AGREEMENT AND PLAN OF MERGER
AGREEMENT
AND PLAN OF MERGER
THIS
AGREEMENT AND PLAN OF MERGER
(the
"Agreement"),
dated
August 6, 2008, is made and entered into as of the 31st
day of
July 2008, by and among ASIA
SPECIAL SITUATION ACQUISITION CORP.,
a
Cayman Island corporation ("ASSAC");
CHINA
TEL GROUP, INC.,
a
Nevada corporation ("CHTL");
XXXXXX
XXXXXXX (“Xxxxxxx”);
and
CHTL
ACQUISITION CORP., a
Nevada
corporation (“Mergerco”).
Xxxxxxx and the other Persons listed on Schedule
A
annexed
hereto and made a part hereof who are holders of CHTL Class B Common Stock
are
hereinafter collectively referred to as the “CHTL
Principal Shareholders”
and
ASSAC, CHTL, the CHTL Principal Shareholders, and Mergerco are hereinafter
sometimes collectively referred to as the “Parties.”
Recitals
A.
Effective
as at the date of this Agreement, ASSAC, CHTL, Trussnet
Group, Inc.,
a
Nevada corporation (“Trussnet”)
and
the CHTL Principal Shareholders entered into an amended and restated stock
purchase agreement (the “Purchase
Agreement”),
pursuant to which, inter
alia,
on the
“Closing Date” of the transactions contemplated by the Purchase Agreement, ASSAC
agreed to purchase for $270,000,000 the “Purchased Securities” of CHTL (as those
terms are defined in the Purchase Agreement).
B. The
Parties hereto all deem it necessary and advisable to enter into this Agreement,
pursuant to which, inter
alia,
Mergerco will be merged with and into CHTL with CHTL as the surviving
corporation of such merger (the “Merger”);
as a
result of which ASSAC shall own 100% of the shares of capital stock of
CHTL.
C. The
Board
of Directors of ASSAC and Mergerco each deems the Merger advisable and in the
best interest of said corporations and its shareholders and have each approved
and adopted the form, terms and provisions of the Purchase Agreement, this
Agreement and the Merger.
D. The
Board
of Directors of CHTL and the CHTL Principal Shareholders each deems the Merger
advisable and in the best interest of said corporation and its shareholders
and
the Board of Directors of CHTL and the CHTL Principal Shareholders have each
approved and adopted the form, terms and provisions of the Purchase Agreement,
this Agreement and the Merger.
X.
Xxxxxxx
is a director, chief executive officer of CHTL and a CHTL Principal Shareholder,
and Xxxxxxx and the other CHTL Principal Shareholders are entering into this
Agreement as an inducement to ASSAC.
Agreement
NOW,
THEREFORE, in consideration of the premises and of the mutual covenants
contained herein, the Parties agree as follows:
ARTICLE
I. -
THE MERGER
1.1 The
Merger.
Upon
the terms and subject to the conditions set forth in this Agreement, and in
accordance with the General Corporation Law of the State of Nevada (the
"Nevada
Corporation Law"),
Mergerco shall be merged with and into CHTL at the Effective Time. Following
the
Effective Time, the separate corporate existence of Mergerco shall cease and
CHTL shall continue as the surviving corporation of the Merger (the
"Surviving
Corporation")
and
shall succeed to and assume all the rights and obligations of Mergerco in
accordance with the Nevada Corporation Law.
1
1.2 Effective
Time.
Subject
to the provisions of this Agreement, as soon as practicable on or after the
Effective Time, the Parties shall file a certificate of merger or other
appropriate documents (in any such case, the "Certificate
of Merger")
executed in accordance with the relevant provisions of the Nevada Corporation
Law and shall make all other filings or recordings required under the Nevada
Corporation Law . The Merger shall become effective at such time and on such
date as the Certificate of Merger is duly filed with the Nevada Secretary of
State, or at such other time as ASSAC and CHTL shall agree should be specified
in the Certificate of Merger (the time the Merger becomes effective being
referred to herein as the "Effective
Time").
1.3 Effects
of the Merger.
The
Merger shall have the effects set forth in the applicable provisions of the
Nevada Corporation Law.
1.4 Certificate
of Incorporation and Bylaws.
(a) The
CHTL
certificate of incorporation as in effect immediately following the Effective
Time shall be the certificate of incorporation of the Surviving Corporation
until thereafter changed or amended as provided therein or by applicable
law.
(b) The
bylaws of CHTL as in effect immediately following the Effective Time shall
be
the bylaws of the Surviving Corporation until thereafter changed or amended
as
provided therein or by applicable law.
1.5 Directors.
The
board of directors of CHTL immediately prior to the Effective Time shall
constitute the entire members of be the board of directors of the Surviving
Corporation until the earlier of their resignation or removal or until their
respective successors are duly elected and qualified, as the case may
be.
1.6 Officers.
The
officers of CHTL immediately prior to the Effective Time shall constitute all
of
the officers of the Surviving Corporation until the earlier of their resignation
or removal or until their respective successors are duly elected and qualified,
as the case may be.
1.7 Effect
on Securities.
As of
the Effective Time, by virtue of the Merger and without any action on the part
of the holder of any shares of the outstanding capital stock, notes or other
evidences of indebtedness of CHTL, Mergerco or ASSAC:
(a) ASSAC
Ordinary Shares and ASSAC Warrants. Each
of
the 14,000,000 ordinary shares of ASSAC, $0.0001 par value per share (the
“ASSAC
Ordinary Shares”)
that
are issued and outstanding as at the Effective Time of the Merger shall remain
issued and outstanding following the Effective Time of the Merger, except as
otherwise provided in Section
1.7(i)
below.
Each of the 17,225,000 issued and outstanding warrants to purchase ASSAC
Ordinary Shares (the “ASSAC
Warrants”)
that
are issued and outstanding as at the Effective Time of the Merger shall remain
issued and outstanding following the Effective Time of the Merger, except as
otherwise provided in Section
1.7(i)
below.
2
(b) CHTL
Treasury Stock. Each
share of CHTL Class A common stock, par value $0.001 per share ("CHTL
Class A Common Stock"),
each
share of CHTL Class B common stock, par value $0.001 per share ("CHTL
Class B Common Stock")
and
each share of CHTL preferred stock, $___ par value per share (the “CHTL
Preferred Stock”)
that
is held in the treasury of CHTL or by any wholly owned subsidiary of CHTL,
and
each share of CHTL Class A Common Stock, each share of CHTL Class B Common
Stock
and each share of CHTL Preferred Stock that is owned by ASSAC shall
automatically be cancelled and returned and shall cease to exist and no
consideration shall be delivered in exchange therefor.
(c) Mergerco
Common Stock.
Each
share of common stock, $0.01 par value per share, of Mergerco issued and
outstanding immediately prior to the Effective Time shall be converted into
and
exchanged for one issued, fully paid and nonassessable share of common stock,
par value $0.01 per share of the Surviving Corporation.
(d) Outstanding
CHTL Class A Common Stock. As
at the
Effective Time, by virtue of the Merger and without any action on the part
of
the holder of any shares of CHTL Class A Common Stock or any shares of capital
stock of ASSAC or the Surviving Corporation, each full share of CHTL Class
A
Common Stock that is issued and outstanding as at the Effective Time of the
Merger (other than shares of CHTL Class A Common Stock to be canceled in
accordance with Section
1.7(b)
hereof),
shall be converted into and exchanged for the right to receive twenty two and
one-half percent (0.225) of one ASSAC Ordinary Share (the
“Class
A Common Stock Exchange Ratio”).
(e) Outstanding
CHTL Class B Common Stock. As
at the
Effective Time, by virtue of the Merger and without any action on the part
of
the holder of any shares of CHTL Class B Common Stock or any shares of capital
stock of ASSAC or the Surviving Corporation, each full share of CHTL Class
B
Common Stock that is issued and outstanding as at the Effective Time of the
Merger (other than shares of CHTL Class B Common Stock to be canceled in
accordance with Section
1.7(b)
hereof),
shall be converted into the right to receive that fraction of a share of ASSAC
Series A Voting Preferred Stock (the
“Class
B Common Stock Exchange Ratio”)
as
shall
be determined by dividing (i) 1,000,000, representing the aggregate number
of
shares of ASSAC Series A Voting Preferred Stock being issued in connection
with
the Merger,
by (ii)
the aggregate number of shares of CHTL Class B Common Stock issued and
outstanding as at the Effective Time of the Merger.
As
of the
Effective Time, all shares of CHTL Class A Common Stock and CHTL Class B Common
Stock (collectively, the “CHTL
Common Stock”)
shall
no longer be issued or outstanding and shall automatically be canceled and
retired and shall cease to exist, and each holder of a certificate representing
any such shares of CHTL Common Stock shall cease to have any rights with respect
thereto, except the right to receive the ASSAC Ordinary Shares and the ASSAC
Series A Voting Preferred Stock, without interest, based on the Class A Common
Stock Exchange Ratio and the Class B Common Stock Exchange Ratio, respectively,
as provided in Section
1.7(d)
and
Section
1.7(e).
(f) Outstanding
CHTL Preferred Stock. As
at the
Effective Time, by virtue of the Merger and without any action on the part
of
the holder of any shares of CHTL Preferred Stock or any shares of capital stock
of ASSAC or the Surviving Corporation, each full share of CHTL Preferred Stock
that is issued and outstanding as at the Effective Time of the Merger (other
than shares of CHTL Preferred Stock to be canceled in accordance with
Section
1.7(b)
hereof),
shall be converted into and exchanged for the right to receive that number
of
ASSAC Ordinary Shares or fraction of an ASSAC Ordinary Share as shall be
determined by (i) converting such share of CHTL Preferred Stock, at the
conversion price then in effect, into the applicable number of shares of CHTL
Class A Common Stock (the “CHTL
Preferred Stock Conversion Shares”),
and
(ii) multiplying such number of CHTL Preferred Stock Conversion Shares by
twenty-two and one-half percent (0.225) (the
“Preferred
Stock Exchange Ratio”).
For
the avoidance of doubt, if each full share of CHTL Preferred Stock (purchased
at
$10.00 per share) is convertible by the holder into 4.4444 shares of CHTL Class
A Common Stock, then such share of CHTL Preferred Stock would be converted
into
and exchanged for one (1) full ASSAC Ordinary Share.
3
As
of the
Effective Time, all shares of CHTL Preferred Stock shall no longer be issued
or
outstanding and shall automatically be canceled and retired and shall cease
to
exist, and each holder of a certificate representing any such shares of CHTL
Preferred Stock shall cease to have any rights with respect thereto, except
the
right to receive the ASSAC Ordinary Shares, without interest, based on the
Class
A Common Stock Exchange Ratio.
(g) Outstanding
CHTL Debentures. By
virtue
of the Merger and without any action on the part of any holder of the aggregate
up to $45,000,000 maximum principal amount of 10% convertible debentures of
CHTL
due December 31, 2008 and convertible by the holder(s) at $0.95 per share into
CHTL Class A Common Stock (the “CHTL
Debentures”),
each
of such CHTL Debentures issued and outstanding as of the Effective Time shall
be
converted into an identical principal amount of 10% convertible debentures
of
ASSAC (individually, an “ASSAC
Debenture”
and
collectively, as the “ASSAC
Debentures”).
Such
ASSAC Debentures:
(i) shall
be
due and payable on March 31, 2009;
(ii) shall
be
convertible by the holder at any time on or after January 1, 2009 and on or
prior to the March 31, 2009 maturity date of the ASSAC Debentures, into
0.236842
ASSAC
Ordinary Share (the “ASSAC
Debenture Exchange Ratio”)
determined
by dividing $1.00 by the $0.95 conversion price of the CHTL Debentures and
multiplying the result thereof by $2.25). For the avoidance of doubt, each
$1.00
principal amount of ASSAC Debentures shall be convertible into 0.2368421 ASSAC
Ordinary Shares,
and
(iii) shall
be
in the form of the note annexed hereto as Exhibit
A
and made
a part hereof.
(h) CHTL
Warrants and CHTL Options. As
at the
Effective Time any issued and outstanding options to purchase shares of CHTL
Common Stock (“CHTL
Options”)
or
warrants to purchase shares of CHTL Common Stock (“CHTL
Warrants”)
shall
be cancelled and of no further force or effect.
(i) ASSAC
Ordinary Shares Owned by CHTL. As
at the
Effective Time, each issued and outstanding share of ASSAC Ordinary Shares,
if
any, that is owned of record by CHTL immediately prior to the Effective Time
of
the
Merger shall automatically be cancelled and returned and shall cease to exist
and no consideration shall be delivered in exchange therefor.
(j) Terms
of ASSAC Series A Voting Preferred Stock. As
at the
Effective Time of the Merger, the board of directors of ASSAC shall issue,
from
the 1,000,000 authorized shares of ASSAC preferred stock, an aggregate of
1,000,000 shares of Series A Voting Preferred Stock of ASSAC, which shall
contain the rights and privileges that are substantially identical to the terms
of the CHTL Class B Common Stock or otherwise acceptable to Xxxxxxx, including,
without limitation, the following:
(i) Amount.
The
authorized and issued shares of Series A Voting Preferred Stock shall not be
increased unless the holders of Eighty-Five Percent (85%) of the issued and
outstanding shares of Series A Voting Preferred Stock vote in favor of
increasing the number of authorized Series A Voting Preferred
Stock.
4
(ii) Voting. Each
holder of a share of Series A Voting Preferred Stock shall have the right to
cast one hundred (100) votes for each share of Series A Voting Preferred Stock
held by such shareholder at any duly called meeting of shareholders or pursuant
to a written consent of shareholders
(iii) No
Economic Interest or Right to Dividends. The
Series A Voting Preferred Stock shall have no economic interest in the assets
or
properties of ASSAC or any of its direct or indirect Subsidiaries, nor shall
the
holders of any shares of Series A Voting Preferred Stock be entitled to receive
any consideration, or share in the receipt of any consideration, available
to
other holders of securities of ASSAC in connection with (A) the sale or transfer
of any securities or assets of ASSAC or any of its direct or indirect
Subsidiaries (whether through stock sale, asset sale, merger, tender offer,
consolidation or like combination), or (B) the transfer of any shares of Series
A Voting Preferred Stock to any other Person. The holders of Series A Voting
Preferred Stock shall not be entitled to the payment of any dividends payable
by
ASSAC or any of its direct or indirect Subsidiaries, in cash or in kind.
(iv) No
Rights on Liquidation. In
the
event of any liquidation, dissolution or winding up of ASSAC or any of its
direct or indirect Subsidiaries, whether voluntary or involuntary, the holders
of shares of Series A Voting Preferred Stock shall not be entitled to receive
any cash, cash-in-kind or assets whatsoever of ASSAC or any of its
Subsidiaries.
(v) Conversion. The
Series A Voting Preferred Stock shall have no rights to convert into any other
authorized shares or other securities of ASSAC or any of its direct or indirect
Subsidiaries.
(vi) Transferability. The
consent of Eighty-One Percent (81%) of the issued and outstanding shares of
Series A Voting Preferred Stock shall be required for any holder of Series
A
Voting Preferred Stock to sell, assign, or transfer any shares of Series A
Voting Preferred Stock to any third party, or to grant proxies or voting rights
with respect to any shares of Series A Voting Preferred Stock, except for any
proxies granted to Xxxxxxx relating to the Series A Voting Preferred
Stock.
(vii) Redemption
Rights. ASSAC
shall automatically redeem the Series A Voting Preferred Stock on July 1, 2023
(the “Redemption
Date”).
On
the Redemption Date each share of Series A Voting Preferred Stock shall be
redeemed by CHTL at the par value ($0.0001) of the shares of Series A Voting
Preferred Stock.
(viii) Proxy. All
holders of CHTL Class B Common Stock who shall receive the ASSAC Series A Voting
Preferred Stock shall grant to Xxxxxxx a proxy to vote all of their shares
of
ASSAC Series A Voting Preferred Stock.
(k) ASSAC
Note. As
at the
Effective Time of the Merger, the then outstanding amount of the $165,000,000
original principal amount of the ASSAC non-interest bearing Note due March
31,
2009 and issued to CHTL under the terms of the Purchase Agreement shall be
cancelled and extinguished.
5
1.8 Exchange
of CHTL Instruments.
(a) ASSAC
shall designate Continental Stock Transfer & Trust Company, or another a
person reasonably acceptable to CHTL to act as exchange agent in the Merger
(the
"Exchange
Agent"),
and,
from time to time on, prior to or after the Effective Time, ASSAC shall make
available, or cause the Surviving Corporation to make available, to the Exchange
Agent ASSAC Ordinary Shares and ASSAC Series A Voting Preferred Stock and ASSAC
Debentures (collectively, the “ASSAC
Securities”)
in
amounts and at the times necessary for the delivery of the Merger Consideration,
to be delivered upon surrender of certificates representing the shares of CHTL
Common Stock and CHTL Preferred Stock, the CHTL Debentures and other CHTL
Securities to be converted into ASSAC Securities pursuant to Section
1.7.
(b) As
soon
as reasonably practicable after the Effective Time, the Exchange Agent shall
mail to each holder of record on the Record Date of CHTL Common Stock, CHTL
Preferred Stock and CHTL Debentures (collectively, “CHTL
Securities”)
(i) a
letter of transmittal (which shall specify that delivery shall be effected,
and
risk of loss and title to the certificates evidencing shares of CHTL Common
Stock, CHTL Preferred Stock, CHTL Debentures and other CHTL Securities
(collectively, “CHTL
Instruments”)
shall
pass, only upon delivery of the CHTL Instruments to the Exchange Agent and
shall
be in a form and have such other provisions as ASSAC may reasonably specify)
and
(ii) instructions for use in effecting the surrender of the CHTL Instruments
in
exchange for the Merger Consideration and other ASSAC Securities. Upon surrender
of a CHTL Instrument for cancellation to the Exchange Agent or to such other
agent or agents as may be appointed by ASSAC, together with such letter of
transmittal, duly executed, and such other documents as may reasonably be
required by the Exchange Agent, the holder of such CHTL Instrument shall be
entitled to receive in exchange therefor the amount of Merger Consideration
and
other ASSAC Securities theretofore represented by such CHTL Instruments which
shall have been converted or exchange pursuant to Section 1.7, and the CHTL
Instruments so surrendered shall forthwith be canceled. In the event any CHTL
Instruments shall have been lost, stolen or destroyed, ASSAC may, in its
discretion and as a condition precedent to the delivery of the Merger
Consideration, ASSAC Debentures or other ASSAC Securities in respect of the
CHTL
Instruments, require the owner of such lost, stolen or destroyed CHTL Instrument
to deliver a affidavit or bond in such amount or form as it may reasonably
direct as indemnity against any claim that may be made against ASSAC, the
Surviving Corporation or the Exchange Agent.
(c) All
Merger Consideration delivered upon the surrender of shares of CHTL Common
Stock, CHTL Preferred Stock, CHTL Debentures and other CHTL Securities in
accordance with the terms of this Section 1.8 shall be deemed to have been
paid
in full satisfaction of all rights pertaining to the shares of CHTL Common
Stock, CHTL Preferred Stock and CHTL Debentures represented by such CHTL
Instruments. At the Effective Time, the stock transfer books and note register
of CHTL shall be closed, and there shall be no further registration of transfers
on the stock transfer books of the Surviving Corporation of shares of CHTL
Common Stock or CHTL Debentures that were outstanding immediately prior to
the
Effective Time. If, after the Effective Time, CHTL Instruments are presented
to
the Surviving Corporation or the Exchange Agent for any reason, they shall
be
canceled and exchanged as provided in this Section 1.8.
1.9 Registration
Statement
.
Prior
to
the Effective Time of the Merger, ASSAC and CHTL shall cause to be filed with
the United States Securities and Exchange Commission (the “SEC”),
a
registration for Form S-4 and Form F-4 of CHTL and ASSAC, respectively (each,
a
“Registration
Statement”.
The
Form S-4 Registration Statement of CHTL shall include the Information Statement,
and the) Form F-4 Registration Statement of ASSAC shall include the Information
Statement as the ASSAC prospectus, pursuant to which ASSAC shall register under
the Securities Act the Merger Consideration.
6
1.10 Holders
of Record of CHTL Securities.
(a) Only
holders of record of shares of CHTL Common Stock and CHTL Preferred Stock as
at
the Effective Time of the Merger shall be entitled to receive ASSAC Ordinary
Shares and ASSAC Series A Voting Preferred Stock, as Merger Consideration as
of
the Effective Time of the Merger. Persons who are holders of CHTL Debentures
as
at the Effective Time of the Merger shall only be entitled to receive ASSAC
Debentures in connection with the Merger.
(b) Persons
who timely deliver to CHTL prior to the Effective Time of the Merger duly
executed notices of conversion of their CHTL Debentures in accordance with
the
terms of such CHTL Debentures hall be deemed to be holders of record of shares
of CHTL Common Stock as at the Effective Time of the Merger, even if a stock
certificate(s) evidencing such shares of CHTL Common Stock shall not have been
delivered to such Person as at the Effective Time of the Merger.
1.11 Closing.
The
closing of the Merger (the “Closing”)
will
take place at the offices of Xxxxxxx Xxxx LLP, counsel to ASSAC, at its office
in New York, New York, within ten days following the delivery of satisfaction
or
waiver of the conditions precedent set forth in Section 4 or at such other
date
as ASSAC and the CHTL Principal Shareholders shall agree (the “Effective
Time”),
but
in no event shall the Effective Time occur later than March 31, 2009, unless
such date shall be extended by mutual agreement of ASSAC and the CHTL Principal
Shareholders to not later than June 30, 2009 (the “Outside
Effective Time”).
On
the Effective Time the Parties shall consummate the Merger and cause the
Articles of Merger to be filed at such Closing with the Secretary of State
of
the State of Nevada.
1.12 Dissenters
Rights. Notwithstanding
anything in this Agreement to the contrary, any issued and outstanding shares
of
CHTL Common Stock held by a Person who objects to the Merger (a "Dissenting
Shareholder")
and
complies with all the provisions of Section 92A.380 of the Nevada Corporation
Law concerning the right of holders of CHTL Common Stock to dissent from the
Merger and require appraisal of their shares of CHTL Common Stock, as the case
may be (the "Dissenting
Shares")
shall
not be converted as described in Section
1.7
but
shall become the right to receive such consideration as may be determined to
be
due to such Dissenting Shareholder pursuant to Section 92A.380 of the Nevada
Corporation Law. If, after the Effective Time, such Dissenting Shareholder
withdraws his demand for appraisal or fails to perfect or otherwise loses his
right of appraisal, in any case pursuant to the Nevada Corporation Law, his
Dissenting Shares shall be deemed to be converted as of the Effective Time
into
the right to receive his pro-rata shares of the Merger Consideration. CHTL
shall
give ASSAC (i) prompt notice of any demands for appraisal of Dissenting Shares
received by either CHTL, and (ii) the opportunity to participate in all
negotiations and proceedings with respect to any such demands. Neither CHTL
nor
ASSAC will voluntarily make any payment with respect to any demands for
appraisal and will not, except with the prior written consent of the CHTL
Principal Shareholders, settle or offer to settle any such demands.
1.13 Change
of Corporate Name. ASSAC
shall use its best efforts (but shall not be legally obligated) to obtain the
requisite shareholders approval to change its corporate name to “CHINATEL
CORPORATION”
or
such
other corporate name as shall be acceptable to the Parties, with such name
change to be effective, pursuant to the ASSAC Restated Charter, on or promptly
following the Effective Time of the Merger.
7
ARTICLE
II - CERTAIN DEFINITIONS
Except
as
defined elsewhere in this Agreement, all capitalized terms not expressly defined
in this Agreement shall have the same meaning as is defined in the Purchase
Agreement. In addition to other terms defined in this Agreement and the Purchase
Agreement, the following terms shall have the meanings set forth below:
“Applicable
Law”
means
any domestic or foreign law, statute, regulation, rule, policy, guideline or
ordinance applicable to the businesses of the Parties and/or the Merger.
“Affiliate”
means
any one or more Person controlling, controlled by or under common control with
any other Person or their affiliate.
“ASSAC
Conversion Shares”
shall
mean the number of ASSAC Ordinary Shares that may be issued following the
Effective Time of the Merger to holders of ASSAC Debentures upon their
conversion of up to $45,000,000 of such ASSAC Debentures.
“ASSAC
Ordinary Shares”
shall
mean the ordinary shares of ASSAC, $0.0001 par value per share.
“ASSAC
Debentures”
shall
have the meaning set forth in Section
1.7(g)
above,
and shall refer to the maximum aggregate $45,000,000 principal amount of 10%
debentures of ASSAC, and in the form of Exhibit
A
annexed
hereto and made a part hereof.
“ASSAC
Financings”
shall
have the meaning set forth in Section 4.9 of this Agreement.
“ASSAC
Restated Charter”
shall
mean the amended and restated certificate of incorporation of ASSAC in effect
as
at the Effective Time of the Merger.
“Business
Day”
shall
mean any day, excluding Saturday, Sunday and any other day on which national
banks located in New York, New York shall be closed for business.
“Dollar”
and
“$”
means
lawful money of the United States of America.
“Chinacomm
Agreements” and
“Chinacomm
Parties”
shall
have the respective meanings as are defined in the Purchase
Agreement.
“CHTL
Common Stock”
means
the collective reference to (a) the 500,000,000 shares of Class A common stock,
$0.001 par value per share, of CHTL, and (b) the 200,000,000 shares of Class
B
common stock, $0.001 par value per share, of CHTL, authorized pursuant to its
certificate of incorporation, as amended, through the Effective
Time.
“CHTL
Principal Executive Officer”
shall
mean Xxxxxxx, in his capacity as President and Chief Executive Officer of
CHTL.
8
“CHTL
Stockholders”
means
the collective reference to the CHTL Principal Shareholders and all other
holders of CHTL Class A Common Stock, Class B Common Stock and CHTL Preferred
Stock.
“Effective
Time”
shall
mean the date upon which the Merger shall be consummated.
“Exchange
Act”
means
the Securities Exchange Act of 1934, as amended.
“GAAP”
means
generally accepted accounting principles in the United States of America as
promulgated by the American Institute of Certified Public Accountants and the
Financial Accounting Standards Board or any successor Institutes concerning
the
treatment of any accounting matter.
“Knowledge”
means
the knowledge after reasonable inquiry.
“Information
Statement”
shall
mean the information statement referred to in Section
1.9
that
will also constitute the ASSAC prospectus to be included in the Registration
Statement declared effective by the SEC.
“Lien”
means,
with respect to any property or asset, any mortgage, lien, pledge, charge,
security interest, encumbrance or other adverse claim of any kind in respect
of
such property or asset.
“Material
Adverse Effect”
with
respect to any entity or group of entities means any event, change or effect
that has or would have a materially adverse effect on the financial condition,
business or results of operations of such entity or group of entities, taken
as
a consolidated whole.
“Merger
Consideration”
shall
mean the collective reference to: (a) all shares of ASSAC Ordinary Shares issued
to the holders of CHTL Class A Common Stock and CHTL Preferred Stock as at
the
Effective Time of the Merger pursuant to Section
1.7(d)
and
Section
1.7(f)
of this
Agreement, (b) all ASSAC Series A Voting Preferred Stock issued to holders
of
CHTL Series B Common Stock as at the Effective Time of the Merger pursuant
to
Section
1.7(e)
of this
Agreement, and (c) all ASSAC Debentures issued to holders of CHTL Debentures
as
at the Effective Time of the Merger pursuant to Section
1.7(g)
of this
Agreement.
“Person”
means
any individual, corporation, partnership, trust or unincorporated organization
or a government or any agency or political subdivision thereof.
“Tax”
(and,
with correlative meaning, “Taxes”
and
“Taxable”)
means:
(i)
any
income, alternative or add-on minimum tax, gross receipts tax, sales tax, use
tax, ad valorem tax, transfer tax, franchise tax, profits tax, license tax,
withholding tax, payroll tax, employment tax, excise tax, severance tax, stamp
tax, occupation tax, property tax, environmental or windfall profit tax, custom,
duty or other tax, impost, levy, governmental fee or other like assessment
or
charge of any kind whatsoever together with any interest or any penalty,
addition to tax or additional amount imposed with respect thereto by any
governmental or Tax authority responsible for the imposition of any such tax
(domestic or foreign), and
(ii)
any
liability for the payment of any amounts of the type described in clause (i)
above as a result of being a member of an affiliated, consolidated, combined
or
unitary group for any Taxable period, and
9
(iii)
any
liability for the payment of any amounts of the type described in clauses (i)
or
(ii) above as a result of any express or implied obligation to indemnify any
other person.
“Tax
Return”
means
any return, declaration, form, claim for refund or information return or
statement relating to Taxes, including any schedule or attachment thereto,
and
including any amendment thereof.
“Westmoore
Warrants”
means
warrants to purchase 500,000 Ordinary Shares of ASSAC upon substantially
identical terms and conditions as the warrants to be issued by ASSAC to
Canaccord Capital Corp. and Xxxx Capital Partners LLC under the engagement
agreement referred to in Section
4.13
of this
Agreement.
ARTICLE
III -. REPRESENTATIONS AND WARRANTIES OF CHTL.
CHTL
hereby
severally represent and warrant to ASSAC
as
follows:
3.1. Organization
and Good Standing.
Each of
CHTL, Trussnet and the “Chinacomm Parties” (as that term is defined in the
Purchase Agreement) are entities duly organized, validly existing and in good
standing under the laws of their respective States or countries of organization,
all as set forth on Schedule
3.1
to the
Purchase Agreement.
3.2. Subsidiaries.
The
only direct subsidiary of CHTL is Trussnet. Trussnet is a corporation duly
organized, validly existing and in good standing under the laws of the State
of
Nevada.
Schedule 3.2
to the
Purchase Agreement sets forth: (a) the names, (b) the authorized,
issued and outstanding shares of capital stock or other equity of Trussnet
and
of each of the direct and indirect subsidiaries of Trussnet and all Chinacomm
Parties, and (c) the record and beneficial owners of such capital stock or
other equity.
3.3. Authorization
and Approvals. Each
of
CHTL, Trussnet and the Chinacomm Parties have the requisite corporate power
and
authority and have obtained all requisite licenses, permits, franchises,
approvals and consents necessary (i) to own and operate its properties and
to
carry on its business as now being conducted, and (ii) to enter into and carry
out the terms and conditions of this Agreement, as well as all transactions
contemplated hereunder. All corporate proceedings have been taken and all
corporate authorizations have been secured which are necessary to authorize
the
execution, delivery and performance by CHTL of this Agreement. This Agreement
has been duly and validly executed and delivered by CHTL and Trussnet and
constitutes the valid and binding obligation of CHTL, enforceable in accordance
with its terms.
3.4. Effect
of Agreement.
As of
the Effective Time of the Merger, the consummation by any of CHTL, Trussnet
and
the Chinacomm Parties of the transactions contemplated hereby and by the
Chinacomm Agreements, including the execution, delivery and consummation of
this
Agreement, will comply with all applicable law and will not:
(a) violate
any
Requirement of Law applicable to or binding upon ASSAC, the Company, Trussnet
or
any of the Chinacomm Parties;
(b) violate:
(i)
the
terms of the Articles of Incorporation or Bylaws of CHTL, Trussnet and the
Chinacomm Parties; or (ii) any material agreement, contract, mortgage,
indenture, xxxx, xxxx, note, or other material instrument or writing binding
upon CHTL, Trussnet and the Chinacomm Parties or to which any of CHTL, Trussnet
and the Chinacomm Parties is subject;
10
(c) accelerate
or constitute an event entitling the holder of any indebtedness of any of
CHTL,
Trussnet and the Chinacomm Parties
to
accelerate the maturity of such indebtedness or to increase the rate of interest
presently in effect with respect to such indebtedness; or
(d) result
in
the breach of, constitute a default under, constitute an event which with notice
or lapse of time, or both, would become a default under, or result in the
creation of any lien, security interest, charge or encumbrance upon any of
the
assets or any other properties of any of CHTL,
Trussnet and the Chinacomm Parties
under
any agreement, commitment, contract (written or oral) or other instrument to
which any of CHTL,
Trussnet and the Chinacomm Parties
is a
party or by which it is bound or affected.
3.5. Consents
and WiMAX License.
(a) All
consents, approvals or other authorizations or notices, required by any state
or
federal regulatory authority or other Person or entity, including all PRC
Regulatory Authorities, in order to permit ASSAC, CHTL, Trussnet and the
Chinacomm Parties to consummate the transactions contemplated by this Agreement
and the Chinacomm Agreements and to enable CHTL, Trussnet and the Chinacomm
Parties to operate their respective businesses, including the construction,
installation and operation of the Wireless Installations under the WiMAX License
have been obtained and are in full force and effect.
(b) The
MII
or other applicable PRC Regulatory Authority have renewed the WiMAX license
granted to Chinacomm for a minimum of not less than three years, and such WiMAX
License, as so renewed is in compliance with the requirements of the PRC
Regulatory Authorities.
3.6. Legal
Proceedings.
There
are no legal, administrative, arbitral or other actions, claims, suits or
proceedings or investigations instituted or pending or, to the Knowledge of
CHTL’s management, threatened against any of CHTL, Trussnet and the Chinacomm
Parties, or against any property, asset, interest or right of any of CHTL,
Trussnet and the Chinacomm Parties, that might reasonably be expected to have
a
Material Adverse Effect or that might reasonably be expected to threaten or
impede the consummation of the transactions contemplated by this
Agreement.
3.7. Regulatory
Compliance.
Neither
CHTL, Trussnet nor, to the best Knowledge of CHTL and Trussnet, any of the
Chinacomm Parties have violated any Requirement of Law, the violation of which
would be reasonably likely to have a Material Adverse Effect. All filings of
CHTL with the SEC have been filed in a timely fashion and are accurate and
complete in all material respects.
3.8. Capitalization;
Transactions with Trussnet Delaware.
(a) CHTL
is
authorized to issue 500,000,000 shares of CHTL Class A Common Stock, 200,000,000
shares of CHTL Class B Common Stock and 25,000,000 shares of CHTL Series A
Preferred Stock. Immediately prior to the Closing of the transactions
contemplated by the Purchase Agreement, CHTL shall have no more than 133,485,509
shares of CHTL Class A Common Stock issued and outstanding on a Fully Diluted
Basis calculated as follows: (i) 86,117,088 shares of CHTL Class A Common
Stock issued and outstanding, plus (ii) up to 47,368,421 shares of CHTL
Class A Common Stock, issuable in the event that CHTL issues up to $45,000,000
in CHTL Debentures, convertible at $.95 per share. As of the date of this
Agreement, CHTL has issued approximately $27,000,000 of such CHTL Debentures.
CHTL and ASSAC hereby agree that up to and including the Closing Date, CHTL
shall have the right to issue up to $45,000,000 in the aggregate principal
amount of CHTL Debentures. CHTL has issued to Trussnet and Trussnet has
distributed to Xxxxxx Xxxxxxx and the other Persons listed on Schedule
3.8(a)
to the
Purchase Agreement an aggregate of 66,909,088 shares of CHTL Class B Common
Stock. All of the issued and outstanding shares of CHTL Class A Common Stock,
CHTL Class B Common Stock and the CHTL Debentures have been duly authorized
and
are validly issued, fully paid, and non-assessable. Other than the CHTL
Debentures and the transactions contemplated hereby, there are no outstanding
or
authorized options, warrants, purchase rights, subscription rights, conversion
rights, exchange rights, or other contracts or commitments that could require
CHTL to issue, sell, or otherwise cause to become outstanding any of its capital
stock.
11
(b) The
capitalization of each of Trussnet and the Chinacomm Parties is set forth on
Schedule
3.8(b)
to the
Purchase Agreement. All of the issued and outstanding shares of capital stock
or
other securities of Trussnet and, to the Knowledge of CHTL and Trussnet, the
Chinacomm Parties have been duly authorized and are validly issued, fully paid,
and non-assessable. Other than the transactions contemplated hereby and by
the
Chinacomm Agreements, there are no outstanding or authorized options, warrants,
purchase rights, subscription rights, conversion rights, exchange rights, or
other contracts or commitments that could require Trussnet or any of the
Chinacomm Parties to issue, sell, or otherwise cause to become outstanding
any
of its capital stock or any other equity.
(c) Annexed
as Schedule
3.8(c) to
the
Purchase Agreement is a description of (i) all of the assets and personnel
of
Trussnet Delaware that has heretofore been transferred, or as at the Closing
Date will have been transferred, to Trussnet, (ii) all loans, services and
other
products heretofore provided by Trussnet Delaware to Trussnet and/or CHTL for
or
on behalf of CHTL or ChinaComm, and (iii) all accounts payable and other amounts
owing as at the date hereof and as at the Closing Date by CHTL or Trussnet
to
Trussnet Delaware; all of which amounts and obligations have been incurred
in
the Ordinary Course of Business.
3.9. Employee
Benefit Plans.
Neither
CHTL nor Trussnet have any labor union contract, bonus, pension, profit-sharing,
retirement, deferred compensation, savings, stock purchase, stock option,
hospitalization, insurance or other plan providing employees benefits,
employment, agency, consulting or similar contract (“Employee
Benefit Plans”)
which
cannot be terminated in thirty (30) days or less, without cost, other than
the
Employment Agreement of Xxxxxx Xxxxxxx. CHTL and Trussnet reserve the right
to
establish Employee Benefit Plans in the future.
3.10. Permits
and Licenses.
CHTL
and Trussnet and to the best Knowledge of CHTL and Trussnet, the Chinacomm
Parties have all licenses and permits (federal, state and local) required by
governmental authorities to own, operate and carry on their respective business
as now being conducted, and such licenses and permits are in full force and
effect. No violations are or have been recorded in respect to the licenses
or
permits, included but not limited to fire and health and safety law violations,
and no proceeding is pending or threatened looking toward the revocation or
limitation of any of them.
3.11. Chinacomm
Transaction.
3.11.1. Controlled
Entities.
The
Chinacomm Agreements require the formation of certain entities, including
Trussnet Gulfstream and Gulfstream Capital and the formation of two wholly
owned
foreign investment enterprises or WOFIEs (as previously defined). Trussnet
Gulfstream and Gulfstream Capital are or will be 100% owned subsidiaries of
Trussnet, and Chinacomm Cayman, Chinacomm Shanghai and Yunji are or on the
Closing Date shall be partially-owned subsidiaries of Trussnet. Such Chinacomm
Parties are sometimes collectively referred to herein as the “Trussnet
Subsidiaries”.
12
3.11.2. Performance.
CHTL
shall have caused $196,000,000 of the proceeds received under the Purchase
Agreement to: (i) be used to discharge the obligation of Gulfstream Capital
that it invest $196,000,000 in Chinacomm Cayman; and (ii) assure that upon
completion of this investment by Gulfstream, that these funds be used as
contemplated by the Chinacomm Agreements. The balance of the proceeds shall
be
used for the payment of commissions and general working capital, in such amounts
as are set forth on Schedule
3.11.2
annexed
to the Purchase Agreement.
3.12. Material
Agreements.
Except
as otherwise disclosed herein, each of CHTL, Trussnet and, to the best Knowledge
of CHTL, the Chinacomm Parties, is not a party to any material agreement, the
failure to perform of which would have a Material Adverse Effect upon any of
CHTL, Trussnet or such Chinacomm Parties.
3.13. Insurance
Policies.
All
insurance policies maintained by each of CHTL, Trussnet and, to the best
Knowledge of CHTL and Trussnet, the Chinacomm Parties on its assets, business,
officers and personnel provide adequate and sufficient liability and property
damage coverage commensurate with the business practices of any of CHTL,
Trussnet and, to the best Knowledge of CHTL and Trussnet, the Chinacomm Parties.
To the best Knowledge of CHTL, each of CHTL, Trussnet and, to the best Knowledge
of CHTL and Trussnet, the Chinacomm Parties does not conduct any business which
would result in the cancellation of, or a material increase in the premiums,
for
any of its insurance policies.
3.14. Environmental
Matters.
With
regard to matters of environmental compliance: each of CHTL, Trussnet and,
to
the best Knowledge of CHTL and Trussnet, the Chinacomm Parties has conducted
and
is conducting its business, and has used and is using its properties, whether
currently owned, operated or leased or owned, operated or leased by CHTL in
compliance with all applicable PRC and United States federal, and state and
local environmental laws and regulations, except where the failure to comply
with such laws and regulations, in the aggregate, has not had and could not
have
a Material Adverse Effect on the condition (financial or otherwise), business
or
properties of CHTL, Trussnet or, to the best Knowledge of CHTL and Trussnet,
any
of the Chinacomm Parties.
3.15. Undisclosed
Liabilities.
Neither
CHTL, Trussnet nor, to the best Knowledge of CHTL and Trussnet, the Chinacomm
Parties have any liability (whether known or unknown, whether asserted or
unasserted, whether absolute or contingent, whether accrued or unaccrued,
whether liquidated or unliquidated, and whether due or to become due), including
any liability for Taxes, except for: (i) liabilities set forth in the
Financial Statements, and (ii) liabilities which have arisen after the date
of the Financial Statements in the Ordinary Course of Business (none of which
results from, arises out of, relates to, is in the nature of, or was caused
by
any breach of contract, breach of warranty, tort, infringement, or violation
of
law).
3.16. Material
Defaults.
Neither
CHTL, Trussnet nor, to the best Knowledge of CHTL and Trussnet, the Chinacomm
Parties is in default, or alleged to be in default, under any material
agreement, contract, lease, mortgage, commitment, instrument or obligation,
and
to the best Knowledge of CHTL and Trussnet of no other party to any agreement,
contract, lease, mortgage, commitment, instrument or obligation to which CHTL
is
a party is in default thereunder, which default would have a Materially
Adversely Effect upon the properties, assets, business or prospects of CHTL,
Trussnet or the Chinacomm Parties.
13
3.17. Tax
Returns and Disputes.
CHTL
and Trussnet, and to the best Knowledge of CHTL and Trussnet, each of the
Chinacomm Parties, has: (a) filed all Tax Returns (PRC and United States
federal, state and local) required to be filed by it, (b) all such Tax
Returns filed are complete and accurate in all material respects, and
(c) the applicable taypayer has paid all Taxes shown to be due and payable
on the returns or any assessments or penalties received by it and all other
Taxes (PRC and United States federal, state and local) due and payable by it.
CHTL and Trussnet, and to the best Knowledge of CHTL and Trussnet, each of
the
Chinacomm Parties, has collected and withheld all Taxes which it has been
required to collect or withhold and has timely submitted all such collected
and
withheld amounts to the appropriate authorities. CHTL and Trussnet, and to
the
best Knowledge of CHTL and Trussnet, each of the Chinacomm Parties, is in
compliance with the back-up withholding and information reporting requirements
under the Code and any state, local or foreign laws, and the rules and
regulations thereunder.
3.18. Financial
Condition.
On or
before the Closing Date, CHTL and Trussnet shall deliver and cause to be
delivered to ASSAC all of the Financial Statements. The Financial Statements
of
CHTL and Trussnet, and to the best Knowledge of CHTL and Trussnet, each of
the
Chinacomm Parties, present fairly the financial position, results of operations
and cash flows of CHTL for the fiscal period then ended and were prepared in
accordance with United States generally accepted accounting principles
(“GAAP”),
except with respect to the Financial Statements of Chinacomm, the same have
been
prepared in accordance with either GAAP or auditing standards accepted in the
European Union.
3.19. No
Adverse Change.
Since
March 31, 2008 there has been no Material Adverse Change in the business,
financial condition, results of operations, assets, or liabilities of CHTL,
Trussnet and, to the best Knowledge of CHTL and Trussnet, each of the Chinacomm
Parties.
3.20. Disclosure.
The
representations and warranties: (a) of CHTL and Trussnet contained in the
Purchase Agreement, in this Agreement and in any agreement, certificate,
affidavit, statutory declaration or other document delivered or given by CHTL
or
Trussnet pursuant to the Purchase Agreement and this Agreement, and (b) to
the best Knowledge of CHTL and Trustnet, of any of the Chinacomm Parties
contained in any of the Chinacomm Agreements or in any other agreement,
certificate, affidavit, statutory declaration or other document delivered or
given by any of the Chinacomm Parties pursuant to the Purchase Agreement and
this Agreement or any Chinacomm Agreements are true and correct and do not
contain any untrue statement of a material fact or omit to state a material
fact
necessary to make the statements contained in such representations and
warranties not misleading to ASSAC.
3.21. Advice
of Changes.
Between
the date of this Agreement and the Effective Time of the Merger, CHTL and
Trussnet shall promptly advise ASSAC in writing of any fact, the occurrence
of
which would render any representation or warranty contained in the Purchase
Agreement and this Agreement to be materially untrue.
ARTICLE
IV - REPRESENTATIONS AND WARRANTIES OF ASSAC
ASSAC
hereby
represents and warrants to CHTL, as follows:
4.1. Organization
and Good Standing.
ASSAC
is a corporation duly organized, validly existing and in good standing under
the
laws of the Cayman Islands.
14
4.2. Authorization.
ASSAC
has full power and authority to execute and deliver this Agreement and to
perform its obligations hereunder. This Agreement constitutes the valid and
legally binding obligation of ASSAC, enforceable in accordance with its terms
and conditions. ASSAC need not give any notice to, make any filing with, or
obtain any authorization, consent, or approval of any government or governmental
agency in order to consummate the transactions contemplated by this Agreement,
other than the Proxy Statement which ASSAC shall, prior to the Closing Date,
distribute to its shareholders in order to obtain the consent of its
shareholders to the transactions contemplated by this Agreement, filings
required by Rule 425 under the Securities Act in connection with a public
announcement of this Agreement and the Registration Statement referred to in
Section 1.9 hereof.
4.3. Operation
of Business.
ASSAC
has the requisite corporate power and authority and all requisite licenses,
permits and franchises necessary to own and operate its properties and to carry
on its business as now being conducted.
4.4. Execution
of Agreement.
ASSAC
has the requisite corporate power and authority and has obtained all approvals
and consents necessary to enter into and carry out the terms and conditions
of
this Agreement, as well as all transactions contemplated hereunder. All
corporate proceedings have been taken and all corporate authorizations have
been
secured which are necessary to authorize the execution, delivery, and
performance by ASSAC of this Agreement. This Agreement has been duly and validly
executed and delivered by ASSAC and constitutes the valid and binding
obligations of ASSAC, enforceable in accordance with the respective
terms.
4.5. Effect
of Agreement.
As of
the Effective Time of the Merger, the consummation by ASSAC of the transactions
herein contemplated, including the execution, delivery and consummation of
this
Agreement, will comply with all applicable law and will not:
(a) violate
any Requirement of Law applicable
to or binding upon ASSAC;
(b) violate:
(i) the terms of the Articles of Incorporation or Bylaws of ASSAC; or, (ii)
any
material agreement, contract, mortgage, indenture, xxxx, xxxx, note, or other
material instrument or writing binding upon ASSAC or to which ASSAC is subject;
or
(c) result
in
the breach of, constitute a default under, constitute an event which with notice
or lapse of time, or both, would become a default under, or result in the
creation of any lien, security interest, charge or encumbrance upon any of
the
assets or any other properties of ASSAC under any agreement, commitment,
contract (written or oral) or other instrument to which ASSAC is a party or
by
which it is bound or affected.
4.6. Consents.
No
consents, approvals or other authorizations or notices, other than those which
have been obtained and are in full force and effect, are required by any state
or federal regulatory authority or other Person or entity in connection with
the
execution and delivery of this Agreement and the performance of any obligations
contemplated hereunder.
4.7. Legal
Proceedings.
There
are no legal, administrative, arbitral or other actions, claims, suits or
proceedings or investigations instituted or pending or, to the Knowledge of
ASSAC’s management, threatened against ASSAC, or against any property, asset,
interest or right of ASSAC, that might reasonably be expected to have a Material
Adverse Effect or that might reasonably be expected to threaten or impede the
consummation of the transactions contemplated by this Agreement.
15
4.8. Compliance
with Laws.
To the
best Knowledge of ASSAC, it has not violated any federal, state, local or
foreign statute or other law (including federal and state securities laws),
the
violation of which would be reasonably likely to have a Material Adverse Effect.
Further, ASSAC is not an “investment company” or a company “controlled” by an
“investment company” within the meaning of the Investment Company Act of 1940.
All filings by ASSAC with the SEC have been filed in a timely fashion and are
accurate and complete in all material respects.
4.9. Capitalization.
(a) ASSAC
is
authorized to issue 50,000,000 ASSAC Ordinary Shares and 1,000,000 shares of
preferred stock containing such terms and conditions as the ASSAC board of
directors may, from time to time determined. As at the date of this Agreement,
there are issued and outstanding (i) 14,000,000 ASSAC Ordinary Shares, of which
11,500,000 are held by public shareholders, and (ii) warrants to purchase
17,225,000 additional ASSAC Ordinary Shares at an exercise price of $7.50 per
share (the “ASSAC Warrants”), of which (A) 5,725,000 ASSAC Warrants are owned of
record by Ho Capital Management LLC, and (B) 11,500,000 ASSAC Warrants are
owned
by public shareholders. As of the date of this Agreement, ASSAC is indebted
to
its Chairman and Chief Executive Officer in the amount of $500,000 and except
for such amount, ASSAC has no outstanding indebtedness for money borrowed.
An
aggregate of $115,000,000 is being held in trust, as described in ASSAC’s
prospectus, dated January 23, 2008 (the “ASSAC
Prospectus”).
(b) All
of
the issued and outstanding ASSAC Ordinary Shares and ASSAC Warrants have been
duly authorized and are validly issued, fully paid, and non-assessable.
(c) Except
for (i) the ASSAC Warrants, and (ii) the issuance and sale by ASSAC of up to
$165,000,000 of additional ASSAC Ordinary Shares or other securities convertible
into or exercisable for ASSAC Ordinary Shares in connection with financings
to
be undertaken by ASSAC between the date of this Agreement and the Effective
Time
of the Merger in order to pay or prepay the “Purchaser Note” referred to in the
Purchase Agreement (the “ASSAC
Financings”),
as at
the date hereof and at the Effective Time of the Merger, ASSAC does not have
and
will not have, issued or outstanding any options, warrants, purchase rights,
subscription rights, conversion rights, exchange rights, or other contracts
or
commitments that could require ASSAC to issue, sell, or otherwise cause to
become outstanding any of its Ordinary Shares.
4.10. The
Merger Consideration.
The
Merger Consideration will, upon issuance, be duly authorized, legally and
validly issued, fully paid and non-assessable, and free and clear of all liens,
mortgages, pledges, and other encumbrances of any nature, unless expressly
provided herein to the contrary.
4.11. Employee
Benefit Plans.
ASSAC
has no labor union contract, bonus, pension, profit-sharing, retirement,
deferred compensation, savings, stock purchase, stock option, hospitalization,
insurance or other plan providing employees benefits, employment, agency,
consulting or similar contract (“Employee
Benefit Plans”)
which
cannot be terminated in thirty (30) days or less.
4.12. Permits
and Licenses.
ASSAC
has all licenses and permits (federal, state and local) required by governmental
authorities to own, operate and carry on its business as now being conducted,
and such licenses and permits are in full force and effect. No violations are
or
have been recorded in respect to the licenses or permits, included but not
limited to fire and health and safety law violations, and no proceeding is
pending or threatened looking toward the revocation or limitation of any of
them.
16
4.13. Material
Agreements.
Except
for (a) the Purchase Agreement, this Agreement and the Exhibits hereto and
thereto, and (b) engagement letter agreement, dated August 4, 2008, with
Canaccord Capital Corp. and Xxxx Capital Partners LLC, ASSAC is not a party
to
any material agreement, the failure on ASSAC’s part to perform could reasonably
be expected to have a Material Adverse Effect upon ASSAC or the consummation
of
the transactions contemplated hereby or under the Purchase
Agreement.
4.14. Insurance
Policies.
ASSAC
maintains a Directors and Officers Liability Policy which remains in full force
and effect. To the best Knowledge of ASSAC, it does not conduct any business
which would result in the cancellation of, or a material increase in the
premiums, for any of its insurance policies.
4.15. Undisclosed
Liabilities.
ASSAC
does not have any liability (whether known or unknown, whether asserted or
unasserted, whether absolute or contingent, whether accrued or unaccrued,
whether liquidated or unliquidated, and whether due or to become due), including
any liability for Taxes, except for: (i) liabilities set forth in the ASSAC
financial statements included in public filings under the Securities Act of
1933, as amended and the Securities Exchange Act of 1934, as amended (the
“ASSAC
Financial Statements”),
and
(ii) liabilities which have arisen after the date of the latest ASSAC
Financial Statements in the Ordinary Course of Business (none of which results
from, arises out of, relates to, is in the nature of, or was caused by any
breach of contract, breach of warranty, tort, infringement, or violation of
law).
4.16. Material
Defaults.
ASSAC
is not in default, or alleged to be in default, under any material agreement,
contract, lease, mortgage, commitment, instrument or obligation, and to the
best
Knowledge of ASSAC no other party to any agreement, contract, lease, mortgage,
commitment, instrument or obligation to which ASSAC is a party is in default
thereunder, which default would have a Materially Adversely Effect upon the
properties, assets, business or prospects of the ASSAC.
4.17. Tax
Returns and Disputes.
ASSAC
has: (a) filed all Tax Returns (Cayman Island and United States federal,
state and local) required to be filed by it, (b) all such Tax Returns filed
are complete and accurate in all material respects, and (c) the applicable
taypayer has paid all Taxes shown to be due and payable on the returns or any
assessments or penalties received by it and all other Taxes (Cayman Island
and
United States federal, state and local) due and payable by it. ASSAC has
collected and withheld all Taxes which it has been required to collect or
withhold and has timely submitted all such collected and withheld amounts to
the
appropriate authorities. ASSAC is in compliance with the back-up withholding
and
information reporting requirements under the Code and any state, local or
foreign laws, and the rules and regulations thereunder.
4.18. Financial
Statements.
All
ASSAC Financial Statements present fairly the financial position, results of
operations and cash flows of ASSAC for the fiscal period then ended and were
prepared in accordance with United States generally accepted accounting
principles (“GAAP”),
except with respect to the unaudited ASSAC Financial Statements which are
subject to non-material audit adjustments and do not contain all footnote
disclosures that are required under GAAP audited financial
statements.
4.19. No
Adverse Change.
Since
March 31, 2008 there has been no Material Adverse Change in the business,
financial condition, results of operations, assets, or liabilities of
ASSAC.
4.20. Disclosure.
The
representations and warranties of ASSAC contained in this Agreement and in
any
agreement, certificate, affidavit, statutory declaration or other document
delivered or given to CHTL or Trussnet pursuant to this Agreement or the
Purchase Agreement are true and correct and do not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements contained in such representations and warranties not misleading
to
CHTL and Trussnet.
17
4.21. Advice
of Changes.
Between
the date hereof and the Effective Time of the Merger, ASSAC shall advise CHTL
shall promptly in writing of any fact, the occurrence of which would render
any
representation or warranty contained in this Agreement to be materially
untrue.
ARTICLE
V - CONDITIONS PRECEDENT
5.1 Conditions
Precedent to the Obligations of CHTL
and
the CHTL Principal Shareholders.
All
obligations of CHTL
and the
CHTL Principal Shareholders under this Agreement are subject to the fulfillment,
prior to or as of the Effective Time, as indicated below, of each of the
following conditions; any one of which may be waived at Closing by Xxxxxxx,
as
representative of all of the CHTL Principal Shareholders (the “CHTL
Stockholders’ Representative):
(a) The
representations and warranties by or on behalf of ASSAC
contained in this Agreement or in any certificate or document delivered pursuant
to the provisions hereof shall be true in all material respects at and as of
Effective Time as though such representations and warranties were made at and
as
of such time.
(b) ASSAC
shall
have performed and complied in all material respects, with all covenants,
agreements, and conditions set forth in, and shall have executed and delivered
all documents required by this Agreement to be performed or complied with or
executed and delivered by it prior to or at the Effective Time.
(c) On
the
Effective Time, an executive officer of ASSAC shall have delivered to CHTL
a
certificate, duly executed by such Person and certifying, that to the best
of
such Person’s knowledge and belief, the representations and warranties of ASSAC
set forth in this Agreement are true and correct in all material
respects.
(d) On
or
before the Effective Time, the Certificate of Merger shall have been duly filed
with the Secretary of State of the State of Nevada, and the Effective Time
of
the Merger shall have occurred.
(e) On
or
before the Effective Time, the holders of a majority of the issued and
outstanding shares of CHTL Common Stock and the holders of a majority of the
issued and outstanding shares of ASSAC Ordinary Shares shall have approved
the
Merger, the Restated ASSAC Charter and all of the other transactions
contemplated by the Purchase Agreement and this Agreement.
(f) On
or
before the Effective Time, ASSAC shall have amended the certificate of
incorporation of ASSAC to (i) increase to 500,000,000 shares of ASSAC Ordinary
Shares the authorized number of shares of ASSAC Ordinary Shares, and (ii)
authorize for issuance up to 25,000,000 shares of preferred stock, containing
such rights, privileges and preferences as the board of directors may, from
time
to time determine, all pursuant to the ASSAC Restated Charter. On the Effective
Time, ASSAC shall have sufficient authorized ASSAC Ordinary Shares to complete
the Merger and issue the maximum number of shares of ASSAC Ordinary Shares
that
may constitute Merger Consideration.
(g) At
the
Effective Time, all instruments and documents delivered to CHTL
and the
Shareholders pursuant to provisions hereof shall be reasonably satisfactory
to
legal counsel for CHTL.
18
(h) At
the
Effective Time, CHTL shall have received an opinion of legal counsel acceptable
to CHTL, dated as of the Closing to the effect that:
(i) ASSAC
is a
corporation duly organized, validly existing and in good standing under the
laws
of the Cayman Islands;
(ii) This
Agreement has been duly authorized, executed and delivered by ASSAC
and is a
valid and binding obligation of ASSAC
enforceable in accordance with its terms;
(iii) ASSAC
and
Mergerco, through their Boards of Directors and stockholders, has taken all
corporate action under Cayman Island and Nevada law that is necessary for the
performance by ASSAC and Mergerco of their respective obligations under this
Agreement; and
(iv) The
Merger Consideration to be issued pursuant to this Agreement hereof will be
duly
and validly issued, fully paid and non-assessable.
(i) ASSAC
shall have issued to the CHTL Stockholders or the Exchange Agent (to be held
on
behalf of the CHTL Stockholders pending delivery of their CHTL Securities)
the
ASSAC Ordinary Shares, the ASSAC Series A Voting Preferred Stock and the ASSAC
Debentures.
(j) ASSAC
shall have issued to the CHTL Principal Shareholders the 1,000,000 shares of
ASSAC Series A Voting Preferred Stock.
(k) Except
for (i) the ASSAC Warrants, or (ii) any ASSAC securities (convertible or
exercisable for ASSAC Ordinary Shares) issued in connection with one or more
ASSAC Financings contemplated by Section
5.1(n)
below,
immediately prior to the Effective Time of the Merger, there shall not be issued
or committed to be issued any warrants, stock options, stock rights or other
commitments of any character relating to the issued or unissued Ordinary Shares
or preferred stock of ASSAC.
(l) At
the
Effective Time, the Merger Consideration to be issued and delivered hereunder
will, when so issued and delivered, constitute valid and legally issued
fully-paid and non-assessable ASSAC Ordinary Shares and shares of ASSAC Series
A
Voting Preferred Stock, and the ASSAC Debentures shall be valid and binding
obligations of ASSAC, enforceable in accordance with their terms.
(m) In
connection with any ASSAC Financing obtained by ASSAC or the exercise of ASSAC
Warrants between the Closing Date under the Purchase Agreement and the Effective
Date of the Merger:
(i) the
net
proceeds of any ASSAC Financing or ASSAC Warrant exercise shall be used by
ASSAC
to retire or prepay the ASSAC “Note” as that term is defined in the Purchase
Agreement; and
(ii) the
terms
and conditions of such ASSAC Financing shall be reasonably acceptable to the
CHTL Stockholders’ Representative; provided,
however,
that in
connection with any ASSAC Financing, so long as (A) any Ordinary Shares are
issued and sold by ASSAC at an effective price of $10.00 per share or greater,
or (B) the conversion price(s) of any ASSAC notes, debentures or preferred
stock
convertible into ASSAC Ordinary Shares, or the exercise price of any ASSAC
warrants to purchase ASSAC Ordinary Shares, shall be $10.00 per share or
greater, than and in such event, such financing terms and conditions shall
be
deemed to be acceptable to the CHTL Stockholders’ Representative.
19
(n) Assuming
that a $105.0 million Additional Investment was made at the Closing of the
transactions contemplated by the Purchase Agreement in the form of shares of
CHTL Preferred Stock, the pro-forma capitalization of CHTL and ASSAC immediately
prior to and after giving effect to the Merger shall be substantially as set
forth on Schedule
A
annexed
hereto and made a part hereof.
5.2 Conditions
Precedent to the Obligations of ASSAC.
All
obligations of ASSAC
under
this Agreement are subject to the fulfillment, prior to or at Closing, of each
of the following conditions (any one of which may be waived at Closing by
ASSAC):
(a) The
representations and warranties by CHTL
contained in this Agreement or in any certificate or document delivered pursuant
to the provisions hereof shall be true in all material respects at and as of
the
Closing as though such representations and warranties were made at and as of
such time;
(b) CHTL
shall have performed and complied with, in all material respects, with all
covenants, agreements, and conditions set forth in, and shall have executed
and
delivered all documents required by this Agreement to be performed or complied
or executed and delivered by them prior to or at the Closing;
(d) As
soon
as is reasonably practicable, CHTL shall have caused to have been delivered
to
ASSAC all balance sheets of CHTL and its consolidated direct and indirect
Subsidiaries (and, if required, of Chinacomm and its consolidated subsidiaries),
and the related statement of operations, statements of cash flows and statements
of stockholders’ equity of CHTL and its consolidated direct and indirect
Subsidiaries (and, if required, of Chinacomm and its consolidated subsidiaries),
(i) as audited by independent auditors qualified under the Public Company
Accounting Oversight Board in accordance with Regulation S-X, as promulgated
under the Securities Act of 1933, as amended, and (ii) as unaudited, to the
extent that any of the foregoing financial statements are required to be
included in the Registration Statement to be filed with and declared effective
by the SEC as a pre-condition to the Merger and the other transactions
contemplated hereby (the “Required
Financial Statements”).
(e) On
or
before the Effective Time, the Certificate of Merger shall have been duly filed
with the Secretary of State of the State of Nevada and the Effective Time of
the
Merger shall have occurred.
(f) On
or
before the Effective Time, the holders of a majority of the issued and
outstanding ASSAC Ordinary Shares entitled to vote at an extraordinary general
shareholders meeting of ASSAC shall have approved the Stock Purchase Agreement,
this Agreement, the Merger, the ASSAC Restated Charter and all of the other
transactions contemplated by hereby and thereby.
(g) Not
in
excess of 2% of the total issued and outstanding shares of CHTL Common Stock
shall constitute Dissenters Shares as at the Effective Time of the
Merger.
(h) On
the
Effective Time, the CHTL Principal Executive Officer shall have delivered to
ASSAC a certificate, duly executed by such Person and certifying, that to the
best of such Person’s knowledge and belief, the representations and warranties
of CHTL set forth in this Agreement are true and correct in all material
respects.
(i) At
the
Effective Time, ASSAC
shall
have received an opinion of Xxxxxxx Cron & Jasper P.L.C., legal counsel to
CHTL, dated as of the Closing to the effect that:
(i) CHTL
is a
corporation duly organized, validly existing and in good standing under the
laws
of the State of Nevada;
20
(ii) this
Agreement has been duly authorized, executed and delivered by CHTL and is a
valid and binding obligation of CHTL enforceable in accordance with its
terms;
(iii) the
Board
of Directors and stockholders of CHTL have each taken all corporate action
under
Nevada law that is necessary for the performance by CHTL of its obligations
under this Agreement;
(iv) as
to
such other matters as ASSAC may reasonably request.
(j) ASSAC
shall have received legal or other assurances reasonably satisfactory to it
that
the key executive employees of CHTL shall have elected to continue their
employment with CHTL subsequent to the Effective Time of the
Merger.
(k) Assuming
that a $105.0 million Additional Investment was made at the Closing of the
transactions contemplated by the Purchase Agreement in the form of shares of
CHTL Preferred Stock, the pro-forma capitalization of CHTL and ASSAC immediately
prior to and after giving effect to the Merger shall be substantially as set
forth on Schedule
A
annexed
hereto and made a part hereof.
(l) The
Registration Statement shall have been declared effective by the SEC and no
stop
order proceedings with respect to such Registration Statement shall be pending
or threatened by the SEC.
ARTICLE
VI - COVENANTS
6.1 Corporate
Examinations and Investigations.
Prior to
the Effective Time, the Parties acknowledge that they have been entitled,
through their employees and representatives, to make such investigation of
the
assets, properties, business and operations, books, records and financial
condition of the other as they each may reasonably require. No investigations,
by a party hereto shall, however, diminish or waive any of the representations,
warranties, covenants or agreements of the party under this
Agreement.
6.2 Further
Assurances.
The
Parties shall execute such documents and other papers and take such further
actions as may be reasonably required or desirable to carry out the provisions
hereof and the transactions contemplated hereby. Each such party shall use
its
best efforts to fulfill or obtain the fulfillment of the conditions to the
Closing, including, without limitation, the execution and delivery of any
documents or other papers, the execution and delivery of which are necessary
or
appropriate to the Closing.
6.3 Confidentiality.
In the
event the transactions contemplated by this Agreement are not consummated,
ASSAC,
the
CHTL Principal Shareholders and
the
CHTL Principal Executive Officer agree to keep confidential any information
disclosed to each other in connection therewith for a period of three (3) years
from the date hereof; provided, however, such obligation shall not apply to
information which:
|
(i)
|
at
the time of the disclosure was public
knowledge;
|
|
(ii)
|
is
required to be disclosed publicly pursuant to any applicable federal
or
state securities laws;
|
21
|
(iii)
|
after
the time of disclosure becomes public knowledge (except due to the
action
of the receiving party);
|
|
(iv)
|
the
receiving party had within its possession at the time of disclosure;
or
|
| (v) |
is
ordered disclosed by a Court of proper
jurisdiction.
|
6.4 Registration
Statement. Each
of
ASSAC and CHTL shall (a) as soon as practicable following delivery of the
Required Financial Statements, file with the SEC the Registration Statement(s)
referred to in Section 1.9 of this Agreement, and (b) use their best efforts
cause such Registration Statement to be declared effective by the SEC as soon
thereafter as is practicable.
6.5 Contents
and Review of the Registration Statement.
The
Registration Statement shall include a joint prospectus/information statement
of
ASSAC and CHTL and shall provide for customary language in wuch each Party
shall
(a) provide the information about its business and management to be included
in
such Registration Statement, and (b) make customary representations about the
accuracy of the information it provides and the absence of materiall
misstatements or omissions. Each of ASSAC and CHTL shall afford the other Party
and their respective legal counsel and other advisors with an opportunity to
review and comment on the filings.
6.6 Voting
of CHTL Shares. By
their
execution of this Agreement, each of the CHTL Principal Shareholders (subject
only to satisfaction of the conditions precedent set forth in Section 5.1)
do
hereby irrevocably and unconditionally covenant and agree, to vote all of their
voting shares of CHTL Common Stock at the Special Stockholders Meeting
IN
FAVOR
of the
Merger, the ASSAC Restated Charter and all other transactions contemplated
hereby.
6.7 ASSAC
Restated Charter. Immediately
following the Effective Time of the Merger, ASSAC shall have filed the ASSAC
Restated Charter in the form and content satisfactory to the ASSAC and the
CHTL
Principal Shareholders with the applicable filing office in the Cayman Islands.
6.8 Boards
of Directors. At
the
Effective Time of the Merger, the initial Board of Directors of ASSAC, as the
Surviving Corporation of the Merger, shall consist of seven (7) Persons, all
of
whom shall be Persons designated in the Purchase Agreement. In addition, two
(2)
of such directors shall be independent directors (as defined in the Sarbanes
Oxley Act of 2002 or rules of the stock exchange on which ASSAC trades, and
one
of whom shall be a financial expert).
6.9 Indemnification
of Officers and Directors. It
is the
intention of the Parties that ASSAC shall indemnify its officers and directors
to the fullest extent permitted by Cayman Island law. In such connection, the
Parties agree not to amend the certificates of incorporation or by-laws of
either ASSAC if such amendment shall have the effect of reducing, terminating
or
otherwise adversely affecting the indemnification rights and privileges
applicable to officers and directors of ASSAC, as the same are in effect
immediately prior to the Effective Time of the Merger.
6.10 Expenses. It
is
understood and agreed that following the execution of this Agreement, any and
all expenses with respect to any filings, documentation and related matters
with
respect to the consummation of the transactions contemplated hereby shall be
the
individual responsibility of each of ASSAC and CHTL.
22
6.11 Specific
Performance. Each
of
Parties acknowledge and agree that ASSAC’s purchase of the Purchased Securities
(as defined in the Purchase Agreement) and the other transactions contemplated
by the Purchase Agreement were consummated in partial reliance upon the fact
that CHTL would become a wholly-owned Subsidiary of ASSAC pursuant to the Merger
contemplated by this Agreement. Accordingly, each of CHTL, Xxxxxxx and the
other
CHTL Principal Shareholders who are executing this Agreement do hereby
acknowledge and agree that, absent only a material breach by ASSAC or Mergerco
of their representations and warrants or the failure on the part of ASSAC or
Mergerco to perform any of their material covenants and agreements contained
herein, if:
(a)
CHTL,
shall fail or refuse to timely perform their respective covenants and agreements
contained herein (including those set forth in Section 5.2 and Article VI),
and/or
(b)
Xxxxxxx or the other CHTL Principal Shareholders shall fail or refuse to timely
perform their respective covenants and agreements contained in Section
6.6
of this
Agreement or in Sections 6.4, 6.5 6.12 and 7.2 of the Purchase
Agreement,
in
either
case, that would make it impossible or impracticable for ASSAC to consummate
by
March 31, 2009 the Merger contemplated hereby, ASSAC would have no adequate
remedy at law. Accordingly, each of CHTL, Xxxxxxx and the CHTL Principal
Shareholders do hereby agree that, in addition to any other remedies available
to ASSAC at law or in equity, ASSAC or their legal representative may seek
and
obtain from the United States District Court for the Southern District of
California or any state court of competent jurisdiction in Los Angeles County,
California, specific performance of this Agreement. Each of CHTL, Xxxxxxx and
the CHTL Principal Stockholder do hereby consent to the jurisdiction of such
federal court or state court of competent jurisdiction in Los Angeles
California.
6.12 Westmoore
Warrants. At
the
Effective Time of the Merger, ASSAC shall issue to Westmoore Partners, L.P.
or
its Affiliates or designees, the Westmoore Warrants.
ARTICLE
VII - TERMINATION.
7.1 Termination
by the Parties. If
the
Effective Time of the Merger has not occurred by the close of business on March
31, 2009, then any Party hereto may thereafter terminate this Agreement by
written notice to such effect, to the other Parties hereto, without liability
of
or to any Party to this Agreement or any shareholder, director, officer,
employee or representative of such Party, unless the reason for such Effective
Time having not occurred is:
(a) such
terminating Party’s willful breach of the provisions of this Agreement, or
(b) if
all of
the conditions to such terminating Party’s obligations set forth in Article V
and Article VI have been satisfied or waived in writing by the date scheduled
for the Closing, and, notwithstanding such satisfaction or waiver, such
terminating Party fails or refuses to close the transactions contemplated by
this Agreement.
23
ARTICLE
VIII - SURVIVAL OF REPRESENTATIONS AND WARRANTIES
8.1 Notwithstanding
any right of either Party to investigate the affairs of the other party and
its
Shareholders, each Party has the right to rely fully upon representations,
warranties, covenants and agreements of the other Parties contained in this
Agreement or in any document delivered to one by the other or any of their
representatives, in connection with the transactions contemplated by this
Agreement. Notwithstanding
the foregoing, all of the representations and warranties of the Parties to
this
Agreement shall terminate as at the Effective Time of the
Merger.
ARTICLE
IX - DISPUTE RESOLUTION; NON-COMPETITION.
9.1 Resolution
of Disputes. Except
as
otherwise provided in Section
6.11
above,
any dispute arising under this Agreement which cannot be resolved among the
Parties shall be submitted to final and binding arbitration in accordance with
the then prevailing rules and regulations of the American Arbitration
Association (the “AAA”),
located in Los Angeles, California. There shall be three arbitrators, one
selected by the claimant, one selected by the respondent and the third
arbitrator selected by the AAA. The decision and award of the arbitrators shall
be final and binding upon all Parties and may be enforced in any federal or
state court of competent jurisdiction. Service of process on any one or more
Parties in connection with any such arbitration may be made by registered or
certified mail, return receipt requested or by email or facsimile
transmission.
ARTICLE
X - MISCELLANEOUS
10.1 Waivers.
The
waiver of a breach of this Agreement or the failure of any party hereto to
exercise any right under this Agreement shall in no way constitute waiver as
to
future breach whether similar or dissimilar in nature or as to the exercise
of
any further right under this Agreement.
10.2 Amendment.
This
Agreement may be amended or modified only by an instrument of equal formality
signed by the Parties or the duly authorized representatives of the respective
Parties.
10.3 Assignment.
This
Agreement is not assignable except by operation of law.
10.4 Notice.
All
notices, requests and demands hereunder shall be in writing and delivered by
hand, by facsimile transmission, by E-Mail, by mail, by telegram, or by
recognized commercial over-night delivery service (such as Federal Express,
UPS,
or DHL), and shall be deemed given: (a) if by hand delivery, upon such
delivery; (b) if by facsimile transmission, upon telephone confirmation of
receipt of same; (c) if by E-Mail, upon confirmation of receipt of same;
(d) if by mail, forty-eight (48) hours after deposit in the United States mail,
first class, registered or certified mail, postage prepaid; (e) if by
telegram, upon telephone confirmation of receipt of same; or (f) if by
recognized commercial over-night delivery service, upon such
delivery.
24
|
If
to ASSAC:
|
Asia
Special Situation Acquisitions Corp.
|
|
|
c/o
M
& C Corporate Services Limited
|
||
|
P.O.
Box 309GT, Xxxxxx House
|
||
|
South
Church Street
|
||
|
Xxxxxx
Town, Grand Cayman
|
||
|
Attention:
Xxxx Xxxxx, Esq.
|
||
|
Telephone:
|
||
|
Facsimile:
|
||
|
E-Mail:
xxxx@xxxxx.xxx
|
||
|
With
a copy to:
|
Xxxxxxx
X. Xxxxx, Esq.
|
|
|
Xxxxxxx
Xxxx LLP
|
||
|
0000
Xxxxxxxx, 00xx Xxxxx
|
||
|
Xxx
Xxxx, Xxx Xxxx 00000-0000
|
||
|
Telephone:
(000) 000-0000
|
||
|
Facsimile:
(000) 000-0000
|
||
|
E-Mail:
xxxxxx@xxxxxxxxxxx.xxx
|
||
|
If
CHTL or the CHTL Principal Shareholders:
|
China
Tel Group, Inc.
|
|
|
0000
Xxxxxx Xxxxxx Xxxxx, Xxxxx 000
|
||
|
Xxxxxx,
Xxxxxxxxxx 00000
|
||
|
Attention:
Xxxxxx Xxxxxxx
|
||
|
Telephone:
(000) 000-0000
|
||
|
Facsimile:
(000) 000-0000
|
||
|
E-Mail:
xxxxxxxx@xxxxxxxx.xxx
|
||
|
With
a copy to:
|
Xxxxxxxx
X. Xxxxxxx, Esq.
|
|
|
XXXXXXX,
CRON & JASPER, P.L.C.
|
||
|
Four
Xxxxxxx Xxxxx Xxxxx 000
|
||
|
Xxxxxx,
Xxxxxxxxxx 00000
|
||
|
Telephone:
(000) 000-0000
|
||
|
Facsimile:
(000) 000-0000
|
||
|
E-Mail:
xxxxxxxx@xxxxx.xxx
|
10.5 Governing
Law.
This
Agreement shall be construed, and the legal relations between the Parties
determined, in accordance with the laws of the State of New York, thereby
precluding any choice of law rules which may direct the application of the
laws
of any other jurisdiction.
10.6 Publicity.
No
publicity release or announcement concerning this Agreement or the transactions
contemplated hereby shall be issued by either party hereto at any time from
the
signing hereof without advance approval in writing of the form and substance
by
the other party.
10.7 Entire
Agreement.
This
Agreement (including the Schedules to be attached hereto) and the collateral
agreements executed in connection with the consummation of the transactions
contemplated herein contain the entire agreement among the Parties with respect
to the transactions contemplated hereby, and supersedes all prior agreements,
written or oral, with respect hereof., including, without limitation the
Exchange Agreement and the Original Merger Agreement.
25
10.8 Headings.
The
headings in this Agreement are for reference purposes only and shall not in
any
way affect the meaning or interpretation of this Agreement.
10.9 Severability
of Provisions.
The
invalidity or unenforceability of any term, phrase, clause, paragraph,
restriction, covenant, agreement or provision of this Agreement shall in no
way
affect the validity or enforcement of any other provision or any part
thereof.
10.10 Counterparts.
This
Agreement may be executed in any number of counterparts, each of which when
so
executed, shall constitute an original copy hereof, but all of which together
shall consider but one and the same document.
10.11 Binding
Effect.
This
Agreement shall be binding upon the Parties hereto and inure to the benefit
of
the Parties, their respective heirs, administrators, executors,
successors
and assigns.
10.12 Press
Releases.
The
Parties will mutually agree as to the wording and timing of any informational
releases concerning this transaction prior to and through Closing.
[balance
of page intentionally left blank - signature page follows]
26
IN
WITNESS WHEREOF,
this
Agreement has been duly executed by the Parties on the date and year first
above
written.
|
ASIA
SPECIAL SITUATION ACQUISITION CORP., a
Cayman Island corporation
|
CHINA
TEL GROUP, INC.,
a
Nevada
Company
|
||
|
By /s/
Xxxx X. Xxxxx
|
By
/s/
Xxxxxx Xxxxxxx
|
||
|
Signature
Xx.
Xxxx X. Xxxxx
Print
Name
Its
President
Print Title
|
Signature
Xxxxxx
Xxxxxxx
Print
Name
Its
President
Print Title
|
||
|
Dated August
6, 2008
|
Dated
August
6, 2008
|
|
CHTL
ACQUISITION CORP.
a
Nevada corporation
|
|||
| By /s/ Xxxx X. Xxxxx | |||
|
Signature
Xx.
Xxxx X. Xxxxx
Print
Name
Its
President
Print Title
|
CHTL
PRINCIPAL SHAREHOLDERS:
|
WESTMOORE
INVESTMENTS, L.P.
|
|||
|
/s/
Xxxxx Xxxxxxx
|
By /s/ Xxxxxxx Xxxxxxxx | ||
|
XXXXX XXXXXXX |
|
| XXXXXXX IRR TRUST | WESTMOORE MANAGEMENT, LLC | ||
| By: /s/ Xxxxx Xxxxxxx | By: /s/ Xxxxxxx Xxxxxxxx | ||
|
Xxxxx
Xxxxxxx, Trustee
|
|
|
WESTMOORE
CAPITAL GROUP
SERIES
A LLC
|
WESTMOORE
CAPITAL GROUP
SERIES
B LLC
|
||
| By: /s/ Xxxxxxx Xxxxxxxx | BY: /s/ Xxxxxxx Xxxxxxxx | ||
|
|
|
27
SCHEDULE
A
I. As
at the Closing of the Purchase Agreement
ASSAC
|
Authorized
Ordinary Shares
|
50,000,000
shares
|
|
|
Authorized
Preferred Shares
|
1,000,000
shares
|
|
|
Issued
Ordinary Shares
|
14,000,000
shares
|
|
|
Issued
Preferred Shares
|
-0-
|
|
|
Issued
ASSAC Note
|
$165,000,000
|
|
|
ASSAC
Warrants Outstanding
|
17,225,000
shares
|
|
|
ASSAC
Fully-Diluted Ordinary Shares
|
31,225,000
shares
|
|
|
CHTL:
|
||
|
Authorized
Class A Common Stock
|
500,000,000
shares
|
|
|
Authorized
Class B Common Stock
|
200,000,000
shares
|
|
|
Authorized
Series A Preferred Shares
|
25,000,000
shares
|
|
|
Issued
Class A Common Stock
|
||
|
to
CHTL shareholders prior to Closing
|
86,117,088
shares
|
|
|
Issued
Class B Common Stock to
|
||
|
CHTL
shareholders prior to Closing
|
66,909,088
shares
|
|
|
Issued
Series A Preferred Shares
|
||
|
to
Additional Investors
|
10,500,000
shares (at a price of $10.00 per share)
|
|
|
Maximum
Issued Debentures
|
$45,000,000
|
|
|
Issued
Class A Common Stock to
|
||
|
ASSAC
for $105,000,000 cash and
|
||
|
$165,000,000
ASSAC Note
|
120,000,000
shares (*)
|
|
|
CHTL
Class A Common Stock issuable
|
||
|
upon
conversion of Debentures @ $0.95/share
|
47,368,421
shares
|
|
|
CHTL
Class A Common Stock issuable
|
||
|
upon
conversion of CHTL Preferred Stock
|
||
|
issued
to Additional Investors @ $2.25/share
|
46,666,667
shares
|
|
|
CHTL
Fully-Diluted Class A Common Stock
|
300,226,176
shares
|
(*) 73,333,333
of such shares are subject to forefeiture and pledged to CHTL as collateral
for
payment of $165,000,000 ASSAC Note. As Note is prepaid, shares are released
based on one share for each $2.25 amount of Note paid down in cash.
28
SCHEDULE
A
II. As
at the Effective Time of the Merger
ASSAC
|
Authorized
Ordinary Shares
|
250,000,000
shares
|
|
|
Authorized
Preferred Shares
|
25,000,000
shares
|
|
|
Issued
Ordinary Shares to insiders
|
2,500,000
shares
|
|
|
Issued
Ordinary Shares to Public Investors
|
11,500,000
shares
|
|
|
ASSAC
Warrants Outstanding
|
17,225,000
shares
|
|
|
Issued
Ordinary Shares to Holders of CHTL
|
||
|
Class
A Common Stock (other than ASSAC)
|
19,376,345
shares (1)
|
|
|
ASSAC
Debentures
|
$45,000,000
|
|
|
ASSAC
Ordinary Shares issuable to
|
||
|
holders
of ASSAC Debentures
|
10,657,895
shares (2)
|
|
|
ASSAC
Ordinary Shares Issued to
|
||
|
holders
of CHTL Preferred Stock
|
10,500,000
(3)
|
|
|
ASSAC
Ordinary Shares issued to New
|
||
|
Investors
at $10.00 per share
|
6,500,000
(4)
|
|
|
ASSAC
Ordinary Shares issuable to New
|
||
|
Investors
upon exercise of ASSAC Warrants
|
3,250,000
(4)
|
|
|
Series
A Voting Preferred Stock issued
|
||
|
to
CHTL Principal Stockholders
|
1,000,000
(5)
|
|
|
ASSAC
Note payable to CHTL
|
-0-
|
|
|
CHTL
Shares formerly held by ASSAC
|
-0-
|
|
|
ASSAC
Fully-Diluted Ordinary Shares
|
81,509,240
shares
|
(2) Based
on
the ASSAC Debenture Exchange Ratio.
(3) Assumes
each share of CHTL Preferred Stock is purchased at $10.00 and is convertible
into 4.4444 shares of CHTL Class A Common Stock.
(4) Assumes
that (a) a total of $65,000,000 is raised by ASSAC in one or more financings
prior to the Effective Time of the Merger, (b) all of the net proceeds of which
were paid to CHTL and used to reduce the original $165,000,000 ASSAC Note to
$100,000,000, and (c) the ASSAC securities consisted of Ordinary Shares issued
at $10.00 per share and warrants entitling the holder to purchase an additional
3,250,000 Ordinary Shares. The terms of such proposed financing are subject
to
change and the provisions of Section
5.1(n)
of the
Agreement and Plan of Merger.
(5) Entitles
the CHTL Principal Stockholders to 100,000,000 votes (100 votes for each share)
voting together with the ASSAC Ordinary Shares on all matters requiring ASSAC
shareholder vote or approval.
29
Based
upon the foregoing, CHTL would receive aggregate financing of $270,000,000,
of
which $196,000,000 would be paid to Chinacomm under the Purchase Agreement,
and
the balance used for working capital. In addition, upon exercise of the
17,225,000 ASSAC Warrants currently outstanding, the consolidated companies
would receive up to an additional $129,187,500.
30
