AGREEMENT AND PLAN OF MERGER
EXHIBIT
10.2
Execution
Copy
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:
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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.
1.2 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:
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(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.
(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).
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(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.
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.
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(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.
(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.
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(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.
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.
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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.
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.
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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.
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.
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“CHTL Principal Executive
Officer” shall mean Xxxxxxx, in his capacity as President and Chief
Executive Officer of CHTL.
“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
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(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
(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;
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(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;
(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.
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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.
(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.
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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”.
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.
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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.
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.
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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.
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.
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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.
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.
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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.
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.
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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.
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.
-18-
(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.
(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:
-19-
(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.
(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.
-20-
(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;
(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.
-21-
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;
|
|
|
(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).
-22-
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.
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:
-23-
(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.
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:
|
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|
Facsimile:
|
|
|
E-Mail: xxxx@xxxxx.xxx
|
|
|
With a copy
to:
|
Xxxxxxx
X. Xxxxx, Esq.
|
|
HodgsonRuss
|
|
|
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
Signature
Xxxx X.
Xxxxx
Print
Name
|
By /s/Xxxxxx
Xxxxxxx
Signature
Xxxxxx
Xxxxxxx
Print
Name
|
|
|
Its President
Print
Title
|
Its CEO
Print
Title
|
|
|
Dated August 6,
2008
|
Dated August 6,
2008
|
|
|
CHTL
ACQUISITION CORP.
a
Nevada corporation
|
||
|
By /s/ Xxxx X.
Xxxxx
Signature
Xxxx X.
Xxxxx
Print
Name
|
||
|
Its President
Print
Title
|
CHTL PRINCIPAL
SHAREHOLDERS:
|
WESTMOORE INVESTMENTS, L.P.
|
|
/s/ Xxxxx
Xxxxxxx
XXXXX
XXXXXXX
By /s/ Xxxx
Xxxxxxxx
|
|
XXXXXXX
& XXXXXXX IRR
TRUST
WESTMOORE MANAGEMENT, LLC
By: /s/ Xxxxx
Xxxxxxx By: /s/ Xxxx
Xxxxxxxx
Xxxxx
Xxxxxxx, Trustee
|
|
WESTMOORE
CAPITAL
GROUP WESTMOORE
CAPITAL GROUP
SERIES
A
LLC SERIES
B LLC
By: /s/ Xxxx
Xxxxxxxx BY:
/s/ Xxxx
Xxxxxxxx
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-27-
SCHEDULE
A
I. As
at the Closing of the Purchase Agreement
ASSAC
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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:
|
|
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Authorized
Class A Common Stock
|
500,000,000
shares
|
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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
|
_____________________________
(1) Based
on the Class A Common Stock Exchange Ratio
(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.
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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.
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