Annual Report of a Foreign Private Issuer — Form 20-F Filing Table of Contents
Document/ExhibitDescriptionPagesSize
1: 20-F Annual Report of a Foreign Private Issuer HTML 1.40M
2: EX-2.6 Plan of Acquisition, Reorganization, Arrangement, HTML 67K
Liquidation or Succession
3: EX-4.50 Instrument Defining the Rights of Security Holders HTML 12K
4: EX-4.51 Instrument Defining the Rights of Security Holders HTML 13K
5: EX-4.52 Instrument Defining the Rights of Security Holders HTML 7K
6: EX-4.53 Instrument Defining the Rights of Security Holders HTML 8K
7: EX-4.54 Instrument Defining the Rights of Security Holders HTML 110K
8: EX-4.55 Instrument Defining the Rights of Security Holders HTML 56K
9: EX-4.56 Instrument Defining the Rights of Security Holders HTML 71K
10: EX-4.57 Instrument Defining the Rights of Security Holders HTML 199K
11: EX-8.1 Opinion re: Tax Matters HTML 10K
12: EX-11.1 Statement re: Computation of Earnings Per Share HTML 27K
13: EX-12.1 Statement re: Computation of Ratios HTML 19K
14: EX-12.2 Statement re: Computation of Ratios HTML 19K
15: EX-13.1 Annual or Quarterly Report to Security Holders HTML 13K
EX-4.57 — Instrument Defining the Rights of Security Holders
THIS SUBSCRIPTION AGREEMENT
(this “Agreement”), is
dated as of May 8, 2008, by and among China Cablecom Holdings, Ltd. (formerly
Jaguar Acquisition Corporation), a British Virgin Islands company (the “Company”), and the subscribers
identified on the signature page hereto (each a “Subscriber” and collectively
“Subscribers”).
WHEREAS, the Company and the
Subscribers are executing and delivering this Agreement in reliance upon an
exemption from securities registration afforded by the provisions of Section
4(2), Section 4(6) and/or Regulation D (“Regulation D”) as promulgated
by the United States Securities and Exchange Commission (the “Commission”) under the
Securities Act of 1933, as amended (the “1933 Act”).
WHEREAS, the parties desire
that, upon the terms and subject to the conditions contained herein, the Company
shall issue and sell to the Subscribers, as provided herein, and the
Subscribers, in the aggregate, shall purchase $43,175,000 (the “Aggregate Principal Amount”)
of principal amount of convertible notes of the Company (“Note” or “Notes”), a form of which is
annexed hereto as Exhibit
A, convertible into the Company’s Ordinary Shares, $0.0005 par value (the
“Ordinary Shares”), at a
per share conversion price set forth in the Note (“Conversion Price”); and
Ordinary Shares (“Incentive
Shares”) for the purchase price (“Purchase Price”) set forth on
the signature page hereto. The Notes, Ordinary Shares issuable upon
conversion of the Notes (the “Conversion Shares” or “Shares”), and Incentive
Shares are collectively referred to herein as the “Securities”; and
WHEREAS, the aggregate
proceeds of the sale of the Notes and the Incentive Shares contemplated hereby
shall be held in escrow pursuant to the terms of an escrow agreement to be
executed by the parties substantially in the form attached hereto as Exhibit B (the “Escrow
Agreement”).
NOW, THEREFORE, in
consideration of the mutual covenants and other agreements contained in this
Agreement the Company and the Subscribers hereby agree as follows:
1. (a) Closing
Date. The “Closing Date” shall be the
date that the Purchase Price is transmitted by wire transfer or otherwise
credited to or for the benefit of the Company. The consummation of the
transactions contemplated herein shall take place at the offices of Grushko
& Mittman, P.C., 551 Fifth Avenue, Suite 1601, New York, New York10176,
upon the satisfaction or waiver of all conditions to closing set forth in this
Agreement. Subject to the satisfaction or waiver of the terms
and conditions of this Agreement, on the Closing Date, each Subscriber shall
purchase and the Company shall sell to each Subscriber a Note in the Principal
Amount designated on the signature page hereto for the Purchase Price indicated
thereon, and Incentive Shares as described in Section 2 of this
Agreement.
(b) Payment of Purchase
Price. The Purchase Price may be paid by a Subscriber by
the cancellation of the amount of principal and accrued interest set forth on
such Subscriber’s signature page hereto, of a certain promissory note issued on
September 20, 2007, by China Cablecom Ltd., a British Virgin Islands company and
wholly-owned subsidiary of the Company (“Prior Note”), which amount of
principal and accrued interest was payable April 18, 2008. The
balance of the Purchase Price is payable in cash. The Purchase Price
shall be allocated by the Company between the Note and Incentive Shares based on
the relative fair market value of each.
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2.
Incentive
Shares. On the Closing Date, the Company shall issue to the
Subscribers, in the aggregate, 1,525,000 Incentive Shares. Each
Subscriber shall receive its Pro Rata Portion (defined
below) of such Incentive Shares and additional Incentive Shares which may be
issuable on the first and second anniversary of the Closing Date. In
the event any Principal Amount remains outstanding on the tenth business day
following the first anniversary of the Closing Date, the Company will issue to
the Subscribers, in the aggregate, up to an additional 125,000 Incentive
Shares. In the event any Principal Amount remains outstanding on the
tenth business day following the second anniversary of the Closing Date, the
Company will issue to the Subscribers, in the aggregate, up to an additional
300,000 Incentive Shares. The Incentive Shares issuable in connection
with Principal Amount of Notes then outstanding shall be issued in proportion to
the initial aggregate Principal Amount. For illustration purposes
only: If one-half the initial aggregate Principal Amount is outstanding ten
business days after each of the first and second anniversary of the Closing
Date, then 62,500 Incentive Shares shall be issued in connection with first
Closing Date and 150,000 Incentive Shares shall be issued in connection with the
Second Closing Date. All additional Incentive Shares shall be
delivered by the Company to the Subscribers not later than twenty business days
after the respective anniversary dates. The Subscribers will not be
required to pay any additional consideration above the Purchase Price paid on
the Closing Date for the Incentive Shares. “Pro Rata Portion” shall be the
amount of Purchase Price paid by a Subscriber relative to the aggregate Purchase
Price paid by all Subscribers for the purchase of Notes and Incentive
Shares.
3.
Security
Interest. A collateral agent, for the ratable benefit of
the Subscribers will be granted a security interest in certain assets of the
Company, including ownership of China Cablecom Ltd., which security interest
will be memorialized in a “Security Agreement,” a form of
which is annexed hereto as Exhibit
C. China Cablecom Ltd. will guaranty the Company’s
obligations under the Transaction Documents [as defined in Section
5(c)]. Such guaranty will be memorialized in a “Subsidiary Guaranty”, the form
of which is annexed hereto as Exhibit D. The
Company will execute such other agreements, documents and financing statements
reasonably requested by the Subscribers, which will be filed at the Company’s
expense with the jurisdictions, states and counties designated by the
Subscribers. The Company will also execute all such documents reasonably
necessary in the opinion of the Subscribers to memorialize and further protect
the security interest described herein. The Subscribers will appoint
a Collateral Agent to represent them collectively. The appointment of the
Collateral Agent in connection with the Security Agreement will be pursuant to a
“Collateral Agent
Agreement,” a form of which is annexed hereto as Exhibit E.
4.
Subscriber
Representations and Warranties. Each Subscriber hereby
represents and warrants to and agrees with the Company only as to such
Subscriber that:
(a) Organization and Standing of
the Subscribers. If such
Subscriber is an entity, such Subscriber is a corporation, partnership or other
entity duly incorporated or organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation or organization and has
the requisite corporate power to own its assets and to carry on its
business.
(b) Authorization and
Power. Such Subscriber has the
requisite power and authority to enter into and perform this Agreement and the
other Transaction Documents and to purchase the Notes and Incentive Shares being
sold to it hereunder. The execution, delivery and performance of this
Agreement and the other Transaction Documents by such Subscriber and the
consummation by it of the transactions contemplated hereby and thereby have been
duly authorized by all necessary corporate or partnership action, and no further
consent or authorization of such Subscriber or its Board of Directors,
stockholders, partners, or members, as the case may be, is
required. This Agreement and the other Transaction Documents have
been duly authorized, executed and delivered by such Subscriber and constitutes,
or shall constitute when executed and delivered, a valid and binding obligation
of such Subscriber enforceable against such Subscriber in accordance with the
terms hereof and thereof, as the case may be.
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(c) No Conflicts. The execution, delivery and performance of
this Agreement and the other Transaction Documents and the consummation by such
Subscriber of the transactions contemplated hereby and thereby or relating
hereto do not and will not (i) result in a violation of such Subscriber’s
charter documents or bylaws or other organizational documents or (ii) conflict
with, or constitute a default (or an event which with notice or lapse of time or
both would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of any agreement, indenture or
instrument or obligation to which such Subscriber is a party or by which its
properties or assets are bound, or result in a violation of any law, rule, or
regulation, or any order, judgment or decree of any court or governmental agency
applicable to such Subscriber or its properties (except for such conflicts,
defaults and violations as would not, individually or in the aggregate, have a
material adverse effect on such Subscriber). Such Subscriber is not
required to obtain any consent, authorization or order of, or make any filing or
registration with, any court or governmental agency in order for it to execute,
deliver or perform any of its obligations under this Agreement and the other
Transaction Documents or to purchase the Securities in accordance
with the terms hereof, provided that for purposes of the representation made in
this sentence, such Subscriber is assuming and relying upon the accuracy of the
relevant representations and agreements of the Company
herein.
(d) Information on
Company. Such
Subscriber has been furnished with or has had access at the EDGAR Website of the
Commission to the Company's Form S-1 filed on April 18, 2008 (“April Registration
Statement”), and the financial statements included therein, together with
all prior filings made with the Commission available at the EDGAR website
(hereinafter referred to collectively as the "Reports"). In
addition, such Subscriber may have received
in writing from the Company such other information concerning its operations,
financial condition and other matters as such Subscriber has requested in writing,
identified thereon as OTHER WRITTEN INFORMATION (such other information is
collectively, the "Other
Written Information"), and considered all factors such Subscriber deems material in deciding on the
advisability of investing in the Securities. The Subscriber and its
advisors, if any, have been afforded the opportunity to ask questions of the
Company and to receive answers thereto concerning the Company and the
transactions contemplated herein. Subscriber does not acknowledge
that any of such information is material non-public information.
(e) Information on
Subscriber. Such
Subscriber is, and will be at the time of the conversion of the Notes and
receipt of the Incentive Shares, a “qualified institutional buyer” as such term
is defined in Rule 144A promulgated by the Commission under the 1933 Act, is
experienced in investments and business matters, has made investments of a
speculative nature and has purchased securities of United States publicly-owned
companies in private placements in the past and, with its representatives, has
such knowledge and experience in financial, tax and other business matters as to
enable such Subscriber to utilize the
information made available by the Company to evaluate the merits and risks of
and to make an informed investment decision with respect to the proposed
purchase, which represents a speculative investment. Such Subscriber has the authority and is duly and
legally qualified to purchase and own the Securities. Such Subscriber is able to bear the risk of such
investment for an indefinite period and to afford a complete loss
thereof.
(f) Purchase of Notes and
Incentive Shares. On the Closing Date and each date upon which
Incentive Shares are received, such
Subscriber will purchase the Notes and Incentive Shares as principal for its own
account for investment only and not with a view toward, or for resale in
connection with, the public sale or any distribution thereof.
(g) Compliance with Securities
Act. Such
Subscriber understands and agrees that the Securities have not been registered
under the 1933 Act or any applicable state securities laws, by reason of their
issuance in a transaction that does not require registration under the 1933 Act
(based in part on the accuracy of the representations and warranties of such Subscriber contained herein), and that such
Securities must be held indefinitely unless a subsequent disposition is
registered under the 1933 Act or any applicable state securities laws or is
exempt from such registration.
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(h) Shares
Legend. The Shares, and Incentive Shares shall bear the
following or similar legend:
"THE ISSUANCE AND SALE OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, NOR APPLICABLE STATE SECURITIES
LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED
OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR
THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION
OF COUNSEL REASONABLY SATISFACTORY TO THE ISSUER HEREOF THAT REGISTRATION IS NOT
REQUIRED UNDER SAID ACT . NOTWITHSTANDING THE FOREGOING, THE
SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES."
(i) Note
Legend. The Note shall bear the following legend:
"NEITHER THE ISSUANCE AND SALE OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE
SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES
MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF
(A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO
THE ISSUER HEREOF THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT
.. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN
CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING
ARRANGEMENT SECURED BY THE SECURITIES. "
(j) Communication of
Offer. The offer to sell the Securities was directly
communicated to such Subscriber by the Company. At no time was such
Subscriber presented with or solicited by any leaflet, newspaper or magazine
article, radio or television advertisement, or any other form of general
advertising or solicited or invited to attend a promotional meeting otherwise
than in connection and concurrently with such communicated offer.
(k) Authority;
Enforceability. This Agreement and other agreements delivered
together with this Agreement or in connection herewith have been duly
authorized, executed and delivered by the Subscriber and are valid and binding
agreements enforceable in accordance with their terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors’ rights generally and
to general principles of equity; and Subscriber (if an entity) has full
corporate power and authority necessary to enter into this Agreement and such
other agreements and to perform its obligations hereunder and under all other
agreements entered into by the Subscriber relating hereto.
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(l) Restricted
Securities. Such Subscriber understands that the
Securities have not been registered under the 1933 Act and such Subscriber will
not sell, offer to sell, assign, pledge, hypothecate or otherwise transfer any
of the Securities unless pursuant to an effective registration statement under
the 1933 Act, or .or (iii) Subscriber provides the Company with reasonable
assurances (in the form of seller and broker representation letters) that the
Securities may be sold pursuant to (A) Rule 144 promulgated under the 1933 Act,
or (B) Rule 144A promulgated under the 1933 Act, in each case following the
applicable holding period set forth therein. Notwithstanding anything
to the contrary contained in this Agreement, such Subscriber may transfer
(without restriction and without the need for an opinion of counsel) the
Securities to its Affiliates (as defined below) provided that such Affiliate is
an “qualified institutional buyer” under Rule 144A and such Affiliate agrees to
be bound by the terms and conditions of this Agreement. For the
purposes of this Agreement, an “Affiliate” of any person or
entity means any other person or entity directly or indirectly controlling,
controlled by or under direct or indirect common control with such person or
entity. For purposes of this definition, “control” means the power to
direct the management and policies of such person or firm, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise.
(m) No Governmental
Review. Such Subscriber understands that no United States
federal or state agency or any other governmental or state agency has passed on
or made recommendations or endorsement of the Securities or the suitability of
the investment in the Securities nor have such authorities passed upon or
endorsed the merits of the offering of the Securities.
(n) Short Sales Prior to the
Date Hereof. Subscriber has not directly or indirectly, nor
has any person acting on behalf of or pursuant to any understanding with such
Subscriber, executed any disposition, including Short Sales (but not including
the location and/or reservation of borrowable shares of Common Stock), in the
securities of the Company during the period commencing from the time that such
Subscriber first received a term sheet from the Company or any other person
setting forth the material terms of the transactions contemplated hereunder
until the date hereof (“Discussion
Time”). Notwithstanding the foregoing, in the case of a
Subscriber that is a multi-managed investment vehicle whereby separate portfolio
managers manage separate portions of such Subscriber’s assets and the portfolio
managers have no direct knowledge of the investment decisions made by the
portfolio managers managing other portions of such Subscriber’s assets, the
representation set forth above shall only apply with respect to the portion of
assets managed by the portfolio manager that made the investment decision to
purchase the Securities covered by this Agreement. For purposes of
this Agreement, the term “Short
Sales” shall include all “short sales” as defined in Rule 200 of
Regulation SHO under the Exchange Act.
(o) Correctness of
Representations. Such Subscriber represents as to such
Subscriber that the foregoing representations and warranties are true and
correct as of the date hereof and, unless such Subscriber otherwise notifies the
Company prior to the Closing Date shall be true and correct as of the Closing
Date.
(p) IRS Form W-8 or
W-9. Subscriber shall provide, on the Closing Date, an
IRS Form W-8 or W-9, as appropriate.
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(q) Satisfaction of Certain
Prior Note Obligations. Each Subscriber hereby confirms to the
Company for itself that, to the extent the Purchase Price is paid by
the cancellation of the principal and accrued interest due on the Prior
Note in accordance with Section 1(b): (a) such principal payment obligations
under the Prior Note held by it arising as a result of the closing of the
Business Combination (as defined in the Prior Note) and any Event of
Default (as defined in the Prior Note) which may occur under the Prior
Note as a result of the Company’s failure to make such principal payment by
April 19, 2008, are hereby satisfied in full or waived, as the case may
be; (b) all liens securing such principal and interest obligations
granted to Subscriber in respect of the Prior Note and the related
documents (including the Pledge Agreement as defined in the Prior Note) are
hereby automatically terminated and released; (c) Subscriber will execute
release documents as the Company may reasonably request in order to evidence or
otherwise give notice of such collateral termination and release; and
(d) should the entire outstanding principal amount of the Prior
Note be repaid, together with all accrued interest thereon, pursuant
to the terms of the Prior Note, Subscriber shall return the Prior Note to
the Company marked “REPAID IN FULL.”
(r) Survival. The
foregoing representations and warranties shall survive the Closing Date for a
period of four years.
5. Company Representations and
Warranties. Except as set forth in the April Registration
Statement, or the OTHER WRITTEN INFORMATION the Company represents and warrants
to and agrees with each Subscriber, Chardan Capital Markets, LLC and Lazard
Frères & Co. LLC that:
(a) Due
Incorporation. The Company is a corporation or other entity
duly incorporated or organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation or organization and has the
requisite corporate power to own its properties and to carry on its business as
presently conducted. The Company is duly qualified as a foreign
corporation to do business and is in good standing in each jurisdiction where
the nature of the business conducted or property owned by it makes such
qualification necessary, other than those jurisdictions in which the failure to
so qualify would not have a Material Adverse Effect. For purposes of
this Agreement, a “Material
Adverse Effect” shall mean a material adverse effect on the financial
condition, results of operations, prospects, properties or business of the
Company and its Subsidiaries taken as a whole. For purposes of this
Agreement, “Subsidiary”
means, with respect to any entity at any date, any corporation, limited or
general partnership, limited liability company, trust, estate, association,
joint venture, variable interest entity or other business entity of which
more than 30% of (i) the outstanding capital stock having (in the
absence of contingencies) ordinary voting power to elect a majority of the board
of directors or other managing body of such entity, (ii) in the case of a
partnership or limited liability company, the interest in the capital or profits
of such partnership or limited liability company or (iii) in the case of a
trust, estate, association, joint venture, variable interest entity or other
entity, the beneficial interest in such trust, estate, association or other
entity business is, at the time of determination, owned or controlled directly
or indirectly through one or more intermediaries, by such entity. The
Company’s direct and indirect Subsidiaries as of the Closing Date and the
Company’s ownership interest in such Subsidiaries is set forth in the
April Registration Statement.
(b) Outstanding
Stock. All issued and outstanding shares of capital stock of
the Company and each Subsidiary have been duly authorized and validly issued and
are fully paid and non-assessable.
(c) Authority;
Enforceability. This Agreement, the Note, the Incentive
Shares, the Security Agreement, Subsidiary Guaranty, the Escrow Agreement, and
any other agreements delivered together with this Agreement or in connection
herewith (collectively “Transaction Documents”) have
been duly authorized, executed and delivered by the Company and Subsidiaries (as
applicable) and are valid and binding agreements of the Company enforceable in
accordance with their terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights generally and to general principles
of equity. The Company has full corporate power and authority
necessary to enter into and deliver the Transaction Documents and to perform its
obligations thereunder.
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(d) Additional
Issuances. There are no outstanding agreements or
preemptive or similar rights affecting the Company's Ordinary Shares or equity
and no outstanding rights, warrants or options to acquire, or instruments
convertible into or exchangeable for, or agreements or understandings with
respect to the sale or issuance of any Ordinary Shares or equity of the Company
or Subsidiaries or other equity interest in the Company except as described on
Schedule
5(d). The Ordinary Shares of the Company on a fully diluted
basis outstanding as of the last Business Day preceding the Closing Date is set
forth on Schedule
5(d).
(e) Consents. No
consent, approval, authorization or order of any court, governmental agency or
body or arbitrator having jurisdiction over the Company, or any of its
Affiliates, the OTC Bulletin Board (the “Bulletin Board”) or the
Company's shareholders is required for the execution by the Company of the
Transaction Documents and compliance and performance by the Company of its
obligations under the Transaction Documents, including, without limitation, the
issuance and sale of the Securities, which consent has not been
obtained. The Transaction Documents and the Company’s performance of
its obligations thereunder has been unanimously approved by the Company’s Board
of Directors, except a director who may have abstained due to a conflict of
interest. Any such qualifications and filings will, in the case of
qualifications, be effective on the Closing and will, in the case of filings, be
made within the time prescribed by law. Under the Regulations on the
Acquisitions by Foreign Investors of Domestic Enterprises jointly promulgated by
the PRC Ministry of Commerce (“MOFCOM”), the China Securities
Regulatory Commission (“CSRC”), the State Owned Assets
Supervision and Management Commission, the General Administration of Taxation
and the State Administration of Foreign Exchange in effect on the Closing Date,
neither the Company nor any Subsidiary is required, as of the date of this
Agreement and as of the Closing, to obtain any approvals of the CSRC in
connection with the transactions contemplated by the Transaction Documents. No
further approval by, or registration or filing with State Administration of
Foreign Exchange (“SAFE”) other than typical SAFE
foreign exchange processing procedural registrations are expressly required
under the current effective and applicable governing regulations for matters
including but not limited to the payment by any Subsidiary of dividends to the
Company in foreign currency, such as U.S. Dollars. The Company has or will have
obtained or made all necessary consents, approvals, registrations and filings
with relevant governmental authorities in the PRC on or before the Closing Date
in accordance with the then effective and applicable PRC regulations to complete
the transactions contemplated in the Transaction Documents, except as would not
have a Material Adverse Effect.
(f) No Violation or
Conflict. Assuming the representations and warranties of the
Subscribers in Section 4 are true and correct, neither the issuance and sale of
the Securities nor the performance of the Company’s obligations under this
Agreement and all other agreements entered into by the Company relating thereto
by the Company will:
(i) violate,
conflict with, result in a breach of, or constitute a default (or an event which
with the giving of notice or the lapse of time or both would be reasonably
likely to constitute a default) under (A) the Articles of Association, charter
or bylaws of the Company, (B) to the Company's knowledge, any decree, judgment,
order, law, treaty, rule, regulation or determination applicable to the Company
of any court, governmental agency or body, or arbitrator having jurisdiction
over the Company or over the properties or assets of the Company or any of its
Affiliates, (C) the terms of any bond, debenture, note or any other evidence of
indebtedness, or any agreement, stock option or other similar plan, indenture,
lease, mortgage, deed of trust or other instrument to which the Company or any
of its Affiliates is a party, by which the Company or any of its Affiliates is
bound, or to which any of the properties of the Company or any of its Affiliates
is subject, or (D) the terms of any "lock-up" or similar provision of any
underwriting or similar agreement to which the Company, or any of its Affiliates
is a party except the violation, conflict, breach, or default of which would not
have a Material Adverse Effect; or
(ii) result
in the creation or imposition of any Lien (as defined herein), charge or
encumbrance upon the Securities or any of the assets of the Company or any of
its Affiliates except than Permitted Liens; or
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(iii) result
in the activation of any anti-dilution rights or a reset or repricing of any
debt or security instrument of any other creditor or equity holder of the
Company, nor result in the acceleration of the due date of any obligation of the
Company; or
(iv) result
in the triggering of any registration rights of any person or entity holding
securities of the Company or having the right to receive securities of the
Company.
(g) The
Securities. The Securities upon issuance:
(i) are,
or will be, free and clear of any security interests, liens, claims or other
encumbrances, subject to restrictions upon transfer under the 1933 Act and any
applicable state securities laws;
(ii) have
been, or will be, duly and validly authorized and on the date of issuance of the
Conversion Shares and the Incentive Shares, the Conversion Shares and Incentive
Shares will be duly and validly issued, fully paid and
non-assessable;
(iii) will
not have been issued or sold in violation of any preemptive or other similar
rights of the holders of any securities of the Company;
(iv) will
not subject the holders thereof to personal liability by reason of being such
holders provided Subscriber’s representations herein are true and accurate and
Subscribers take no actions or fail to take any actions required to be taken by
the Subscribers pursuant to this Agreement for their purchase of the Securities
to be in compliance with all applicable laws and regulations; and
(v) assuming
the representations and warranties of the Subscribers as set forth in Section 4
hereof are true and correct and Subscribers take no actions or fail to take any
actions required to be taken by the Subscribers pursuant to this Agreement for
their purchase of the Securities to be in compliance with all applicable laws
and regulations, will not result in a violation of Section 5 under the 1933
Act.
(h) Litigation. There
is no pending or, to the best knowledge of the Company, threatened action, suit,
proceeding or investigation before any court, governmental agency or body, or
arbitrator having jurisdiction over the Company, or any of its Affiliates that
would affect the execution by the Company or the performance by the Company of
its obligations under the Transaction Documents. Except as disclosed
in the Reports, there is no pending or, to the best knowledge of the Company,
basis for or threatened action, suit, proceeding or investigation before any
court, governmental agency or body, or arbitrator having jurisdiction over the
Company, or any of its Affiliates which litigation if adversely determined would
have a Material Adverse Effect.
(i) No Market
Manipulation. The Company and its Affiliates have not taken,
and will not take, directly or indirectly, any action designed to, or that might
reasonably be expected to, cause or result in stabilization or manipulation of
the price of the Ordinary Shares to facilitate the sale or resale of the
Securities or affect the price at which the Securities may be issued or
resold.
(j) Information Concerning
Company. The Reports and Other Written Information contain all
material information relating to the Company and its operations and financial
condition as of their respective dates which information is required to be
disclosed therein. Since the dates of the financial statements
included in the April Registration Statement except as modified in the Other
Written Information or in the Schedules hereto, there has been no Material
Adverse Effect on the Company's business, financial condition or affairs. The
Reports and Other Written Information do not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, taken as a whole, not misleading in
light of the circumstances when made.
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(k) Solvency. Based
on the financial condition of the Company as of the Closing Date after giving
effect to the receipt by the Company of the proceeds from the sale of the Notes
and Incentive Shares hereunder, (i) the Company’s fair saleable value of its
assets exceeds the amount that will be required to be paid on or in respect of
the Company’s existing debts and other liabilities (including known contingent
liabilities) as they mature; and (ii) the Company’s assets do not
constitute unreasonably small capital to carry on its business for the current
fiscal year as now conducted and as proposed to be conducted including its
capital needs taking into account the particular capital requirements of the
business conducted by the Company, and projected capital requirements and
capital availability thereof; and (iii) the current cash flow of the Company,
together with the proceeds the Company would receive, were it to liquidate all
of its assets, after taking into account all anticipated uses of the cash, would
be sufficient to pay all amounts on or in respect of its debt when such amounts
are required to be paid. The Company does not intend to incur debts
beyond its ability to pay such debts as they mature (taking into account the
timing and amounts of cash to be payable on or in respect of its
debt).
(l) Defaults. The
Company is not in violation of its Articles of Association or
bylaws. The Company is (i) not in default under or in violation of
any other material agreement or instrument to which it is a party or by which it
or any of its properties are bound or affected, which default or violation would
have a Material Adverse Effect, (ii) not in default with respect to any order of
any court, arbitrator or governmental body or subject to or party to any order
of any court or governmental authority arising out of any action, suit or
proceeding under any statute or other law respecting antitrust, monopoly,
restraint of trade, unfair competition or similar matters, or (iii) not in
violation of any statute, rule or regulation of any governmental or regulatory
authority which violation would have a Material Adverse Effect.
(m) No Integrated
Offering. Neither the Company, nor any of its
Affiliates, nor any person acting on its or their behalf, has directly or
indirectly made any offers or sales of any security or solicited any offers to
buy any security under circumstances that would cause the offer of the
Securities pursuant to this Agreement to be integrated with prior offerings by
the Company for purposes of the 1933 Act or any applicable stockholder approval
provisions. No prior offering will impair the exemptions relied upon
in this Offering or the Company’s ability to timely comply with its obligations
under the Transaction Documents. Neither the Company nor any of its
Affiliates will take any action or conduct any offering other than the
transactions contemplated hereby that will be integrated with the offer or
issuance of the Securities that would impair the exemptions relied upon in this
Offering or the Company’s ability to timely comply with its obligations under
the Transaction Documents.
(n) No General
Solicitation. Neither the Company, nor any of its Affiliates,
nor to its knowledge, any person acting on its or their behalf, has engaged in
any form of general solicitation or general advertising (within the meaning of
Regulation D under the 1933 Act) in connection with the offer or sale of the
Securities.
(o) No Undisclosed
Liabilities. The Company has no liabilities or obligations
which are material, individually or in the aggregate, other than those incurred
in the ordinary course of the Company businesses and which, individually or in
the aggregate, would reasonably be expected to have a Material Adverse Effect
that are not disclosed in the Reports.
(p) No Undisclosed Events or
Circumstances. No event or circumstance has occurred or exists
with respect to the Company or its businesses, properties, operations or
financial condition, that, under applicable law, rule or regulation, requires
public disclosure or announcement prior to the date hereof by the Company but
which has not been so publicly announced or disclosed in the
Reports.
9
(q) Capitalization. The
authorized and outstanding capital stock of the Company and Subsidiaries as of
the date of this Agreement and the Closing Date (not including the Securities)
are set forth on Schedule
5(d). Except as set forth on Schedule 5(d), there are no
options, warrants, or rights to subscribe to, securities, rights or obligations
convertible into or exchangeable for or giving any right to subscribe for any
shares of capital stock of the Company or any of its
Subsidiaries. The only officer, director, employee and consultant
stock option or stock incentive plan currently in effect or contemplated by the
Company is described on Schedule 5(d).
(r) Dilution. The
Company's executive officers and directors understand the nature of the
Securities being sold hereby and recognize that the issuance of the Securities
may have a potential dilutive effect on the equity holdings of other holders of
the Company’s equity or rights to receive equity of the Company. The
board of directors of the Company has concluded, in its good faith business
judgment that the issuance of the Securities is in the best interests of the
Company. The Company specifically acknowledges that its obligation to
issue the Conversion Shares upon conversion of the Notes, and the Incentive
Shares is binding upon the Company and enforceable regardless of the dilution
such issuance may have on the ownership interests of other shareholders of the
Company or parties entitled to receive equity of the Company.
(s) No Disagreements with
Accountants and Lawyers. There are no material disagreements
of any kind presently existing, or reasonably anticipated by the Company to
arise between the Company and the accountants and lawyers presently employed by
the Company, including but not limited to disputes or conflicts over payment
owed to such accountants and lawyers.
(t) Investment
Company. The Company is not an “investment company”
required to register under the Investment Company Act of 1940, as
amended.
(u) Foreign Corrupt
Practices. Neither the Company, nor to the knowledge of the
Company, any agent or other person acting on behalf of the Company, has (i)
directly or indirectly, used any funds for unlawful contributions, gifts,
entertainment or other unlawful expenses related to foreign or domestic
political activity, (ii) made any unlawful payment to foreign or domestic
government officials or employees or to any foreign or domestic political
parties or campaigns from corporate funds, (iii) failed to disclose fully any
contribution made by the Company (or made by any person acting on its behalf of
which the Company is aware) which is in violation of law, or (iv)
violated in any material respect any provision of the Foreign Corrupt Practices
Act of 1977, as amended.
(v) Reporting
Company. The Company is a publicly-held company subject to
reporting obligations pursuant to Section 15 of the Securities Exchange Act of
1934, as amended (the "1934
Act") and has a class of Ordinary Shares registered pursuant to Section
12(g) of the 1934 Act. Pursuant to the provisions of the 1934 Act,
the Company has timely filed all reports and other materials required to be
filed thereunder with the Commission during the preceding twelve
months.
(w) Listing. The
Company's Ordinary Shares are quoted on the Bulletin Board under the symbol
CCCHF. The Company has not received any oral or written notice that
the Ordinary Shares are not eligible nor will become ineligible for quotation on
the Bulletin Board nor that the Ordinary Shares does not meet all requirements
for the continuation of such quotation. The Company satisfies all the
requirements for the continued quotation of the Ordinary Shares on the Bulletin
Board.
(x) DTC
Status. The Company’s transfer agent is a participant
in, and the Ordinary Shares are eligible for transfer pursuant to, the
Depository Trust Company Automated Securities Transfer Program. The name,
address, telephone number, fax number, contact person and email address of the
Company transfer agent is set forth on Schedule 5(x)
hereto.
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(y) Company Predecessor and
Subsidiaries. The Company makes each of the representations
contained in Sections 5(a), (b), (c), (d), (e), (f), (h), (j), (l), (o), (p),
(q), (s), (t) and (u) of this Agreement, as the same may relate to each
Subsidiary of the Company. All representations made by or relating to
the Company of a historical or prospective nature and all undertakings described
in Sections 9(g) through 9(l) shall relate, apply and refer to the Company and
its predecessors. The Company represents that it owns the equity of
the Subsidiaries and rights to receive equity of the Subsidiaries, free and
clear of all liens, encumbrances and claims, except as set forth on Schedule 5(d). No
person or entity other than the Company has the right to receive any equity
interest in the Subsidiaries except as disclosed in the Reports.
(z) Seniority. As
of the Closing Date, no indebtedness or other claim against the Company is
senior to the Notes in right of payment, whether with respect to interest or
upon liquidation or dissolution, or otherwise, other than indebtedness secured
by purchase money security interests (which is senior only as to underlying
assets covered thereby) and capital lease obligations (which is senior only as
to the property covered thereby).
(AA) Correctness of
Representations. The Company represents that the foregoing
representations and warranties are true and correct as of the date hereof in all
material respects, and, unless the Company otherwise notifies the Subscribers
prior to the Closing Date, shall be true and correct in all material respects as
of the Closing Date; provided, that, if such representation or warranty is made
as of a different date in which case such representation or warranty shall be
true as of such date.
(BB) Survival. The
foregoing representations and warranties shall survive the Closing Date for a
period of four years.
6.
Regulation D
Offering/Legal Opinion. The offer and issuance of the
Securities to the Subscribers is being made pursuant to the exemption from the
registration provisions of the 1933 Act afforded by Section 4(2) of the 1933 Act
and/or Rule 506 of Regulation D promulgated thereunder. On the
Closing Date, the Company will provide one or more opinions reasonably
acceptable to the Subscribers from the Company's legal counsel opining on the
availability of an exemption from registration under the 1933 Act as it relates
to the offer and issuance of the Securities and other matters reasonably
requested by Subscribers. Forms of the legal opinions are annexed
hereto as Exhibit F1 and
Exhibit F2. The Company will provide, at the Company's
expense, such other legal opinions, if any, as are reasonably necessary in each
Subscriber’s opinion for the issuance and resale of the Ordinary
Shares issuable upon conversion of the Notes pursuant to an exemption from
registration.
7.1. Conversion of
Note.
(a) Upon
the conversion of a Note or part thereof, the Company shall, at its own cost and
expense, take all necessary action, including obtaining and delivering, an
opinion of counsel to assure that the Company's transfer agent shall issue stock
certificates in the name of Subscriber (or its permitted assignee or nominee) or
such other persons as designated by Subscriber and in such denominations to be
specified at conversion representing the number of Ordinary Shares issuable upon
such conversion. The Company warrants that no instructions other than
these instructions have been or will be given to the transfer agent of the
Company's Ordinary Shares and that the certificates representing such shares
shall contain no legend other than the legend set forth in Section
4(h). In the event that the Conversion Shares are sold in a manner
that complies with an exemption from registration, the Company will promptly
instruct its counsel to issue to the transfer agent an opinion permitting
removal of the legend (indefinitely, if pursuant to Rule 144(b)(1)(i) of the
1933 Act, or for ninety (90) days if pursuant to the other provisions of Rule
144 of the 1933 Act, provided that Subscriber delivers all reasonably requested
representations in support of such opinion).
11
(b) A
Subscriber will give notice of its decision to exercise its right to convert the
Note, interest, or part thereof by telecopying, or otherwise delivering a
completed Notice of Conversion (a form of which is annexed as Exhibit A to the Note) to the
Company via confirmed telecopier transmission or otherwise pursuant to Section
12(a) of this Agreement. Such Subscriber will not be required to
surrender the Note until the Note has been fully converted or
satisfied. Each date on which a Notice of Conversion is telecopied to
the Company in accordance with the provisions hereof by 5 PM Eastern Time (“ET”)
(or if received by the Company after 5 PM ET then the next business day) shall
be deemed a “Conversion
Date.”The Company will itself or cause the Company’s transfer
agent to transmit the Ordinary Shares certificates representing the Conversion
Shares issuable upon conversion of the Note to such Subscriber via express
courier for receipt by such Subscriber within three (3) business days after the
Notice of Conversion is given by the Subscriber (such third day being the "Delivery Date"). In
the event the Shares are electronically transferable and the Shares are freely
transferable under the 1933 Act, then delivery of the Shares must be made by
electronic transfer provided request for such electronic transfer has been made
by the Subscriber. A Note representing the balance of the Note
not so converted will be provided by the Company to such Subscriber if requested
by Subscriber, provided such Subscriber delivers the original Note to
the Company. In the event that a Subscriber elects not to surrender a Note for
reissuance upon partial payment or conversion of a Note, such Subscriber hereby
indemnifies the Company against any and all loss or damage attributable to a
third-party claim in an amount in excess of the actual amount then due under the
Note.
(c) The
Company understands that a delay in the delivery of the Conversion Shares in the
form required pursuant to Section 7.1 hereof, later than the Delivery Date could
result in economic loss to the Subscriber. As compensation to a
Subscriber for such loss, the Company agrees to pay (as liquidated damages and
not as a penalty) to such Subscriber for late issuance of Conversion Shares in
the form required pursuant to Section 7.1 hereof upon Conversion of the Note in
the amount of $100 per business day after the Delivery Date for each $10,000 of
Note principal and interest amount (and proportionately for other amounts) being
converted of the corresponding Conversion Shares which are not timely
delivered. The Company shall pay any payments incurred under this
Section in immediately available funds upon demand. Furthermore, in
addition to any other remedies which may be available to the Subscriber, in the
event that the Company fails for any reason to effect delivery of the Conversion
Shares within seven (7) business days after the Delivery Date, such Subscriber
will be entitled to revoke all or part of the relevant Notice of Conversion by
delivery of a notice to such effect to the Company whereupon the Company and
such Subscriber shall each be restored to their respective positions immediately
prior to the delivery of such notice, except that the liquidated damages
described above shall be payable through the date notice of revocation is given
to the Company.
7.2. Injunction Posting of
Bond. In the event a Subscriber shall elect to convert a Note
or part thereof, the Company may not refuse conversion for any reason, unless,
an injunction from a court, on notice, restraining and or enjoining conversion
of all or part of such Note shall have been sought and obtained by the Company,
and the Company has posted a surety bond for the benefit of such Subscriber in
the amount of 100% of the outstanding principal and interest of the Note, which
bond shall remain in effect until the completion of arbitration/litigation of
the dispute and the proceeds of which shall be payable to such Subscriber to the
extent Subscriber obtains judgment in Subscriber’s favor.
7.3. Buy-In. In
addition to any other rights available to a Subscriber, if the Company fails to
deliver to a Subscriber such Conversion Shares issuable upon conversion of a
Note by the Delivery Date and if after seven (7) business days after the
Delivery Date such Subscriber or a broker on such Subscriber’s behalf purchases
(in an open market transaction or otherwise) Ordinary Shares to deliver in
satisfaction of a sale by such Subscriber of the Ordinary Shares which such
Subscriber was entitled to receive upon such conversion (a "Buy-In"), then the Company
shall promptly pay in cash to such Subscriber (in addition to any remedies
available to or elected by the Subscriber) the amount by which (A) such
Subscriber's total purchase price (including brokerage commissions, if any) for
the Ordinary Shares so purchased exceeds (B) the aggregate principal and/or
interest amount of the Note for which such conversion was not timely honored
together with interest thereon at a rate of 15% per annum, accruing until such
amount and any accrued interest thereon is paid in full (which amount shall be
paid as liquidated damages and not as a penalty). For example, if a
Subscriber purchases Ordinary Shares having a total purchase price of $11,000 to
cover a Buy-In with respect to an attempted conversion of $10,000 of Note
principal and/or interest, the Company shall be required to pay such Subscriber
$1,000 plus interest. Such Subscriber shall provide the Company written notice
and evidence indicating the amounts payable to such Subscriber in respect of the
Buy-In.
12
7.4 Adjustments. The
Conversion Price upon conversion of the Notes and the amount of Incentive
Shares, if any, issuable pursuant to Section 2 above, shall be equitably
adjusted and as otherwise described in this Agreement and the
Notes.
7.5. Redemption. The
Notes shall not be redeemable or callable by the Company except as described in
the Notes.
7.6. (a) Anti-Dilution. Except
than in connection with the (i) full or partial consideration in connection with
a strategic merger, acquisition, consolidation or purchase of substantially all
of the securities or assets of corporation or other entity which holders of such
securities or debt are not at any time granted registration rights, (ii) the
Company’s issuance of securities in connection with strategic license agreements
and other partnering arrangements so long as such issuances are not for the
purpose of raising capital and which holders of such securities or debt are not
at any time granted registration rights, (iii) the Company’s issuance of
Ordinary Shares or the issuances or grants of options to purchase Ordinary
Shares to employees, directors, and consultants, pursuant to plans or
arrangements described in the April Registration Statement, (iv) securities
issuable upon the exercise or exchange of or conversion of any securities
exercisable or exchangeable for or convertible into Ordinary Shares issued and
outstanding on the date of this Agreement and described in the April
Registration Statement, and (v) as a result of the conversion of
Notes (collectively the foregoing (i) through (v) are “Excepted Issuances”), if at
any time the Notes are outstanding or Incentive Shares are issuable,
the Company shall agree to or issue (the “Lower Price Issuance”) any
Ordinary Shares or securities convertible into or exercisable for Ordinary
Shares with respect to the Incentive Shares, or securities which are convertible
into or exercisable for Ordinary Shares with respect to the Notes (or modify any
of the foregoing convertible or exercisable securities which may be outstanding)
to any person or entity at a price per share or conversion or exercise price per
share which shall be less than the Conversion Price in effect at such time with
respect to the Notes or if less than the Attributed Price as defined in Section
11 (c) with respect to the Incentive Shares, without the consent of the
Subscribers, then the Conversion Price shall automatically be reduced to such
other lower price. Upon a Lower Price Issuance, the amount of
Incentive Shares issuable pursuant to Section 2 above, after the Closing Date,
shall be adjusted to an amount equal to the amount of Incentive Shares issuable
prior to the Lower Price Issuance multiplied by the Attributed Price, and then
divided by the price of the Lower Price Issuance. Thereafter, the
Attributed Price shall be such lower price until further
adjustment. Until three years after the Closing Date, a similar
adjustment shall be made to the amount of Incentive Shares issuable to the
Subscribers and to the Attributed Price. For purposes of the
issuance and adjustment described in this paragraph, the issuance of any
security of the Company carrying the right to convert such security into shares
of Ordinary Shares or of any warrant, right or option to purchase Ordinary
Shares shall result in the reduction of the Conversion Price and recalculation
of issuable Incentive Shares as described above upon the sooner of the agreement
to issue or the actual issuance of such convertible security, warrant, right or
option and again at any time upon any subsequent issuances of Ordinary Shares
upon exercise of such conversion or purchase rights if such issuance is at a
price lower than the Conversion Price with respect to the Notes or lower than
the Attributed Price with respect to the Incentive Shares, in effect upon such
issuance. The rights of each Subscriber set forth in this Section 7.6
are in addition to any other rights the Subscriber has pursuant to this
Agreement, the Note, any Transaction Document, and any other agreement referred
to or entered into in connection herewith or to which such Subscriber and
Company are parties.
13
(b) Maximum Exercise of
Rights. In the event the exercise of the rights
described in Section 7.8(a) would or could result in the issuance of an amount
of Ordinary Shares that would exceed the maximum amount that may be issued to a
Subscriber calculated in the manner described in Section 2.4 of the Note, then
the issuance of such additional Ordinary Shares to such Subscriber will be
deferred in whole or in part until such time as such Subscriber is able to
beneficially own such Incentive Shares without exceeding the applicable maximum
amount set forth calculated in the manner described in Section 2.4 of the
Note. The determination of when such Ordinary Shares may be issued
shall be made by each Subscriber as to only such Subscriber.
8. Broker/Due Diligence/Legal
Fees.
(a) Broker. The
Company on the one hand, and each Subscriber (for himself only) on the other
hand, agree to indemnify the other against and hold the other harmless from any
and all liabilities to any persons other than Chardan Capital Markets, LLC and
Lazard Frères & Co. LLC (collectively the “Broker”) claiming brokerage
commissions, finder’s fees or due diligence fees on account of services
purported to have been rendered on behalf of the indemnifying party in
connection with this Agreement or the transactions contemplated hereby or in
connection with any investment in the Company at any time, whether or not such
investment was consummated and arising out of such party’s
actions. The Company represents that there are no parties entitled to
receive fees, commissions, due diligence fees, or similar payments in connection
with the Offering except as described on Schedule 8(a). The
Company is solely responsible for payment of the fees described on Schedule 8(a).
(b) Due Diligence
Fee. Platinum Partners Value Arbitrage Fund L.P. (“Lead Investor”) and the other
entity identified on Schedule
8(b) will be paid the due diligence fee (“Due Diligence Fee”) described
on Schedule
8(b).
(c) Collateral Agent
Fee. The Company will pay the Collateral Agent a fee of
$7,500 out of the funds held pursuant to the Escrow Agreement.
(d) Subscriber’s Legal
Fees. The Company shall pay to Grushko & Mittman,
P.C., a fee of one half of one percent (.005) of the aggregate cash Purchase
Price set forth on the signature pages hereto (“Subscriber’s Legal Fees”) as reimbursement
for services rendered to the Subscribers in connection with this Agreement (the
“Offering”) and acting
as escrow agent pursuant to the Escrow Agreement. The Subscriber’s
Legal Fees and expenses (to the extent known as of the Closing) will be payable
out of funds held pursuant to the Escrow Agreement. Grushko &
Mittman, P.C. will be reimbursed at Closing for all lien searches, filing fees,
and printing and shipping costs for the closing statements to be delivered to
Subscribers.
9. Covenants of the
Company. The Company covenants and agrees with the Subscribers
as follows:
(a) Stop
Orders. The Company will advise the Subscribers, within
twenty-four hours after it receives notice of issuance by the Commission, any
state securities commission or any other regulatory authority of any stop order
or of any order preventing or suspending any offering of any securities of the
Company, or of the suspension of the qualification of the Ordinary Shares for
offering or sale in any jurisdiction, or the initiation of any proceeding for
any such purpose. The Company will not issue any stop transfer order
or other order impeding the sale, resale or delivery of any of the Securities,
except as may be required by any applicable federal or state securities laws and
unless contemporaneous notice of such instruction is given to the
Subscriber.
14
(b) Listing/Quotation. The
Company shall promptly secure the quotation or listing of the Conversion Shares
and Incentive Shares upon each national securities exchange, or automated
quotation system upon which they are or become eligible for quotation or listing
(subject to official notice of issuance) and shall maintain same so long as any
Notes are outstanding. The Company will maintain the quotation or
listing of its Ordinary Shares on the American Stock Exchange, Nasdaq Capital
Market, Nasdaq Global Market, Nasdaq Global Select Market, Bulletin Board, or
New York Stock Exchange (whichever of the foregoing is at the time the principal
trading exchange or market for the Ordinary Shares (the “Principal Market”), and will
comply in all respects with the Company's reporting, filing and other
obligations under the bylaws or rules of the Principal Market, as applicable.
The Company will provide the Subscribers copies of all notices it receives
notifying the Company of the threatened and actual delisting of the Ordinary
Shares from any Principal Market. As of the date of this Agreement
and the Closing Date, the Bulletin Board is and will be the Principal
Market.
(c) Market
Regulations. If required, the Company shall notify the
Commission, the Principal Market and applicable state authorities, in accordance
with their requirements, of the transactions contemplated by this Agreement, and
shall take all other necessary action and proceedings as may be required and
permitted by applicable law, rule and regulation, for the legal and valid
issuance of the Securities to the Subscribers and promptly provide copies
thereof to the Subscribers.
(d) Filing
Requirements. From the date of this Agreement and until the
later to occur of (i) four (4) years after the Closing Date, or (ii) the Notes
are no longer outstanding (the date of such later occurrence being the “End Date”), the Company will
(A) cause the Ordinary Shares to continue to be registered under Section 12(b)
or 12(g) of the 1934 Act, (B) comply in all respects with its reporting and
filing obligations under the 1934 Act, and (C) voluntarily comply with all
reporting requirements that are applicable to an issuer with a class of stock
registered pursuant to Section 12(g) of the 1934 Act, if the Company is not
subject to such reporting requirements. The Company will use its best
efforts not to take any action or file any document (whether or not permitted by
the 1933 Act or the 1934 Act or the rules thereunder) to terminate or suspend
its reporting and filing obligations under said acts until the End
Date. Until the End Date, the Company will continue the listing or
quotation of the Ordinary Shares on a Principal Market and will comply in all
respects with the Company’s reporting, filing and other obligations under the
bylaws or rules of the Principal Market. The Company agrees to timely
file a Form D with respect to the Securities if required under Regulation D and
to provide a copy thereof to each Subscriber promptly after such
filing.
(e) Use of
Proceeds. The proceeds of the Offering will be employed
by the Company for general corporate purposes.
(f) Reservation. Prior
to the Closing, the Company undertakes to reserve, pro rata, on behalf of
each holder of a Note, from its authorized but unissued Ordinary Shares, a
number of Ordinary Shares equal to 150% of the amount of Ordinary Shares
necessary to allow each holder of a Note to be able to convert all such
outstanding Notes and reserve the maximum amount of Incentive Shares issuable
pursuant to Section 2 above. Failure to have sufficient shares
reserved pursuant to this Section 9(f) at any time shall be a material default
of the Company’s obligations under this Agreement and an Event of Default under
the Note.
(g) DTC
Program. Until the End Date, the Company will employ as the
transfer agent for its Ordinary Shares a participant in the Depository Trust
Company Automated Securities Transfer Program.
(h) Taxes. From
the date of this Agreement and until the End Date, the Company will promptly pay
and discharge, or cause to be paid and discharged, when due and payable, all
lawful taxes, assessments and governmental charges or levies imposed upon the
income, profits, property or business of the Company; provided, however, that
any such tax, assessment, charge or levy need not be paid if the validity
thereof shall currently be contested in good faith by appropriate proceedings
and if the Company shall have set aside on its books adequate reserves with
respect thereto, and provided, further, that the Company will pay all such
taxes, assessments, charges or levies forthwith upon the commencement of
proceedings to foreclose any lien which may have attached as security
therefore.
15
(i) Insurance. From
the date of this Agreement and until the End Date, the Company will keep its
assets which are of an insurable character insured by financially sound and
reputable insurers against loss or damage by fire, explosion and other risks
customarily insured against by companies in the Company’s line of business and
location, in amounts sufficient to prevent the Company from becoming a
co-insurer and not in any event less than one hundred percent (100%) of the
insurable value of the property insured less reasonable deductible amounts; and
the Company will maintain, with financially sound and reputable insurers,
insurance against other hazards and risks and liability to persons and property
to the extent and in the manner customary for companies in similar businesses
similarly situated and located and to the extent available on commercially
reasonable terms.
(j) Books and
Records. From the date of this Agreement and until the End
Date, the Company will keep true records and books of account in which full,
true and correct entries will be made of all dealings or transactions in
relation to its business and affairs in accordance with generally accepted
accounting principles applied on a consistent basis.
(k) Governmental
Authorities. From the date of this Agreement and until
the End Date, the Company shall duly observe and conform in all material
respects to all valid requirements of governmental authorities relating to the
conduct of its business or to its properties or assets.
(l) Intellectual
Property. From the date of this Agreement and until the End
Date, the Company shall maintain in full force and effect its corporate
existence, rights and franchises and all licenses and other rights to use
intellectual property owned or possessed by it and reasonably deemed to be
necessary to the conduct of its business, unless it is sold for
value.
(m) Properties. From
the date of this Agreement and until the End Date, the Company will keep its
properties in good repair, working order and condition, reasonable wear and tear
excepted, and from time to time make all necessary and proper repairs, renewals,
replacements, additions and improvements thereto; and the Company will at all
times comply with each provision of all leases to which it is a party or under
which it occupies property if the breach of such provision could reasonably be
expected to have a Material Adverse Effect.
(n) Confidentiality/Public
Announcement. From the date of this Agreement and until the
End Date, the Company agrees that except in connection with a Form 8-K or a
registration statement or statements regarding the Subscribers’ securities or in
correspondence with the SEC regarding same, it will not publicly or privately
disclose the identity of the Subscribers unless expressly agreed to in writing
by a Subscriber or only to the extent required by law and then only upon five
days prior notice to Subscriber. In any event and subject to the
foregoing, the Company undertakes to file a Form 8-K describing the Offering not
later than the fourth business day after the Closing Date. Prior to
filing, such Form 8-K will be provided to Subscribers for their review and
approval, acting reasonably. The Company will specifically disclose
in the Form 8-K the amount of Ordinary Shares outstanding immediately after the
Closing. In
the event that the Company believes that a
notice or communication to a Subscriber contains material, nonpublic
information, relating to the Company or Subsidiaries, the Company shall so
indicate to such Subscriber prior to delivery of such notice or
information. Subscriber will be granted sufficient time to notify the
Company that Subscriber elects not to receive such
information. In such case, the Company will not deliver such
information to Subscriber. In the absence of any such
indication, such Subscriber shall be allowed to presume that all matters
relating to such notice and information do not constitute material,
nonpublic information relating to the Company or its
Subsidiaries.
16
(o) Non-Public
Information. The Company covenants and agrees that except for
the Reports, Other Written Information and schedules and exhibits to this
Agreement and any other disclosure required under the Transaction Documents,
neither it nor any other person acting on its behalf has nor will at any time
provide any Subscriber or its agents or counsel with any information that the
Company believes constitutes material non-public information, unless prior
thereto such Subscriber shall have agreed in writing to accept such
information. The Company understands and confirms that each
Subscriber shall be relying on the foregoing representations in effecting
transactions in securities of the Company.
(p) Negative
Covenants. So long as a Note is outstanding, without the
consent of the Subscribers, which consent will not be unreasonably withheld or
delayed, and except as set forth on Schedule 9(p), the Company
will not and will not permit any of its Subsidiaries to directly or
indirectly:
(i) create,
incur, assume or suffer to exist any pledge, hypothecation, assignment, deposit
arrangement, lien, charge, claim, security interest, security title, mortgage,
security deed or deed of trust, easement or encumbrance, or preference, priority
or other security agreement or preferential arrangement of any kind or nature
whatsoever (including any lease or title retention agreement, any financing
lease having substantially the same economic effect as any of the foregoing, and
the filing of, or agreement to give, any financing statement perfecting a
security interest under the Uniform Commercial Code or comparable law of any
jurisdiction) (each, a “Lien”) upon any of its
property, whether now owned or hereafter acquired except for: (A)
Liens in connection with the Excepted Issuances, and (B) (a) Liens imposed by
law for taxes that are not yet due or are being contested in good faith and for
which adequate reserves have been established in accordance with generally
accepted accounting principles; (b) carriers’, warehousemen’s, mechanics’,
material men’s, repairmen’s and other like Liens imposed by law, arising in the
ordinary course of business and securing obligations that are not overdue by
more than 30 days or that are being contested in good faith and by appropriate
proceedings; (c) pledges and deposits made in the ordinary course of business in
compliance with workers’ compensation, unemployment insurance and other social
security laws or regulations; (d) deposits to secure the performance of bids,
trade contracts, leases, statutory obligations, surety and appeal bonds,
performance bonds and other obligations of a like nature, in each case in the
ordinary course of business; (e) Liens created with respect to the financing of
the purchase of new property in the ordinary course of the Company’s business up
to the amount of the purchase price of such property; and (f) easements, zoning
restrictions, rights-of-way and similar encumbrances on real property imposed by
law or arising in the ordinary course of business that do not secure any
monetary obligations and do not materially detract from the value of the
affected property (each of (a) through (f), a “Permitted Lien”);
(ii) amend
its Articles of Association, bylaws or its charter documents so as to materially
and adversely affect any rights of the Subscriber;
(iii) repay,
repurchase or offer to repay, repurchase or otherwise acquire or make any
dividend or distribution in respect of any of its Ordinary Shares, preferred
stock, or other equity securities other than to the extent permitted or required
under the Transaction Documents.
(iv) except
as described in the Reports, engage in any transactions with any officer,
director, employee or any Affiliate of the Company, including any contract,
agreement or other arrangement providing for the furnishing of services to or
by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any officer, director or such employee or, to the
knowledge of the Company, any entity in which any officer, director, or any such
employee has a substantial interest or is an officer, director, trustee or
partner, in each case in excess of $100,000 other than (i) for payment of
salary, or consulting fees for services rendered, (ii) reimbursement for
expenses incurred on behalf of the Company, and (iii) for other employee
benefits, including stock option agreements under any stock option plan of the
Company; or
17
(v) prepay
or redeem any financing related debt or past due obligations outstanding as of
the Closing Date other than the indebtedness owed to the Subscribers under the
Prior Notes in relative proportion to their initial holdings of Prior
Notes.
The
Company agrees to provide Subscribers not less than ten (10) days notice prior
to becoming obligated to or effectuating a Permitted Lien or Excepted
Issuance.
(q) Offering
Restrictions. For so long as the Notes are outstanding,
the Company will not enter into any Equity Line of Credit or similar agreement,
nor issue nor agree to issue any floating or Variable Priced Equity Linked
Instruments nor any of the foregoing or equity with price reset rights
(collectively, the “Variable
Rate Restrictions”). For purposes hereof, “Equity Line of Credit” shall
include any transaction involving a written agreement between the Company and an
investor or underwriter whereby the Company has the right to “put” its
securities to the investor or underwriter over an agreed period of time and at
an agreed price or price formula, and “Variable Priced Equity Linked
Instruments” shall include: (A) any debt or equity securities which are
convertible into, exercisable or exchangeable for, or carry the right to receive
Ordinary Shares either (1) at any conversion, exercise or exchange rate or other
price that is based upon and/or varies with the trading prices of or quotations
for Ordinary Shares at any time after the initial issuance of such debt or
equity security, or (2) with a fixed conversion, exercise or exchange price that
is subject to being reset at some future date at any time after the initial
issuance of such debt or equity security due to a change in the market price of
the Company’s Ordinary Shares since date of initial issuance, and (B) any
amortizing convertible security which amortizes prior to its maturity date,
where the Company is required or has the option to (or any investor in such
transaction has the option to require the Company to) make such amortization
payments in Ordinary Shares which are valued at a price that is based upon
and/or varies with the trading prices of or quotations for Ordinary Shares at
any time after the initial issuance of such debt or equity security (whether or
not such payments in shares are subject to certain equity
conditions).
(r) Notices. For
so long as the Subscribers hold any Securities, the Company will maintain a
United States fax number for notice purposes under the Transaction
Documents.
10.1 Covenants of the Company
Regarding Indemnification.
(a) The
Company agrees to indemnify, hold harmless, reimburse and defend the
Subscribers, the Subscribers' officers, directors, agents, Affiliates, members,
managers, control persons, and principal shareholders, against any claim, cost,
expense, liability, obligation, loss or damage (including reasonable legal fees)
of any nature, incurred by or imposed upon the Subscriber or any such person
which results, arises out of or is based upon (i) any material misrepresentation
by the Company or breach of any representation or warranty by the Company in
this Agreement or in any Exhibits or Schedules attached hereto, or any other
Transaction Document; or (ii) after any applicable notice and/or cure periods,
any breach or default in performance by the Company of any covenant or
undertaking to be performed by the Company hereunder, or any other agreement
entered into by the Company and Subscriber relating hereto.
18
10.2 Covenants
of Subscribers
(a) Short Sales After the Date
Hereof. Each Subscriber severally and not jointly with the
other Subscribers covenants that neither it nor any affiliates acting on its
behalf or pursuant to any understanding with it will execute any Short Sales
during the period after the Discussion Time and ending at the time that the
transactions contemplated by this Agreement are first publicly
announced. Each Subscriber, severally and not jointly with the other
Subscribers, covenants that until such time as the transactions contemplated by
this Agreement are publicly disclosed by the Company, such Subscriber will
maintain, the confidentiality of all disclosures made to it in connection with
this transaction (including the existence and terms of this
transaction). Each Subscriber understands and acknowledges, severally
and not jointly with any other Subscriber, that the SEC currently takes the
position that coverage of short sales of shares of the Common Stock “against the
box” prior to the Effective Date of the Registration Statement with respect to
the Securities is a violation of Section 5 of the 1933 Act, as set forth in Item
65, Section 5 under Section A, of the Manual of Publicly Available Telephone
Interpretations, dated July 1997, compiled by the Office of Chief Counsel,
Division of Corporation Finance. Notwithstanding the foregoing, in
the case of a Subscriber that is a multi-managed investment vehicle whereby
separate portfolio managers manage separate portions of such Subscriber’s assets
and the portfolio manager have no direct knowledge of the investment decisions
made by the portfolio managers managing other portions of such Subscriber’s
assets, the covenant set forth above shall only apply with respect to the
portion of assets managed by the portfolio manager that made the investment
decision to purchase the Securities covered by the
Agreement. Upon delivery by the Company to Subscriber
after the Closing Date of any notice or information, in writing, electronically
or otherwise, and while a Note or Incentive Shares are owned by Subscriber, are
held by Subscriber, unless the Company has in good faith determined
that the matters relating to such notice do not
constitute material, nonpublic information relating to
the Company or Subsidiaries, the Company shall within one
business day after any such delivery publicly disclose such
material, nonpublic information on a
Report on Form 8-K or otherwise. In the event that
the Company believes that a notice or communication contains
material, nonpublic information, relating to the Company or Subsidiaries, the
Company shall so indicate to the Subscriber contemporaneously with delivery of
such notice or information. In the absence of any such
indication, the Subscriber shall be allowed to presume that all matters
relating to such notice and information do not constitute material,
nonpublic information relating to the Company or
Subsidiaries.
11.1 Delivery of Unlegended
Shares.
(a) Within
three (3) business (such third business day being the “Unlegended Shares Delivery
Date”) after the business day on which the Company has received (i) a
notice that Conversion Shares or Incentive Shares held by a Subscriber have been
sold pursuant to Rule 144 under the 1933 Act, (ii) a representation that the
requirements of Rule 144, as applicable and if required, have been satisfied,
and (iii) the original share certificates representing the Conversion Shares or
Incentive Shares that have been sold, and (iv) customary representation letters
of the Subscriber and, if required, Subscriber’s broker regarding compliance
with the requirements of Rule 144, the Company at its expense, (y) shall
deliver, and shall cause legal counsel selected by the Company to deliver to its
transfer agent (with copies to Subscriber) an appropriate instruction and
opinion of such counsel, directing the delivery of Ordinary Shares without any
legends including the legend set forth in Section 4(i) above (the “Unlegended Shares”); and (z)
cause the transmission of the certificates representing the Unlegended Shares
together with a legended certificate representing the balance of the submitted
shares certificate, if any, to the Subscriber at the address specified in the
notice of sale, via express courier, by electronic transfer or otherwise on or
before the Unlegended Shares Delivery Date.
(b) In
lieu of delivering physical certificates representing the Unlegended Shares,
upon request of a Subscriber, so long as the certificates therefor do not bear a
legend and the Subscriber is not obligated to return such certificate for the
placement of a legend thereon, the Company shall cause its transfer agent to
electronically transmit the Unlegended Shares by crediting the account of
Subscriber’s prime broker with the Depository Trust Company through its Deposit
Withdrawal Agent Commission system, if such transfer agent participates in such
DWAC system. Such delivery must be made on or before the Unlegended
Shares Delivery Date.
19
(c) The
Company understands that a delay in the delivery of the Unlegended Shares
pursuant to Section 11.1 hereof later than the Unlegended Shares Delivery Date
could result in economic loss to a Subscriber. As compensation to a
Subscriber for such loss, the Company agrees to pay late payment fees (as
liquidated damages and not as a penalty) to the Subscriber for late delivery of
Unlegended Shares in the amount of $100 per business day after the Delivery Date
for each $10,000 of purchase price of the Unlegended Shares subject to the
delivery default. If during any 360 day period, the Company fails to
deliver Unlegended Shares as required by this Section 11.1 for an aggregate of
thirty (30) days, then each Subscriber or assignee holding Conversion Shares or
Incentive Shares subject to such default may, at its option, require the Company
to redeem all or any portion of the Conversion Shares or Incentive Shares
subject to such default at a price per share equal to the greater of (i) 120%,
or (ii) a fraction in which the numerator is the highest closing price of the
Ordinary Shares during the aforedescribed thirty day period and the denominator
of which is the lowest conversion price during such thirty day period,
multiplied by the Conversion Price of such Conversion Shares and/or an
attributed price per Incentive Share equal to the closing price of the Ordinary
Shares on the Principal Market reported by Bloomberg L.P. for the trading day
immediately preceding the Closing Date (“Attributed Price”) (“Unlegended Redemption
Amount”). The Company shall pay any payments incurred under
this Section in immediately available funds upon demand.
(d)
In addition to any other rights available to a Subscriber, if the Company fails
to deliver to a Subscriber Unlegended Shares as required pursuant to this
Agreement, within seven (7) business days after the Unlegended Shares Delivery
Date and the Subscriber or a broker on the Subscriber’s behalf, purchases (in an
open market transaction or otherwise) Ordinary Shares to deliver in satisfaction
of a sale by such Subscriber of the Unlegended Shares which the Subscriber was
entitled to receive from the Company (a "Buy-In"), then the Company
shall promptly pay in cash to the Subscriber (in addition to any remedies
available to or elected by the Subscriber) the amount by which (A) the
Subscriber's total purchase price (including brokerage commissions, if any) for
the Ordinary Shares so purchased exceeds (B) the aggregate Conversion Price and
Attributed Price of the Conversion Shares and/or Incentive Shares delivered to
the Company for reissuance as Unlegended Shares together with interest thereon
at a rate of 15% per annum accruing until such amount and any accrued interest
thereon is paid in full (which amount shall be paid as liquidated damages and
not as a penalty). For example, if a Subscriber purchases Ordinary
Shares having a total purchase price of $11,000 to cover a Buy-In with respect
to $10,000 of Conversion Price of Ordinary Shares or Attributed Price of
Incentive Shares delivered to the Company for reissuance as Unlegended Shares,
the Company shall be required to pay the Subscriber $1,000, plus interest. The
Subscriber shall provide the Company written notice indicating the amounts
payable to the Subscriber in respect of the Buy-In.
(e) In
the event a Subscriber shall request delivery of Unlegended Shares as described
in Section 11.1 and the Company is required to deliver such Unlegended Shares
pursuant to Section 11.1, the Company may not refuse to deliver Unlegended
Shares for any reason, unless an injunction or temporary restraining order from
a court, on notice, restraining and or enjoining delivery of such Unlegended
Shares shall have been sought and obtained by the Company, and the Company has
posted a surety bond for the benefit of such Subscriber in the amount of 100% of
the amount of the aggregate Conversion Price of the Ordinary
Shares and Attributed Price of the Incentive Shares which are subject
to the injunction or temporary restraining order, which bond shall remain in
effect until the completion of arbitration/litigation of the dispute and the
proceeds of which shall be payable to such Subscriber to the extent Subscriber
obtains judgment in Subscriber’s favor.
11.2. In
the event any Conversion Shares after six months after the Closing Date or
Incentive Shares after six months after the required delivery date of such
Incentive Shares, without any restrictive legend or if such sales are permitted
but subject to volume limitations or further restrictions on resale as a result
of the unavailability to Subscriber of Rule 144(b)(1) under the 1933 Act or any
successor rule (a “144
Default”), for any reason except for Subscriber’s status as an Affiliate
or “control person” of the Company or change in current applicable securities
laws, then the Company shall pay such Subscriber as liquidated damages and not
as a penalty an amount equal to two percent (2%) for each thirty (30) days (or
such lesser pro-rata amount for any period less than thirty (30) days)
thereafter of the aggregate Conversion Price of the Conversion Shares and
aggregate Attributed Price of the Incentive Shares owned by the Subscriber
during the pendency of the 144 Default.
20
12. Miscellaneous.
(a) Notices. All
notices, demands, requests, consents, approvals, and other communications
required or permitted hereunder shall be in writing and, unless otherwise
specified herein, shall be (a) personally served, (b) deposited in the mail,
registered or certified, return receipt requested, postage prepaid, (c)
delivered by a reputable overnight courier service with charges prepaid, or (d)
transmitted by hand delivery, telegram, or facsimile, addressed as set forth
below or to such other address as such party shall have specified most recently
by written notice. Any notice or other communication required or
permitted to be given hereunder shall be deemed effective upon hand delivery or
delivery by facsimile, with accurate confirmation generated by the transmitting
facsimile machine, at the address or number designated below (if delivered on a
business day during normal business hours), or the first business day following
such delivery (if delivered other than on a business day during normal business
hours), (ii) on the first business day following the date deposited with an
overnight courier service with charges prepaid, or (iii) on the fifth business
day following the date of mailing pursuant to subpart (b) above, or upon actual
receipt of such mailing, whichever shall first occur. The addresses
for such communications shall be: (i) if to the Company, to: China Cablecom
Holdings, Ltd., Unit 3309-3310, 1 Grand Gateway, 1 Hongqiao, Shanghai,
200030, PRC, Attn: Colin Sung, President and CFO, fax number: (917)
591-8839, with a copy by fax only to: Loeb & Loeb LLP, 345 Park Avenue,
New York, NY10154, Attn: Mitchell S. Nussbaum, Esq., fax number: (212)
407-4990, and (ii) if to the Subscriber, to: the one or more addresses and fax
numbers indicated on the signature pages hereto, with an additional copy by fax
only to: Grushko & Mittman, P.C., 551 Fifth Avenue, Suite 1601, New York,
New York10176, fax number: (212) 697-3575.
(b) Entire Agreement;
Assignment. This Agreement and other documents delivered in
connection herewith represent the entire agreement between the parties hereto
with respect to the subject matter hereof and may be amended only by a writing
executed by both parties. Neither the Company nor the Subscribers
have relied on any representations not contained or referred to in this
Agreement and the documents delivered herewith. No right or
obligation of the Company shall be assigned without prior notice to and the
written consent of the Subscribers.
(c) Counterparts/Execution. This
Agreement may be executed in any number of counterparts and by the different
signatories hereto on separate counterparts, each of which, when so executed,
shall be deemed an original, but all such counterparts shall constitute but one
and the same instrument. This Agreement may be executed by facsimile
signature and delivered by facsimile transmission.
(d) Law Governing this
Agreement. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York without regard to conflicts
of laws principals that would result in the application of the substantive law
of another jurisdiction. Any action brought by either party against the other
concerning the transactions contemplated by this Agreement shall be brought only
in the state courts of New York or in the federal courts located in the state
and county of New York. The parties to this Agreement hereby
irrevocably waive any objection to jurisdiction and venue of any action
instituted hereunder and shall not assert any defense based on lack of
jurisdiction or venue or based upon forum non
conveniens. The parties executing this Agreement
and other agreements referred to herein or delivered in connection herewith on
behalf of the Company agree to submit to the in personam jurisdiction of such
courts and hereby irrevocably waive trial by jury. The
prevailing party shall be entitled to recover from the other party its
reasonable attorney's fees and costs. In the event that any provision
of this Agreement or any other agreement delivered in connection herewith is
invalid or unenforceable under any applicable statute or rule of law, then such
provision shall be deemed inoperative to the extent that it may conflict
therewith and shall be deemed modified to conform with such statute or rule of
law. Any such provision which may prove invalid or unenforceable
under any law shall not affect the validity or enforceability of any other
provision of any agreement. Each party hereby irrevocably waives
personal service of process and consents to process being served in any suit,
action or proceeding in connection with this Agreement or any other Transaction
Document by mailing a copy thereof via registered or certified mail or overnight
delivery (with evidence of delivery) to such party at the address in effect for
notices to it under this Agreement and agrees that such service shall constitute
good and sufficient service of process and notice thereof. Nothing
contained herein shall be deemed to limit in any way any right to serve process
in any other manner permitted by law.
21
(e) Specific Enforcement,
Consent to Jurisdiction. The Company and Subscriber
acknowledge and agree that irreparable damage would occur in the event that any
of the provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed
that the parties shall be entitled to seek an injunction or injunctions to
prevent or cure breaches of the provisions of this Agreement and to enforce
specifically the terms and provisions hereof, this being in addition to any
other remedy to which any of them may be entitled by law or
equity. Subject to Section 12(d) hereof, each party hereby
irrevocably waives, and agrees not to assert in any such suit, action or
proceeding, any claim that it is not personally subject to the jurisdiction in
New York of such court, that the suit, action or proceeding is brought in an
inconvenient forum or that the venue of the suit, action or proceeding is
improper. Nothing in this Section shall affect or limit any right to
serve process in any other manner permitted by law.
(f) Independent Nature of
Subscribers. The Company acknowledges that the
obligations of each Subscriber under the Transaction Documents are several and
not joint with the obligations of any other Subscriber, and no Subscriber shall
be responsible in any way for the performance of the obligations of any other
Subscriber under the Transaction Documents. The Company acknowledges that each
Subscriber has represented that the decision of each Subscriber to purchase
Securities has been made by such Subscriber independently of any other
Subscriber and independently of any information, materials, statements or
opinions as to the business, affairs, operations, assets, properties,
liabilities, results of operations, condition (financial or otherwise) or
prospects of the Company which may have been made or given by any other
Subscriber or by any agent or employee of any other Subscriber, and no
Subscriber or any of its agents or employees shall have any liability to any
Subscriber (or any other person) relating to or arising from any such
information, materials, statements or opinions. The Company acknowledges
that nothing contained in any Transaction Document, and no action taken by any
Subscriber pursuant hereto or thereto shall be deemed to constitute the
Subscribers as a partnership, an association, a joint venture or any other kind
of entity, or create a presumption that the Subscribers are in any way acting in
concert or as a group with respect to such obligations or the transactions
contemplated by the Transaction Documents. The Company acknowledges that
each Subscriber shall be entitled to independently protect and enforce its
rights, including without limitation, the rights arising out
of the Transaction Documents, and it shall not be necessary for any
other Subscriber to be joined as an additional party in any proceeding for such
purpose. The Company acknowledges that it has elected to provide all
Subscribers with the same terms and Transaction Documents for the convenience of
the Company and not because Company was required or requested to do so by the
Subscribers. The Company acknowledges that such procedure with respect to
the Transaction Documents in no way creates a presumption that the Subscribers
are in any way acting in concert or as a group with respect to the Transaction
Documents or the transactions contemplated thereby.
(g) Damages. In
the event the Subscriber is entitled to receive any liquidated damages pursuant
to the Transactions, the Subscriber may elect to receive the greater of actual
damages or such liquidated damages.
(h) Consent. As
used in the Agreement, “consent of the Subscribers” or similar language means
the consent of holders of not less than 51% of the total of the Shares issued
and issuable upon conversion of outstanding Notes owned by Subscribers on the
date consent is requested.
22
(i) Equal
Treatment. No consideration shall be offered or paid to
any person to amend or consent to a waiver or modification of any provision of
the Transaction Documents unless the same consideration is also offered and paid
to all the Subscribers and their permitted successors and assigns.
(j) Maximum
Payments. Nothing contained herein or in any document
referred to herein or delivered in connection herewith shall be deemed to
establish or require the payment of a rate of interest or other charges in
excess of the maximum permitted by applicable law. In the event that
the rate of interest or dividends required to be paid or other charges hereunder
exceed the maximum permitted by such law, any payments in excess of such maximum
shall be credited against amounts owed by the Company to the Subscriber and thus
refunded to the Company.
(k) Calendar Days/Business
Days. All references to “days” in the Transaction
Documents shall mean calendar days unless otherwise stated. The terms
“business days” and “trading days” shall mean days that the New York Stock
Exchange is open for trading for three or more hours. Time periods
and notices in all of the Transaction Documents shall be determined as if the
relevant action, calculation or time period were occurring in New York
City. Any deadline that falls on a non-business day in any of the
Transaction Documents shall be automatically extended to the next business day
and interest, if any, shall be calculated and payable through such extended
period.
(l) Maximum
Liability. In no event shall the liability of any
Subscriber or permitted successor hereunder or under any Transaction Document or
other agreement delivered in connection herewith be greater in amount than the
dollar amount of the net proceeds actually received by such Subscriber upon the
sale of Notes, Conversion Shares or Incentive Shares.
(m) Captions: Certain
Definitions. The captions of the various sections and
paragraphs of this Agreement have been inserted only for the purposes of
convenience; such captions are not a part of this Agreement and shall not be
deemed in any manner to modify, explain, enlarge or restrict any of the
provisions of this Agreement. As used in this Agreement the term
“person” shall
mean and include an individual, a partnership, a joint venture, a corporation, a
limited liability company, a trust, an unincorporated organization and a
government or any department or agency thereof.
(n) Severability. In
the event that any term or provision of this Agreement shall be finally
determined to be superseded, invalid, illegal or otherwise unenforceable
pursuant to applicable law by an authority having jurisdiction and venue, that
determination shall not impair or otherwise affect the validity, legality or
enforceability: (i) by or before that authority of the remaining terms and
provisions of this Agreement, which shall be enforced as if the unenforceable
term or provision were deleted, or (ii) by or before any other authority of any
of the terms and provisions of this Agreement.
(o) Successor
Laws. References in the Transaction Documents to laws, rules,
regulations and forms shall also include successors to and functionally
equivalent replacements of such laws, rules, regulations and forms. A
successor rule to Rule 144(b)(1) shall include any rule that would be available
to a non-Affiliate of the Company for the sale of Ordinary Shares not subject to
volume restrictions and after a six month holding period.
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REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
23
SIGNATURE PAGE TO
SUBSCRIPTION AGREEMENT
Please
acknowledge your acceptance of the foregoing Subscription Agreement by signing
and returning a copy to the undersigned whereupon it shall become a binding
agreement between us.
Additional
Issuances / Capitalization / Reset Rights
Schedule
5(x)
Transfer
Agent
Schedule
8(a)
Broker’s
Fees
Schedule
8(b)
Due
Diligence Fees
Schedule
9(p)
Exceptions
to Permitted Liens
25
Schedule
5(d)
Additional
Issuances / Capitalization / Reset Rights
China
Cablecom Holdings, Ltd
Capitalization
Table
Authorized
shares
Ordinary
shares - $.0005 par value
40,000,000
Preferred
shares - $.0005 par value
1,000,000
Total
authorized shares
41,000,000
Ordinary
shares issued and outstanding
7,775,106
Warrants
and Unit Purchase Option
Ordinary
shares issuable upon exercise of outstanding warrants, which have an
exercise price of $5.00 per share
9,433,334
Ordinary
shares issuable upon exercise of outstanding unit purchase option, which
have an exercise price of $9.10 per share
1,050,000
2007 Omnibus
Securities and Incentive Plan (1)
10,000,000
(1)
Includes up to 8,120,000 shares reserved for issuance upon the
achievement of certain EBITDA goals of China Cablecom Holdings,
Ltd.
The China
Cablecom Holdings, Ltd. 2007 Omnibus Securities and Incentive Plan (the “Plan”)
provides for the granting of Distribution Equivalent Rights, Incentive Share
Options, Non-Qualified Share Options, Performance Share Awards, Restricted Share
Awards, Share Appreciation Rights, Tandem Share Appreciation Rights,
Unrestricted Share Awards or any combination of the foregoing (collectively, the
‘‘Awards’’), as may be best suited to the circumstances of the particular
employee, director or consultant as provided in the Plan. The Plan
will be administered by the Compensation Committee upon formation by the Board.
The Compensation Committee may from time to time grant Awards to one or more
employees, directors and/or consultants determined by it to be eligible for
participation in the Plan. China Cablecom Holdings has reserved 10,000,000
Ordinary Shares for issuance under the Plan. Awards made under the Plan may be
granted solely to persons or entities who, at the time of grant, are employees,
directors or consultants of China Cablecom Holdings or its affiliates. An Award
may be granted on more than one occasion to the same employee, director or
consultant, subject to the limitations set forth in the Plan. Each
individual grant of an Award which provides for the issuance of ordinary shares,
including but not limited to the issuance of Ordinary Shares upon the exercise
of a Share Option, shall provide for a lock-up covenant by the individual, to be
effective for a period not to exceed one year, upon the request of China
Cablecom Holdings or China Cablecom Holdings’ principal underwriter in
connection with an underwritten public offering of its Ordinary Shares. The
price at which an Ordinary Share may be purchased upon exercise of a Share
Option shall be determined by the Compensation Committee; provided, however,
that such price shall not be less than the mean of the bid and asked prices per
Ordinary Share as quoted on the OTC Bulletin Board on the date such Share Option
is granted.
(i)
Existence of Prior Notes and the security interest granted
thereunder
(ii) and
(iii) Acquisition of assets of Hubei Chutian Broadcasting and Television
Networks Co., Ltd. (“Hubei”) pursuant to the Framework Agreement between Hubei
and Jinan Youxiantong Network Technology Co., Ltd. dated on April 26,2008.
28
Dates Referenced Herein and Documents Incorporated by Reference
