REGISTRATION RIGHTS AGREEMENT
EXHIBIT
10.16
THIS
REGISTRATION RIGHTS AGREEMENT (“Agreement”) made as of this 17th day of October,
2006, by and among SRKP 1, Inc., a Delaware corporation (the “Company”); Full
Art International Ltd., a Hong Kong corporation and upon the Closing Date
(as
defined below) a 100%-owned subsidiary of the Company ("Full Art"); and the
undersigned (the “Holder”).
WHEREAS,
the Company, Full Art, and KGE Group, Ltd., a Hong Kong corporation, are
parties
to a certain Share Exchange Agreement dated as of August 21, 2006, as amended
(the “Exchange Agreement”), pursuant to which Full Art will become a 100%-owned
subsidiary of the Company and 100% of the outstanding securities of Full
Art
will be exchanged for securities in the Company (the “Share Exchange”).
Immediately after the effective time of the Share Exchange (the “Closing Date”),
the Company will assume the business and operations of Full Art;
and
WHEREAS,
the Company agreed to file, within thirty (30) days after the Closing Date
with
the U.S. Securities and Exchange Commission (the “Commission” or “SEC”) a
registration statement (the “Initial Registration Statement”) covering the
resale of shares issued in connection with the Company’s private offering that
closed concurrently with the Share Exchange and covering the resale of Common
Shares held by those persons that are shareholders of the Company immediately
prior to the Closing Date (“Pre-Existing Shareholders”), except for WestPark
Affiliates (as defined below);
WHEREAS,
as set forth in Section 10.1 of the Exchange Agreement, and as a condition
to
the closing of the Share Exchange, the Company agreed to enter into a
registration rights agreement with requiring the Company to file, within
the
time periods as set forth herein, with the U.S. Securities and Exchange
Commission (the “Commission”) a registration statement covering the resale of
shares of Common Stock, as set forth on Schedule
I
hereof
(the “Shares”), held by those persons (and/or their designees) that are (i)
shareholders of the Company immediately prior to the Closing who are affiliates
of WestPark Capital (“WestPark Affiliates”), and (ii) FirstAlliance Financial
Group, Inc. (“FirstAlliance”) (together , the “Holders”).
NOW,
THEREFORE, for and in consideration of the promises and the mutual covenants
hereinafter set forth, the parties hereto do hereby agree as
follows:
1.
Registration
Rights
1.1
Registration
Requirement.
Subject
to the terms and limitations hereof, the parties hereto agree and acknowledge
that the Company shall prepare and file a registration statement (the
“Registration Statement”) on Form SB-2 or other appropriate registration
document under the Securities Act of 1933, as amended (the “Act”) for resale of
the Shares (the “Registrable Securities”) and shall use its reasonable best
efforts to maintain the Registration Statement effective for a period of
twenty-four (24) months at the Company’s expense (the “Effectiveness Period”).
The Company shall file such Registration Statement no later than the tenth
(10)
day after the end of the six (6) month period that immediately follows the
filing date of the Initial Registration Statement (the “Required Filing Date”),
provided that if such day is not a Business Day, then the Required Filing
Date
shall be the next business day thereafter. The Company shall use reasonable
best
efforts to cause such Registration Statement to become effective within one
hundred and twenty (120) days after the Required Filing Date or the actual
filing date, whichever is earlier, or one hundred fifty (150) days after
the
Required Filing Date or the actual filing date, whichever is earlier, if
the
Registration Statement is subject to a full review by the SEC (the “Required
Effectiveness Date”). If the Company fails to file the Registration Statement by
the Required Filing Date or if the Registration Statement does not become
effective on or before the Required Effectiveness Date due to the failure
of the
Company to fulfill its obligations hereunder, the Company shall be required
to
issue, as liquidated damages, to each of the Holders shares (the “Penalty
Shares”) equal to a total of 0.0333% of their respective Shares for each
calendar day that the Registration Statement has not been filed or declared
effective by the SEC (and until the Registration Statement is filed with
or
declared effective by the SEC), as applicable.
1.2
Limitation
to Registration Requirement.
Notwithstanding the foregoing, no Penalty Shares shall be due to the Holders
if
the Company is using its best efforts to cause the Registration Statement
to be
filed and declared effective in a timely manner. In addition, the Company
shall
not be obligated to effect any registration of the Registrable Securities
or
take any other action pursuant to this Section 4: (i) in any particular
jurisdiction in which the Company would be required to execute a general
consent
to service of process in effecting such registration, qualification or
compliance unless the Company is already subject to service in such jurisdiction
and except as may be required by the Act, or (ii) during any period in which
the
Company suspends the rights of a Holder after giving the Holder written
notification of a Potential Material Event (defined below) pursuant to Section
1.6 hereof.
1.3
Expenses
of Registration.
Except
as otherwise expressly set forth, the Company shall bear all expenses incurred
by the Company in compliance with the registration obligation of the Company,
including, without limitation, all registration and filing fees, printing
expenses, fees and disbursements of counsel for the Company incurred in
connection with any registration, qualification or compliance pursuant to
this
Agreement and all underwriting discounts, selling commissions and expense
allowances applicable to the sale of any securities by the Company for its
own
account in any registration. All underwriting discounts, selling commissions
and
expense allowances applicable to the sale by Holder of Registrable Securities
and all fees and disbursements of counsel for the Holder shall be borne by
the
Holder.
1.4
Indemnification.
(a)
To
the
extent permitted by law the Company will indemnify each Holder, each of its
officers, directors, agents, employees and partners, and each person controlling
such Holder, with respect to each registration, qualification or compliance
effected pursuant to this Agreement, and each underwriter, if any, and each
person who controls any underwriter, and their respective counsel against
all
claims, losses, damages and liabilities (or actions, proceedings or settlements
in respect thereof) arising out of or based on (i) any untrue statement (or
alleged untrue statement) of a material fact contained in any prospectus,
offering circular or other document prepared by the Company (including any
related registration statement, notification or the like) incident to any
such
registration, qualification or compliance, or (ii) any omission (or alleged
omission) to state therein a material fact required to be stated therein
or
necessary to make the statements therein not misleading, or any violation
by the
Company of the Act or any rule or regulation thereunder applicable to the
Company and relating to action or inaction required of the Company in connection
with any such registration, qualification or compliance, and subject to the
provisions of Section 1.4(c) below, will reimburse each such Holder, each
of its
officers, directors, agents, employees and partners, and each person controlling
such Holder, each such underwriter and each person who controls any such
underwriter, for any legal and any other expenses as they are reasonably
incurred in connection with investigating and defending any such claim, loss,
damage, liability or action, provided that the Company will not be liable
in any
such case to the extent that any such claim, loss, damage, liability or expense
arises out of or is based on any untrue statement (or alleged untrue statement)
or omission (or alleged omissions) based upon written information furnished
to
the Company by (or on behalf of) such Holder or underwriter, or if the person
asserting any such loss, claim, damage or liability (or action or proceeding
in
respect thereof did not receive a copy of an amended preliminary prospectus
or
the final prospectus (or the final prospectus as amended and supplemented)
at or
before the written confirmation of the sale of such Registrable Securities
to
such person because of the failure of the Holder or underwriter to so provide
such amended preliminary or final prospectus (or the final prospectus as
amended
and supplemented); provided, however, that the indemnity agreement contained
in
this subsection shall not apply to amounts paid in settlement of any such
loss,
claim, damage, liability or action if such settlement is effected without
the
consent of the Company (which consent shall not be unreasonably withheld),
nor
shall the Company be liable in any such case for any such loss, claim, damage,
liability or action to the extent that it arises out of or is based upon
a
violation which occurs in reliance upon and in conformity with written
information furnished expressly for use in connection with such registration
by
the Holder, any such partner, officer, director, employee, agent or controlling
person of such Holder, or any such underwriter or any person who controls
any
such underwriter; provided, however, that the obligations of the Company
hereunder shall be limited to an amount equal to the portion of net proceeds
represented by the Registrable Securities pursuant to this
Agreement.
(b)
To
the
extent permitted by law, each Holder whose Registrable Securities are included
in any registration, qualification or compliance effected pursuant to this
Agreement will indemnify the Company, and its directors, officers, agents,
employees and each underwriter, if any, of the Company’s securities covered by
such a registration statement, each person who controls the Company or such
underwriter within the meaning of the Act and the rules and regulations
thereunder, each other such Holder and each of their officers, directors,
partners, agents and employees, and each person controlling such Holder,
and
their respective counsel against all claims, losses, damages and liabilities
(or
actions in respect thereof) arising out of or based on any untrue statement
(or
alleged untrue statement) of a material fact contained in any such registration
statement, prospectus, offering circular or other document, or any omission
(or
alleged omission) to state therein a material fact required to be stated
therein
or necessary to make the statements therein not misleading, and will reimburse
the Company and such Holders, directors, officers, partners, persons,
underwriters or control persons for any legal or any other expenses as they
are
reasonably incurred in connection with investigating or defending any such
claim, loss, damage, liability or action, in each case to the extent, but
only
to the extent, that such untrue statement (or alleged untrue statement) or
omission (or alleged omission) is made in such registration statement,
prospectus, offering circular or other document in reliance upon and in
conformity with written information furnished to the Company by such Holder;
provided,
however,
that
the obligations of any Holder hereunder shall be limited to an amount equal
to
the net proceeds to such Holder from Registrable Securities sold under such
registration statement, prospectus, offering circular or other document as
contemplated herein; provided, further, that the indemnity agreement contained
in this subsection shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or action if such settlement is effected without
the consent of the Holder, which consent shall not be unreasonably withheld
or
delayed.
(a)
Each
party entitled to indemnification under this Section (the “Indemnified Party”)
shall give notice to the party required to provide indemnification (the
“Indemnifying Party”) promptly after such Indemnified Party has actual knowledge
of any claim as to which indemnity may be sought, and shall permit the
Indemnifying Party to assume the defense of any such claim or any litigation
resulting therefrom, provided that counsel for the Indemnifying Party, who
shall
conduct the defense of such claim or any litigation resulting therefrom,
shall
be approved by the Indemnified Party (whose approval shall not unreasonably
be
withheld), and the Indemnified Party may participate in such defense at such
party’s expense; and provided further that if any Indemnified Party reasonably
concludes that there may be one or more legal defenses available to it that
are
not available to the Indemnifying Party, or that such claim or litigation
involves or could have an effect on matters beyond the scope of this Agreement,
then the Indemnified Party may retain its own counsel at the expense of the
Indemnifying Party; and provided further that the failure of any Indemnified
Party to give notice as provided herein shall not relieve the Indemnifying
Party
of its obligations under this Agreement unless and only to the extent that
such
failure to give notice results in material prejudice to the Indemnifying
Party.
No Indemnifying Party, in the defense of any such claim or litigation, shall,
except with the consent of each Indemnified Party, consent to entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such Indemnified
Party
of a release from all liability in respect to such claim or litigation. Each
Indemnified Party shall furnish such information regarding itself or the
claim
in question as an Indemnifying Party may reasonably request in writing and
as
shall be reasonably required in connection with defense of such claim and
litigation resulting therefrom.
(b)
If
the
indemnification provided for in this Section is held by a court of competent
jurisdiction to be unavailable to an Indemnified Party with respect to any
loss,
liability, claim, damage or expense referred to herein, then the Indemnifying
Party, in lieu of indemnifying such Indemnified Party hereunder, shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such loss, liability, claim, damage or expense in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party on the
one
hand and of the Indemnified Party on the other in connection with the statements
or omissions which resulted in such loss, liability, claim, damage or expense
as
well as any other relevant equitable considerations. The relative fault of
the
Indemnifying Party and of the Indemnified Party shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of
a
material fact or the omission to state a material fact relates to information
supplied by the Indemnifying Party or by the Indemnified Party and the parties’
relative intent, knowledge, access to information and opportunity to correct
or
prevent such statement or omission.
1.5
Transfer
or Assignment of Registration Rights.
The
Registrable Securities, and any related benefits to the Holder hereunder
may be
transferred or assigned by the Holder to a permitted transferee or assignee,
provided that the Company is given written notice of such transfer or
assignment, stating the name and address of said transferee or assignee and
identifying the Registrable Securities with respect to which such registration
rights are being transferred or assigned; provided further that the transferee
or assignee of such Registrable Securities shall be deemed to have assumed
the
obligations of the Holder under this Agreement by the acceptance of such
assignment and shall, upon request from the Company, evidence such assumption
by
delivery to the Company of a written agreement assuming such obligations
of the
Holder.
1.6
Registration
Procedures.
In the
case of the registration effected by the Company pursuant to this Agreement,
the
Company will keep the Holder advised in writing as to the initiation of each
registration and as to the completion thereof. The Company will:
(a)
Prepare
and file with the SEC such amendments and supplements to such registration
statement and the prospectus used in connection with such registration statement
as may be necessary to comply with the provisions of the Act with respect
to the
disposition of securities covered by such registration statement;
(b)
Respond
as promptly as reasonably practicable to any comments received from the SEC
with
respect to a registration statement or any amendment thereto.
(c)
Notify
the Holder as promptly as reasonably practicable and (if requested by any
such
person) confirm such notice in writing no later than one trading day following
the day (A) when a prospectus or any prospectus supplement or post-effective
amendment to a registration statement is proposed to be filed and (B) with
respect to a registration statement or any post-effective amendment, when
the
same has become effective;
(d)
Furnish
such number of prospectuses and other documents incident thereto, including
supplements and amendments, as the Holder may reasonably request;
(e)
Furnish
to the Holder, upon request, a copy of all documents filed with and all
correspondence from or to the SEC in connection with any such registration
statement other than non-substantive cover letters and the like;
(f)
Use
its
reasonable best efforts to avoid the issuance of, or, if issued, obtain the
withdrawal of (i) any order suspending the effectiveness of a registration
statement, or (ii) any suspension of the qualification (or exemption from
qualification) of any of the Registrable Securities for sale in any
jurisdiction, at the earliest practicable moment; and
(g)
Use
its
reasonable best efforts to comply with all applicable rules and regulations
of
the SEC.
Notwithstanding
the foregoing, if at any time or from time to time after the date hereof,
the
Company notifies the Holder in writing of the existence of an event or
circumstance that is not disclosed in the Registration Statement and that
may
have a material effect on the Company or its business (a “Potential Material
Event”), the Holder shall not offer or sell any Registrable Securities, or
engage in any other transaction involving or relating to the Registrable
Securities, from the time of the giving of notice with respect to a Potential
Material Event until the Company notifies the Holder that such Potential
Material Event either has been added to the Registration Statement by amendment
or supplement or no longer constitutes a Potential Material Event; provided,
that
the Company may not so suspend the right of Holder for more than one hundred
twenty (120) days in the aggregate.
1.7
Statement
of Beneficial Ownership.
The
Company may require the Holder to furnish to the Company a certified statement
as to the number of shares of Common Stock beneficially owned, including
derivative instruments underlying Common Stock, by such Holder and the
controlling person thereof and any other such information regarding the Holder,
the Registrable Securities held by the Holder and the intended method of
disposition of such securities as shall be reasonably required with respect
to
the registration of the Holder’s Registrable Securities. The Holder hereby
understands and agrees that the Company may, in its sole discretion, exclude
the
Holder’s shares of Common Stock from the Registration Statement in the event
that the Holder fails to provide such information requested by the Company
within the time period reasonably specified by the Company or is required
to do
so by law or the SEC.
1.8
Compliance.
Holder
covenants and agrees that such Holder will comply with the prospectus delivery
requirements of the Act as applicable to such Holder in connection with sales
of
Registrable Securities pursuant to the registration statement required
hereunder.
1.9
Piggy-Back
Registrations.
If at
any time during the Effectiveness Period there is not an effective registration
statement covering all of the Registrable Securities and the Company shall
determine to prepare and file with the SEC a registration statement relating
to
an offering for its own account or the account of others under the Act of
any of
its Common Stock, other than an offering of securities issued pursuant to
a
Strategic Issuance (as defined below) and other than a Form S-4 or Form S-8
registration statement (each as promulgated under the Act or their then
equivalents relating to equity securities to be issued solely in connection
with
any business combination transaction, acquisition of any entity or business
or
equity securities issuable in connection with stock option or other employee
benefit plans), then the Company shall send to the Holder (together with
any
other holders of its Common Stock possessing “piggyback registration rights”
comparable to those granted to the Holder hereunder (“Rightsholders”)) written
notice of such determination and, if within fifteen (15) days after receipt
of
such notice, the Holder shall so request in writing, the Company shall include
in such registration statement all or any part of such Registrable Securities
such Holder requests to be registered; provided that the Company shall not
be
required to register any Registrable Securities pursuant to this Section
that
are eligible for resale pursuant to Rule 144(k) promulgated under the Act;
and
provided further that the Company may, without the consent of the Holder,
withdraw such registration statement before its becoming effective if the
Company or other stockholders have elected to abandon the proposal to register
the securities proposed to be registered thereunder. If the registration
statement is being filed for an underwritten public offering, the Holder
must
timely execute and deliver the usual and customary agreement among the Company,
such Holder and the underwriters relating to the registration. If the
registration statement is being filed for an underwritten offer and sale
by the
Company of securities for its own account and the managing underwriters advise
the Company in writing that in their opinion the offering contemplated by
the
registration statement cannot be successfully completed if the Company were
to
also register the Registrable Shares of the Holder requested to be included
in
such registration statement, then the Company will include in the registration:
(i) first, any securities the Company proposes to sell, (ii) second, any
securities of any person whose securities are being registered as a result
of
the exercise of a demand registration right, and (iii) third, that portion
of
the aggregate number of shares being requested for inclusion in the registration
statement by (X) the Holder and (Y) all other Rightsholders, which in the
opinion of such managing underwriters can successfully be sold, such number
of
shares to be taken pro
rata
from the
Rightsholders on the basis of the total number of shares being requested
for
inclusion in the registration statement by each Rightsholder. “Strategic
Issuance” shall mean an issuance of securities: (i) in connection with a
“corporate partnering” transaction or a “strategic alliance” (as determined by
the Board of Directors of the Company in good faith); (ii) in connection
with
any financing transaction in respect of which the Company is a borrower;
or
(iii) to a vendor, lessor, lender, or customer of the Company, or a research,
manufacturing or other commercial collaborator of the Company, in a transaction
approved by the Board of Directors, provided in any case, that such issuance
is
not being made primarily for the purpose of avoiding compliance with this
Agreement.
2.
Miscellaneous
2.1
Any
notice or other communication given hereunder shall be deemed sufficient
if in
writing and sent by registered or certified mail, return receipt requested,
addressed to the Company, at 000 Xxxxxx Xxxx, Xxxxxxx Xxxx Xxxxxx, Xxxxxx,
Xxxxxx'x Xxxxxxxx of China, Attention: Xxx Xx with
a copy to
(which
shall not constitute notice) Xxxxxxxxxxx & Xxxxxxxx Xxxxxxxxx Xxxxxx LLP,
00000 Xxxxx Xxxxxx Xxxx., Xxxxxxx Xxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000,
Attention: Xxxxxx X. Xxxxxxx, Esq., and to the Holder at his or her address
indicated on the signature page of this Agreement. Notices shall be deemed
to
have been given three (3) business days after the date of mailing, except
notices of change of address, which shall be deemed to have been given when
received.
2.2 This
Agreement may only be amended through a written instrument signed by the
Holder,
Full Art and the Company.
2.3 This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and to their respective heirs, legal representatives, successors and assigns.
This Agreement sets forth the entire agreement and understanding between
the
parties as to the subject matter hereof and merges and supersedes all prior
discussions, agreements and understandings of any and every nature among
them.
2.4
Notwithstanding
the place where this Agreement may be executed by any of the parties hereto,
the
parties expressly agree that all the terms and provisions hereof shall be
construed in accordance with and governed by the laws of the State of Delaware.
2.5
This
Agreement may be executed in counterparts. Upon the execution and delivery
of
this Agreement, this Agreement shall become a binding obligation of the parties
hereto. This Agreement may be executed and delivered by facsimile.
2.6
The
holding of any provision of this Agreement to be invalid or unenforceable
by a
court of competent jurisdiction shall not affect any other provision of this
Agreement, which shall remain in full force and effect.
2.7
It
is
agreed that a waiver by either party of a breach of any provision of this
Agreement shall not operate, or be construed, as a waiver of any subsequent
breach by that same party.
2.8
The
parties agree to execute and deliver all such further documents, agreements
and
instruments and take such other and further action as may be necessary or
appropriate to carry out the purposes and intent of this Agreement.
2.9
The
Company agrees not to disclose the names, addresses or any other information
about the Holders, except as required by law, provided that the Company may
provide information relating to the Holder as required in any registration
statement under the Act that may be filed by the Company pursuant to the
requirements of this Agreement.
2.10 The
obligation of the Holder hereunder is several and not joint with the obligations
of any other Holders (the “Other Holders”), and the Holder shall not be
responsible in any way for the performance of the obligations of any Other
Holders. Nothing contained herein or in any other agreement or document
delivered at the Closing, and no action taken by the Holder pursuant hereto,
shall be deemed to constitute the Holder and the Other Holders as a partnership,
an association, a joint venture or any other kind of entity, or create a
presumption that the Holder and the Other Holders are in any way acting in
concert with respect to such obligations or the transactions contemplated
by
this Agreement. The Holder shall be entitled to protect and enforce the Holder’s
rights, including without limitation the rights arising out of this Agreement,
and it shall not be necessary for any Other Holder to be joined as an additional
party in any proceeding for such purpose. 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.
The Holder is not acting as part of a “group” (as that term is used in Section
13(d) of the 0000 Xxx) in negotiating and entering into this Agreement or
purchasing the Shares or acquiring, disposing of or voting any of the underlying
shares of Common Stock. The Company hereby confirms that it understands and
agrees that the Holder is not acting as part of any such group.
[SIGNATURE
PAGE FOLLOWS]
IN
WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year
first written above.
|
|
|
Full Legal Name of Holder (Please print) |
|
|
|
Signature of (or on behalf of) Holder |
|
Name:
|
|
Title:
|
|
|
|
Address of Holder |
|
|
|
Social Security or Taxpayer |
|
Identification
Number of Holder
|
|
|
|
Number of Shares being Registered |
| SRKP 1, INC. | FULL ART INTERNATIONAL, LTD. | |||
| By: | By: | |||
| Name: | Xxxxxxx Xxxxxxxxx | Name: | Xxx Xxx Yi | |
| Title: | President | Title: | President | |
SCHEDULE
I
HOLDERS
AND REGISTRABLE SECURITIES
|
HOLDER
|
NO.
OF SHARES BEING REGISTERED
|
||
|
1.
|
FirstAlliance
Financial Group, Inc.
|
2,000,000
|
|
|
2.
|
Xxxxxxx
Xxxxxxxxx
|
461,825
|
|
|
3.
|
The
Xxxxxx Xxxxxxxxx Trust
|
250,250
|
|
|
4.
|
The
Xxxxxx Xxxxxxxxx Trust
|
250,250
|
|
|
|
|||
|
TOTAL
|
2,962,325
|
||
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