DEBENTURE EXTENSION
AGREEMENT
This Debenture Extension Agreement (“
Agreement ”) is made and entered into as of December
8, 2008, by and among, China Digital Media Corporation, a Nevada
corporation (“Company”) and Vision Opportunity Master
Fund, Ltd., a Cayman corporation (“Vision”).
WHEREAS
, on November 17, 2006, the Company
issued to Vision, and Vision purchased from the Company, a
Debenture in the amount of Two Million One Hundred Fifty Thousand
Dollars ($2,150,000), which carries interest thereon at a rate of
four percent (4%) per annum and is convertible at $0.45 per share
(the “Debenture”). The Debenture carries
penalty interest, payable in cash and monthly, at a simple rate of
1.5% per month until the principal and interest has been paid in
full;
WHEREAS
, Vision is the holder of three (3)
warrants issued to Vision by the Company consisting of (i) a Class
A Warrant to purchase 4,777,773 common shares at an exercise price
of $0.80 per share, (ii) a Class B Warrant to purchase 4,777,773
common shares at an exercise price of $1.20 per share, and (iii) a
Class C Warrant to purchase 2,388,887 common shares at an exercise
price of $2.25 (collectively, the
“Warrants”);
WHEREAS,
the Company agreed, but has failed,
to pay in full all unpaid principal in the amount of $2,015,000.00,
net of converted amount $135,000.00 (the “Principal”),
and all remaining accrued interest on the Debenture in the amount
of $30,672.81, such Principal and interest totaling
$2,045,672.80 (the “Outstanding Balance”), on May 17,
2008 (“Maturity Date”);
WHEREAS
, the Company wishes for Vision to
extend the date for repayment of the Outstanding Balance of the
Debenture until June 30, 2010 and Vision has, therefore, requested
as consideration for this extension, that all interest pursuant to
the Debenture be paid in accordance with the Extension Repayment
Table as detailed below, that the conversion price of the Debenture
be reduced to $0.25 and that five percent (5%) of the then
outstanding principal be paid in cash
