the
Indemnifying Party shall not have the right to assume the defense thereof and
such counsel shall be at the expense of the Indemnifying Party). The
Indemnifying Party shall not be liable for any settlement of any such Proceeding
effected without its written consent, which consent shall not be unreasonably
withheld or delayed. No Indemnifying Party shall, without the prior
written consent of the Indemnified Party, effect any settlement of any pending
or threatened Proceeding in respect of which any Indemnified Party is a party
and indemnity has been sought hereunder, unless such settlement includes an
unconditional release of such Indemnified Party from all liability on claims
that are the subject matter of such Proceeding.
All indemnifiable fees and expenses of
the Indemnified Party (including reasonable fees and expenses incurred in
connection with investigating or preparing to defend such Proceeding in a manner
not inconsistent with this Section) shall be paid to the Indemnified Party, as
incurred, within ten (10) Business Days of written notice thereof to the
Indemnifying Party (regardless of whether it is ultimately determined that an
Indemnified Party is not entitled to indemnification hereunder; provided, that the
Indemnified Party shall reimburse all such fees and expenses to the extent it is
finally judicially determined that such Indemnified Party is not entitled to
indemnification hereunder).
(d) Contribution. If a
claim for indemnification under Section 5(a) or 5(b) is due but unavailable to
an Indemnified Party because of a failure or refusal of a governmental authority
to enforce such indemnification in accordance with its terms (by reason of
public policy or otherwise), then each Indemnifying Party, in lieu of
indemnifying such Indemnified Party, shall contribute to the amount paid or
payable by such Indemnified Party as a result of such Losses, in such proportion
as is appropriate to reflect the relative benefits received by the Indemnifying
Party on the one hand and the Indemnified Party on the other from the offering
of the Preferred Shares. If, but only if, the allocation provided by
the foregoing sentence is not permitted by applicable law, the allocation of
contribution shall be made in such proportion as is appropriate to reflect not
only the relative benefits referred to in the foregoing sentence but also the
relative fault, as applicable, of the Indemnifying Party and Indemnified Party
in connection with the actions, statements or omissions that resulted in such
Losses as well as any other relevant equitable considerations. The
relative fault of such Indemnifying Party and Indemnified Party shall be
determined by reference to, among other things, whether any action in question,
including any untrue statement of a material fact or omission of a material
fact, has been taken or made by, or relates to information supplied by, such
Indemnifying Party or Indemnified Party, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such action, statement or omission. The amount paid or payable by a
party as a result of any Losses shall be deemed to include, subject to the
limitations set forth in Section 5(c), any reasonable attorneys' or other
reasonable fees or expenses incurred by such party in connection with any
Proceeding to the extent such party would have been indemnified for such fees or
expenses if the indemnification provided for in this Section was available to
such party in accordance with its terms. In no event shall any
selling Holder be required to contribute an amount under this Section 5(d) in
excess of the gross proceeds received by such Holder upon sale of such Holder’s
Registrable Securities pursuant to the Registration Statement giving rise to
such contribution obligation.
The
parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 5(d) were determined by pro rata allocation or by any
other method of allocation that does not take into account the equitable
considerations referred to in the immediately preceding paragraph. 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.
The
indemnity and contribution agreements contained in this Section are in addition
to any liability that the Indemnifying Parties may have to the Indemnified
Parties pursuant to applicable law.
6. Rule
144.
As long
as any Holder owns Preferred Shares or Registrable Securities, the Company
covenants to timely file (or obtain extensions in respect thereof and file
within the applicable grace period) all reports required to be filed by the
Company after the date hereof pursuant to Section 13(a) or 15(d) of the Exchange
Act. As long as any Holder owns Preferred Shares or Registrable
Securities, if the Company is not required to file reports pursuant to Section
13(a) or 15(d) of the Exchange Act, it will prepare and furnish to the Holders
and make publicly available in accordance with Rule 144(c) promulgated under the
Securities Act annual and quarterly financial statements, together with a
discussion and analysis of such financial statements in form and substance
substantially similar to those that would otherwise be required to be included
in reports required by Section 13(a) or 15(d) of the Exchange Act, as well as
any other information required thereby, in the time period that such filings
would have been required to have been made under the Exchange
Act. The Company further covenants that it will take such further
action as any Holder may reasonably request, all to the extent reasonably
required from time to time to enable such Person to sell Conversion Shares
without registration under the Securities Act within the limitation of the
exemptions provided by Rule 144 promulgated under the Securities Act, including
providing any legal opinions relating to such sale pursuant to Rule
144. Upon the request of any Holder, the Company shall deliver to
such Holder a written certification of a duly authorized officer as to whether
it has complied with such requirements.
7. Miscellaneous.
(a) Remedies. In
the event of a breach by the Company or by a Holder of any of their obligations
under this Agreement, such Holder or the Company, as the case may be, in
addition to being entitled to exercise all rights granted by law and under this
Agreement, including recovery of damages, will be entitled to specific
performance of its rights under this Agreement. Each
of the Company and each Holder agrees that monetary damages would not
provide adequate
compensation for any losses incurred by reason of a breach by it of any of the
provisions of this Agreement and hereby further agrees that, in the event of any
action for specific performance in respect of such breach, it shall waive the
defense that a remedy at law would be adequate.
(b) No Inconsistent
Agreements. The Company has not entered into, and shall not
enter into on or after the date of this Agreement, 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. Except for this Agreement, the Company has not previously
entered into any agreement that is currently in effect granting any registration
rights with respect to any of its securities to any Person. Without
limiting the generality of the foregoing, without the written consent of the
Purchaser Representative, the Company shall not grant to any Person the right to
request the Company to register any securities of the Company under the
Securities Act unless the rights so granted are subject in all respects to the
prior rights in full of the Holders set forth herein, and are not otherwise in
conflict with the provisions of this Agreement.
(c) Failure to Have the
Registration Statement Declared Effective for Conversion Shares and Other
Events. The Company agrees that the Holders of the Conversion
Shares will suffer damages if the Registration Statement is not declared
effective by the Commission on or prior to the Effectiveness Date and maintained
in the manner contemplated herein during the Effectiveness Period or if certain
other events occur. The Company and the Holders of the Conversion
Shares further agree that it would not be feasible to ascertain the extent of
such damages with precision. Accordingly, (A) if the Registration Statement is
not declared effective by the Commission on or prior to the Effectiveness Date,
or (B) the Registration Statement is filed with and declared effective by the
Commission but thereafter ceases to be effective as to all Registrable
Securities at any time prior to the expiration of the Effectiveness Period,
without being succeeded immediately by a subsequent Registration Statement filed
with and declared effective by the Commission, or (C) the Company has breached
Section 3(n) of this Agreement (any such failure or breach of the foregoing
being referred to as an "Event," and for
purposes of clause (A) the date on which such Event occurs, or for purposes of
clause (B) after more than fifteen (15) Business Days, being referred to as
“Event Date”),
the Company shall pay an amount in cash as liquidated damages to each Holder of
the Conversion Shares equal to 0.3%of the amount of such Holder’s initial
investment in the Preferred Shares for each calendar month or portion thereof
thereafter from the Event Date until the applicable Event is cured; provided, however, that in no
event shall the amount of liquidated damages payable at any time and from time
to time to any Holder of the Conversion Shares pursuant to this Section 7(c)
exceed an aggregate of ten percent (10%) of the amount of such Holder’s initial
investment in the Preferred Shares; and provided, further, that in the
event the Commission does not permit all of the Registrable Securities to be
included in the Registration Statement because of its application of Rule 415,
liquidated damages payable pursuant to this Section shall only be payable by the
Company based on the portion of the Holder’s initial investment in the Preferred
Shares that corresponds to the number of such Holder’s Registrable Securities
permitted to be registered by the Commission in such Registration Statement
pursuant to Rule 415. For further clarification, the parties
understand that no liquidated damages shall be payable pursuant to this Section
with respect to any Registrable Securities that the Company is not permitted to
include on such Registration Statement due to the Commission’s application of
Rule 415. Notwithstanding anything to the contrary in this paragraph (c), if (a)
any of the Events described above shall have occurred, (b) on or prior to the
applicable Event Date, the Company shall have exercised its rights under Section
3(n) hereof and (c) the postponement or suspension permitted pursuant to such
Section 3(n) shall remain effective as of such applicable Event Date, then the
applicable Event Date shall be deemed instead to occur on the second Business
Day following the termination of such postponement or
suspension. Liquidated damages payable by the Company pursuant to
this Section 7(c) shall be paid on a monthly basis in accordance with this
Section.
(d) Lock-Up. In
the event the Company undertakes a bona fide public offering of its Ordinary
Shares, the Purchasers shall agree at the request of the lead underwriter to
execute a lock-up agreement which shall provide that the Purchasers will not
sell, transfer or dispose of their Ordinary Shares until one hundred and eighty
(180) days after the consummation of such public offering; provided, however,
that any such lock-up with respect to the Purchasers shall be on no less
favorable terms than any lock-up executed by any officer, director or 5%
shareholder in connection with such public offering.
(e) Amendments and
Waivers. The provisions of this Agreement, including the
provisions of this sentence, may not be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof may not be given,
unless the same shall be in writing and signed by the Company and the Purchaser
Representaitve and upon such signature shall be binding upon all
Holders.
(f) Notices. Any
notice, demand, request, waiver or other communication required or permitted to
be given hereunder shall be in writing and shall be effective (a) upon hand
delivery, telecopy or facsimile at the address or number designated below (if
delivered on a business day during normal business hours where such notice is to
be received), or the first business day following such delivery (if delivered
other than on a business day during normal business hours where such notice is
to be received) or (b) on the second business day following the date of mailing
by express courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur. The
addresses for such communications shall be:
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If
to the Company:
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Floor
18, Tower A
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Zhongshan
Building, No. 154
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Hudong
Road, Gulou District, Fuzhou City, Fujian Province, PRC
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Attention:
Xx. Xxxx Xinrong
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Tel.
No.:
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Fax
No.:
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with
copies to
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Loeb
& Loeb
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(which
shall not
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000
Xxxx Xxxxxx
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xxxxxxxxxx
xxxxxx):
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Xxx
Xxxx, XX00000
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Attn:
Xxxxxxxx X. Xxxxxxxx
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Tel:
000.000.0000
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Fax:
212.407-4990
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If
to any Purchaser:
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At
the address of such Purchaser set forth on Schedule
I to this Agreement
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with
copies to
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(which
shall not
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constitute
notice):
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Attention:
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Tel:
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Fax:
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If
to the Founders:
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If to
Chardan
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Any party
hereto may from time to time change its address for notices by giving at least
ten (10) days written notice of such changed address to the other party
hereto.
(g) Successors and
Assigns. This Agreement shall be binding upon and inure to the
benefit of the parties and their successors and permitted assigns and shall
inure to the benefit of each Holder and its successors and
assigns. The Company may not assign this Agreement or any of its
rights or obligations hereunder without the prior written consent of each
Holder. Each Purchaser may assign its rights hereunder in the manner
and to the Persons as permitted under the Purchase Agreement.
(h) Assignment of Registration
Rights. The rights of each Holder, including the right to have
the Company register for resale Registrable Securities in accordance with the
terms of this Agreement, shall be automatically assignable by each Holder to any
Person who acquires all or a portion of the Preferred Shares
or the Registrable Securities if: (i) the Holder agrees in writing with the
transferee or assignee to assign such rights, and a copy of such agreement is
furnished to the Company within a reasonable time after such assignment, (ii)
the Company is, within a reasonable time 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) following such transfer or assignment
the further disposition of such securities by the transferee or assignees is
restricted under the Securities Act and applicable state securities laws unless
such securities are registered in a Registration Statement under this Agreement
(in which case the Company shall be obligated to amend such Registration
Statement to reflect such transfer or assignment) or are otherwise exempt from
registration, (iv) at or before the time the Company receives the written notice
contemplated by clause (ii) of this Section, the transferee or assignee agrees
in writing with the Company to be bound by all of the provisions of this
Agreement, and (v) such transfer shall have been made in accordance with the
applicable requirements of the Purchase Agreement. The rights to
assignment shall apply to the Holders (and to subsequent) successors and
assigns.
(i) Counterparts. This
Agreement may be executed in any number of 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 and shall become effective when
counterparts have been signed by each party and delivered to the other parties
hereto, it being understood that all parties need not sign the same
counterpart. In the event that any signature is delivered by
facsimile transmission, such signature shall create a valid binding obligation
of the party executing (or on whose behalf such signature is executed) the same
with the same force and effect as if such facsimile signature were the original
thereof.
(j) Governing Law;
Jurisdiction. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York, without
giving effect to any of the conflicts of law principles which would result in
the application of the substantive law of another jurisdiction. This
Agreement shall not be interpreted or construed with any presumption against the
party causing this Agreement to be drafted. The Company and the
Holders agree that venue for any dispute arising under this Agreement will lie
exclusively in the state or federal courts located in New York County, New York,
and the parties irrevocably waive any right to raise forum non conveniens or any
other argument that New York is not the proper venue. The Company and
the Holders irrevocably consent to personal jurisdiction in the state and
federal courts of the state of New York. The Company and the Holders
consent to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address in effect for notices to it
under this Agreement and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing in this
Section 7(j) shall affect or limit any right to serve process in any other
manner permitted by law. The Company and the Holders hereby agree
that the prevailing party in any suit, action or proceeding arising out of or
relating to this Agreement or the Purchase Agreement, shall be entitled to
reimbursement for reasonable legal fees from the non-prevailing
party. The parties hereby waive all rights to a trial by
jury.
(k) Cumulative
Remedies. The remedies provided herein are cumulative and not
exclusive of any remedies provided by law.
(l) Severability. If any
term, provision, covenant or restriction of this Agreement is held to be
invalid, illegal, void or unenforceable in any respect, the remainder of the
terms, provisions, covenants and restrictions set forth herein shall remain in
full force and effect and shall in no way be affected, impaired or invalidated,
and the parties hereto shall use their reasonable efforts to find and employ an
alternative means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It is
hereby stipulated and declared to be the intention of
the parties that they would have executed the remaining terms, provisions,
covenants and restrictions without including any of such that may be hereafter
declared invalid, illegal, void or unenforceable.
(m) Headings. The
headings herein are for convenience only, do not constitute a part of this
Agreement and shall not be deemed to limit or affect any of the provisions
hereof.
IN
WITNESS WHEREOF, the parties hereto have caused this Registration Rights
Agreement to be duly executed by their respective authorized persons as of the
date first indicated above.
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By:
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Name:
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Xxxx
Xxxxxxx
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Title:
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Chief
Executive Officer
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SHAREHOLDERS
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CHARDAN
CAPITAL MARKETS LLC
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By:
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Name:
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Title:
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XXXXX
XXXXXXX
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MARS
HARVEST CO., LTD.
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By:
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Name:
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Title:
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VENUS
SEED CO., LTD.
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By:
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Name:
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Title:
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SATURN
GLORY CO., LTD.
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By:
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Name:
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Title:
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REGENT
FILL INVESTMENT GROUP LIMITED
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By:
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Name:
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Title:
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POYING
HOLDINGS LIMITED
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By:
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Name:
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Title:
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||
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XX
XXXXXXXXX
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XXXX
XXX
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PURCHASERS:
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By:
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||
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Name:
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||
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Title:
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||
[Signature
Page to Registration Rights Agreement]
