Ex-10.1 Letter Agreement, dated June 27, 2008






Exhibit 10.1




June 27, 2008




Mr. David Salanic

Fir Tree, Inc.




Dear Mr. Salanic:



This letter agreement between Fir Tree Value Master Fund, L.P. and Fir Tree Capital Opportunity
Master Fund, L.P. (collectively, the “Warrantholder”) and ChinaCast Education Corporation (the
“Company”) sets forth the understanding between the parties in connection with the exercise by the
Warrantholder of 3,007,200 warrants (the “Warrants”) currently held by the Warrantholder.



Pursuant to Section 3.1 of the Warrant Agreement dated on or about March 17, 2004 (the “Warrant
Agreement”), the Company hereby agrees to reduce the Warrant Price (as defined in the Warrant
Agreement) for the Warrantholder from $5.00 per share to $4.25 per share. In connection with this
reduction of the Warrant Price, the Warrantholder hereby elects to exercise all of the Warrants,
and to purchase the shares of common stock, par value $0.0001 per share, of the Company (the
“Common Stock”) issuable upon the exercise of such Warrants (the “Warrant Shares”).



Further, pursuant to Section 3.3.1 of the Warrant Agreement, in connection with the exercise of the
Warrants, upon exercise hereof, the Warrantholder shall execute the attached Subscription Form and
submit it to the Warrant Agent and shall pay, in full to the Company, the Warrant Price, as hereby
reduced, in cash, certified check or wire transfer, for each share of Common Stock as to which the
Warrant is exercised.



In further consideration for the Warrantholder exercising the Warrants in full and in consideration
for the value of the Warrants, upon such exercise and payment in full of the Warrant Price, the
Company hereby agrees to the following:





     (a) The Company shall issue to the Warrantholder 459,925 shares of Common Stock (the
“Additional Shares”), which was determined by the following formula:



Warrants exercised by the Warrantholder x 0.65

$4.25





     (b) Reasonably promptly following receipt of a written request from the Warrantholder,
the Company shall cause one person designated by the Warrantholder (the “Warrantholder
Designee”) to be elected or appointed to the board of directors of the Company, subject to
such Warrantholder Designee being a person that the Company’s board of directors reasonably
determines meets applicable legal, regulatory and governance requirements and who at all
times complies with the policies and procedures of the Company that are applicable to all of
its directors (a “Suitable Person”), and shall cause the



 









 







Warrantholder Designee to be appointed to serve on the compensation committee of the board of directors. Until such time
as the Warrantholder ceases to own at least 10% of the outstanding Common Stock (the “Trigger
Event”), the Company shall:




     (i) not increase the number of directors comprising its board of directors beyond
seven persons unless it increases the number of Warrantholder Designees proportionately in a ratio of 1 to 5 (rounded to the nearest whole number) (for
example, if the number of directors is increased to 8, the number of Warrantholder
Designees would increase to 2 and if the number of directors is increased to 13, the
number of Warrantholder Designees would increase to 3)




     (ii) use best efforts to cause the re-election of the Warrantholder Designee at
each annual meeting of the Company’s stockholders at which such person’s term expires;




     (iii) not increase the number of directors appointed to the compensation committee
beyond three persons unless it increases the number of Warrantholder Designees
appointed to such committee proportionately; and




     (iv) use best efforts to cause the re-appointment of a Warrantholder Designee when
such person’s term expires.



If the Warrantholder Designee shall cease to serve as a director or on the compensation
committee for any reason the Company’s board of directors will use its reasonable efforts to
take all action required to fill the vacancy resulting therefrom with a person designated by
the Warrantholder, subject to any such replacement designee being a Suitable Person. From
and after the occurrence of the Trigger Event, the Warrantholder shall, if requested by the
Company’s board of directors, use its reasonable efforts to cause the Warrantholder Designee
then serving on the board of directors and/or the compensation committee to offer his or her
resignation from the board of directors and/or the compensation committee as soon as
reasonably practicable and shall take all such other action necessary, or reasonably
requested by the Company, to cause the prompt removal of such person from the board of
directors and/or the compensation committee.


     (c) Within 15 days following the date hereof, the Company shall execute and deliver to
the Warrantholder a registration rights agreement, in form and substance satisfactory to the
Warrantholder and the Company, pursuant to which the Company will provide certain
registration rights covering all of the shares (however acquired) of Common Stock owned by
the Warrantholder or its affiliated funds, substantially similar to the registration rights
provided under the Company’s Registration Rights Agreement dated on or about March 17, 2004.


The Warrantholder represents that it is an “accredited investor” as such term is defined in Rule
501 of Regulation D promulgated under the Securities Act of 1933, as amended (the “Act”). The
Warrantholder represents that the Additional Shares are purchased for its own account, for
investment and not for distribution except pursuant to an effective registration statement or a
transfer exempt from registration under the Act.



The Warrantholder consents to the placement of a legend on any certificate or other document
evidencing the Additional Shares stating that they have not been registered under the Act and
setting forth or referring to the restrictions on transferability and sale thereof. Each
certificate


 









 






evidencing the Additional Shares shall bear the legends set forth below, or legends
substantially equivalent thereto, together with any other legends that may be required by federal
or state securities laws at the time of the issuance of the Additional Shares:





	 	 	 	THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR
HYPOTHECATED UNLESS AND UNTIL (I) REGISTERED UNDER THE ACT OR (II) (A) THE ISSUER OF
THE SHARES (THE “ISSUER”) HAS RECEIVED AN OPINION OF COUNSEL IN FORM AND SUBSTANCE
SATISFACTORY TO THE ISSUER THAT SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION
IS IN COMPLIANCE WITH THE ACT AND (B) THE TRANSFEREE IS REASONABLY ACCEPTABLE TO THE
ISSUER.




Unless otherwise set forth herein, all terms shall have the meaning ascribed to them in the Warrant
Agreement.



Except as expressly set forth in this letter agreement, all of the terms of the Warrant Agreement
shall remain unchanged and in full force and effect.



The parties expressly agree that all the terms and provisions hereof shall be construed in
accordance with and governed by the internal laws of the State of New York.



This letter agreement may be signed in counterparts, which may be delivered by facsimile or other
electronic transmission (which delivery shall not affect the validity of such counterparts).




Very truly yours,




	 	 	 	 	 
	CHINACAST EDUCATION CORPORATION
 	 	 
	By:  	/s/ Ron Chan
 	 	 
	Name:  	Ron Chan 	 	 
	Title:  	CEO 	 	 
	 



Accepted and agreed to as of the date first above written:




	 	 	 	 	 
	FIR TREE VALUE MASTER FUND, L.P.
 	 	 
	By:  	/s/ Brian Meyer 	 	 
	Name:  	Brian Meyer 	 	 
	Title:  	Authorized Person 	 	 
	 
	FIR TREE CAPITAL OPPORTUNITY MASTER FUND, L.P.
 	 	 
	By:  	/s/ Brian Meyer 	 	 
	Name:  	Brian Meyer 	 	 
	Title:  	Authorized Person 	 	 
	 




 











 





SUBSCRIPTION FORM




To Be Executed by the Registered Holder in Order to Exercise Warrants



The undersigned Registered Holder irrevocably elects to exercise _____________ Warrants
represented by this Warrant Certificate, and to purchase the shares
of common stock issuable upon
the exercise of such Warrants, and requests that Certificates for such shares shall be issued in
the name of



 




(PLEASE TYPE OR PRINT NAME AND ADDRESS)



 



 



 




(SOCIAL SECURITY OR TAX IDENTIFICATION NUMBER)




	 	 	 
	and be delivered to
	 	 
	 

	 	 
	 

	 	(PLEASE PRINT OR TYPE NAME AND ADDRESS)





 




and, if such number of Warrants shall not be all the Warrants evidenced by
this Warrant Certificate, that a new Warrant Certificate for the balance of
such Warrants be registered in the name of, and delivered to, the Registered
Holder at the address stated below:




	 	 	 	 	 
	Dated:
	 	 	 	 
	 

	 	 
	 	 
	 

	 	 	 	(SIGNATURE)
	 
	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 

	 	 	 	(ADDRESS)
	 
	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 

	 	 	 	(TAX IDENTIFICATION NUMBER)