UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
6-K
REPORT
OF FOREIGN ISSUER
PURSUANT
TO RULE 13a-16 OR 15b-16 OF
THE
SECURITIES EXCHANGE ACT OF 1934
Date of
Report: July 2, 2009
Commission
File Number: 001-34395
China
Networks International Holdings Ltd.
(Exact
name of registrant as specified in its charter)
China
Networks International Holdings Ltd.
(Translation
of Registrant’s name into English)
801 Block
C, Central International Trade Center
6A
Jianguomenwai Avenue
Chaoyang
District
Beijing,
100022 PRC
(Address
of principal executive office)
Indicate
by check mark whether the registrant files or will file annual
reports
under
cover Form 20-F or Form 40-F.
Form 20-F
x
Form 40-F
o
Indicate
by check mark if the Registrant is submitting this Form 6-K in paper
as
permitted
by Regulation S-T Rule 101(b)(1):
Yes
o
No
x
Indicate
by check mark if the Registrant is submitting this Form 6-K in paper
as
permitted
by Regulation S-T Rule 101(b)(7):
Yes
o
No
x
Indicate
by check mark whether the registrant by furnishing the information contained in
this Form 6-K is also
thereby
furnishing the information to the
Commission
pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934
Yes
o
No
x
Safe
Harbor Statement
This
Form 6-K contains forward-looking statements within the meaning of Section 27A
of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of
1934 about the registrant and its business. Forward-looking
statements are statements that are not historical facts and may be identified by
the use of forward-looking terminology, including the words “believes,”
“expects,” “intends,” “may,” “will,” “should” or comparable terminology. Such
forward-looking statements are based upon the current beliefs and expectations
of the registrant’s management and are subject to risks and uncertainties which
could cause actual results to differ materially from the forward-looking
statements.
Forward-looking
statements are not guarantees of future performance and actual results of
operations, financial condition and liquidity, and developments in the industry
may differ materially from those made in or suggested by the forward-looking
statements contained in this Form 6-K. These forward-looking statements are
subject to numerous risks, uncertainties and assumptions. The
forward-looking statements in this Form 6-K speak only as of the date of this
report and might not occur in light of these risks, uncertainties, and
assumptions. The registrant undertakes no obligation and disclaims any
obligation to publicly update or revise any forward-looking statements, whether
as a result of new information, future events, or otherwise.
Background
On June 25, 2009, Alyst Acquisition
Corp. (“Alyst”) issued a press release announcing that on June 24, 2009, at a
Special Meeting of Stockholders (the “Special Meeting”), approval was obtained
for, among other things, the proposed business combination with China Networks
Media, Ltd., a private British Virgin Islands (“BVI”) company with limited
liability (“China Networks”), and the redomestication of Alyst to the BVI
through a merger with its wholly-owned subsidiary, China Networks International
Holding Ltd. (“CNIH”).
On June 25, 2009, pursuant to the terms
of an Agreement and Plan of Merger, dated August 13, 2008, as amended (the
“Merger Agreement”), Alyst merged with and into CNIH to effect the
redomestication (the “Redomestication Merger”). On June 26, 2009,
China Networks Merger Co., Ltd., a wholly-owned British Virgin Islands
subsidiary of CNIH (“China Networks Merger Co.”), merged with and into China
Networks Media, resulting in China Networks Media becoming a wholly-owned
subsidiary of CNIH (the “Business Combination”). The merger certificate relating
to the Business Combination was accepted by the BVI Registrar of
Companies on June 29, 2009, with effect from June 26, 2009. On June
30, 2009, CNIH and Alyst issued a press release confirming the consummation of
the Business Combination. CNIH is the surviving entity of the
foregoing transactions and, as a result of the transactions, qualifies as a
foreign private issuer under U.S. federal securities laws. A copy of
each press release is attached hereto as Exhibits A and B, respectively, and
incorporated herein by reference.
The
Special Meeting
At the
Special Meeting, of the 9,794,400 shares entitled to vote, 9,094,819 shares were
present by proxy, constituting a quorum. Of the votes cast, 6,941,979
were cast in favor of the Redomestication Merger proposal, 6,888,079 were cast
in favor of the Business Combination proposal, 6,941,979 were cast in favor of
adopting the 2008 Omnibus Securities and Incentive Plan (as discussed below),
and 6,988,755 were cast in favor of the adjournment and postponement proposal.
Holders of 2,146,156 shares of Alyst’s common stock elected to convert their
common stock into their pro rata portion of Alyst’s trust account, at a
conversion price of $7.85 per share of common stock. Cash in the
amount of approximately $16.9 million was paid to converting
stockholders. In addition, prior to the Special Meeting, Alyst
entered into privately negotiated transactions to repurchase more than 71% of
the common stock held by its public stockholders after the closing of the
Business Combination for aggregate consideration of approximately $45 million,
in order to ensure stockholder approval of the Redomestication Merger and
Business Combination.
In connection with the approval of the
Redomestication Merger and the Business Combination at the Special Meeting,
Alyst’s stockholders also approved the adoption of CNIH’s 2008 Omnibus
Securities and Incentive Plan, which provides for the grant of up to 2,500,000
ordinary shares of CNIH to directors, officers, employees and consultants of
CNIH or its subsidiaries.
The
Business Combination
At the
closing of the Business Combination, CNIH issued to China Networks’
stockholders, in reliance upon available exemptions from the registration
requirements of the Securities Act of 1933 (the “Securities Act”), aggregate
merger consideration of 10,728,540 CNIH ordinary shares, which shares are
subject to restrictions on resale. In addition, pursuant to the terms
of the Merger Agreement, China Networks’ stockholders are entitled to (i)
$22,110,000 of proceeds from the future exercise of CNIH warrants, (ii) $7
million of proceeds payable to China Networks' stockholders, and (iii) deferred
cash payments of up to $6,000,000 and deferred share payments of up to 9,000,000
ordinary shares of CNIH subject to the achievement of specified financial
milestones set forth in the Merger Agreement. The aggregate market
value of the merger consideration, including the deferred portion, issued to
China Networks (based upon the closing price of CNIH’s ordinary shares on the
NYSE Amex on July 1, 2009, of $4.85 per share) was $130,793,419.
Upon
consummation of the Business Combination, CNIH had outstanding 12,927,888
ordinary shares, 9,864,400 warrants, and an IPO Underwriters’ Purchase Option
for 300 units, each unit containing one ordinary share and one
warrant. Of the outstanding ordinary shares, 10,728,540 are held by
the former 29 common and preferred shareholders of China Networks, 1,750,000 are
held by the Alyst’s initial 11 shareholders, 253,488 are held by the
representatives of the IPO Underwriters, and the remaining 195,860 are held by
Alyst’s former public shareholders.
Lock-up
Agreements
On June 26, 2009, in connection with
the Business Combination, CNIH and Alyst entered into a lock-up agreement with
each of Mr. Shuangqing, Kerry Propper and MediaInv Ltd. (each, a “Principal
Shareholder”). Pursuant to the lock-up agreement, each Principal
Shareholder has agreed that, without the prior written consent of CNIH, until
the date that is six months after the effective date of the Business Combination
(the “Trade Commencement Date”), each Principal Shareholder shall not offer,
sell, contract to sell, gift, exchange, assign, pledge or otherwise encumber or
dispose of his Surviving Corporation Shares (as defined in the lock-up
agreement) (or enter into any transaction which is designed to, or might
reasonably be expected to, result in the disposition, (whether by actual
disposition or effective economic disposition due to cash settlement or
otherwise) by the Principal Shareholder, or any affiliate of the Principal
Shareholder, other than CNIH, or any person in privity with the Principal
Shareholder or any affiliate of the Principal Shareholder, other than CNIH),
directly or indirectly, including the establishment or increase in a put
equivalent position or liquidation or decrease in a call equivalent position
within the meaning of Section 16 of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”) and the rules and regulations of the SEC
promulgated thereunder (each of the foregoing referred to as a
“Disposition”). Thereafter, for a period of six months after the
Trade Commencement Date, the Principal Shareholder shall not effect a
Disposition of more than 50% of his Surviving Corporation
Shares. Thereafter, for a period of 12 months after the Trade
Commencement Date, the Principal Shareholder shall not effect a disposition of
more than 25% of his Surviving Corporation Shares. The foregoing
description of the lock-up agreements with Mr. Shuangqing, Mr. Propper and
MediaInv Ltd. is summary in nature, and is qualified in its entirety by
reference to the full text of the lock-up agreements, the form of which is
appended hereto as Exhibit C and incorporated herein by reference.
Information
About China Networks
The business of China Networks is
described in the Proxy Statement/Prospectus, contained in the registration
statement on Form S-4, File No. 333-157026 (the “S-4”), filed by CNIH with the
SEC in connection with the Business Combination and related transactions, in the
section entitled “Information About China Networks Media,” beginning on page
115, and is incorporated herein by reference. All references in this
Form 6-K to the Proxy Statement/Prospectus are to the final Proxy
Statement/Prospectus that forms a part of CNIH’s S-4 as set out in the
preceding sentence. The Proxy Statement/Prospectus and
the S-4 are publicly accessible, at no charge, on the SEC’s website at
www.sec.gov
.
Risk
Factors
The risks associated with the business
of China Networks and CNIH’s securities are described in the Proxy
Statement/Prospectus in the section entitled “Risk Factors” beginning on page
16, which is incorporated herein by reference.
Financial
Information
The financial information of Alyst/CNIH
and China Networks are included in the Proxy Statement/Prospectus in the
sections entitled “Selected Summary Historical Financial Information,” beginning
on page 33, “China Networks Media’s Management’s Discussion and Analysis of
Financial Condition and Results of Operations,” beginning on page 129, “Alyst’s
Management’s Discussion and Analysis or Plan of Operation,” beginning on page
151 and “Index to Financial Statements,” beginning on page F-1, each of which is
incorporated herein by reference.
In addition, Unaudited Pro Forma
Financial Information reflecting the transactions relating to and including the
Business Combination, as consummated, is set out in Annex 1 attached hereto and
incorporated herein by reference.
Properties
The facilities of China Networks are
described in the Proxy Statement/Prospectus in the section entitled “Information
About China Networks Media – Facilities” on page 126, which is incorporated
herein by reference.
Security
Ownership of Certain Beneficial Owners and Management
The following table sets forth
information with respect to the beneficial ownership of CNIH’s ordinary shares
immediately following the Business Combination by each person who beneficially
owns more than 5% thereof and each officer, each director and all officers and
directors as a group.
|
Name
of Beneficial Owner
|
Number
of
Ordinary
Shares
|
Percent
of
Outstanding
Ordinary
Shares
|
||||||
|
MediaInv
Ltd. (1)
|
7,311,405 | 56.5 | % | |||||
|
Kerry
Propper
|
2,437,135 | 18.8 | % | |||||
|
Michael
E. Weksel (2)
|
362,500 | 2.8 | % | |||||
|
Li
Shuangqing
|
— | — | ||||||
|
George
Kaufman
|
— | — | ||||||
|
Donald
Quinby
|
— | — | ||||||
|
Jian
Ping Huang
|
— | — | ||||||
|
May
Huang
|
— | — | ||||||
|
All
Directors and Officers as a Group (7 persons) (3)
|
2,799,635 | 21.6 | % | |||||
____________
(1) A
BVI limited liability company and former principal shareholder of China
Networks.
(2) Includes
12,500 shares of common stock held by the Carina Heart Weksel Irrevocable Trust,
a trust established for the benefit of Mr. Weksel’s daughter, of which Mr.
Weksel and his wife are the sole trustees.
(3) Includes
Kerry Propper, Michael E. Weksel, Li Shuangqing, George Kaufman, Donald Quinby,
Dr. Jian Ping Huang, and May Huang.
Directors
and Executive Officers; Director Independence; Board Committees
The directors of CNIH following the
consummation of the Business Combination are as follows:
Class A Directors: May Huang
and Donald Quinby
Class B Directors: George
Kaufman and Li Shuangqing
Class C Directors: Kerry
Propper, Jian Ping Huang and Michael E. Weksel
The term
of the Class A directors expires at the first annual meeting of the Company’s
stockholders, with the Class B term expiring at the second annual meeting, and
the Class C term expiring at the third annual meeting.
CNIH’s Chief Executive Officer
(principal executive officer) and Chairman of the Board is Mr. Li Shuangqing;
Michael E. Weksel is the Chief Financial Officer (principal financial and
accounting officer).
Information on the directors and
executive officers of CNIH is contained in the Proxy Statement/Prospectus in the
section entitled “Directors and Management,” beginning on page 153, which is
incorporated herein by reference. In addition, certain key employees
of China Networks following the consummation of the Business Combination are
described in the Proxy Statement/Prospectus in the section entitled “Key
Employees,” beginning on page 155, which is incorporated herein by
reference.
Director
Independence
The NYSE Amex requires that a majority
of the board of directors be composed of “independent directors” as defined in
Section 803A of the Exchange’s Company Guide, which generally is a person other
than an officer or employee of the company or its subsidiaries or any other
individual having a relationship, which in the opinion of the company’s board of
directors would interfere with the director’s exercise of independent judgment
in carrying out the responsibilities. However, this requirement does
not apply if the company is a “controlled company” as defined in Section 801(a)
of the Company Guide. In general, a “controlled company” is one in
which more than 50% of the outstanding voting power is held by an individual,
group or another company. In respect of CNIH, MediaInv Ltd. holds
approximately 56.5% of the outstanding voting power and, consequently, the Board
of Directors consider CNIH a “controlled company” for purposes of NYSE Amex
corporate governance requirements. Notwithstanding the foregoing, the
Board of Directors considers that the following individuals are “independent
directors” under section 803A of the Company Guide: George Kaufman,
Donald Quinby, Jian Ping Huang and May Huang.
Board
Committees
CNIH has established the following
committees of the Board of Directors, the initial members of which are set out
below:
|
Audit
Committee:
|
Jian
Ping Huang (Chairman), Donald Quinby and May Huang.
|
|
|
Norminating
and
Corporate
Governance
Committee:
|
Donald Quinby (Chairman) and Jian
Ping Huang
|
|
|
Compensation
Committee:
|
George
Kaufman (Chairman), Jian Ping Huang and Donald
Quinby
|
May Huang
is considered “financially sophisticated” under Section 803B(2) of the NYSE Amex
Company Guide and an “audit committee financial expert” under applicable SEC
rules and regulations.
Each of the foregoing committees will
operate under the respective committee charter previously adopted by Alyst until
such committees have the opportunity to consider any changes thereto that they
may deem appropriate.
Executive
Compensation
The executive compensation of the
executive officers and directors is described in the Proxy Statement/Prospectus
in the sections entitled “Directors and Management – Director Compensation, ”
beginning on page 158, and “Directors and Management – Executive Compensation,”
beginning on page 159, respectively, each of which is incorporated herein by
reference.
Certain
Relationships and Related Transactions
The description of certain
relationships and related transactions are described in the Proxy
Statement/Prospectus in the section entitled “Certain Relationships and Related
Transactions,” beginning on page 161, which is incorporated herein by
reference.
Legal
Proceedings
The legal proceedings of CNIH’s
predecessor-in-interest, Alyst, are described in the Proxy Statement/Prospectus
in the section entitled “Information About Alyst – Legal Proceedings” on page
150, which is incorporated herein by reference.
Market
Price of CNIH’s Common Equity; Dividends
CNIH’s ordinary shares and warrants
began trading on the NYSE Amex on June 25, 2009, under the symbols CNR and
CNR.W, respectively. The closing price per share of CNIH’s ordinary
shares as reported on the NYSE Amex on July 1, 2009 was $4.85.
As described under “Price Range of
Securities and Dividends – Alyst” on page 55 of the Proxy Statement/Prospectus,
which section is incorporated herein by reference, there can be no assurance
that CNIH will meet the listing requirements of the NYSE Amex as a result of the
transactions relating to the Business Combination. If CNIH is unable
to meet such requirements, the NYSE Amex may initiate de-listing proceedings,
which CNIH would expect to appeal if deemed in the best interests of the Company
and its shareholders. In the event of a de-listing, CNIH’s securities
would become eligible for quotation in the OTC Bulletin Board until such time as
CNIH was able to meet the listing requirements of a recognized national
exchange. Given the limited number of freely tradable ordinary shares
following the Business Combination, there can be no assurance that a liquid
trading market will develop for CNIH’s securities in the near term or at any
time.
Dividends
The payment of dividends by CNIH in the
future will be contingent upon revenues and earnings, if any, capital
requirements and the general financial condition of the combined entity
following the Business Combination. The payment of any dividends will
be within the sole discretion of the Board of Directors. It is the
present intention of the Board of Directors to retain all earnings, if any, for
use in business operations and, accordingly, the Board does not anticipate
declaring any dividends in the foreseeable future. Loans or credit
facilities may also limit CNIH’s ability to pay dividends.
Recent
Sales of Unregistered Securities
As
discussed above under “The Business Combination,” CNIH issued China Networks’
stockholders 10,728,540 ordinary shares on or about June 26, 2009, in reliance
upon the exemption from the registration requirements provided in Section 4(2)
of and Regulation S under the Securities Act.
In
connection with the consummation of the Business Combination, on or about June
26, 2009, CNIH issued 253,488 ordinary shares to the representatives of Alyst’s
IPO Underwriters, representing the deferred commission and non-accountable
expense allowance due from the initial public offering pursuant to the
Underwriting Agreement, dated as of June 28, 2007 and amended on June 11, 2009
(the “Underwriting Agreement”). Such shares were issued in
transactions exemption from the registration requirements of the Securities Act
in reliance upon Section 4(2) thereof, and are entitled to “piggy-back”
registration rights.
On July
21, 2008, China Networks Media issued an aggregate of $27,990,200 in promissory
notes and 980,000 class A preferred shares, with a par value of $0.0001 to 27
investors in exchange for proceeds of $28,000,000. The description of
such financing is contained in the Proxy Statement/Prospectus in the section
entitled “China Networks Media Limited’s Management’s Discussion and Analysis of
Financial Condition and Results of Operations – Liquidity and Capital
Resources,” beginning on page 146, which is incorporated herein by
reference. In connection with the consummation of the Business
Combination, the class A preferred shares were exchanged for 980,000 ordinary
shares of CNIH in transactions exempt from the registration requirements of the
Securities Act, in reliance upon Section 4(2) thereof and Regulation S
thereunder.
Description
of CNIH’s Securities
The
description of CNIH’s ordinary shares, preferred shares and warrants are
described in the Proxy Statement/Prospectus in the section entitled “Description
of CN Holdings Securities Following the Business Combination,” beginning on page
173, which is incorporated herein by reference.
Indemnification
of Directors and Officers
Information about the indemnification
of CNIH’s directors and officers is described in the Proxy Statement/Prospectus
in the sections entitled “The Redomestication Proposal – Differences of
Stockholder Rights,” beginning on page 173, and “The Redomestication Proposal –
Indemnification of Officers and Directors,” on page 106, and under Item 20 of
Part II of Amendment No. 5 to CNIH’s S-4, as filed with the SEC on May 29, 2009,
each of which is incorporated herein by reference.
Changes
in Registrant’s Certifying Accountant
In
connection with the completion of the Business Combination, the Audit Committee
of the Board of Directors of CNIH has appointed UHY LLP as its principal
reporting accountant and auditor, with immediate effect, for the year ending
December 31, 2009.
UHY LLP
has served to date as the principal reporting accountant and auditor for China
Networks.
The
engagement of Alyst’s reporting accountants and auditors, Marcum & Kliegman
LLP, expired upon the consummation of the Business
Combination.
Amendments
to Articles of Incorporation or Bylaws; Change in Fiscal Year
The Memorandum and Articles of
Association of CNIH were amended and restated on June 24, 2009
to include protective
provisions substantially identical to those contained in Alyst’s Amended and
Restated Certificate of Incorporation at the time of its initial public
offering, including the formation of a staggered board of directors with three
classes, each with a term of three years. There are no material
differences between the provisions of Alyst’s Amended and Restated Certificate
of Incorporation and CNIH Amended and Restated Memorandum and Articles of
Association, although the number of authorized shares increased to 75 million in
order to effect the transactions contemplated by the Merger Agreement and to
have sufficient shares available for other corporate purposes. A copy
of the Amended and Restated Memorandum and Articles of Association is attached
hereto as Exhibit D.
The Audit Committee of the Board of
Directors of CNIH adopted resolutions following the Business Combination, which
have been ratified by the Board, to change with immediate effect the Company’s
fiscal year to the 12-month period ending December 31 of each year, instead of
June 30, to coincide with that of China Networks. As a result,
CNIH’s current fiscal year will end on December 31, 2009.
Change
in Shell Company Status
As a result of the Business
Combination, which fulfilled the definition of “Business Combination” as
required by Alyst’s Amended and Restated Certificate of Incorporation, CNIH (as
Alyst’s successor-in-interest) is no longer a shell company.
List
of Exhibits Following Signature Page
| Exhibit A | Press Release, dated June 25, 2009 |
| Exhibit B | Press Release, dated June 30, 2009 |
| Exhibit C | Form of Lock-Up Agreement |
| Exhibit D | Amended and Restated Memorandum and Articles of Association, as filed June 24, 2009 |
| Annex 1 | Unaudited Pro Forma Financial Information |
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
|
CHINA
NETWORKS INTERNATIONAL HOLDINGS LTD.
|
|||
|
|
By:
|
/s/
Michael E. Weksel
|
|
|
Name:
Michael E. Weksel
|
|||
|
Title: Chief
Financial Officer
|
|||
July 2,
2009
E
xhibit
A
ALYST
ACQUISITION CORP. STOCKHOLDERS APPROVE BUSINESS COMBINATION WITH
CHINA
NETWORKS MEDIA, LTD.
NEW YORK,
June 25/PRNewswire-FirstCall/(NYSE Amex: AYA) -- China Networks International
Holdings, Ltd., a British Virgin Islands company (“CN Holdings”) and Alyst
Acquisition Corp., a special purpose acquisition company (“Alyst”), today
announced that Alyst’s stockholders approved its proposed business combination
with China Networks Media, Ltd., a British Virgin Islands
company. Alyst anticipates the acquisition will close on Friday June
26, 2009 or Monday June 29, 2009. In connection with the business
combination, Alyst redomesticated to the British Virgin Islands through a merger
with its wholly-owned subsidiary, CN Holdings, effective June 24,
2009. CN Holdings became the surviving entity and its ordinary
shares, units and warrants will continue to trade on the NYSE Amex under CNR,
CNR.U and CNR.W, respectively.
The
business combination was approved by the holders of 6,888,079 common shares,
representing 75.7% of the outstanding shares of common stock of
Alyst. The holders of 2,146,156 common shares of Alyst elected to
exercise their rights to convert their shares into cash, and will receive
proceeds from Alyst’s trust of $7.85 in cash per converted share of common
stock.
About
China Networks Media
China
Networks Media is a television advertising company formed in 2007 for the
purpose of investing in, consolidating, expanding and streamlining PRC
television advertising assets in partnership with municipal and provincial level
TV stations. In June 2008, CN Media raised $28 million in a private placement
for the consolidation and operation of the advertising operations of two
television stations: Kunming and Yellow River.
Safe
Harbor Statement
This
press release contains forward-looking statements within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act
of 1934 about Alyst and CN Media and their combined business after completion of
the proposed acquisition. Forward-looking statements are statements that are not
historical facts and may be identified by the use of forward-looking
terminology, including the words “believes,” “expects,” “intends,” “may,”
“will,” “should” or comparable terminology. Such forward-looking statements are
based upon the current beliefs and expectations of Alyst’s, CN Holdings’ and
China Networks Media’s management and are subject to risks and uncertainties
which could cause actual results to differ materially from the forward-looking
statements.
Forward-looking
statements are not guarantees of future performance and actual results of
operations, financial condition and liquidity, and developments in the industry
may differ materially from those made in or suggested by the forward-looking
statements contained in this press release. These forward-looking statements are
subject to numerous risks, uncertainties and assumptions. The forward-looking
statements in this press release speak only as of the date of this press release
and might not occur in light of these risks, uncertainties, and assumptions. CN
Holdings undertakes no obligation and disclaims any obligation to publicly
update or revise any forward-looking statements, whether as a result of new
information, future events, or otherwise.
For
further information, please contact:
Alyst
Acquisition Corp.
Michael
E. Weksel
Tel:
212-650-0232
Email:
mweksel@alyst.net
SOURCE: Alyst
Acquisition Corp.
Exhibit
B
CHINA
NETWORKS INTERNATIONAL HOLDINGS AND ALYST ACQUISITION CORP. CLOSE
BUSINESS
COMBINATION WITH CHINA NETWORKS MEDIA
NEW YORK,
June 30/PRNewswire-FirstCall/ -- China Networks International Holdings, Ltd., a
British Virgin Islands company (“CN Holdings”) (NYSE Amex:
CNR
) and Alyst
Acquisition Corp., a special purpose acquisition company (“Alyst”), today
announced that they completed both the previously announced redomestication
merger of Alyst in the British Virgin Islands by merging Alyst with and into CN
Holdings and the subsequent business combination merger of CN Holdings’
subsidiary with China Networks Media, Ltd. (“CN Media”), a joint-venture
provider of broadcast television services in the People’s Republic of China
(“PRC”). Chardan Capital Markets, LLC acted as M&A Advisor to
Alyst in the merger.
Both the
redomestication merger and the business combination merger were approved by the
stockholders of Alyst at a special meeting on June 24, 2009. The
final step of the transaction, the closing of the business combination merger,
occurred today immediately upon the confirmation by British Virgin Island
authorities of the acceptance of the Articles and Plan of Merger effecting the
business combination merger. Holders of over 70% of Alyst’s common
stock voted in favor of the transaction. Initially, the ordinary
shares, units and warrants of CN Holdings will continue to be traded on the NYSE
Amex under the ticker symbols CNR, CNR.U and CNR.WS,
respectively. Additional information concerning the conversion of
Alyst securities to CN Holdings securities can be found in the registration
statement on Form S-4/A filed by CN Holdings with the SEC on May 29,
2009. This information is also available in the Alyst definitive
proxy statement/prospectus mailed to its stockholders on or around June 1,
2009.
Li
Shuangqing, Chairman and Chief Executive Officer of China Networks continued,
“We are very pleased to have been able to bring this merger to completion and we
are grateful to the many people and investors who supported us in this
effort. We look forward to growing this company and creating
stockholder value in the process.”
In
addition to approving the redomestication merger and the business combination
merger, Alyst stockholders also approved the 2009 Omnibus Securities and
Incentive Plan, pursuant to which the directors, officers, employees and
consultants of CN Holdings or its subsidiaries may be granted options to
purchase up to 2,500,000 ordinary shares of CN Holdings.
A total
of 2,146,156 shares issued in Alyst’s initial public offering were cast in
opposition to the business combination and elected to be converted into a pro
rata portion of the proceeds from the initial public offering held in trust,
representing less than 30% of the shares issued in the initial public
offering. Cash in the amount of approximately $16,850,235
(representing $7.85 per share) will be paid to these stockholders.
About
China Networks Media
China
Networks Media is a television advertising company formed in 2007 for the
purpose of investing in, consolidating, expanding and streamlining PRC
television advertising assets in partnership with municipal and provincial level
TV stations. In June 2008, CN Media raised $28 million in a private placement
for the consolidation and operation of the advertising operations of two
television stations: Kunming and Yellow River.
Safe
Harbor Statement
This
press release contains forward-looking statements within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act
of 1934 about Alyst and CN Media and their combined business after completion of
the proposed acquisition. Forward-looking statements are statements that are not
historical facts and may be identified by the use of forward-looking
terminology, including the words “believes,” “expects,” “intends,” “may,”
“will,” “should” or comparable terminology. Such forward-looking statements are
based upon the current beliefs and expectations of Alyst’s, CN Holdings’ and
China Networks Media’s management and are subject to risks and uncertainties
which could cause actual results to differ materially from the forward-looking
statements.
Forward-looking
statements are not guarantees of future performance and actual results of
operations, financial condition and liquidity, and developments in the industry
may differ materially from those made in or suggested by the forward-looking
statements contained in this press release. These forward-looking statements are
subject to numerous risks, uncertainties and assumptions. The forward-looking
statements in this press release speak only as of the date of this press release
and might not occur in light of these risks, uncertainties, and assumptions. CN
Holdings undertakes no obligation and disclaims any obligation to publicly
update or revise any forward-looking statements, whether as a result of new
information, future events, or otherwise.
For
further information, please contact:
China
Networks International Holdings, Ltd.
Michael
E. Weksel
Tel:
212-650-0232
Email:
mweksel@alyst.net
SOURCE
China Networks International Holdings, Ltd.
Exhibit
C
FORM OF
LOCK-UP AGREEMENT
June 26,
2009
China
Networks International Holdings, Ltd.
233 East
69th Street, #6J
New York,
New York 10021
Alyst
Acquisition Corp.
233 East
69th Street, #6J
New York,
New York 10021
|
|
Re:
|
Agreement
and Plan of Merger, dated August 13, 2008, by and among Alyst Acquisition
Corp. (the “Company”), China Networks International Holdings, Ltd. (“CN
Holdings”), China Networks Media, Ltd., China Networks Merger Co., Ltd.,
Mr. Li Shuangqing,
Kerry Propper and MediaInv
Ltd., as amended (the ‘‘Agreement’’)
|
Ladies
and Gentlemen:
Defined
terms not otherwise defined herein (the “Letter Agreement”) shall have the
meanings set forth in the Agreement. Pursuant to Section 2.14 of the
Agreement and in satisfaction of a condition of the Company’s and CN Holdings’
obligations under the Agreement, the undersigned irrevocably agrees with the
Company and CN Holdings that until the six (6) month anniversary of the Business
Combination Effective Time (the “Trade Commencement Date”) (the “First
Restricted Period”) he shall not offer, sell, contract to sell, gift, exchange,
assign, pledge or otherwise encumber or dispose of his Surviving Corporation
Shares received in connection with the Agreement on the Closing Date (or enter
into any transaction which is designed to, or might reasonably be expected to,
result in the disposition, (whether by actual disposition or effective economic
disposition due to cash settlement or otherwise) by the Principal Shareholder or
any affiliate of Principal Shareholder, other than CN Holdings, or any person in
privity with Principal Shareholder or any affiliate of Principal Shareholder,
other than CN Holdings), directly or indirectly, including the establishment or
increase in a put equivalent position or liquidation or decrease in a call
equivalent position within the meaning of Section 16 of the
Securities Exchange Act of 1934, as
amended,
and the rules and regulations of the Securities and Exchange
Commission promulgated thereunder (each of the foregoing referred to as a “
Disposition
”). Thereafter,
for a period of six (6) months after the Trade Commencement Date (the “Second
Restricted Period”), the undersigned irrevocably agrees with the Company and CN
Holdings not to effect a Disposition of more than fifty percent (50%) of his
Surviving Corporation Shares received in connection with the Agreement on the
Closing Date. Thereafter, for a period of twelve (12) months after
the Trade Commencement Date (the “Third Restricted Period” and, together with
the First Restricted Period and the Second Restricted Period, the “Restricted
Period”), the undersigned irrevocably agrees with the Company and CN Holdings
not to effect a Disposition of more than 25% of his Surviving Corporation Shares
received in connection with the Agreement on the Closing Date.
The
foregoing restriction is intended to preclude the Principal Shareholder from
engaging in any hedging transaction, which is designed to or is reasonably
expected to lead to or result in such a Disposition during such periods even if
the relevant Surviving Corporation Shares would be disposed of by someone other
than the Principal Shareholder. In order to enforce this covenant,
the Company or CN Holdings, as applicable, will impose, on or before the Closing
Date, irrevocable stop-transfer instructions preventing the Company’s or CN
Holdings’, respectively, transfer agent from effecting any actions in violation
of this Letter Agreement.
Notwithstanding
the foregoing, nothing in the Agreement or this Letter Agreement shall prevent
the Principal Shareholder from negotiating the sale of Surviving Corporation
Shares where neither the obligation to sell nor the obligation to buy become
binding until the Trade Commencement Date, subject to the limitation on the
number of Surviving Corporation Shares the Principal Shareholder is permitted to
dispose of during the Restricted Period; and further, the Principal Shareholder
may effect a Disposition of Surviving Corporation Shares pursuant to a pledge,
grant of security interest or other encumbrance effected in a bona fide
transaction with an unrelated and unaffiliated pledgee if such pledgee agrees
that it will under no circumstances foreclose with respect to such Surviving
Corporation Shares until after the Trade Commencement Date, subject to the
limitation on the number of Surviving Corporation Shares the Principal
Shareholder is permitted to dispose of during the Restricted
Period.
The
undersigned acknowledges that the execution, delivery and performance of this
Letter Agreement is a material inducement to the Company and CN Holdings to
complete the transaction contemplated by the Agreement and that the Company and
CN Holdings shall be entitled to specific performance of my obligations
hereunder. The undersigned hereby represents that the undersigned has
the power and authority to execute, deliver and perform this Letter Agreement,
that the undersigned has received adequate consideration therefor and that the
undersigned will indirectly benefit from the closing of the transactions
contemplated by the Agreement.
This
Letter Agreement may not be amended or otherwise modified in any respect without
the written consent of the Company, CN Holdings and the
undersigned. This Letter Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware, without regard to the laws
that might otherwise govern under applicable principles of conflicts of
law. The undersigned hereby irrevocably submit to the exclusive
jurisdiction of any court located within the State of Delaware in connection
with any matter based upon or arising out of this Letter Agreement or the
matters contemplated herein, agrees that process may be served upon him in any
manner authorized by the laws of the State of Delaware for such person and
waives and covenants not to assert or plead any objection which he might
otherwise have to such jurisdiction and such process.
By its
signature below, each of the Company and CN Holdings acknowledges and agrees
that it will instruct its transfer agent, as applicable, to place an irrevocable
stop transfer instruction on all Securities beneficially owned by the
undersigned until the end of the Restriction Period. This Letter
Agreement shall be binding on successors and assigns of the undersigned with
respect to the Surviving Corporation Shares and any such successor or assign
shall enter into a similar agreement for the benefit of the Company and CN
Holdings.
***
SIGNATURE PAGE FOLLOWS***
This
Letter Agreement may be executed in two or more counterparts, all of which when
taken together may be considered one and the same agreement.
[Principal
Shareholder]
Address
for Notice:
_______________________________
_______________________________
_______________________________
Number of
Ordinary Shares
By
signing below, the Company and CN Holdings agree to enforce the restrictions on
transfer set forth in this Letter Agreement.
ALYST
ACQUISITION CORPORATION
By: _______________________________
Name:
Title:
CHINA
NETWORKS INTERNATIONAL HOLDINGS, LTD.
By: _______________________________
Name:
Title:
Exhibit
D
British
Virgin Islands
The
BVI Business Companies Act
(No.
16 of 2004)
Memorandum
and Articles of Association
of
China
Networks International Holdings Ltd.
Incorporated
this 17th day of April 2008
Amended
and Restated the 1st day of May 2008
Amended
and restated the 24th day of June 2009
Maples
Finance BVI Limited
Kingston
Chambers
P.O.
Box 173
Road
Town, Tortola
British
Virgin Islands
TERRITORY
OF THE BRITISH VIRGIN ISLANDS
THE
BVI BUSINESS COMPANIES ACT, 2004
AMENDED
AND RESTATED
MEMORANDUM
OF ASSOCIATION
OF
China
Networks International Holdings Ltd.
|
1
|
Company
Name
|
|
1.1
|
The
name of the Company is China Networks International Holdings
Ltd.
|
|
1.2
|
The
directors or members may from time to time change the Company's name by
Resolution of Directors or Resolution of Members. The directors
shall give notice of such resolution to the registered agent of the
Company, for the registered agent to file an application for change of
name with the Registrar, and any such change will take effect from the
date of the certificate of change of name issued by the
Registrar.
|
|
1.3
|
A
change of name of the Company shall constitute an amendment of the
Memorandum and Articles and in the event of a resolution being passed to
change the name of the Company, the provisions below in respect of
amendments to the Memorandum and Articles must be complied
with.
|
|
2
|
Company
Limited by Shares, Liability of
Members
|
|
2.1
|
The
Company is a company limited by
shares.
|
|
2.2
|
The
liability of each member is limited to the amount from time to time unpaid
on that member's shares.
|
|
3
|
Registered
Office
|
|
3.1
|
The
first registered office of the Company will be situated at Kingston
Chambers, PO Box 173, Road Town, Tortola, British Virgin
Islands.
|
|
3.2
|
The
directors or members may from time to time change the Company's registered
office by Resolution of Directors or Resolution of Members, provided that
the Company's registered office shall at all times be the office of the
registered agent. The directors shall give notice of such
resolution to the registered agent of the Company, for the registered
agent to file with the Registrar a notice of change of registered office,
and any such change of registered office will take effect from the date of
the registration by the Registrar of such
notice.
|
|
4
|
Registered
Agent
|
|
4.1
|
The
first registered agent of the Company will be Maples Finance BVI Limited
of Kingston Chambers, PO Box 173, Road Town, Tortola, British Virgin
Islands.
|
|
4.2
|
The
directors or members may from time to time change the Company's registered
agent by Resolution of Directors or Resolution of Members. The
directors shall give notice of such resolution to the registered agent of
the Company (meaning the existing registered agent), for the registered
agent to file with the Registrar a notice of change of registered agent,
and any such change of registered agent will take effect from the date of
the registration by the Registrar of such
notice.
|
|
4.3
|
If
the existing registered agent does not file such notice on instruction by
the directors, the directors shall procure that a notice of change of
registered agent is filed with the Registrar by a legal practitioner in
the British Virgin Islands acting on behalf of the Company, and any such
change of registered agent will take effect from the date of the
registration by the Registrar of such
notice.
|
|
5
|
General
Objects and Powers
|
|
5.1
|
Subject
to the following provisions of this Memorandum, the objects for which the
Company is established are unrestricted and the Company shall have full
power and authority to carry out any object not prohibited by the Act or
any other law of the British Virgin
Islands.
|
|
5.2
|
The
Company has no power to:
|
|
|
(a)
|
carry
on banking or trust business, unless it is licensed to do so under the
Banks and Trust Companies Act,
1990;
|
|
|
(b)
|
carry
on business as an insurance or as a reinsurance company, insurance agent
or insurance broker, unless it is licensed or authorised to do so under
the Insurance Act, 1994;
|
|
|
(c)
|
carry
on the business of company management unless it is licensed to do so under
the Companies Management Act, 1990;
|
|
|
(d)
|
carry
on the business of providing the registered office or the registered agent
for companies incorporated in the British Virgin Islands unless it is
licensed to do so under the Banks and Trust Companies Act, 1990;
or
|
|
|
(e)
|
carry
on the business as a mutual fund, mutual fund manager or mutual fund
administrator unless it is licensed to do so under the Mutual Funds Act,
1996.
|
|
5.3
|
Without
limiting the foregoing, the powers of the Company include the power to do
the following:
|
|
|
(a)
|
grant
options over unissued shares in the Company and treasury
shares;
|
|
|
(b)
|
issue
securities that are convertible into
shares;
|
|
|
(c)
|
give
financial assistance to any person in connection with the acquisition of
the Company's own shares;
|
|
|
(d)
|
issue
debt obligations of every kind and grant options, warrants and rights to
acquire debt obligations;
|
|
|
(e)
|
guarantee
a liability or obligation of any person and secure any of its obligations
by mortgage, pledge or other charge, of any of its assets for that
purpose; and
|
|
|
(f)
|
protect
the assets of the Company for the benefit of the Company, its creditors
and its members and, at the discretion of the directors, for any person
having a direct or indirect interest in the
Company.
|
|
6
|
Maximum
Number of Authorised Shares
|
|
6.1
|
The
Company is authorised to issue a maximum of 75,000,000 shares of one class
with a par value of US$0.0001 each divided into the following classes of
shares:
|
|
|
(a)
|
74,000,000
ordinary shares of US$0.0001 par value each;
and
|
|
|
(b)
|
1,000,000
preferred shares of US$0.0001 par value
each.
|
|
6.2
|
The
directors or members may from time to time by Resolution of Directors or
Resolution of Members increase the maximum number of shares the Company is
authorised to issue, by amendment to the Memorandum in accordance with the
provisions below.
|
|
7
|
Rights
Conferred by Shares
|
|
7.1
|
Each
share in the Company confers on the
holder:
|
|
|
(a)
|
the
right to one vote on any Resolution of
Members;
|
|
|
(b)
|
the
right to an equal share in any dividend paid by the Company in accordance
with the Act; and
|
|
|
(c)
|
the
right to an equal share in the distribution of the surplus assets of the
Company.
|
|
7.2
|
If
at any time the Company is authorised to issue shares of more than one
class the rights attached to any class (unless otherwise provided by the
terms of issue of the shares of that class) may, whether or not the
Company is being wound up, be varied only with the consent in writing of
the holders of not less than three-fourths of the issued shares of that
class and the holders of not less than three-fourths of the issued shares
of any other class of shares which may be affected by such
variation.
|
|
7.3
|
The
rights conferred upon the holders of the shares of any class issued with
preferred or other rights shall not, unless otherwise expressly provided
by the terms of issue of the shares of that class, be deemed to be varied
by the creation or issue of further shares ranking pari passu
therewith.
|
|
7.4
|
The
directors may, subject to the Act, by amending this Memorandum and/or the
Articles, determine the designations, powers, preferences and relative,
participation, optional and other rights, if any, and the qualifications,
limitations and restrictions thereof, if any, including, without
limitation, dividend rights, conversion rights, redemption privileges,
voting powers and liquidation preferences that any Preferred Share issued
by the Company confers on the
holder.
|
|
8
|
Registered
Shares Only
|
Shares in
the Company may only be issued as registered shares and the Company is not
authorised to issue bearer shares. Registered shares may not be
exchanged for bearer shares or converted to bearer shares.
|
9
|
Amendments
to the Memorandum and Articles
|
|
9.1
|
Subject
to the provisions of the Act, the directors or members may from time to
time amend the Memorandum or Articles by Resolution of Directors or
Resolution of Members. The directors shall give notice of such
resolution to the registered agent of the Company, for the registered
agent to file with the Registrar a notice of the amendment to the
Memorandum or Articles, or a restated memorandum and articles of
association incorporating the amendment(s) made, and any such amendment to
the Memorandum or Articles will take effect from the date of the
registration by the Registrar of the notice of amendment or restated
memorandum and articles of association incorporating the amendment(s)
made.
|
|
9.2
|
The
directors shall not have the power to amend the Memorandum or
Articles:
|
|
|
(a)
|
to
restrict the rights or powers of the members to amend the Memorandum or
Articles;
|
|
|
(b)
|
to
change the percentage of members required to pass a resolution to amend
the Memorandum or Articles; or
|
|
|
(c)
|
in
circumstances where the Memorandum or Articles cannot be amended by the
members.
|
|
|
(d)
|
A
change of registered office or registered agent shall not constitute an
amendment of the Memorandum or
Articles.
|
|
|
(e)
|
An
amendment to the Memorandum or Articles which would have the effect of
varying the rights of the holders of a class of shares may only be made in
accordance with the provisions of the Memorandum and Articles relating to
the variation of class rights.
|
|
10
|
Definitions
and Interpretation
|
|
10.1
|
In
this memorandum of association and the attached articles of
association:
|
|
"
Act
"
|
means
the BVI Business Companies Act, 2004;
|
|
"
Articles
"
|
means
the Company's articles of association as attached to this
Memorandum, and "Article" shall be construed
accordingly;
|
|
"
Memorandum
"
|
means
this, the Company's memorandum of association;
|
|
"
Registrar
"
|
means
the Registrar of Corporate Affairs appointed under the Act;
|
|
"
Resolution of
Directors
"
|
means
a resolution by the majority of the directors of the Company passed either
at a meeting of directors, or by way of a Written Resolution, in either
case in accordance with the provisions of the Articles;
|
|
"
Resolution of
Members
"
|
means
a resolution by the members holding a majority of the voting rights in
respect of such resolution passed either at a meeting of members, or by
way of a Written Resolution, in either case in accordance with the
provisions of the Articles; and
|
|
"
Written
Resolution
"
|
means
a resolution of members or directors (as applicable) consented to in
writing or by telex, telegram, cable or other written electronic
communication, without the need for any notice. A Written
Resolution may consist of several documents, including written electronic
communications, in like form each signed or assented to by one or more
members or directors (including directors' alternates) (as
applicable). A Written Resolution shall be passed if so
consented by a majority of those members or directors (including
directors' alternates) (as applicable) entitled to vote on the
resolution.
|
|
10.2
|
In
the Memorandum and Articles:
|
|
|
(a)
|
words
and expressions defined in the Act shall have the same meaning and, unless
otherwise required by the context, the singular shall include the plural
and vice versa, the masculine shall include the feminine and the neuter
and references to persons shall include corporations and all entities
capable of having a legal
existence;
|
|
|
(b)
|
reference
to a provision of law is a reference to that provision as extended,
applied, amended or re-enacted and includes any subordinate
legislation;
|
|
|
(c)
|
the
headings are for convenience only and shall not affect the construction of
the Memorandum or Articles;
|
|
|
(d)
|
reference
to a thing being "
written
" or "
in writing
" includes all
forms of writing, including all electronic records which satisfy the
requirements of the Electronic Transactions Act,
2001;
|
|
|
(e)
|
reference
to a thing being "
signed
" or to a person's
"
signature
" shall
include reference to an electronic signature which satisfies the
requirements of the Electronic Transactions Act, 2001, and reference to
the Company's "
seal
" shall include
reference to an electronic seal which satisfies the requirements of the
Electronic Transactions Act, 2001.
|
We,
Maples Finance BVI Limited of Kingston Chambers, PO Box 173, Road Town, Tortola,
British Virgin Islands in our capacity as registered agent for the Company
hereby apply to the Registrar for the incorporation of the Company this 17th day
of April 2008
.
Incorporator
(Sgd.)
Clinton Hempel
________________________________
Clinton
Hempel
Authorised
Signatory
Maples
Finance BVI Limited
TERRITORY
OF THE BRITISH VIRGIN ISLANDS
THE
BVI BUSINESS COMPANIES ACT, 2004
AMENDED
AND RESTATED
ARTICLES
OF ASSOCIATION
OF
China
Networks International Holdings Ltd.
|
1
|
Share
Certificates
|
|
1.1
|
Every
person whose name is entered as a member in the share register, being the
holder of registered shares, shall without payment be entitled to a share
certificate in the following
circumstances:
|
|
|
(a)
|
on
the issuance of such shares to such
member;
|
|
|
(b)
|
on
the transfer of such shares to such
member;
|
|
|
(c)
|
on
a re-designation or conversion of such shares with the effect that the
certificate previously issued no longer properly describes such shares;
and
|
|
|
(d)
|
at
the discretion of the directors (who may levy a reasonable charge), on
notice to the Company of a change of name of the
member.
|
|
1.2
|
Such
certificate shall be signed by a director or under the common seal of the
Company (which the registered agent of the Company is authorised to affix
to such certificate) with or without the signature of any director or
officer of the Company specifying the share or shares held and the par
value thereof (if the Company is authorised at the relevant time to issue
shares with a par value), provided that in respect of shares held jointly
by several persons, the Company shall not be bound to issue more than one
certificate and delivery of a certificate for a share to one of several
joint holders shall be sufficient delivery to
all
|
|
1.3
|
If
a certificate is worn out or lost it may, subject to the prior written
consent of any mortgagee or chargee whose interest has been noted on the
register of members, be renewed on production of the worn out certificate,
or on satisfactory proof of its loss together with such indemnity as the
directors may reasonably require. Any member receiving a share
certificate shall indemnify and hold the Company and its officers harmless
from any loss or liability which it or they may incur by reason of
wrongful or fraudulent use or representation made by any person by virtue
of the possession of such a
certificate.
|
|
2
|
Issue
of Shares
|
|
2.1
|
Subject
to the provisions of these Articles, the unissued shares of the Company
(whether forming part of the original or any increased authorised shares)
shall be at the disposal of the directors who may offer, allot, grant
options over or otherwise dispose of them to such persons at such times
and for such consideration, being not less than the par value (if any) of
the shares being disposed of, and upon such terms and conditions as the
directors may determine. Such consideration may take any form
acceptable to the directors, including money, a promissory note, or other
written obligation to contribute money or property, real property,
personal property (including goodwill and know-how), services rendered or
a contract for future services. Before issuing shares for a consideration
other than money, the directors shall pass a Resolution of Directors
stating:
|
|
|
(a)
|
the
amount to be credited for the issue of the
shares;
|
|
|
(b)
|
their
determination of the reasonable present cash value of the non-money
consideration for the issue; and
|
|
|
(c)
|
that,
in their opinion, the present cash value of the non-money consideration
for the issue is not less than the amount to be credited for the issue of
the shares.
|
|
2.2
|
Subject
to the provisions of the Act in this regard, shares may be issued on the
terms that they are redeemable, or at the option of the Company be liable
to be redeemed on such terms and in such manner as the directors before or
at the time of the issue of such shares may determine. At any
time after the consummation of a Business Combination (as defined in these
Articles), the directors may issue options, warrants or convertible
securities or securities of similar nature conferring the right upon the
holders thereof to subscribe for, purchase or receive any class of shares
or securities in the Company on such terms as it may from time to time
determine. Notwithstanding the foregoing, the directors may
issue options, warrants or convertible securities in connection with the
Company’s initial public offering.
|
|
2.3
|
The
Company may issue bonus shares, partly paid shares and nil paid
shares.
|
|
2.4
|
The
directors may redeem any share issued by the Company at a
premium.
|
|
2.5
|
Except
as otherwise expressly provided in the resolution or resolutions providing
for the establishment of any class or series of preferred shares, no vote
of the holders of preferred shares or of the holders of ordinary shares
shall be a prerequisite to the issuance of any shares of any class or
series of the preferred shares authorized by and complying with the
conditions in the Memorandum or these
Articles.
|
|
2.6
|
Except
as required by the Act, and notwithstanding that a share certificate may
refer to a member holding shares "as trustee" or similar expression, no
person shall be recognised by the Company as holding any share upon any
trust, and the Company shall not be bound by or be compelled in any way to
recognise (even when having notice thereof) any equitable, contingent,
future or partial interest in any share or any interest in any fractional
part of a share or (except as provided by these Articles or by the Act)
any other rights in respect of any share except any absolute right to the
entirety thereof by the registered
holder.
|
|
3
|
Forfeiture
of Shares
|
|
3.1
|
The
Company may, at any time after the due date for payment, serve on a member
who has not paid in full for shares registered in the name of that member,
a written notice of call ("
Notice of Call
")
specifying a date for payment to be made. The Notice of Call
shall name a further date not earlier than the expiration of 14 days from
the date of service of the Notice of Call on or before which the payment
required by the Notice of Call is to be made and shall contain a statement
that in the event of non-payment at or before the time named in the Notice
of Call the shares, or any of them, in respect of which payment is not
made will be liable to be
forfeited.
|
|
3.2
|
Where
a written Notice of Call has been issued under the foregoing Article and
the requirements of the Notice of Call have not been complied with, the
directors may, at any time before tender of payment, forfeit and cancel
the shares to which the Notice of Call relates. The Company is
under no obligation to refund any moneys to the member whose shares have
been cancelled pursuant to this Article and that member shall be
discharged from any further obligation to the
Company.
|
|
4
|
Transfer
of Shares
|
|
4.1
|
Shares
in the Company shall be transferred by a written instrument of transfer
signed by the transferor and containing the name and address of the
transferee. The instrument of transfer shall also be signed by
the transferee if registration as a holder of the shares imposes a
liability to the Company on the transferee. The instrument of
transfer of a registered share shall be sent to the Company for
registration.
|
|
4.2
|
Subject
to the Memorandum of Association, these Articles and to Section 54(5) of
the Act, the Company shall, on receipt of an instrument of transfer, enter
the name of the transferee of the share in the register of members unless
the directors resolve to refuse or delay the registration of the transfer
for reasons that shall be specified in the resolution. Where
the directors pass such a resolution, the Company shall send to the
transferor and the transferee a notice of the refusal or
delay. Notwithstanding anything contained in the
Memorandum or Articles, the directors shall not decline to register any
transfer of shares, nor may they suspend registration thereof where such
transfer is:
|
|
|
(a)
|
to
any mortgagee or chargee whose interest has been noted on the register of
members;
|
|
|
(b)
|
by
any such mortgagee or chargee, pursuant to the power of sale under its
security; or
|
|
|
(c)
|
by
any such mortgagee or chargee in accordance with the terms of the relevant
security document.
|
|
4.3
|
The
transfer of a registered share is effective when the name of the
transferee is entered in the register of
members.
|
|
5
|
Mortgages
of Shares and Charges over Shares
|
|
5.1
|
Members
may mortgage or create a charge or other form of security over their
shares.
|
|
5.2
|
The
directors shall, at the written request of a member who has mortgaged or
created a charge over his shares, enter in the register of members of the
Company:
|
|
|
(a)
|
a
statement that such shares are mortgaged or
charged;
|
|
|
(b)
|
the
name of the mortgagee or chargee (where such information has been stated
by the member); and
|
|
|
(c)
|
the
date on which the statement and name are entered in the register of
members.
|
|
6
|
Transmission
of Shares
|
|
6.1
|
Subject
to Sections 52(2) and 53 of the Act, the executor or administrator of a
deceased member, the guardian of an incompetent member or the trustee of a
bankrupt member shall be the only person recognised by the Company as
having any title to his share, save that and only in the event of death,
incompetence or bankruptcy of any member or members of the Company as a
consequence of which the Company no longer has any directors or members,
then upon the production of any documentation which is reasonable evidence
of the applicant being entitled to:
|
|
|
(a)
|
a
grant of probate of the deceased's will, or grant of letters of
administration of the deceased's estate, or confirmation of the
appointment as executor or administrator (as the case may be, or analogous
position in the relevant jurisdiction), of a deceased member's
estate;
|
|
|
(b)
|
the
appointment of a guardian (or analogous position in the relevant
jurisdiction) of an incompetent
member;
|
|
|
(c)
|
the
appointment as trustee (or analogous position in the relevant
jurisdiction) of a bankrupt member;
or
|
|
|
(d)
|
upon
production of any other reasonable evidence of the applicant's beneficial
ownership of, or entitlement to the
shares,
|
|
to
the Company's registered agent in the British Virgin Islands together with
(if so requested by the registered agent) a notarised copy of the share
certificate(s) of the deceased, incompetent or bankrupt member, an
indemnity in favour of the registered agent and/or appropriate legal
advice in respect of any document issued by a foreign court, then the
administrator, executor, guardian or trustee in bankruptcy (as the case
may be) notwithstanding that their name has not been entered in the share
register of the Company, may by written resolution of the applicant,
endorsed with written approval by the registered agent, be appointed a
director of the Company and/or entered in the share register as the legal
and/or beneficial owner of the
shares.
|
|
6.2
|
Without
limiting the foregoing, the production to the Company of any document
which is reasonable evidence of:
|
|
|
(a)
|
a
grant of probate of the will, or grant of letters of administration of the
estate, or confirmation of the appointment as executor (or analogous
position in the relevant jurisdiction), of a deceased
member;
|
|
|
(b)
|
the
appointment of a guardian (or analogous position in the relevant
jurisdiction) of an incompetent
member;
|
|
|
(c)
|
the
trustee (or analogous position in the relevant jurisdiction) of a bankrupt
member; or
|
|
|
(d)
|
the
applicant's legal and/or beneficial ownership of the
shares,
|
shall be
accepted by the Company even if the deceased, incompetent member or bankrupt
member is resident and/or domiciled outside the British Virgin Islands if the
document is issued by a foreign court which had competent jurisdiction in the
matter. For the purposes of establishing whether or not a foreign
court had competent jurisdiction in such a matter the directors may obtain
appropriate legal advice. The directors may also require an indemnity
to be given by the executor, administrator, guardian, trustee in bankruptcy or
the applicant.
|
6.3
|
Any
person becoming entitled by operation of law or otherwise to a share or
shares in consequence of the death, incompetence or bankruptcy of any
member may be registered as a member upon such evidence being produced as
may reasonably be required by the directors. An application by
any such person to be registered as a member shall for all purposes be
deemed to be a transfer of shares of the deceased, incompetent or bankrupt
member and the directors shall treat it as
such.
|
|
6.4
|
Any
person who has become entitled to a share or shares in consequence of the
death, incompetence or bankruptcy of any member may, instead of being
registered himself, request in writing that some person to be named by him
be registered as the transferee of such share or shares and such request
shall likewise be treated as if it were a
transfer.
|
|
6.5
|
What
amounts to incompetence on the part of a person is a matter to be
determined by the court having regard to all the relevant evidence and the
circumstances of the case.
|
|
7
|
Acquisition
of Own Shares
|
|
7.1
|
Subject
to Article 27 of these Articles, the directors may, on behalf of the
Company, purchase, redeem or otherwise acquire any of the Company's own
shares for such consideration as the directors consider fit, and either
cancel or hold such shares as treasury shares. Shares may be
purchased or otherwise acquired in exchange for newly issued shares in the
Company.
|
|
7.2
|
The
directors shall not, unless permitted pursuant to the Act, purchase,
redeem or otherwise acquire any of the Company's own shares unless
immediately after such purchase, redemption or other
acquisition:
|
|
|
(a)
|
the
value of the Company's assets exceeds it liabilities;
and
|
|
|
(b)
|
the
Company is able to pay its debts as they fall
due.
|
|
7.3
|
Sections
60 and 61 of the Act shall not apply to the
Company.
|
|
8
|
Treasury
Shares
|
|
8.1
|
Shares
may only be held as treasury shares by the Company to the extent that the
number of treasury shares does not exceed 50% of the shares of that class
previously issued by the Company, excluding shares that have been
cancelled.
|
|
8.2
|
The
directors may dispose of any shares held as treasury shares on such terms
and conditions as they may from time to time
determine.
|
|
9
|
Notice
of Meetings of Members
|
|
9.1
|
The
directors may convene meetings of the members of the Company at such times
and in such manner and places (within or outside the British Virgin
Islands) as the directors consider necessary or desirable, and they shall
convene such a meeting upon the written request of members entitled to
exercise at least thirty (30) percent of the voting rights in respect of
the matter for which the meeting is requested. Meetings of members shall
take place at least annually (the “
Annual
Meeting
”).
|
|
9.2
|
Not
less than seven (7) days' notice specifying at least the place, the day
and the hour of the meeting and general nature of the business to be
conducted shall be given in the manner hereinafter mentioned to such
persons whose names on the date the notice is given appear as members in
the share register of the Company and are entitled to vote at the
meeting. Notwithstanding the foregoing, a meeting of members
held in contravention of the requirement to give notice is valid if
members holding a ninety (90) percent majority
of:
|
|
|
(a)
|
the
total voting rights on all the matters to be considered at the meeting;
or
|
|
|
(b)
|
the
votes of each class or series of shares where members are entitled to vote
thereon as a class or series together with an absolute majority of the
remaining votes,
|
have
waived notice of the meeting and, for this purpose, the presence of a member at
the meeting shall be deemed to constitute waiver on his part (unless such member
objects in writing before or at the meeting).
|
9.3
|
The
inadvertent failure of the directors to give notice of a meeting to a
member or the fact that a member has not received a notice that has been
properly given, shall not invalidate the
meeting.
|
|
10
|
Proceedings
at Meetings of Members
|
|
10.1
|
No
business shall be transacted at any meeting of members unless a quorum of
members is present at the time when the meeting proceeds to
business. A quorum shall consist of the holder or holders
present in person or by proxy entitled to exercise at least fifty (50)
percent of the voting rights of the shares of each class or series of
shares entitled to vote as a class or series thereon and the same
proportion of the votes of the remaining shares entitled to vote
thereon.
|
|
10.2
|
A
member of the Company shall be deemed to be present at a meeting of
members if:
|
|
|
(a)
|
he
or his proxy participates by telephone or other electronic means;
and
|
|
|
(b)
|
all
members and proxies participating in the meeting are able to hear each
other.
|
|
10.3
|
If,
within half an hour from the time appointed for the meeting, a quorum is
not present, the meeting shall be
dissolved.
|
|
10.4
|
A
member may attend a meeting of members personally or be represented by a
proxy who may speak and vote on behalf of the
member.
|
|
10.5
|
The
instrument appointing a proxy shall be produced at the place appointed for
the meeting before the time for holding the meeting at which the person
named in such instrument proposes to vote. An instrument
appointing a proxy shall be in such form as the Chairman of the meeting
shall accept as properly evidencing the wishes of the member appointing
the proxy, but must be in writing under the hand of the appointer unless
the appointer is a corporation or other form of legal entity (other than
one or more individuals holding as joint owner) in which case the
instrument appointing a proxy shall be in writing under the hand of an
individual duly authorised by such corporation or legal entity to execute
the same.
|
|
10.6
|
At
every meeting the members present shall choose someone of their number to
be the chairman (the "
Chairman
"). If
the members are unable to choose a Chairman for any reason, then the
person representing the greatest number of voting shares present at the
meeting shall preside as Chairman.
|
|
10.7
|
The
Chairman may, with the consent of the meeting, adjourn any meeting from
time to time, and from place to place, but no business shall be transacted
at any adjourned meeting other than the business left unfinished at the
meeting from which the adjournment took
place.
|
|
10.8
|
At
any meeting a resolution put to the vote of the meeting shall be decided
on a show of hands by a simple majority of those members (or their duly
appointed proxies) entitled to vote and voting on the resolution, unless a
poll is (before or on the declaration of the result of the show of hands)
demanded:
|
|
|
(a)
|
by
the Chairman; or
|
|
|
(b)
|
by
any member present in person or by proxy and holding not less than one
tenth of the total voting shares issued by the Company and having the
right to vote on such resolution.
|
|
10.9
|
Unless
a poll be so demanded, a declaration by the Chairman that a resolution
has, on a show of hands been carried, and an entry to that effect in the
book containing the minutes
of the proceedings
of the Company, shall be sufficient evidence of the fact, without proof of
the number or proportion of the votes recorded in favour of or against
such resolution.
|
|
10.10
|
If
a poll is duly demanded it shall be taken in such manner as the Chairman
directs, and the result of the poll shall be deemed to be the resolution
of the meeting
at which the poll
was demanded. The demand for a poll may be withdrawn, at the
discretion of the Chairman.
|
|
10.11
|
On
a poll, every holder of a voting share present in person or by proxy shall
have one vote for every voting share of which he is the holder which
confers the right to a vote on the
resolution.
|
|
10.12
|
In
the case of an equality of votes, whether on a show of hands
or on a poll, the
Chairman
of
the meeting at which the show of hands takes place, or at which the poll
is demanded, shall be entitled to a second or casting
vote.
|
|
10.13
|
Subject
to the Memorandum or these Articles, an action that may be taken by
members of the Company at a meeting of members may also be taken by
Written Resolution.
|
|
10.14
|
If
a committee is appointed for any member who is of unsound mind, that
member may vote by such committee.
|
|
11
|
Jointly
Held Shares
|
|
11.1
|
Where
shares are registered in the names of joint
owners:
|
|
|
(a)
|
each
registered owner may be present in person or by proxy at a meeting of
members and may speak as a member;
|
|
|
(b)
|
if
only one of them is present in person or by proxy, he may vote on behalf
of all of them; and
|
|
|
(c)
|
if
two or more are present in person or by proxy, they must vote as
one. If more than one joint owner votes in person or by proxy
at any meeting of members or by Written Resolution, the vote of the joint
owner whose name appears first among such voting joint holders in the
share register shall alone be
counted.
|
|
12
|
Corporations
Acting by Representatives at
Meetings
|
Any
corporation or other form of corporate legal entity which is a member of the
Company may by resolution of its directors or other governing body authorise
such person as it thinks fit to act as its representative at any meeting of the
members or any class of members of the Company, and the person so authorised
shall be entitled to exercise the same powers on behalf of the corporation which
he represents as that corporation could exercise if it were an individual member
of the Company.
|
13
|
Appointment
and Removal of Directors
|
|
13.1
|
The
first director or directors shall be appointed by the registered agent of
the Company. Thereafter, the directors shall be appointed as
follows:
|
|
|
(a)
|
subject
to the provisions of Article 27, any existing director(s) shall be
designated as a Class C Director for a term expiring at the Company's
third Annual Meeting of Members. The Class C director shall then appoint
additional Class A, Class B and Class C directors, as necessary. The
directors in Class A shall be elected for a term expiring at the first
Annual Meeting of Members, the directors in Class B shall be elected for a
term expiring at the second Annual Meeting of Members and the directors in
Class C shall be elected for a term expiring at the third Annual Meeting
of Members. Commencing at the first Annual Meeting of Members, and at each
annual meeting thereafter, directors elected to succeed those directors
whose terms expire shall be elected for a term of office to expire at the
third succeeding annual meeting of members after their election. Except as
the Act may otherwise require, in the interim between annual meetings of
members or special meetings of members called for the election of
directors and/or the removal of one or more directors and the filling of
any vacancy in that connection, newly created directorships and any
vacancies in the Board of Directors, including unfilled vacancies
resulting from the removal of directors for cause, may be filled by the
vote of a majority of the remaining directors then in office, although
less than a quorum, or by the sole remaining
director;
|
|
|
(b)
|
all
directors shall hold office until the expiration of their respective terms
of office and until their successors shall have been elected and
qualified. A director elected to fill a vacancy resulting from the death,
resignation or removal of a director shall serve for the remainder of the
full term of the director whose death, resignation or removal shall have
created such vacancy and until his successor shall have been elected and
qualified; and
|
|
|
(c)
|
following
the consummation of a Business Combination, the directors shall be
appointed and removed by resolution of directors or resolution of members
for such terms as the directors or members may so
determine. Sections 114(2) and 114(3) of the Act shall not
apply to the Company.
|
|
13.2
|
Except
as the Act may otherwise require, newly created directorships and any
vacancies in the board of directors, including unfilled vacancies
resulting from the removal of directors for cause, may be filled by the
vote of a majority of the remaining directors then in office, although
less than a quorum (as defined in these Articles), or by the sole
remaining director.
|
|
13.3
|
A
director elected to fill a vacancy resulting from the death, resignation
or removal of a director shall serve for the remainder of the full term of
the director whose death, resignation or removal shall have created such
vacancy and until his successor shall have been elected and
qualified.
|
|
13.4
|
A
person shall not be appointed as a director of the Company unless he has
consented in writing to be a
director.
|
|
13.5
|
Each
director holds office until:
|
|
|
(a)
|
his
disqualification to act as a director under Section 111 of the Act (on
which his office as director shall be automatically terminated if he has
not resigned in accordance with section 115(2) of the
Act);
|
|
|
(b)
|
his
death;
|
|
|
(c)
|
his
resignation; or
|
|
|
(d)
|
the
effective date of his removal by Resolution of Directors or Resolution of
Members.
|
|
13.6
|
The
following are disqualified for appointment as the director of the
Company:
|
|
|
(a)
|
an
individual who is under 18 years of
age;
|
|
|
(b)
|
a
person who is a disqualified person within the meaning of section 260(4)
of the Insolvency Act, 2003;
|
|
|
(c)
|
a
person who is a restricted person within the meaning of section 409 of the
Insolvency Act, 2003; and
|
|
|
(d)
|
an
undischarged bankrupt.
|
|
13.7
|
A
director shall not require a share qualification, but nevertheless shall
be entitled to attend and speak at any meeting of the directors and
meeting of the members and at any separate meeting of the holders of any
class of shares in the Company.
|
|
13.8
|
The
remuneration of directors (whether by way of salary, commission,
participation in profits or otherwise) in respect of services rendered or
to be rendered in any capacity to the Company (including to any company in
which the Company may be interested) shall be fixed by Resolution of
Directors or Resolution of Members. The directors may also be
paid such travelling, hotel and other expenses properly incurred by them
in attending and returning from meetings of the directors, or any
committee of the directors or meetings of the members, or in connection
with the business of the Company as shall be approved by Resolution of
Directors or Resolution of Members.
|
|
14
|
Alternate
and Reserve Directors
|
|
14.1
|
A
director, by written instrument deposited at the registered office of the
Company, may from time to time appoint another director or another person
to be his alternate. Every such alternate shall be entitled to
be given notice of meetings of the directors and to attend and vote as a
director at any such meeting at which the director appointing him is not
personally present (and to vote on a Written Resolution) and generally at
such meeting (or in connection with such Written Resolution) to have and
exercise all the powers, rights, duties and authorities of the director
appointing him. Every such alternate shall be deemed to be an
officer of the Company and shall not be deemed to be an agent of the
director appointing him. Unless stated otherwise in the notice
of the appointment of the alternate, if undue delay or difficulty would be
occasioned by giving notice to a director of a resolution of which his
approval is sought in accordance with these Articles his alternate (if
any) shall be entitled to signify approval of the same on behalf of that
director. The remuneration of an alternate shall be payable out
of the remuneration payable to the director appointing him, as agreed
between such alternate and the director appointing him. A
director, by writing under his hand deposited at the registered office of
the Company, may at any time vary or revoke the appointment of an
alternate appointed by him. If a director shall die or cease to
hold the office of director, the appointment of his alternate shall
thereupon cease and terminate.
|
|
14.2
|
Where
the Company has only one member with voting rights who is an individual
and that member is also the sole director of the Company (the
"
sole member/director
"),
that sole member/director may, by instrument in writing, nominate a person
who is not disqualified from being a director of the Company under section
111(1) of the Act as a reserve director of the Company to act in the place
of the sole director in the event of his death.A person shall not be
nominated as a reserve director unless he has consented in writing to be
nominated as a reserve director. The nomination of a person as a reserve
director of the Company ceases to have effect
if:
|
|
|
(a)
|
before
the death of the sole member/director who nominated
him:
|
|
|
(i)
|
he
resigns as reserve director, or
|
|
|
(ii)
|
the
sole member/director revokes the nomination in writing;
or
|
|
|
(b)
|
the
sole member/director who nominated him ceases to be the sole
member/director of the company for any reason other than his
death.
|
|
15
|
Duties
of Directors and Conflicts of
Interests
|
|
15.1
|
A
director of the Company, in exercising his powers or performing his
duties, shall act honestly and in good faith and in what the director
believes to be in the best interests of the
Company.
|
|
15.2
|
Notwithstanding
the foregoing Article, if the Company is a wholly-owned subsidiary, a
director of the Company may, when exercising powers or performing duties
as a director, act in a manner which he believes is in the best interests
of that Company’s holding company (as defined in the Act) even though it
may not be in the best interests of the
Company.
|
|
15.3
|
A
director shall exercise his powers as a director for a proper purpose and
shall not act, or agree to the Company acting, in a manner that
contravenes the Act or the Memorandum or
Articles.
|
|
15.4
|
A
director, when exercising powers or performing duties as a director, shall
exercise the care, diligence, and skill that a reasonable director would
exercise in the same circumstances taking into account,
but
without limitation:
|
|
|
(a)
|
the
nature of the Company;
|
|
|
(b)
|
the
nature of the decision; and
|
|
|
(c)
|
the
position of the director and the nature of the responsibilities undertaken
by him.
|
|
15.5
|
A
director of the Company, when exercising his powers or performing his
duties as a director, is entitled to rely upon the register of members and
upon books, records, financial statements and other information prepared
or supplied, and on professional or expert advice given,
by:
|
|
|
(a)
|
an
employee of the Company whom the director believes on reasonable grounds
to be reliable and competent in relation to the matters
concerned;
|
|
|
(b)
|
a
professional adviser or expert in relation to matters which the director
believes on reasonable grounds to be within the person’s professional or
expert competence; and
|
|
|
(c)
|
any
other director, or committee of directors upon which the director did not
serve, in relation to matters within the director’s or committee’s
designated authority,
|
provided
that the director:
|
|
(d)
|
acts
in good faith;
|
|
|
(e)
|
makes
proper inquiry where the need for the inquiry is indicated by the
circumstances; and
|
|
|
(f)
|
has
no knowledge that his reliance on the register of members or the books,
records, financial statements and other information or expert advice is
not warranted.
|
|
15.6
|
A
director may hold any other office or position of profit under the Company
(except that of auditor) in conjunction with his office of director, and
may act in a professional capacity to the Company on such terms as to
remuneration and otherwise as the directors shall
approve.
|
|
15.7
|
A
director may be or become a director or officer of, or otherwise be
interested in any company promoted by the Company, or in which the Company
may be interested, as a member or otherwise and no such director shall be
accountable for any remuneration or other benefits received by him as
director or officer or from his interest in such other
company. The directors may also exercise the voting powers
conferred by the shares in any other company held or owned by the Company
in such manner in all respects as they think fit, including the exercise
thereof in favour of any resolutions appointing them, or of their number,
directors or officers of such other company, or voting or providing for
the payment of remuneration to the directors or officers of such other
company. A director may vote in favour of the exercise of such
voting rights in the manner aforesaid notwithstanding that he may be, or
be about to become, a director or officer of such other company, and as
such in any other manner is, or may be, interested in the exercise of such
voting rights in the manner
aforesaid.
|
|
15.8
|
No
director shall be disqualified by his office from contracting with the
Company either as a buyer, seller or otherwise, nor shall any such
contract or arrangement entered into by or on behalf of the Company in
which any director shall be in any way interested be voided, nor shall any
director so contracting or being so interested be liable to account to the
Company for any profit realised by any such contract or arrangement, by
reason of such director holding that office or by reason of the fiduciary
relationship thereby established, provided such director shall,
immediately after becoming aware of the fact that he is interested in a
transaction entered into or to be entered into by the Company, disclose
such interest to the board of directors. For the purposes of
this Article:
|
|
|
(a)
|
A
director of the Company is not required to make such a disclosure
if:
|
|
|
(i)
|
the
transaction or proposed transaction is between the director and the
Company; and
|
|
|
(ii)
|
the
transaction or proposed transaction is or is to be entered into in the
ordinary course of the Company's business and on usual terms and
conditions.
|
|
|
(b)
|
A
disclosure to the board to the effect that a director is a member,
director, officer or trustee of another named company or other person and
is to be regarded as interested in any transaction which may, after the
date of the entry or disclosure, be entered into with that company or
person, is a sufficient disclosure of interest in relation to that
transaction. Such a disclosure is not made to the board unless
it is made or brought to the attention of every director on the
board.
|
|
|
(c)
|
Subject
to Section 125(1) of the Act, the failure by a director to comply with
this Article does not affect the validity of a transaction entered into by
the director or the Company.
|
|
15.9
|
A
director of the Company who is interested in a transaction entered into or
to be entered into by the Company
may:
|
|
|
(a)
|
vote
on a matter relating to the
transaction;
|
|
|
(b)
|
attend
a meeting of directors at which a matter relating to the transaction
arises and be included among the directors present at the meeting for the
purposes of a quorum; and
|
|
|
(c)
|
sign
a document on behalf of the Company, or do any other thing in his capacity
as a director, that relates to the
transaction.
|
|
16
|
Powers
of Directors
|
|
16.1
|
The
business of the Company shall be managed by the directors who may pay all
expenses incurred preliminary to and in connection with the formation and
registration of the Company, and may exercise all such powers of the
Company necessary for managing and for directing and supervising, the
business and affairs of the Company as are not by the Act or by the
Memorandum or these Articles required to be exercised by the members,
subject to any delegation of such powers as may be authorised by these
Articles and permitted by the Act and to such requirements as may be
prescribed by Resolution of the Members, but no requirement made by
Resolution of the Members shall prevail if it be inconsistent with these
Articles nor shall such requirement invalidate any prior act of the
directors which would have been valid if such requirement had not been
made.
|
|
16.2
|
If
the number of directors shall have been fixed at two or more persons and
by reason of vacancies having occurred in the board of directors there
shall be only one continuing director, he shall be authorised to act alone
only for the purpose of appointing another
director.
|
|
17
|
Delegation
by the Board to Directors, Committees, Officers, Attorneys and
Agents
|
|
17.1
|
The
board of directors may entrust to and confer upon any director or officer
any of the powers exercisable by it upon such terms and conditions and
with such restrictions as it thinks fit, and either collaterally with, or
to the exclusion of, its own powers, and may from time to time revoke,
withdraw, alter or vary all or any of such powers. Subject to
the provisions of Section 110 of the Act, the directors may delegate any
of their powers to committees consisting of such member or members of
their body as they think fit. Any committees so formed shall in
the exercise of powers so delegated conform to any regulations that may be
imposed on it by the directors or the provisions of the
Act.
|
|
17.2
|
The
directors have no power to delegate the following powers to a committee of
directors:
|
|
|
(a)
|
to
amend the Memorandum or Articles;
|
|
|
(b)
|
to
designate committees of directors;
|
|
|
(c)
|
to
delegate powers to a committee of directors; (This and the preceding
sub-Article do not prevent a committee of directors, where authorised by
the directors, from appointing a sub-committee and delegating powers
exercisable by the committee to the
sub-committee);
|
|
|
(d)
|
to
appoint or remove directors;
|
|
|
(e)
|
to
appoint or remove an agent;
|
|
|
(f)
|
to
approve a plan or merger, consolidation or
arrangement;
|
|
|
(g)
|
to
make a declaration of solvency for the purposes of section 198(1)(a) of
the Act or approve a liquidation plan;
or
|
|
|
(h)
|
to
make a determination under section 57(1) of the Act that the Company will,
immediately after a proposed distribution, satisfy the solvency
test.
|
|
17.3
|
Where
the directors of the Company delegate their powers to a committee of
directors, they remain responsible for the exercise of that power by the
committee, unless they believed on reasonable grounds that at all times
before the exercise of the power that the committee would exercise the
power in conformity with the duties imposed on directors of the Company by
the Act.
|
|
17.4
|
The
directors of the Company may, by Resolution of Directors, appoint officers
of the Company at such times as shall be considered necessary or
expedient. The officers shall perform such duties as shall be
prescribed at the time of their appointment subject to any modifications
in such duties as may be prescribed by the directors
thereafter.
|
|
17.5
|
Any
person may hold more than one office and no officer need be a director or
member of the Company. The officers shall remain in office
until removed from office by the directors, whether or not a successor is
appointed.
|
|
17.6
|
Any
officer who is a body corporate may appoint any person as its duly
authorised representative for the purpose of representing it and of
transacting any of the business of the
officers.
|
|
17.7
|
The
directors may from time to time by power of attorney appoint any company,
firm or person or body of persons to be the attorney or attorneys of the
Company for such purposes and with such powers, authorities and
discretions (not exceeding those vested in or exercisable by the directors
under these Articles) and for such period and subject to such conditions
as the directors think fit.
|
|
17.8
|
The
directors may appoint any person, including a person who is a director, to
be an agent of the company. An agent of the Company has such
powers and authority of the directors, including the power and authority
to affix the common seal of the Company, as are set forth in the
Resolution of Directors appointing the agent, except that no agent has any
power or authority with respect to the
following:
|
|
|
(a)
|
to
amend the Memorandum or Articles;
|
|
|
(b)
|
to
change the registered office or registered
agent;
|
|
|
(c)
|
to
designate committees of directors;
|
|
|
(d)
|
to
delegate powers to a committee of
directors;
|
|
|
(e)
|
to
appoint or remove directors;
|
|
|
(f)
|
to
appoint or remove an agent;
|
|
|
(g)
|
to
fix emoluments of directors;
|
|
|
(h)
|
to
approve a plan of merger, consolidation or
arrangement;
|
|
|
(i)
|
to
make a declaration of solvency for the purposes of section 198(1)(a) of
the Act or to approve a liquidation
plan;
|
|
|
(j)
|
to
make a determination under section 57(1) of the Act that the Company will,
immediately after a proposed distribution, satisfy the solvency test as
stipulated in Section 56 of the Act;
or
|
|
|
(k)
|
to
authorise the Company to continue as a company incorporated under the laws
of a jurisdiction outside the British Virgin
Islands.
|
|
18
|
Proceedings
of Directors
|
|
18.1
|
The
directors may meet together for the dispatch of business, adjourn and
otherwise regulate their meetings as they think fit. The
meetings of the board of directors and any committee thereof shall be held
at such place or places (within or outside the British Virgin Islands) as
the directors shall decide.
|
|
18.2
|
A
director may at any time summon a meeting of the directors. A
director shall be given not less than three (3) business days' (being full
business days in the place of the director's residence) notice of a
meeting of the directors, save that a meeting of directors held on less
notice is valid if a majority of the directors entitled to vote at the
meeting have waived the notice of the meeting; and, for this purpose, the
presence of a director at the meeting shall be deemed to constitute waiver
on his part (unless he objects in writing before or at the
meeting).
|
|
18.3
|
The
inadvertent failure to give notice of a meeting to a director, or the fact
that a director has not received the notice shall not invalidate the
meeting.
|
|
18.4
|
Any
director who is a body corporate may appoint any person its duly
authorised representative for the purpose of representing it at meetings
of the directors and of transacting any of the business of the
directors.
|
|
18.5
|
A
meeting of the directors is duly constituted for all purposes if at the
commencement of the meeting there are present in person or by alternate
not less than one-third of the total number of directors with a minimum of
two (2).
|
|
18.6
|
If
within half an hour from the time appointed for the meeting a quorum is
not present, the meeting shall be
dissolved.
|
|
18.7
|
A
director of the Company shall be deemed to be present at a meeting of the
board if:
|
|
|
(a)
|
he
or his alternate participates by telephone or other electronic means;
and
|
|
|
(b)
|
all
directors and alternates participating in the meeting are able to hear
each other.
|
|
18.8
|
The
directors may elect a chairman (the "
Chairman of the Board
")
of their meeting and determine the period for which he is to hold
office. If no such Chairman of the Board is elected, or if at
any meeting the Chairman of the Board is not present at the time appointed
for holding the meeting, the directors present may choose one of their
number to be Chairman of the Board for the meeting. If the
directors are unable to choose a Chairman of the Board, for any reason,
then the longest serving director present at the meeting shall preside as
the Chairman of the Board.
|
|
18.9
|
Questions
arising at any meeting of directors shall be decided by a majority of
votes. In case of an equality in votes the Chairman of the
Board shall have a second or casting
vote.
|
|
18.10
|
A
resolution approved by a majority of the directors for the time being
entitled to receive notice of a meeting of the directors or of a committee
of the directors and taking the form of a Written Resolution shall be as
valid and effectual as if it had been passed at a meeting of the directors
or of such committee duly convened and held, without the need for any
notice.
|
|
18.11
|
If
the Company shall have only one director, the foregoing provisions for
meetings of the directors shall not apply but such sole director shall
have full power to represent and act for the Company in all matters and in
lieu of minutes of a meeting shall record in writing and sign a note of
memorandum of all matters requiring a resolution of the
directors. Such note or memorandum shall constitute sufficient
evidence of such resolution for all
purposes.
|
|
19
|
Indemnification
and Insurance
|
|
19.1
|
Subject
to the provisions of the Act and the subsequent provisions of this
Article, the Company may indemnify against all expenses, including legal
fees, and against all judgments, fines and amounts paid in settlement and
reasonably incurred in connection with legal, administrative or
investigative proceedings any person
who:
|
|
|
(a)
|
is
or was a party or is threatened to be made a party to any threatened,
pending or completed proceedings, whether civil, criminal, administrative
or investigative, by reason of the fact that the person is or was a
director of the
Company; or
|
|
|
(b)
|
is
or was, at the request of the Company, serving as a director of, or in any
other capacity is or was acting for, another company or a partnership,
joint venture, trust or other
enterprise.
|
|
19.2
|
This
Article applies only to a person who has acted honestly and in good faith
and in what he believed to be the best interests of the Company and, in
the case of criminal proceedings, the person had no reasonable cause to
believe that his conduct was unlawful. The Company shall not indemnify a
person who has not so acted, and any indemnity given to such a person is
void and of no effect. A director acts in the best interests of the
Company if he acts in the best interests
of:
|
|
|
(a)
|
the
Company’s holding company; or
|
|
|
(b)
|
a
shareholder or shareholders of the
Company;
|
in either
case, in the circumstances specified in the sub-Articles below, as the case may
be:
|
19.3
|
The
termination of any proceedings by any judgement, order, settlement,
conviction or the entering of a
nolle prosequi
does
not, by itself, create a presumption that the person did not act honestly
and in good faith and with a view to the best interests of the Company or
that the person had reasonable cause to believe that his conduct was
unlawful.
|
|
19.4
|
Expenses,
including legal fees, incurred by a director in defending any legal,
administrative or investigative proceedings may be paid by the Company in
advance of the final disposition of such proceedings upon receipt of an
undertaking by or on behalf of the director to repay the amount if it
shall ultimately be determined that the director is not entitled to be
indemnified by the Company in accordance with this
Article.
|
|
19.5
|
Expenses,
including legal fees, incurred by a former director in defending any
legal, administrative or investigative proceedings may be paid by the
Company in advance of the final disposition of such proceedings upon
receipt of an undertaking by or on behalf of the former director to repay
the amount if it shall ultimately be determined that the former director
is not entitled to be indemnified by the Company in accordance with this
Article and upon such other terms and conditions, if any, as the Company
deems appropriate.
|
|
19.6
|
The
indemnification and advancement of expenses provided by, or granted
pursuant to, this Article is not exclusive of any other rights to which
the person seeking indemnification or advancement of expenses may be
entitled under any agreement, resolution of members, resolution of
disinterested directors or otherwise, both as to acting in the person’s
official capacity and as to acting in another capacity while serving as a
director of the Company.
|
|
19.7
|
The
Company may purchase and maintain insurance in relation to any person who
is or was a director of the Company, or who at the request of the Company
is or was serving as a director of, or in any other capacity is or was
acting for, another body corporate or a partnership, joint venture, trust
or other enterprise, against any liability asserted against the person and
incurred by the person in that capacity, whether or not the Company has or
would have had the power to indemnify the person against the liability
under the foregoing Article.
|
|
20
|
Company
Seal and Entry into Contracts and
Deeds
|
|
20.1
|
The
directors shall provide for the safe custody of the common seal of the
Company. The common seal when affixed to any instrument (save
for a share certificate in accordance with these Articles) shall be
witnessed by a director or officer of the Company or any other person so
authorised from time to time by the
directors.
|
|
20.2
|
A
contract may be entered into by the Company as
follows:
|
|
|
(a)
|
a
contract that, if entered into by an individual, would be required by law
to be in writing and under seal, may be entered into by or on behalf of
the Company in writing under the common seal of the Company, or executed
by or on behalf of the Company by a director or an authorised agent of the
Company, and may be varied or discharged in the same
manner;
|
|
|
(b)
|
a
contract that, if entered into by an individual, would be required by law
to be in writing and signed, may be entered into by or on behalf of the
Company in writing and signed by a person acting under the express or
implied authority of the company, and may be varied or discharged in the
same manner; and
|
|
|
(c)
|
a
contract that, if entered into by an individual, would be valid although
entered into orally, and not reduced to writing, may be entered into
orally by or on behalf of the Company by a person acting under the express
or implied authority of the Company, and may be varied or discharged in
the same manner.
|
|
20.3
|
Notwithstanding
the foregoing Article, an instrument is validly executed by the Company as
a deed, or an instrument under seal, if it is
either:
|
|
|
(a)
|
sealed
with the common seal of the Company and witnessed by a director of the
Company and/or such other person who is authorised by the Memorandum or
Articles to witness the application of the Company’s seal;
or
|
|
|
(b)
|
expressed
to be, or is expressed to be executed as, or otherwise makes clear on its
face that it is intended to be, a deed and it is signed by a director
and/or by a person acting under the express or implied authority of the
Company.
|
|
21
|
Distributions
|
|
21.1
|
Subject
to the provisions of the Act, the directors of a Company may, by
Resolution of Directors, authorise a distribution by the Company at a
time, and of an amount, and to any members they think fit if they are
satisfied, on reasonable grounds that, immediately after the distribution,
the value of the Company's assets will exceed the Company's liabilities
and the Company is able to pay its debts as they fall
due.
|
|
21.2
|
No
distribution shall be paid on those shares which are held by the Company
as treasury shares at the date of declaration of the
distribution.
|
|
21.3
|
The
directors may, before recommending any distribution, set aside out of the
profits of the Company such sums as they think proper as a reserve or
reserves which shall, at their discretion, either be employed in the
business of the Company or be invested in such investments as the
directors may from time to time think
fit.
|
|
21.4
|
If
several persons are registered as joint holders of any share, any of them
may give effectual receipt for any distribution or other monies payable on
or in respect of the share.
|
|
21.5
|
Notice
of any distribution that may have been declared shall be given to each
member in manner hereinafter mentioned and all distributions unclaimed for
three years after having been declared may be forfeited by the directors
for the benefit of the Company.
|
|
21.6
|
No
distribution shall bear interest against the
Company.
|
|
22
|
Company
Records
|
|
22.1
|
The
Company shall keep records that:
|
|
|
(a)
|
are
sufficient to show and explain the Company's transactions;
and
|
|
|
(b)
|
will,
at any time, enable the financial position of the Company to be determined
with reasonable accuracy.
|
|
22.2
|
The
Company shall keep the following records at the office of its registered
agent or at such other place or places, within or outside the British
Virgin Islands, as the directors may
determine:
|
|
|
(a)
|
minutes
of all meetings and all resolutions of members and of classes of members;
and
|
|
|
(b)
|
minutes
of all meetings and all resolutions of directors and committees of
directors
.
|
Where any
such records are kept at a place other than at the office of the Company’s
registered agent, the Company shall provide the registered agent with a written
record of the physical address of the place or places at which the records are
kept. Where the place at which any such records is changed, the
Company shall provide the registered agent with the physical address of the new
location of the records within fourteen days of the change of
location.
|
22.3
|
The
Company shall keep a register to be known as a register of directors
containing the names and addresses of the persons who are directors of the
Company, the date on which each person whose name is entered in the
register was appointed as a director of the Company, the date on which
each person named as a director ceased to be a director of the Company,
and such other information as may be prescribed from time to time by
law.
|
|
22.4
|
The
Company shall maintain an accurate and complete register of members
showing the full names and addresses of all persons holding registered
shares in the Company, the number of each class and series of registered
shares held by such person, the date on which the name of each member was
entered in the register of members and where applicable, the date such
person ceased to hold any registered shares in the
Company.
|
|
22.5
|
The
Company shall keep the following at the office of its registered
agent:
|
|
|
(a)
|
the
Memorandum and Articles of the
Company;
|
|
|
(b)
|
the
register of members maintained in accordance with these Articles or a copy
of the register of members;
|
|
|
(c)
|
the
register of directors maintained in accordance with these Articles or a
copy of the register of directors;
|
|
|
(d)
|
copies
of all notices and other documents filed by the Company in the previous
ten years;
|
|
|
(e)
|
a
copy of the register of charges kept by the Company pursuant to Section
162(1) of the Act; and
|
|
|
(f)
|
an
imprint of the common seal.
|
|
22.6
|
Where
the Company keeps a copy of the register of members or the register of
directors at the office of its registered agent, it
shall:
|
|
|
(a)
|
within
15 days of any change in the register, notify the registered agent,
in writing, of the change; and
|
|
|
(b)
|
provide
the registered agent with a written record of the physical
address of the place or places at which the original register of members
or the original register of directors is
kept.
|
|
|
(c)
|
Where
the place at which the original register of members or the original
register of directors is changed, the Company shall provide the registered
agent with the physical address of the new location of the records within
14 days of the change of location.
|
|
22.7
|
The
records, documents and registers required by these Articles shall be open
to the inspection of the directors at all
times.
|
|
22.8
|
The
directors shall from time to time determine whether and to what extent and
at what times and places and under what conditions the records, documents
and registers of the Company or any of them shall be open to the
inspection of members not being directors, and no member (not being a
director) shall have any right to inspect any records, documents or
registers of the Company except as conferred by the Act or authorised by a
Resolution of Directors.
|
|
23
|
Audit
|
|
23.1
|
The
directors may by a Resolution of Directors call for the accounts of the
Company to be examined by an auditor or auditors to be appointed by them
at such remuneration as may from time to time be
agreed.
|
|
23.2
|
The
auditor may be a member of the Company but no director or officer shall be
eligible during his continuance in
office.
|
|
23.3
|
Every
auditor of the Company shall have a right of access at all times to the
books of accounts of the Company, and shall be entitled to require from
the officers of the Company such information and explanations as he thinks
necessary for the performance of his
duties.
|
|
23.4
|
The
report of the auditor shall be annexed to the accounts upon which he
reports, and the auditor shall be entitled to receive notice of, and to
attend, any meeting at which the Company's audited profit and loss account
and/or balance sheet is to be
presented.
|
|
24
|
Notices
|
|
24.1
|
Any
notice, information or written statement required to be given to members
shall be served by mail (air-mail service if available) addressed to each
member at the address shown in the share
register.
|
|
24.2
|
All
notices directed to be given to the members shall, with respect to any
registered shares to which persons are jointly entitled, be given to
whichever of such persons is named first in the share register, and notice
so given shall be sufficient notice to all the holders of such
shares.
|
|
24.3
|
Any
notice, if served by post, shall be deemed to have been served within ten
days of posting, and in proving such service it shall be sufficient to
prove that the letter containing the notice was properly addressed and
mailed with the postage prepaid.
|
|
25
|
Continuation
|
The
Company may, by a Resolution of Directors or by a Resolution of Members,
continue as a company incorporated under the laws of a jurisdiction outside the
British Virgin Islands in the manner provided under those laws.
|
26
|
Winding
Up
|
|
26.1
|
The
Company may be voluntarily liquidated under Part XII of the Act if it has
no liabilities and it is able to pay its debts as they become
due. A liquidator may, subject to the terms of the Act, be
appointed by a Resolution of Directors or by a Resolution of
Members.
|
|
26.2
|
If
the Company shall be wound up, the liquidator may, in accordance with a
Resolution of Members, divide amongst the members in specie or in kind the
whole or any part of the assets of the Company (whether they shall consist
of property of the same kind or not) and may for such purpose set such
value as he deems fair upon any such property to be divided as aforesaid
and may determine how such division shall be carried out as between the
members or different classes of members. The liquidator may
vest the whole or any part of such assets in trustees upon such trust for
the benefit of the contributors as the liquidator shall think fit, but so
that no member shall be compelled to accept any shares or other securities
whereon there is any liability.
|
|
27
|
Business
Combination
|
|
27.1
|
The
following provisions 27.2 through 27.5 and Article 13.1(a) and (b) shall
terminate upon the consummation of any "Business Combination," and may not
be amended during the "Target Business Acquisition Period." A
"Business Combination" shall mean the acquisition by the Company, whether
by merger, share capital exchange, asset or share acquisition or other
similar type of transaction, of an operating business ("Target Business").
The "Target Business Acquisition Period" shall mean the period commencing
from the effectiveness of the registration statement filed in connection
with the initial public offering ("IPO") of the Company’s parent
corporation, Alyst Acquisition Corporation, a Delaware corporation
(“Alyst”) up to and including the first to occur of (a) a Business
Combination; or (b) the Termination Date (defined
below).
|
|
27.2
|
Prior
to the consummation of any Business Combination, the Company shall submit
such Business Combination to its shareholders for approval regardless of
whether the Business Combination is of a type which normally would require
such shareholder approval under the Act. In the event that a majority of
the IPO Shares (defined below) cast at the meeting to approve the Business
Combination are voted for the approval of such Business Combination, the
Company shall be authorized to consummate the Business Combination;
provided that the Company shall not consummate any Business Combination if
the holders of 30% or more of the IPO Shares exercise their redemption
rights described in Article 27.3
below.
|
|
27.3
|
In
the event that a Business Combination is approved in accordance with the
above Article 27.2 and is consummated by the Company, any shareholder of
the Company holding Ordinary Shares in the IPO ("IPO Shares") who voted
against the Business Combination may, contemporaneously with such vote,
demand that the Company redeem his IPO Shares into cash. If so demanded,
the Company shall, promptly after consummation of the Business
Combination, redeem such shares into cash at a per share redemption price
equal to the quotient determined by dividing (i) the amount in the Trust
Fund (as defined below), inclusive of any interest thereon, calculated as
of two business days prior to the consummation of the Business
Combination, by (ii) the total number of IPO Shares. "Trust Fund" shall
mean the trust account established by Alyst at the consummation of Alyst's
IPO and into which a certain amount of the net proceeds of the IPO are
deposited.
|
|
27.4
|
In
the event that the Company does not consummate a Business Combination by
29 June 2009 (the "Termination Date"), the officers of the Company shall
take all such action necessary to liquidate and dissolve the Company as
soon as reasonably practicable. In the event that the Company is so
wound-up and subsequently liquidated, only the holders of IPO Shares shall
be entitled to receive pro rata liquidating distributions and the Company
shall pay no liquidating distributions with respect to any other shares of
the Company.
|
|
27.5
|
A
holder of IPO Shares shall be entitled to receive distributions from the
Trust Fund only in the event of a liquidation of the Company or in the
event he demands redemption of his shares in accordance with Article 27.3
above. In no other circumstances shall a holder of IPO Shares have any
right or interest of any kind in or to the Trust
Fund.
|
We,
Maples Finance BVI Limited of Kingston Chambers, PO Box 173, Road Town, Tortola,
British Virgin Islands in our capacity as registered agent for the Company
hereby apply to the Registrar for the incorporation of the Company this 17th day
of April 2008
.
Incorporator
(Sgd.)
Clinton Hempel
_______________________
Clinton
Hempel
Authorised
Signatory
Maples
Finance BVI Limited
Annex
1
ALYST
ACQUISITION CORP./CHINA NETWORKS INTERNATIONAL HOLDINGS LTD.
CHINA
NETWORKS MEDIA LTD.
CHINA
NETWORKS MEDIA, LTD. (CARVE-OUT)
UNAUDITED
PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
FOR
THE YEAR ENDED JUNE 30, 2008 AND THE NINE MONTHS ENDED MARCH 31,
2009
The
following unaudited pro forma condensed combined financial statements of Alyst
Acquisition Corp./China Networks International Holdings Ltd. (“CN Holdings),
China Networks Media, Ltd. (“CN Networks”) and China Networks Media, Ltd.
(Carve-out) (“CN Media”) give effect to the transaction between the companies as
contemplated in the Agreement and Plan of Merger (the “Merger Agreement”) as
subsequently amended, dated August 13, 2008 (“Merger Agreement”) as
amended . This agreement provided, among other things, for the
redomestication of Alyst from the State of Delaware to the British Virgin
Islands (the “Redomestication Merger”) and the merger of a wholly-owned
subsidiary of Alyst into CN Networks (the "Business Combination"). On June 24,
2009, the Alyst shareholders approved the Redomestication Merger and the
Business Combination and the shareholders of CN Networks approved the Merger
Agreement and the Business Combination. In connection with the Redomestication
Merger, all of the holders of Alyst common stock outstanding immediately prior
to the Redomestication Merger received, on a one-for-one basis, ordinary shares
of CN Holdings in exchange for their Alyst common stock, and all units, warrants
and other rights to purchase Alyst common stock immediately prior to the
Redomestication Merger were exchanged for substantially equivalent securities of
CN Holdings at the rate set forth in the Merger Agreement. The share
exchange ratio was 1:1. As result of the foregoing, CN Networks
became a wholly-owned subsidiary of Alyst. In accordance with the revised merger
agreement, Alyst paid $7 million to the CN Networks shareholders and issued
2,880,000 shares of its common stock. In addition, in order to secure the
necessary favorable vote of its stockholders to allow the merger to proceed,
Alyst entered into privately negotiated arrangements with certain of its
existing stockholders pursuant to which it repurchased 5,702,384 of its common
shares (71% of the shares held by public shareholders) after the closing of the
merger for aggregate consideration of approximately $45
million. In addition, as part of the merger, the Company purchased
2,146,156 of its public shares from converting shareholders for an aggregate of
$16.9 million. As part of the amended merger agreement, among other things,
after consummation of the merger, the Company issued to the common shareholders
of CN Networks an equal number of shares that were repurchased or converted in
the aggregate amount of 7,848,540. Consequently the CN Networks interests own
approximately 85% of the common shares outstanding, having clear voting control
of the post merged entity. As a result the transaction, CN Networks is
considered to be the accounting acquirer and the merger has been accounted for
as a reverse merger. Upon consummation of the merger, and as part of the
Redomestication merger, the Company changed its name to China Networks
International Holdings Ltd.
The
unaudited pro forma condensed combined statement of operations for the year
ended June 30, 2008 combines the historical statements of operations of CN
Holdings, CN Networks and CN Media giving effect to the acquisition as if it had
occurred on July 1, 2007.
The
unaudited pro forma condensed combined statement of operations for the nine
months ended March 31, 2009 combines the historical statements of operations of
CN Holdings, CN Networks and CN Media giving effect to the acquisition as if it
had occurred on July 1, 2008.
The
unaudited pro forma condensed combined balance sheet combines the historical
balance sheets of CN Holdings, CN Networks and CN Media giving effect to the
transactions described in the merger agreement as if they had occurred on March
31, 2009.
The pro
forma adjustments give effect to events that are directly attributable to the
transactions discussed below and that have a continuing impact on the operations
of CN Holdings and are based on available data and certain assumptions that
management believes are factually supportable. In addition, the
effects of the Redomestication Merger have been treated as if it occurred at the
beginning of each period for which a pro forma statement of operations is
presented and as of the date of the pro forma balance sheet presented
below.
The
unaudited pro forma condensed combined financial statements described above
should be read in conjunction with the historical consolidated financial
statements of Alyst for the period August 16, 2006 (Inception) to June 30,
2007 and the year ended June 30, 2008 and the related notes thereto,
the historical financial statements of CN Networks for the period March 30, 2007
(Inception) to December 31, 2008 and the unaudited historical financial
statements for the three months ended March 31, 2009 and the related notes
thereto and the historical special purpose combined carve-out financial
statements of CN Media for the years ended December 31, 2007, 2006 and 2005 and
in conjunction with the unaudited historical financial statements of Alyst for
the three months and nine months ended March 31, 2009 and 2008, the CN Networks
consolidated financial statements for the year ended December 31, 2008 and the
related notes thereto, the CN Networks unaudited condensed consolidated
historical financial statements for the three months ended March 31, 2009 and
related notes there to and the unaudited historical financial statements of CN
Media for the six months ended December 31, 2008 and the related notes thereto
which are contained elsewhere in this proxy statement. The appropriate
historical periods derived from CN Networks and CN Media (Carve-out) were added
and subtracted to arrive at the appropriate periods included in these pro forma
statements of operations. The following table is the derivation of the
historical unaudited pro forma condensed combined statement of operations of
China Networks, Ltd. (Carve - out) for the twelve months ended June 30,
2008:
|
A
|
B
|
C
|
A+B-C
|
|||||||||||||
|
Six months
ended June
30,
2008
|
Year ended
December 31,
2007
|
Six months
ended June
30,
2007
|
Year ended
June 30, 2008
|
|||||||||||||
|
Historical
|
Historical
|
Historical
|
Derived
|
|||||||||||||
|
Revenues
|
$ | 8,772,248 | $ | 18,987,149 | $ | 9,664,794 | $ | 18,094,603 | ||||||||
|
Cost
or revenue
|
3,037,439 | 4,844,541 | 1,948,853 | 5,933,127 | ||||||||||||
|
General
and administrative
|
1,032,904 | 1,712,931 | 818,524 | 1,927,311 | ||||||||||||
|
Operating
income (loss)
|
4,701,905 | 12,429,677 | 6,897,417 | 10,234,165 | ||||||||||||
|
Other
income
|
- | 28,802 | - | 28,802 | ||||||||||||
|
NET
INCOME
|
$ | 4,701,905 | $ | 12,458,479 | $ | 6,897,417 | $ | 10,262,967 | ||||||||
CN
Networks is a provider of broadcast television advertising services in the
People’s Republic of China (“PRC”), operating joint-venture partnerships with
PRC state-owned television broadcasters in Kunming and Taiyuan (collectively,
“PRC TV Stations”). It manages these regional businesses through a series of
joint ventures and contractual arrangements to sell broadcast television
advertising time slots and so-called “soft” advertising opportunities to local
advertisers directly and through advertising agencies and brokers. CN Networks
assists PRC TV Stations in selling advertising time slots and “soft” advertising
opportunities to national advertisers, specifically by offering multi-region
campaigns to maximize value and cut costs these national advertisers would
otherwise face when dealing with individual stations on a station by station
basis. It also provides advisory services to PRC TV Stations to help optimize
the impact that their program scheduling and content has on their key
advertising demographics. CN Networks owns 100% of Advertising Networks Ltd., a
Hong Kong holding company that owns the PRC joint-venture partnerships that
provide these services to the PRC TV Stations.
In the
Business Combination, (upon consummation of the Redomestication Merger) on
closing CN Network shareholders will receive aggregate merger
consideration of (i) 2,880,000 shares of CN Holdings ordinary
shares and (ii) an aggregate of $7,000,000 in cash in exchange
for their shares of preferred and common stock. Further, upon the
satisfaction of certain financial performance milestones set forth in the Merger
Agreement in each of the three years ending after the consummation of the
Merger. CN Holdings could be obligated for the payment of additional contingent
consideration to the shareholders of CN Networks comprised (i) cash payment
of $3,000,000 and 2,850,000 ordinary shares for year 1, (ii)
$3,000,000 and 3,075,000 ordinary shares for year 2, and (iii) 3,075,000 for
year 3 of CN Holdings upon the attainment of certain financial milestones in
each year, as defined in the Merger Agreement.
In
addition, up to approximately $22,110,000 of the potential proceeds from the
exercise of the post-merger CN Holdings’ warrants (which are to be issued in
exchange for Alyst IPO and insider warrants with similar terms and conditions
upon consummation of the Business Combination) would be payable to the holders
of ordinary and preferred shareholders of CN Networks. The cash amount payable
to these holders upon exercise of the warrants represents up to 66% of the
actual cash proceeds to be received upon exercise, if any. For purposes of these
unaudited pro forma financial statements, management is unable to determine if
and/or when we would receive proceeds from the exercise of these warrants.
Therefore, no proceeds on warrant exercises can be assumed and consequently
any future payments related to this provision are considered to be contingent
purchase price payments.
For
purposes of these unaudited pro forma financial statements, we have
applied the provisions of Statement of Financial Standards (“SFAS”) No.
141, “Business Combinations”, since the fiscal year of Alyst commenced on July
1, 2008 and the merger would close within this fiscal year (no later than June
29, 2009). Therefore, none of the aforementioned contingent consideration has
been included in the total purchase price for CN Networks.
The total
merger consideration as of March 31, 2009 determined based upon the pro forma
assumptions contained herein is as follows:
The
payments made to purchasers as reflected above have been charged to APIC in the
accompanying pro forma balance sheet.
The
following are the components of the gross contingent consideration payable in
each year assuming the attainment in that year of annual financial
performance milestones as defined in the merger agreement, based upon the
trust account value per share of $7.865 as of March 31, 2009:
|
Total
|
Year
1
|
Year
2
|
Year
3
|
|||||||||||||
|
Cash
|
$
|
6,000,000
|
$
|
3,000,000
|
$
|
3,000,000
|
$
|
—
|
||||||||
|
Issuance
of shares to CN Network holders
|
70,783,000
|
22,415,000
|
24,184,000
|
24,184,000
|
||||||||||||
|
Amount
|
$
|
76,783,000
|
$
|
25,415,000
|
$
|
27,184,000
|
$
|
24,184,000
|
||||||||
|
Shares
of common stock
|
9,000,000
|
2,850,000
|
3,075,000
|
3,075,000
|
||||||||||||
In
addition, as described above, up to an additional $22,110,000 would be payable
from the exercise of CN Holdings warrant proceeds.
Recent
accounting changes
SFAS No.
160, Noncontrolling Interests in Consolidated Financial Statements, will apply
to financial statements for fiscal years and interim periods within those fiscal
years, beginning on or after December 15, 2008. Therefore SFAS No 160 will apply
to our post merger consolidated financial statements for our fiscal year
beginning July 1, 2009. Had the provisions of SFAS No. 160 been applicable to
these unaudited pro forma condensed combined financial statements, then the
Noncontrolling interest liability as of March 31, 2009 in the amount of
$3,492,052 (to the extent that it is reported as equity in the subsidiaries
financial statement) would have been required to be shown within equity,
separately from the parent’s equity. Revenues, expenses, gains,
losses, net income or net loss, and other comprehensive income will be reported
in the consolidated financial statements at the consolidated amounts, which
include the amounts attributable to the owners of the parent and the
noncontrolling interest, which is consistent with the current accounting
methodology. However, under the new rules, losses attributable to the parent and
the noncontrolling interest in a subsidiary may exceed their interests in the
subsidiary’s equity. The excess, and any further losses attributable to the
parent and the noncontrolling interest, will be attributed to those interests.
That is, the noncontrolling interest will continue to be attributed its share of
losses even if that attribution results in a deficit noncontrolling interest
balance.
The
Unaudited Pro Forma Condensed Combined Financial Statements reflect that the
Alyst/CN Holdings acquisition of 100% of CN Networks and CN Media is accounted
is considered to be a reverse merger which is accounted for as a
recapitalization of and therefore the assets and liabilities are reflected at
their historical cost basis. The cash payment and transaction costs incurred as
of March 31, 2009 has been allocated entirely to Goodwill in the amount of $
9,902,288 (excluding contingent consideration of up to $76,783,000 based upon
future operating results and up to $22,110,000 of proceeds from the exercise of
CN Holdings warrants). The Redomestication Merger is considered to be a
reorganization within the meaning of Section 368(a) of the U.S. Internal Revenue
Code of 1986, as amended. It is also contemplated that the Redomestication
Merger should have no adverse U.S. federal income tax consequences to the
shareholders of Alyst. However, Alyst should recognize taxable gain (but not
loss) to the extent (if any) that the fair market value of each of its assets
exceeds the adjusted tax basis of such asset at the effective time of
the merger for income tax purposes. Since any such gain will be determined based
on the value of the relevant Alyst assets at the effective time of the
Redomestication Merger for U.S. federal income tax purposes, the amount of such
gain cannot be determined at this time.
|
Alyst
Acquisition Corp./China Networks International Holdings
LTD.
|
China
Networks Media, LTD. (CN BVI Company)
|
Pro
Forma Adjustments - actual conversion and transaction
|
Notes
|
Pro
Forma Combined based upon actual transaction
|
||||||||||||||||||||
|
Assets
|
Dr | Cr | ||||||||||||||||||||||
|
Current
assets:
|
||||||||||||||||||||||||
|
Cash
and cash equivalents
|
$ | 716,618 | $ | 12,941,200 | $ | 63,518,925 | $ | 71,777,235 |
1,
3, 4, 5,6, 7
|
$ | 5,399,508 | |||||||||||||
|
Cash
held in trust account, interest available for
working capital and
taxes
|
251,733 | - | - | 251,733 |
1
|
|
- | |||||||||||||||||
|
Accounts
receivable, net
|
1,447,037 | - | - | 1,447,037 | ||||||||||||||||||||
|
Receivable
from television stations
|
906,531 | - | - | 906,531 | ||||||||||||||||||||
|
Other
receivables and prepaid expenses
|
13,807 | 749,734 | - | - | 763,541 | |||||||||||||||||||
|
Loan
receivable from related party
|
- | 1,311,111 | - | - | 1,311,111 | |||||||||||||||||||
|
Total
current assets
|
982,158 | 17,355,613 | 63,518,925 | 72,028,968 | 9,827,728 | |||||||||||||||||||
|
Trust
Account:
|
||||||||||||||||||||||||
|
Cash held in trust account,
restricted
|
63,267,192 | - | 63,267,192 |
1
|
- | |||||||||||||||||||
|
Property
and equipment, net
|
- | 132,988 | - | - | 132,988 | |||||||||||||||||||
|
Intangible
assets - Program and Contractual rights
|
- | 27,307,154 | - | - | 27,307,154 | |||||||||||||||||||
|
Film
library and program inventory
|
- | 2,543,579 | - | - | 2,543,579 | |||||||||||||||||||
|
Deferred
target acquisition and financing costs
|
896,861 | 1,146,886 | - | 896,861 |
5
|
1,146,886 | ||||||||||||||||||
|
Total
assets
|
$ | 65,146,211 | $ | 48,486,220 | $ | 63,518,925 | $ | 136,193,021 | $ | 40,958,335 | ||||||||||||||
UNAUDITED
PRO FORMA CONDENSED COMBINED BALANCE SHEET
March
31, 2009
|
Alyst
Acquisition Corp./China Networks International Holdings
LTD.
|
China
Networks Media, LTD and Subsidiaries
|
Pro
Forma Adjustments - no conversion
|
Notes
|
Pro
Forma Combined-no conversion
|
||||||||||||||||||||
|
Liailities
and Stockholders' Equity (Deficit)
|
Dr
|
Cr
|
||||||||||||||||||||||
|
Current
liabilities:
|
||||||||||||||||||||||||
|
Accounts
payable
|
- | 598,694 | - | - | $ | 598,694 | ||||||||||||||||||
|
Due
to television stations
|
- | 15,210,862 | - | - | 15,210,862 | |||||||||||||||||||
|
Customer
deposits
|
- | 292,047 | - | - | 292,047 | |||||||||||||||||||
|
Accrued
and other expenses
|
741,483 | 3,261,760 | 960,000 | - |
4
|
3,043,243 | ||||||||||||||||||
|
Accrued
interest
|
- | 1,791,468 | 1,791,468 | |||||||||||||||||||||
|
Due
to related party
|
- | 503,442 | - | 503,442 | ||||||||||||||||||||
|
Notes
payable, net
|
- | - | - | - | - | |||||||||||||||||||
|
Total
current liabilities
|
741,483 | 21,658,273 | 960,000 | - | 21,439,756 | |||||||||||||||||||
|
Notes
payable, net
|
- | 23,231,039 | 23,231,039 | |||||||||||||||||||||
|
Deferred
tax liabilities
|
- | 678,374 | 678,374 | |||||||||||||||||||||
|
Common
stock, subject to possible conversion,
2,413,319
shares at conversion
value
|
18,980,148 | - | 18,980,148 | - |
2
|
- | ||||||||||||||||||
|
Total
liabilities
|
19,721,631 | 45,567,686 | 19,940,148 | - | 45,349,169 | |||||||||||||||||||
|
Non-Controlling
Interest
|
- | 3,492,052 | - | - | 3,492,052 | |||||||||||||||||||
|
Stockholders’
equity:
|
||||||||||||||||||||||||
|
Preferred
stock
|
- | 490 | 490 | - |
|
5
|
- | |||||||||||||||||
|
Common
stock
|
738 | 950 | 950 | 554 |
2,3,5,6
|
1,292 | ||||||||||||||||||
|
Additional
paid-in capital
|
44,246,378 | 3,951,599 | 11,168,861 | 21,425,498 |
2,3,5,6
|
58,454,614 | ||||||||||||||||||
|
Retained
earnings (deficit)
|
1,177,464 | (4,470,210 | ) | 1,177,464 | - |
5
|
(4,470,210 | ) | ||||||||||||||||
|
Treasury
stock
|
- | - | 61,812,235 | - |
2,6
|
(61,812,235 | ) | |||||||||||||||||
|
Accumulated
other comprehensive income
|
- | (56,347 | ) | - | - | (56,347 | ) | |||||||||||||||||
|
Total
stockholders’ equity
|
45,424,580 | (573,518 | ) | 74,160,000 | 21,426,052 | (7,882,886 | ) | |||||||||||||||||
|
Total
liabilities and stockholders’ equity
|
$ | 65,146,211 | $ | 48,486,220 | $ | 94,100,148 | $ | 21,426,052 | $ | 40,958,335 | ||||||||||||||
NOTES
TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
March
31, 2009
Balance
Sheet pro forma notes
UNAUDITED
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
Nine
Months Ended March 31, 2009
|
Alyst
Acquisition Corp./China Networks International Holdings
LTD.
|
China
Networks Media, LTD. (CN BVI Company)
|
China
Networks Media, LTD. (Carve-Out)
|
Pro
Forma Adjustments - no conversion
|
Notes
|
Pro
Forma Combined-no conversion
|
|||||||||||||||||||||||
|
Dr
|
Cr
|
|||||||||||||||||||||||||||
|
Revenue,
net
|
$ | - | $ | 9,306,695 | $ | 4,890,942 | $ | - | $ | - | $ | 14,197,637 | ||||||||||||||||
|
Cost
or revenue
|
- | 1,916,096 | 1,060,955 | - | - | 2,977,051 | ||||||||||||||||||||||
|
General
and administrative - including transation costs
|
537,452 | 4,434,304 | 1,435,412 | - | 14,281 |
F
|
6,392,887 | |||||||||||||||||||||
|
Operating
income (loss)
|
(537,452 | ) | 2,956,295 | 2,394,575 | - | (14,281 | ) | 4,827,699 | ||||||||||||||||||||
|
Other
income (expense):
|
||||||||||||||||||||||||||||
| Interest income - | 567,272 | 146,767 | - | 567,272 | - |
|
C
|
146,767 | ||||||||||||||||||||
|
Interest
(expense)
|
(4,728,620 | ) | - | - | - | (4,728,620 | ) | |||||||||||||||||||||
|
Other
|
- | (34,966 | ) | - | - | - | (34,966 | ) | ||||||||||||||||||||
|
Total
other income (expense), net
|
567,272 | (4,616,819 | ) | - | (567,272 | ) | - | (4,616,819 | ) | |||||||||||||||||||
|
Income
(loss) before noncontrolling interest
|
29,820 | (1,660,524 | ) | 2,394,575 | (567,272 | ) | (14,281 | ) | 210,880 | |||||||||||||||||||
|
Non-controlling
interest
|
- | (2,543,555 | ) | (1,197,288 | ) | - | 387,517 |
G
|
(3,353,326 | ) | ||||||||||||||||||
|
Net
income (loss) before income taxes
|
29,820 | (4,204,079 | ) | 1,197,287 | (567,272 | ) | (401,798 | ) | (3,142,446 | ) | ||||||||||||||||||
|
Benefit
(provision) for income taxes
|
(38,848 | ) | (1,466,841 | ) | - | 599,000 | 38,848 |
B,F
|
(2,065,841 | ) | ||||||||||||||||||
|
Total
income tax benefit (expense)
|
||||||||||||||||||||||||||||
|
NET
INCOME (LOSS)
|
$ | (9,028 | ) | $ | (5,670,920 | ) | $ | 1,197,287 | $ | (1,166,272 | ) | $ | 440,646 | $ | (5,208,287 | ) | ||||||||||||
|
Pro
forma weighted average common shares outstanding:
|
||||||||||||||||||||||||||||
|
Basic
|
7,381,081 | 2,146,156 | 7,692,963 |
2,
H
|
12,927,888 | |||||||||||||||||||||||
|
Diluted
|
7,381,081 | 2,146,156 | 11,135,228 |
H
|
16,370,153 | |||||||||||||||||||||||
|
Pro
forma income per common share:
|
||||||||||||||||||||||||||||
|
Basic
|
$ | (0.40 | ) | |||||||||||||||||||||||||
|
Diluted
|
$ | (0.32 | ) | |||||||||||||||||||||||||
|
Pro
forma book value per common share
|
$ | 0.16 | ||||||||||||||||||||||||||
UNAUDITED
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
Year
Ended June 30, 2008
|
Alyst
Acquisition Corp.
|
China
Networks Media, LTD. (CN BVI Company)
|
China
Networks Media, LTD. (Carve-Out)
|
Pro
Forma Adjustments - no conversion
|
Notes
|
Pro
Forma Combined-no conversion
|
|||||||||||||||||||||||
|
Dr
|
Cr
|
|||||||||||||||||||||||||||
|
Revenues,
net
|
$ | - | $ | - | $ | 18,094,603 | $ | - | $ | - | $ | 18,094,603 | ||||||||||||||||
|
Cost
or revenue
|
5,933,127 | 896,000 | - |
A
|
6,829,127 | |||||||||||||||||||||||
|
General
and administrative and amortization
|
319,003 | 128,152 | 1,927,311 | - | 52,175 |
F
|
2,322,291 | |||||||||||||||||||||
|
Operating
income (loss)
|
(319,003 | ) | (128,152 | ) | 10,234,165 | (896,000 | ) | (52,175 | ) | 8,943,185 | ||||||||||||||||||
|
Other
income (expense):
|
||||||||||||||||||||||||||||
|
Interest
income
|
2,426,933 | - | - | 2,426,933 | - |
C
|
- | |||||||||||||||||||||
|
Interest
(expense)
|
- | - | - | 3,535,000 | - |
|
C
|
(3,535,000 | ) | |||||||||||||||||||
|
Other
|
- | - | 28,802 | - | - | 28,802 | ||||||||||||||||||||||
|
Total
other income (expense), net
|
2,426,933 | - | 28,802 | (5,961,933 | ) | - | (3,506,198 | ) | ||||||||||||||||||||
|
Income
(loss) before non-controlling interest
|
2,107,930 | (128,152 | ) | 10,262,967 | (6,857,933 | ) | (52,175 | ) | 5,436,987 | |||||||||||||||||||
|
Non-controlling
interest
|
- | - | - | 3,848,000 | - |
D
|
(3,848,000 | ) | ||||||||||||||||||||
|
Net
income (loss) before income taxes
|
2,107,930 | (128,152 | ) | 10,262,967 | (3,009,933 | ) | (52,175 | ) | 1,588,987 | |||||||||||||||||||
|
Benefit
(provision) for income taxes
|
(951,394 | ) | - | - | 2,566,000 | 951,394 |
F
|
(2,566,000 | ) | |||||||||||||||||||
|
NET
INCOME (LOSS)
|
$ | 1,156,536 | $ | (128,152 | ) | $ | 10,262,967 | $ | (443,933 | ) | $ | 899,219 | $ | (977,013 | ) | |||||||||||||
|
Pro
forma weighted average common shares outstanding:
|
||||||||||||||||||||||||||||
|
Basic
|
7,381,081 | 2,146,156 | 7,692,963 |
2,
H
|
12,927,888 | |||||||||||||||||||||||
|
Diluted
|
7,381,081 | 2,146,156 | 11,007,297 |
2,
H
|
16,242,222 | |||||||||||||||||||||||
|
Pro
forma income per common share:
|
||||||||||||||||||||||||||||
|
Basic
|
$ | (0.08 | ) | |||||||||||||||||||||||||
|
Diluted
|
$ | (0.06 | ) | |||||||||||||||||||||||||
NOTES
TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
June
30, 2008 and March 31, 2009
Income
Statement Pro Forma Notes to Pro Forma Statements of Operations for the year
ended June 30, 2008 and nine months ended March 31, 2009
Assuming
no conversions:
|
Note
D
|
To
reflect Non Controlling interest expense associated
with carved out entities on earnings of merger
|
|
Expense
|
Non
controlling interest expense
|
$
|
$
|
3,848,000
|
|
Note
E
|
Not
used
|
|||||||||
|
Note
F
|
To
eliminate income tax provision assuming status BVI entity
|
|||||||||
|
Income
|
General
and Administrative
|
$
|
(14,281
|
)
|
$
|
(52,175
|
)
|
|||
|
Income
|
Income
Tax Provision
|
$
|
(38,848
|
)
|
$
|
(951,394
|
)
|
|||
Note
G
The
following is the derivation of the combined pro forma Non-controlling interest
expense for the nine month period ended March 31, 2009. The Noncontrolling
interest, as calculated below, arises from the joint venture related operations
conducted in the PRC, and does not apply to China Networks Media (CN BVI Company
and certain other non-joint venture entities). Further, the trustee company,
through the joint ventures with PRC TV Stations (JV Ad Cos), generates income
from the sale of television advertising spots. The trustee company is controlled
by China Networks Media through a series of contractual relations (including an
exclusive service arrangement, loan agreement with the trustee and share
purchase options). The 50% Non-controlling interest is determined by the
application of a 50% contractual rate to income before income taxes of the joint
venture entities as determined under PRC GAAP. Under the exclusive service fee
arrangement, China Networks Media has the ability to determine the profits (if
any) to be retained by Hetong through a service fee. As such, 50% of the
registered capital, results of operations and retained earnings of the JV AD Cos
is allocated to the non-controlling interest. As a result of the foregoing, the
combined proforma Non-controlling interest differs from the 50% relationship
that is applied to the joint venture operations.
Note
H
Determination
of additional shares that would have been required to be issued and the
resulting pro forma common shares outstanding as of June 30, 2008 and March 31,
2009:
Reconciliation
of weighted average common shares outstanding - June 30, 2008
|
Without Contingent Consideration
|
With Contingent Consideration
|
|||||||||||||||
|
Basic
|
Diluted
|
Basic
|
Diluted
|
|||||||||||||
|
Shares
outstanding, June 30, 2008
|
9,794,400
|
9,794,400
|
9,794,400
|
9,794,400
|
||||||||||||
|
Less:conversion
actual conversion shares
|
(2,146,156
|
)
|
(2,146,156
|
)
|
(2,146,156
|
)
|
(2,146,156
|
)
|
||||||||
|
Add:
shares issuable to CN Media interests
|
2,146,156
|
2,146,156
|
2,146,156
|
2,146,156
|
||||||||||||
|
Shares
issued – underwriter’s deferred compensation
|
253,488
|
253,488
|
253,488
|
253,488
|
||||||||||||
|
Shares
issued - merger consideration on closing
|
2,880,000
|
2,880,000
|
2,880,000
|
2,880,000
|
||||||||||||
|
Fully
diluted - before contingent consideration
|
12,927,888
|
12,927,888
|
12,927,888
|
12,927,888
|
||||||||||||
|
Dilutive
shares issuable based upon the application of the treasury stock method
with respect to dilutive Alyst warrants outstanding
|
3,314,334
|
3,314,334
|
||||||||||||||
|
Shares
issued - purchase price - contingent consideration
|
9,000,000
|
9,000,000
|
||||||||||||||
|
Assuming
no conversion
|
12,927,888
|
16,242,222
|
21,927,888
|
25,242,222
|
||||||||||||
|
Note
Reference
|
H
|
H
|
||||||||||||||
Reconciliation
of weighted average common shares outstanding - March 31, 2009
|
Without Contingent Consideration
|
With Contingent Consideration
|
|||||||||||||||
|
Basic
|
Diluted
|
Basic
|
Diluted
|
|||||||||||||
|
Shares
outstanding, June 30, 2008
|
9,794,400
|
9,794,400
|
9,794,400
|
9,794,400
|
||||||||||||
|
Less:conversion
actual conversion shares
|
(2,146,156
|
)
|
(2,146,156
|
)
|
(2,146,156
|
)
|
(2,146,156
|
)
|
||||||||
|
Add:
shares issuable to CN Media interests
|
2,146,156
|
2,146,156
|
2,146,156
|
2,146,156
|
||||||||||||
|
Shares
issued – underwriter’s deferred compensation
|
253,488
|
253,488
|
253,488
|
253,488
|
||||||||||||
|
Shares
issued - merger consideration on closing
|
2,880,000
|
2,880,000
|
2,880,000
|
2,880,000
|
||||||||||||
|
Fully
diluted - before contingent consideration
|
12,927,888
|
12,927,888
|
12,927,888
|
12,927,888
|
||||||||||||
|
Dilutive
shares issuable based upon the application of the treasury stock method
with respect to dilutive Alyst warrants outstanding
|
3,442,265
|
3,442,265
|
||||||||||||||
|
Shares
issued - purchase price - contingent consideration
|
9,000,000
|
9,000,000
|
||||||||||||||
|
Assuming
no conversion
|
12,927,888
|
16,370,153
|
21,927,888
|
25,370,153
|
||||||||||||
|
Note
Reference
|
H
|
H
|
||||||||||||||