FORM OF PLEDGE AGREEMENT
FORM
OF PLEDGE AGREEMENT
THIS
PLEDGE AGREEMENT ("Agreement"),
dated
as of ___________ __, 2008, is executed by and between ASIA
SPECIAL SITUATION ACQUISITION CORP., a
Cayman
Island corporation ("ASSAC"),
having an office c/o M&C Corporate Services Limited, P.O. Box 309GT, Xxxxxx
House, South Church Street, Xxxxxx Town, Grand Cayman; CHINA
TEL GROUP, INC., a
Nevada
corporation (“CHTL”)
having
an office at 0000 Xxxxxx Xxxxxx Xxxxx, Xxxxx 000, Xxxxxx, XX 00000; and
XXXXXXX,
CRON & JASPER, P.L.C.,
a law
firm formed under the laws of the State of California (the “Collateral
Agent”)
and
having an xxxxxx xx Xxxx Xxxxxxx Xxxxx, Xxxxx 000, Xxxxxx, XX 00000. ASSAC,
CHTL
and their respective officers, directors, shareholders, authorized
representatives and affiliates are hereinafter sometimes collectively referred
to as the “Business
Parties.”
WITNESSETH:
WHEREAS,
on the date hereof, the ASSAC has purchased from CHTL certain shares of Class
A
common stock (“Class
A Common Shares”)
and
Series A preferred stock (“Series
A Preferred Shares”)
of
CHTL (collectively, the “Purchased
Securities”),
pursuant to the terms of an amended and restated stock purchase agreement,
dated
July __, 2008 (the “Purchase
Agreement”);
and
WHEREAS,
ASSAC has paid a portion of the purchase price for such Purchased Securities
by
issuing and delivering to CHTL ASSAC’s non-interest bearing promissory note in
$____________ principal amount, due March 31, 2009, and dated of even date
herewith (the “Note”);
and
WHEREAS,
in order to secure the payment and performance of the obligations, liabilities
and indebtedness of ASSAC in favor of CHTL under the Note, ASSAC has agreed
to
pledge to the CHTL certain of the Purchased Securities specified below, and
has
delivered such Purchased Securities to the Collateral Agent for the benefit
of
CHTL;
NOW,
THEREFORE, in
consideration of the premises and of the mutual covenants set forth herein
and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto hereby agree as follows:
1.
Pledge;
Non-Recourse Obligation.
(a) ASSAC
hereby pledges, as pledgor, to CHTL, as pledgee, and grants to CHTL a first
priority lien on and security interest in all of ASSAC's right, title and
interest in and to an aggregate of __________ Series A Preferred Shares of
CHTL
(collectively, the “Pledged
Securities”),
together with all proceeds from the sale of the Pledged Securities, all
dividends paid in capital stock respect of the Pledged Securities and any
property or securities delivered to the holder of the Pledged Securities in
respect thereof in the event of a merger or takeover of CHTL by an unaffiliated
third party (collectively, with the Pledged Securities, the "Pledged
Collateral").
(b) ASSAC
hereby agrees to execute and deliver to the Collateral Agent (i)
the
Pledged Securities, (ii) assignments
separate from the Pledged Securities substantially in the form of Exhibit
A
hereto,
undated and appropriately endorsed in blank, with respect to the Pledged
Securities comprising the Pledged Collateral and (iii) if legally required,
such
financing statements as the Collateral Agent may reasonably request with respect
to the Pledged Collateral (or, if execution by ASSAC is not required pursuant
to
the applicable Uniform Commercial Code, ASSAC hereby authorizes the Collateral
Agent to file all financing statements deemed necessary by CHTL to perfect
the
security interests granted hereunder), (iii) take such other steps as CHTL
may
from time to time reasonably request to perfect CHTL's security interest in
the
Pledged Collateral or any part thereof under applicable law, and (iv) after
the
occurrence and during the continuance of an Event of Default, to execute and
deliver on behalf of ASSAC such other documents of transfer as CHTL or the
Collateral Agent may from time to time reasonably require to enable CHTL to
transfer the Pledged Collateral into the name of CHTL or the name of its nominee
(all of the foregoing are hereinafter collectively referred to as the
"Assignments").
-1-
(c) CHTL
hereby agrees to deliver to the Collateral Agent the original of the Note to
be
held under this terms of this Agreement. By its execution of this Agreement,
the
CHTL does hereby acknowledge and agree that notwithstanding anything to the
contrary, express or implied, contained in this Agreement or in the Note:
(i) Nothing
contained in the Note or any other agreement or instrument shall be deemed
or
construed to constitute a guaranty or undertaking by ASSAC or any officer,
director, shareholder, employee, agent or consultant of ASSAC, or any other
person, of any of the obligations of ASSAC under the Note or this Agreement;
it
being understood and agreed by CHTL that, absent the receipt by ASSAC of funds
from the issuance and sale of its securities or the exercise of outstanding
ASSAC warrants on or prior to the Maturity Date of the Note, ASSAC will not
have
any funds or financial resources to pay all or any portion of its obligations
under the Note on the Maturity Date or otherwise;
(ii) CHTL
hereby
acknowledges and agrees that the sole source for payment of the outstanding
principal amount of the Note shall be the proceeds from the issuance and sale
of
securities of ASSAC or the foreclosure and transfer to CHTL of the Pledged
Collateral under this Agreement. Accordingly, and notwithstanding anything
to
the contrary, express or implied, contained in the Note or in this Agreement:
(i) absent
only acts or omissions of ASSAC constituting actual fraud against CHTL, neither
ASSAC, ASSAC nor any officer, director, shareholder, employee, agent or
consultant of ASSAC, or any other person shall have any personal liability
or
obligation to CHTL pursuant to the Note or this Agreement; and
(ii) except
for such Pledged Collateral, none of the assets or properties of ASSAC, or
any
officer, director, shareholder, employee, agent or consultant of ASSAC, or
any
other person (including without limitation any portion of the ordinary shares
of
ASSAC owned by its existing shareholders or their transferees) shall be subject
to any claims, attachments, liens, security interests or rights in favor of
ASSAC to secure payment of the Note.
2.
Security
for Secured Obligations.
The
Pledged Collateral secures the prompt and complete payment, performance and
observance of the Note (including, without limitation, all obligations and
liabilities of ASSAC thereunder).
3.
Delivery
of Pledged Securities.
(a) On
each
occasion that the outstanding principal amount of this Note is prepaid in part
and reduced or paid in full, in accordance with the provisions of Section
5(b)
of the
Note, a corresponding amount of the Pledged Securities (valued (i) as to the
Class A Common Shares of CHTL held under this Pledge Agreement at $2.25 per
share, and (ii) as to any shares of Series A Preferred Shares of CHTL held
under
this Pledge Agreement, at the $10.00 per share purchase price) shall be released
by the Collateral Agent from this Pledge Agreement and delivered to the Maker,
free and clear of all liens, claims and encumbrances created by such Pledge
Agreement. The Collateral Agent shall deliver such of the Pledged Securities
to
be released from this Pledge Agreement to ASSAC, within not later than five
(5)
Business Days following receipt of confirmation, in a form and manner reasonably
satisfactory to the Collateral Agent, that a full or partial prepayment of
the
Note has been made by or on behalf of ASSAC. Delivery of Pledged Collateral
released from this Pledge Agreement shall be made by the Collateral Agent to
the
Maker, c/o Xxxxxxx Xxxx LLP at 0000 Xxxxxxxx, 00xx
xxxxx,
Xxx Xxxx, Xxx Xxxx 00000, attn: Xxxxxxx X. Xxxxx, Esq. or such other person
as
may be designated from time to time by ASSAC
-2-
(b) In
the
event and to the extent that the Note shall not have been paid in full by the
March 31, 2009 Maturity Date of the Note (unless such Maturity Date shall be
extended in writing by the Payee), the amount of the Pledged Securities then
being held under the terms of the Pledge Agreement which are not then subject
to
release and delivery to ASSAC pursuant to Section 3(a) above), shall be returned
by the Collateral Agent to CHTL for cancellation and, simultaneous with such
return, this Note shall cancelled and shall be returned by the Collateral Agent
to ASSAC. The Collateral Agent shall redeliver such of the Pledged Collateral
to
be delivered to CHTL and CHTL shall deliver this Note to ASSAC, in each case,
within not later than five (5) Business Days following the Maturity Date of
the
Note or the occurrence and continuation of an earlier “Event of Default” under
the Note and following receipt of confirmation, in a form and manner reasonably
satisfactory to the Collateral Agent, that the entire Note has not been paid
in
full
4.
Pledged
Collateral Adjustments.
If during
the term of this Agreement:
(a)
any
non-cash dividend or distribution, reclassification, readjustment or other
change is declared or made in the capital structure of CHTL, or any option,
warrant or similar instrument included within the Pledged Collateral is
exercised, or both, or
(b)
any
subscription, warrants, options shall be issued in connection with the Pledged
Collateral, then ASSAC shall (i) promptly deliver new, substituted and
additional shares, warrants, options, or other equity securities, issued by
reason of any of the foregoing, and all certificates and other instruments
evidencing the same to CHTL to be held under the terms of this Agreement and
shall constitute Pledged Collateral hereunder, and (ii) promptly deliver to
CHTL
or the Collateral Agent such additional Pledged Collateral.
5.
Remedies;
Transfer of Pledged Collateral and Cancellation of
Note.
(a) In
the
event and to the extent any portion of the Note shall not have been paid in
cash
on the March 31, 2009 Maturity Date of such Note, as its sole and exclusive
remedy under this Agreement and the Note, CHTL
shall, upon not less than five (5) days prior written notice to ASSAC and the
Collateral Agent, cause the Collateral Agent to transfer back to CHTL or its
designee such portion of the Pledged Collateral referred above to in
Section
3(b)
of this
Agreement.
(b) At
the
time the collateral Agent transfers the Pledged Collateral back to CHTL as
contemplated by Section
5(a)
above,
such Collateral Agent shall also deliver to ASSAC the Note held under this
Agreement, marked, “cancelled.”
6.
Representations
and Warranties.
ASSAC
hereby represents and warrants as of the date hereof to CHTL as follows:
(a)
ASSAC
is
the legal and beneficial owner of the Pledged Collateral owned by ASSAC, free
and clear of any lien, except for the lien created by this Agreement;
(b)
The
Pledged Securities have been duly authorized and are exercisable in accordance
with their terms and, when exercised in accordance therewith, upon exercise
and
full payment to the Business Combination Company of the exercise price specified
in the Pledged Securities, the Warrant Shares shall be duly authorized, validly
issued, fully paid and non-assessable; and
-3-
(c)
ASSAC
has
full power and authority to enter into this Agreement, assign, deposit, pledge
and xxxxx x xxxx on or otherwise transfer all of its rights in the Pledged
Collateral free and clear of any liens and, upon exercise of the Pledged
Securities and issuance of Warrant Shares, has the right to vote the Warrant
Shares;
7.
Voting
Rights.
(a) During
the term of this Agreement, and except as otherwise provided in Section
7(b)
below,
ASSAC shall have the right to vote, on all questions presented to the holders
of
capital stock of CHTL, such number of shares of the Pledged Securities forming
all or a portion of the Pledged Collateral, to the extent of such number of
shares of the Pledged Securities which, when coupled with the 46,666,667 Class
A
Common Shares of CHTL and the Class B Common Shares of CHTL issued to ASSAC
under the Purchase Agreement, shall represent fifty-one percent (51%) or more
of
the aggregate voting power of all classes of capital stock of CHTL entitled
to
vote at any regular or special meeting of CHTL shareholders or in connection
with any other consents or approvals required to be obtained from CHTL
shareholders. In scuh connect, the Collateral Agent will deliver all necessary
documents to allow ASSAC to take such action upon ASSAC's request.
(b) After
the
occurrence and during the continuance of an Event of Default, CHTL may, at
CHTL's option, exercise all voting and other consensual rights and powers
pertaining to the Pledged Collateral (to the extent it may vote). ASSAC hereby
agrees to execute all proxies or other instruments, documents or agreements
deemed reasonably necessary by CHTL to evidence the right to vote the Pledged
Collateral as provided hereunder, and ASSAC agrees that it shall not be entitled
to rescind, revoke or otherwise modify CHTL's vote executed in accordance with
this Section 7. Any and all proxies executed by ASSAC pursuant to this Section
7
shall be deemed for all purposes to be a proxy coupled with an interest and
shall be irrevocable until the payment in full, in cash, of all amounts due
under the Note (the "Obligations").
8.
Dividends
and Other Distributions.
The
Collateral
Agent shall be entitled to receive any and all stock dividends and other
distributions paid in respect of the Pledged Collateral which dividends and/or
distributions shall be deemed to be held in escrow if received by CHTL and
shall
become part of the Pledged Collateral upon receipt thereof.
9.
Transfers
and Other Liens.
ASSAC
agrees that until all of the Obligations are paid in full, it will not
(i)
sell
or
otherwise dispose of, or grant any option or other rights with respect to,
any
of the Pledged Collateral without the prior written consent of CHTL, or (ii)
create or permit to exist any lien upon or with respect to any of the Pledged
Collateral, except for the lien created by this Agreement.
10. Termination.
This
Agreement shall remain in full force and effect until the
earliest
to occur
of (i) the payment of the Note in full, (ii) the consummation of the “Merger” on
the Merger Date” (as those terms are defined in the Purchase Agreement), or
(iii) the transfer of the Pledged Collateral and the Note contemplated by
Section
5
of this
Agreement. Upon the termination of this Agreement as provided above, this
Agreement shall automatically terminate and all liens and security interests
created hereunder shall terminate and be released. Upon confirmation of payment
in full of the Note, if any UCC-1 Financing Statements were previously filed,
the Collateral Agent shall file any UCC-3 Termination Statements releasing
the
lien and security interest created by the Assignments.
-4-
11. Agreements
with and Duties of the Collateral Agent.
(a) The
Collateral Agent shall be under no duty to give the Pledged Collateral held
by
it hereunder any greater degree of care than it gives its own similar
property.
(b) If
the
Collateral Agent is permitted or required to deliver any of the Pledged
Collateral or pay money back to any Business Party or Business Parties, such
payment shall be made by check or by wire transfer, at the Collateral Agent's
sole discretion, unless the Collateral Agent shall have received written notice
from such Business Party or Business Parties of a new and/or different postal
address or unless this Agreement shall have provided otherwise. If payment
is
made by check or Pledged Collateral is to be delivered, the same shall be mailed
to the address specified by the Business Party(s) in this Agreement (or to
a new
or different address subsequently specified to Collateral Agent by writing
from
such Business Party(s)).
(c) Whenever
authorization shall be provided by the terms of this Agreement for the payment
or delivery of Pledged Collateral by the Collateral Agent to one or more
Business Parties and there is no express requirement hereunder for written
instructions from the applicable Business Party(s) before such delivery is
made,
the Collateral Agent shall notify all Business Parties and, in its sole
discretion, may defer payment or defer return or delivery of Pledged Collateral
until such written requirement or consent is received from all of the Business
Parties (or, depending on the Collateral Agent’s requirements, from less than
all of them). Where Collateral Agent determines to so defer payment or delivery,
the Collateral Agent shall give written notice to the Business Parties of such
determination.
(e) It
is
expressly understood and agreed that under no circumstances shall the Collateral
Agent be required to pay or have paid to any Business Party(s) any sum not
representing proceeds from the sale of any Pledged Collateral that may be
delivered to the Collateral Agent.
(f) It
is
intended that the duties and responsibilities of the Collateral Agent shall
be
limited to ministerial duties and responsibilities to the maximum extent
permitted by law. In keeping with that intent, it is agreed that the receipt
by
Collateral Agent of Exhibit
B,
or an
alternative written instrument containing the substantive information or content
that is in Exhibit
B
(whether
or not also including other information and content not inconsistent with the
request and approval of delivery or disbursement action proposed to be taken
by
the Collateral Agent) shall, in the absence of actual knowledge by the
Collateral Agent of falsehood, fraud or other intentional or gross misconduct
on
the part of any of the Business Parties that would render the proposed action
under the written instrument to be inappropriate, be full and sufficient
justification and authorization for the proposed payment or disbursement action
by the Collateral Agent. Notwithstanding
anything to the contrary, express or implied, contained in this Agreement,
if
the Collateral Agent shall receive written instructions from CHTL in accordance
with Alternative Instructions 2 of Exhibit
B
(or words of similar import), the Collateral Agent shall: (i) furnish a copy
of
such instructions to ASSAC at the address designated on Exhibit
B
(or any alternative address requested by ASSAC in writing), and (ii) take no
action with respect to such written request until a date which shall be not
less
than (A) five (5) days following the March 31, 2009 Maturity Date of the Note,
or (B) twenty (20) days following receipt of such written instructions from
CHTL
that ASSAC has committed any Event of Default under the Note, other than the
failure to make payment of the Note on the Maturity Date.
(g) The
ministerial reliance by Collateral Agent on the written instrument referred
to
in Section
11(f)
shall be
full and sufficient justification and authorization, as stated in such Section,
notwithstanding a determination that Collateral Agent had certain specified
discretionary inquiry powers and opportunities that Collateral Agent did not
pursue or that, absent the provisions of Section
11(f) above,
Collateral Agent had (or might have had) fiduciary responsibilities to
investigate before making any such payment or disbursement and did not do
so.
-5-
(h) The
Collateral Agent shall have no duty or responsibility to enforce collection
of
any check delivered to it and subsequently dishonored, nor shall Collateral
Agent have any duty or responsibility to give notice to any Business Party
of
such attempted payment and the subsequent dishonor thereof.
(i) The
Collateral Agent shall be entitled to rely upon the accuracy, act in reliance
upon the contents, and assume the genuineness of any notice, instruction,
certificate, signature (including copies of signature pages), instrument or
other document (in each case, whether a copy, facsimile or original) which
is
given to the Collateral Agent pursuant to this Agreement, without the Collateral
Agent being obligated to undertake any action or investigation to verify the
truth or accuracy thereof -- unless
the Collateral Agent has actual knowledge that the document or other document,
instruction, certificate or signature is not accurate, truthful, authorized
or
genuine. For
purposes of this Section
11(i),
“Actual
knowledge, or any other instance where “knowledge” would be required (and,
therefore, “actual knowledge” would be required as a standard of “knowledge”)
shall consist of actual and conscious apprehension and understanding, presently
in the mind or consciousness of the person acting for Collateral Agent (as
opposed to knowledge previously known but not currently remembered or
consciously being thought about) and shall be limited to such “actual knowledge”
by an attorney in Collateral Agent’s firm who is currently actively engaged in
the management of the Collateral Agent and who is made aware of the document,
etc. that is the subject of this Section
11(i).
For
purposes of this Agreement “knowledge” (being required to be “actual knowledge”)
shall not included knowledge of any other attorney or person in Xxxxxxx Xxxx
who
is not directly involved in making decisions regarding, or managing, the Xxxxxxx
Xxxx activities as Collateral Agent. Knowledge by others within Xxxxxxx Xxxx
shall not be imputed to the persons described above for purposes of determining
whether “knowledge” or “actual knowledge” existed. Persons (lawyers) at
Collateral Agent as to whom “actual knowledge” is relevant under this
Section
11(i)
currently includes Xxxxxxxx Xxxxxxx, Esq. and Xxxxxxxx Xxxx, Esq.
(j) The
Collateral Agent may consult with and act relative hereto upon advice of counsel
of its own selection in reference to any matter connected herewith, and shall
not be liable to any of the parties hereto, or their respective legal
representatives, heirs, successors and assigns, for any action taken in good
faith on the advice of counsel or for any mistake of fact or error of judgment,
or for any acts or omissions of any kind taken or made in good faith unless
caused by its willful misconduct or gross negligence.
(k) The
Collateral Agent shall not be responsible for, or have any duty to inquire
into,
or be required to enforce any of the terms and provisions of any document or
agreement other than this Agreement.
(l) Without
limiting the foregoing, the Collateral Agent shall not be responsible for,
or
have any duty to inquire into, monitor or enforce obligations between any of
the
Business Parties as to (i) whether there was support or justification for any
such Business Party to act in accordance with written instructions of such
Business Party or any other Business Party in attached Exhibit
B
or any
written alternative acceptable to Collateral Agent that included (with anything
else) the material or content of Exhibit
B,
or (ii)
whether any Business Party properly uses and applies funds received by it,
whether from the Collateral Agent or third parties, in accordance with the
provisions of this Agreement or other applicable documents. Notwithstanding
anything to the contrary, express or implied, contained in this Agreement,
if
the Collateral Agent shall receive written instructions from CHTL in accordance
with Alternative Instructions 2 of Exhibit
B
(or words of similar import), the Collateral Agent shall: (i) furnish a copy
of
such instructions to ASSAC at the address designated on Exhibit
B
(or any alternative address requested by ASSAC in writing), and (ii) take no
action with respect to such written request until a date which shall be not
less
than twenty (20) days following receipt of such written instructions from
CHTL.
-6-
(m) This
Agreement sets forth exclusively the duties of the Collateral Agent with respect
to any and all matters pertinent hereto and no implied duties or obligations
shall be read into this Agreement against the Collateral Agent.
(n) If
the
Collateral Agent shall be uncertain as to its duties or rights hereunder or
if
it receives instructions with respect to the Pledged Collateral or any funds
that may be derived from the sale or transfer of any Pledged Collateral, which,
in the Collateral Agent’s sole discretion, it determines to be in actual or
potential conflict with this Agreement or other instructions that it has
received, the Collateral Agent shall be excused from taking action that it
might
otherwise be required to take, and its sole obligation shall be to keep safely
all property held in escrow until the uncertainty is resolved. Such uncertainty
can be resolved by written and signed agreement among all affected Business
Parties or by order or judgment of a court of competent jurisdiction, naming
the
involved Business Parties as participants in the action or proceeding brought
to
obtain judicial determination of the involved uncertain duties and
obligations.
(o) Alternatively,
the Collateral Agent may, in its discretion, seek judicial determination of
any
dispute or uncertainty and/or deposit all of the Pledged Collateral and any
funds that may be derived from the sale or transfer of any Pledged Collateral,
in Court pursuant to proceedings under New York law.
(p) The
Collateral Agent makes no representation as to the validity, value, genuineness
or collectability of any portion or all of the Pledged Collateral held by or
delivered to it.
(q) In
the
event that:
(i) the
Collateral Agent shall receive any conflicting or inconsistent notices or
instructions from any one or more of the Business Parties, or
(ii) there
shall be any disagreement between or among any of the Business Parties,
resulting in adverse claims or demands being made in connection with the subject
matter of this Agreement, or
(iii) there
shall be any disagreement between or among any of the Business Parties and
any
other person, resulting in adverse claims or demands being made in connection
with the subject matter of this Agreement, or
(iv) the
Collateral Agent, in good faith, shall be in doubt as to what action it should
take hereunder,
then,
and
in any such event, Collateral Agent may, at its option, refuse to comply with
any notices, instructions, claims or demands on it, or refuse to take any other
action hereunder, so long as such disagreement continues or such doubt exists,
and in any such event, the Collateral Agent shall not become liable in any
way
or to any person for its failure or refusal to act. The Collateral Agent shall
be entitled to continue so to refrain from acting until (A) the rights of all
Business Parties or other third person(s) shall have been fully and finally
adjudicated by a court of competent jurisdiction or (B) all differences shall
have been adjusted and all doubt resolved by agreement among all of the
interested persons, and the Collateral Agent shall have been notified thereof
in
writing signed by all such persons. The Collateral Agent shall have the option,
after thirty (30) days’ notice to the Business Parties of its intention to do
so, to file an action in interpleader requiring the parties to answer and
litigate any claims and rights among themselves.
-7-
The
rights of the Collateral Agent under this Section
11(q)
are
cumulative of all other rights which it may have by law or
otherwise.
(r) The
Collateral Agent does not have and will not have any interest in the Pledged
Collateral or any funds that may be derived from the sale or transfer of any
Pledged Collateral, but is serving only as escrow holder and has only possession
thereof.
(s) The
Collateral Agent’s duties and responsibilities shall be determined only with
reference to this Agreement. The Collateral Agent is not charged with any duties
or responsibilities in connection with any other document or
agreement.
(t) The
Collateral Agent may execute any of its powers or responsibilities hereunder
either directly or by or through its agents or attorneys and the Collateral
Agent shall not be responsible for any misconduct or negligence on the part
of
any agent or attorney appointed with due care by it hereunder.
(u) Each
of
Business Parties do hereby release the Collateral Agent from any act done or
omitted to be done by the Collateral Agent in good faith in the performance
of
its duties hereunder, and each of Business Parties do hereby jointly and
severally agree to fully indemnify the Collateral Agent and its directors,
officers, employees and agents (the “Collateral
Agent Indemnified Parties”)
for,
and to hold each of them harmless from and against, any loss, liability, claim,
damage or expense (including reasonable attorneys’ fees and expenses) incurred
by the Collateral Agent Indemnified Parties, arising out of or in connection
with the Collateral Agent entering into this Agreement and carrying out its
duties hereunder, including the reasonable costs and expenses of defending
itself from any claim or liability; provided,
however,
that
the Collateral Agent Indemnified Parties shall not be entitled to
indemnification hereunder for losses, liabilities and expenses caused by the
willful misconduct, fraud or gross negligence of any of the Collateral Agent
Indemnified Parties. The agreements contained in this Section
11(u)
shall
survive despite any termination of this Agreement or the resignation or removal
of the Collateral Agent.
(v) The
Collateral Agent shall not incur any liability for not performing any act or
fulfilling any duty, obligation or responsibility hereunder by reason of any
occurrence beyond the control of the Collateral Agent (including but not limited
to any act or provision of any present or future law or regulation or
governmental authority, any act of God or war, or the unavailability of the
Federal Reserve Bank wire or telex or other wire or communication
facility).
(w) Anything
in this Agreement to the contrary notwithstanding, in no event shall the
Collateral Agent be liable for consequential loss or damage of any kind
whatsoever (including but not limited to lost profits), regardless of the form
of action.
(x) The
Collateral Agent may resign at any time or be removed by the written mutual
consent of the Business Parties. No resignation or removal of the Collateral
Agent and no appointment of a successor Collateral Agent, however, shall be
effective until the acceptance or removal of the Collateral Agent in the manner
herein provided. In the event of the resignation or removal of the Collateral
Agent, the Business Parties shall in good faith agree upon a successor
Collateral Agent. If the Business Parties are unable to agree upon a successor
Collateral Agent within fourteen (14) days after receipt of a notice of
resignation or removal is given, the Collateral Agent may deposit the Pledged
Collateral and any funds delivered to the Collateral Agent from the sale or
transfer of any Pledged Collateral with a court of competent jurisdiction and
may petition, at the sole expense of the Business Parties, a court of competent
jurisdiction for the appointment of a successor Collateral Agent. Any successor
Collateral Agent shall execute and deliver to the predecessor Collateral Agent
and the Business Parties an instrument accepting such appointment and the
transfer of the Pledged Collateral and any funds delivered to the Collateral
Agent from the sale or transfer of any Pledged Collateral and agreeing to the
terms of this Agreement, and thereupon such successor Collateral Agent shall,
without further act, become vested with all the estates, properties, rights,
powers and duties of the predecessor Collateral Agent as if originally named
herein.
-8-
(y) Any
law
firm with which the Collateral Agent may merge or consolidate shall be the
successor Collateral Agent without further act.
(z) At
any
time CHTL can request the Collateral Agent to resign, the Collateral Agent
agrees to resign and another Collateral Agent acceptable to both ASSAC and
CHTL
shall be appointed as Collateral Agent.
12. Definitions. The
singular shall include the plural and vice versa and any gender shall include
any other gender as the context may require.
13. Successors
and Assigns. This
Agreement shall be binding upon and inure to the benefit of ASSAC, CHTL and
their respective successors and assigns. ASSAC's successors and assigns shall
include, without limitation, a receiver, trustee or debtor-in-possession of
or
for ASSAC.
13. GOVERNING
LAW.
THIS
AGREEMENT SHALL BE A CONTRACT MADE UNDER
AND GOVERNED BY
THE
INTERNAL LAWS OF THE STATE OF CALIFORNIA WITHOUT REGARD TO CONFLICT OF LAWS
PRINCIPLES THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF ANY STATE OTHER
THAN THE STATE OF CALIFORNIA.
14. Severability. Whenever
possible, each provision of this Agreement shall be interpreted in such manner
as to be effective and valid under applicable law, but, if any provision of
this
Agreement shall be held to be prohibited or invalid under applicable law, such
provision shall be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement.
15. Further
Assurances. ASSAC
agrees that it
will
cooperate with CHTL and the Collateral Agent and will execute and deliver,
or
cause to be executed and delivered, all such other assignments separate from
certificate, proxies, instruments and documents, and will take all such other
actions, including, without limitation, the execution and filing of financing
statements, as CHTL or the Collateral Agent may reasonably request from time
to
time m order to carry out the provisions and purposes of this Agreement.
16. Notices.
Except
as otherwise provided herein, whenever it is provided herein that any notice,
demand, request, consent, approval, declaration or other communications shall
or
may be given to or served upon any of the parties by any other party, or
whenever any of the parties desires to give or serve upon any other
communication with respect to this Agreement, each such notice, demand, request,
consent, approval, declaration or other communication shall be in writing and
shall be given (and deemed to have been given) to the address on record with
the
sending party and otherwise in accordance with and subject to the terms of
the
Note.
17.
Amendments,
Waivers and Consents.
No
amendment to, modification or waiver of, or consent with respect to, any
provision of this Agreement shall in any event be effective unless the same
shall be in writing and signed and delivered by CHTL and ASSAC, and then any
such amendment, modification, waiver or consent shall be effective only in
the
specific instance and for the specific purpose for which given.
18.
Section
Headings.
The
section headings in this Agreement are inserted for convenience of reference
and
shall not be considered a part of this Agreement or used in its
interpretation.
19.
Execution
in Counterparts.
This
Agreement may be executed in any number of counterparts, each of which shall
be
an original, but all of which shall together constitute one and the same
agreement. Any such counterpart which may be delivered by facsimile transmission
shall be deemed the equivalent of an originally signed counterpart and shall
be
fully admissible in any enforcement proceedings regarding this Agreement.
-9-
20.
Merger.
This
Agreement represents the final agreement of ASSAC and CHTL with respect to
the
matters contained herein and may not be contradicted by evidence of prior or
contemporaneous agreements, or subsequent oral agreements, between ASSAC and
CHTL.
[Remainder
of Page Intentionally Left Blank; Signature Page Follows]
-10-
IN
WITNESS WHEREOF, the
parties hereto have
each
caused this Pledge Agreement to be executed and delivered by its duly authorized
officer as of the date first set forth above.
PLEDGOR:
| By: | |||
|
Xx.
Xxxx X. Xxxxx, President
|
PLEDGEE:
|
CHINA
TEL GROUP, INC.
|
|||
| By: | |||
|
Xxxxxx
Xxxxxxx, President
|
COLLATERAL
AGENT:
|
XXXXXXX,
CRON & JASPER,
P.L.C.
|
|||
| By: | |||
|
Xxxxxxxx
Xxxxxxx, Partner
|
-11-
EXHIBIT
A
FORM
OF ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR
VALUE RECEIVED, the
undersigned, ________________________,
does
hereby sell, assign
and transfer unto __________________,
warrants
to purchase ordinary shares of ____________________________
(the
“Pledged
Securities”),
standing in the name of the undersigned on the books of said corporation and
does hereby irrevocably constitute and appoint
____________________________________, as Agent, as the undersigned's true and
lawful attorney, for it and in its name and stead, to sell, assign and transfer
all or any of the Shares, and for that purpose to make and execute all necessary
acts of assignment and transfer thereof; and to substitute one or more persons
with like full power, hereby ratifying and confirming all that said attorney
or
substitute or substitutes shall lawfully do by virtue hereof.
Dated:
__________________
[_____________,
a_____________, ___________]
| By: | |||
|
Name:
_______________________________
|
|||
|
Its:
_________________________________
|
EXHIBIT
B
LETTER
OF INSTRUCTION
XXXXXXX,
CRON & JASPER, P.L.C.,
Four
Xxxxxxx Xxxxx, Xxxxx 000,
Xxxxxx,
XX 00000
Attn:
Xxxxxxxx Xxxxxxx, Esq.
Re: Pledge
Agreement, dated __________ 2008 among Asia Special Situation Acquisition Corp.
(“ASSAC”), China Tel Group, Inc. (“CHTL”), and Xxxxxxx, Cron & Jasper,
P.L.C. (“Collateral Agent”).
Gentlemen:
Reference
is made to the above captioned Pledge Agreement. Unless otherwise defined
herein, all capitalized terms shall have the same meaning as is defined in
the
Pledge Agreement.
Alternative
Instructions 1
You
are
hereby instructed to release the following items of the Pledged Collateral
of
CHTL in your possession to ASSAC.
_________
shares of Class A Common Stock and ____________ shares of Series A Preferred
Stock.
Very
truly yours,
| China Tel Group, Inc. | Asia Special Situation Acquisition Corp. | ||
| By: | By: | ||
|
______________,
Authorized Signatory
|
______________,
Authorized
Signatory
|
Alternative
Instructions 2
Please
be
advised that an Event of Default under the Note has occurred and is continuing,
as a result of which you are hereby instructed to release all of the Pledged
Collateral in your possession to China Tel Group, Inc.
Very
truly yours,
|
China
Tel Group, Inc.
|
|||
| By: | |||
|
______________,
Authorized Signatory
|
|
cc:
Xx.
Xxxx
X. Xxxxx
c/o
M&C Corporate Services Limited, P.O. Box 309GT,
gland
House, South Church Street, Xxxxxx Town, Grand Cayman
EXHIBIT
C
Names,
Emails and signature(s) for:
Person(s)
Designated to give Instructions to the Collateral
Agent
If
from
ASSAC:
|
Name
|
Email
|
Signature
|
||
|
Xx.
Xxxx X. Hirst
|
xxxx@xxxxx.xxx
|
___________________________
|
If
from
CHTL
|
Name
|
Email
|
Signatures
|
||
|
Xxxxxx
Xxxxxxx
or
________________
|
____________________
|
__________________________
___________________________
|
All
instructions must include the signature of the person(s) authorizing said
instructions.
