PROMISSORY NOTE
EXHIBIT
10.4
| $___________________ |
_______ __,
2008
|
FOR VALUE RECEIVED, ASIA SPECIAL SITUATION ACQUISITION
CORP., a Cayman Island corporation (the "Maker"), having an
office c/o M&C Corporate Services Limited, P.O. Box 309GT, Xxxxxx House,
South Church Street, Xxxxxx Town, Grand Cayman, does hereby promise to CHINA TEL GROUP, INC., a
Nevada corporation (the “Payee”) having an
office at 0000 Xxxxxx Xxxxxx Xxxxx, Xxxxx 000, Xxxxxx, XX 00000, or at such
other place as Payee may designate in writing, in lawful money of the United
States of America, the principal sum of
_________________________________________________________ Dollars ($___________)
under this promissory note (the “Note”) in accordance with the
following terms:
1. Interest. This
Note shall not bear interest.
2. Maturity
Date. The entire
outstanding principal amount of this Note shall be due and payable on March 31,
2009 (the "Maturity Date"),
subject to mandatory prepayment of this Note as set forth herein.
3. No Guarantees of
Payment. Nothing contained in this Note or any other agreement
or instrument shall be deemed or construed to constitute a guaranty or
undertaking by the Maker or any officer, director, shareholder, employee, agent
or consultant of the Maker, or any other person, of any of the obligations of
the Maker under this Note; it being understood and agreed by the Payee that,
absent the receipt by the Maker of funds from the issuance and sale of its
securities or the exercise of outstanding ASSAC warrants on or prior to the
Maturity Date, the Maker will not have any funds or financial resources to pay
all or any portion of its obligations under this Note on the Maturity Date or
otherwise.
4. No Personal Liability;
Non-Recourse Obligation. The Payee hereby acknowledges and
agrees that the sole source for payment of the outstanding principal amount of
this Note shall be the proceeds from the issuance and sale of securities of the
Maker or the foreclosure and transfer to the Payee of the “Pledged Securities”
(as that term is defined in the Pledge Agreement). Accordingly, and
notwithstanding anything to the contrary, express or implied, contained in this
Note or in the Pledge Agreement:
(a) absent
only acts or omissions of the Maker constituting actual fraud against the Payee,
neither the Maker, the Maker nor any officer, director, shareholder, employee,
agent or consultant of the Maker, or any other person shall have any personal
liability or obligation to the Payee pursuant to this Note; and
(b) except
for such Pledged Securities and the proceeds thereof which shall be subject to
the Pledge Agreement referred to in Section 8 below, none
of the assets or properties of the Maker, or any officer, director, shareholder,
employee, agent or consultant of the Maker, or any other person (including
without limitation any portion of the ordinary shares of the Maker owned by its
existing shareholders or their transferees) shall be subject to any claims,
attachments, liens, security interests or rights in favor of the Maker to secure
payment of this Note.
5. Payment on Maturity Date:
Mandatory Prepayments.
(a) The
entire outstanding principal amount and accrued and unpaid interest under this
Note shall be due and payable in full on the Maturity Date.
(b) Notwithstanding
the foregoing, if, at any time or from time to time prior to the Maturity Date
the Maker shall either (i) issue and sell for cash consideration, any equity or
debt securities of the Maker prior to the Maturity Date, or (ii) receive cash
consideration from the exercise of outstanding warrants to purchase ordinary
shares of the Maker, then and in either case, the Maker must remit to the Payee
all of the net proceeds (after deduction and payment of all selling commissions
and offering expenses) received by the Maker from any such sale, transfer or
exercise in order to prepay, in whole or in part, all or an applicable portion
of the then outstanding principal amount of this Note.
6. Delivery of Pledged
Securities; Cancellation of Note.
(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) above, a
corresponding amount of the Pledged Securities (valued (i) as to any of the
Class A Common Shares of the Payee held under the Pledge Agreement at $2.25 per
share, and (ii) as to any of the shares of Series A Preferred Shares of the
Payee held under the Pledge Agreement, at the $10.00 per share purchase price)
shall be released from the Pledge Agreement by the “Collateral Agent” (as
defined in the Pledge Agreement) and delivered to the Maker, free and
clear of all liens, claims and encumbrances created by such Pledge
Agreement.
(b) In
the event and to the extent that this Note shall not have been paid in full by
the Maturity Date (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 the
Purchaser pursuant to Section 6(a) above), shall be returned to the Payee for
cancellation and, simultaneous with such return, this Note shall cancelled and
shall be returned by the Collateral Agent to the Maker.
7. Event of
Default. The occurrence and continuation of any of the
following events shall constitute an Event of Default under this
Note.
(a) the
failure of the Maker to pay the principal amount of this Note, within ten (10)
Business Days of the date when such payment(s) shall be due, in accordance with
Section 6 above and under the Pledge Agreement referred to below;
(b) if
the Maker defaults in the performance of any material term, condition or
covenant contained in Pledge Agreement, and fails to fully cure such default
within ten (10) Business Days after the occurrence of the Maker’s default ;
or
(c) if
the Maker has breached in any material respect of any of its material
representations or warranties contained in the Purchase Agreement or the Merger
Agreement; or
(d) if
the Maker shall (i) apply for or consent to the appointment of, or the
taking of possession by, a receiver, custodian, trustee, examiner or liquidator
of the Maker or its assets or property, (ii) make a general assignment for
the benefit of its creditors, (iii) commence a voluntary case under the
Federal Bankruptcy Code, (iv) file a petition seeking to take advantage of
any other law relating to bankruptcy, insolvency, reorganization, liquidation,
dissolution, assignment, arrangement or winding-up, or composition or
readjustment of debts, or (v) have a petition filed against it in an
involuntary case under the U.S. Bankruptcy Code.
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If any
Event of Default occurs and is continuing, then and in every such case the Payee
may declare the principal of this Note to be due and payable immediately, by a
notice in writing to the Maker, and upon any such declaration such amounts shall
become due and payable immediately without presentment, demand, protest or other
formalities of any kind, all of which are hereby expressly waived by the
Maker.
8. Security. As
a material inducement to the Payee to loan the principal amount of this Note to
the Maker on the date hereof, the Maker hereby pledges to the Payee, and its
successors, endorsees, transferees or assigns, and grants the Payee a first
priority lien and security interest in and to certain of the Class A Common
Shares and/or Series A Preferred Shares of the Payee owned of record and
beneficially by the Maker (collectively, the “Pledged Securities”)
in the amounts specified the pledge agreement between the Maker and the Payee in
the form of Exhibit
A annexed hereto and made a part hereof (the “Pledge
Agreement”).
9. Title and Ownership of the
Pledged Securities. All right, title and legal ownership to
the Pledged Securities will remain with the Maker at all times until the date of
delivery of the Pledged Securities by the Collateral Agent in accordance with
Section 6 of this Note and the Pledge Agreement.
10. Choice of Law: Venue and
Jurisdiction. This Note shall be governed and controlled as to validity,
enforcement, interpretation, construction, effect and in all other respects by
the statutes, laws and decisions of the State of New York. The exclusive venue
and/or jurisdiction for any proceeding which may be brought in connection with
this Note shall be any federal and state court located in Los Angeles County,
Los Angeles, California and each of the parties hereto irrevocably consents to
such venue and/or jurisdiction.
11. Miscellaneous
Provisions.
(a) This
Note may not be amended or modified, and revision hereto shall not be effective,
except by an instrument in writing executed by Maker and Payee.
(b) Any
and all notices, demands or requests required or permitted to be given under
this Note shall be given in writing and sent, by registered or certified U.S.
mail, return receipt requested, by hand, or by overnight courier, addressed to
the parties hereto at their addresses set forth above or such other addresses as
they may from time to-time designate by written notice, given in accordance
with the terms of this Section. A party may change its address for notification
purposes by giving the other parties notice in accordance with the terms of this
Section 10(b) of the new address and the date upon which it shall become
effective.
(c) The
Maker hereby waive presentment, protest and demand, notice of protest, dishonor
and nonpayment of this Note, and expressly agrees that, without in any way
affecting the liability of the Maker hereunder, the Payee may extend the time
for payment of any amount due hereunder and release any party liable hereunder
without in any other way affecting the liability and obligation of the
Maker.
(d) Headings
at the beginning of each numbered Section of this Note are intended solely for
convenience of reference and are not to be deemed or construed to be a part of
this Note.
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IN
WITNESS WHEREOF, Maker have executed this Note as of the date first set forth
above.
|
ASIA
SPECIAL SITUATION ACQUISITION CORP.
By:
__________________________
Xx.
Xxxx X. Xxxxx, President |
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